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  Jeff Bailey   2/4/03,  10:01:47 PM
Pivot Matrix for tomorrow. Link

After a "choppy" after-hours trade from Cisco's (CSCO) earnings, CSCO settled out at $13.12, compared to close of $13.20 (after-hours hi-low $13.38-$12.30).

QQQ settles at $24.21 compared to $24.25 close, with after-hours high/low of $24.27/$23.94.

S&P 500 futures (sp03h) settlement for Tuesday was 848.30, and as I type, currently trade 849.40, so up 1.10 points.

  Linda Piazza   2/4/03,  5:38:04 PM
Reporting after the close, CSCO posted earnings of $.14, beating consensus forecasts as it usually does. At $4.7 billion, sales fell short of the $4.73 billion forecast and the $4.8 billion from the same period last year. Chambers cited "most challenging environment the information technology industry has ever faced." After closing at 13.20, CSCO slipped as low as 12.63 in after-hours trading, but has since recovered to trade at 13.17 as of this writing.

  Mark Phillips   2/4/03,  4:05:51 PM
DELL Very bullish end to an impressive day for shares of DELL, current LEAPS Call play. That's right, I said bullish and DELL in the same sentence. After testing $23.25 support again this morning, the stock went up all day, posting a big engulfing candle that encompassed the total range of teh past two days to close right on the high of the day, just a few pennies below the 10-dma. Hmmm...could it be someone else is watching that bullish support line ($23) on the PnF chart? No question, DELL isn't out of the woods yet, but the better than average volume today hints that there is some solid buying interest down near the $23 level.

  Jonathan Levinson   2/4/03,  3:59:59 PM
Central Fund of Canada (CEF) is looking to close within a few ticks of its high of the day on better than 3 times its average daily volume. Correction: at its high of the day, +6.61%.

  Jeff Bailey   2/4/03,  3:58:53 PM
The 3:15 PM Intraday Update has been posted. Link

  John Seckinger   2/4/03,  3:55:01 PM
Let us say the Dow closes at 8010, then tomorrow's pivot would be 8016, with R1 at 8098 and R2 at 8186. Support 1 would be at 7928, and Support 2 at 7847. With that said, it makes sense for traders to be squaring positions ahead of Cisco as today's close is more neutral than expected. Still intermediate-term bearish, so it depends on what kind of trader you are. Day traders are likely covering shorts, while swing traders are not adding to bearish positions.

  Steven Price   2/4/03,  3:46:09 PM
Swing Trade Signals
Dow back over 8000 and we are at risk for being stopped out on a ramp up into the close ahead of Cisco.

  Jonathan Levinson   2/4/03,  3:42:42 PM
Spot gold is now above 380/oz, HUI at 150.66 and XAU at 80.21. The put to call ratio is .90 for the past half hour as the COMPX attempts to retake 1300.

  Linda Piazza   2/4/03,  3:41:10 PM
Volume is light currently, with about 1.2 billion shares traded on the NYSE and 1.1 on the Nasdaq. On both indices, down volume is about four times up volume.

  Steven Price   2/4/03,  3:40:37 PM
Swing Trade Signals
The Dow is holding without a breakdown, although remains below 8800. With Cisco's earnings and Colin Powell speaking tomorrow, traders not wanting to risk a gap up in the morning should be thinking about closing the position. Of course, I have identified these plays as HIGH RISK when entered, so hopefully only traders willing to take that risk were playing anyway. That being said, we are about to get hit in the face with some of those risks and traders need to be aware of that.

Current levels: Dow 7989/OEX 426.97/SPX 845.03/COMP1299

  Jonathan Levinson   2/4/03,  3:29:38 PM
The HUI and XAU continue higher, now up a whopping 7.87 and 4.08 respectively. The COMPX is trading just below 1300, TRINQ 2.21 and TICK.NQ -198. Bonds closed near their highs of the day.

  John Seckinger   2/4/03,  3:19:03 PM
It is interesting that the 30-year closed at the session's high of 112'25. Turning to the 10-year yield, the 3.93% area is near the low yields as well; however, a trend line from the December 31st low (3.76%) that bisects the low on January 24th at 3.87% comes in at 3.924% and has not yet been tested. A close under here would definitely be bearish for stocks.

  Linda Piazza   2/4/03,  3:13:08 PM
The OEX made a downside break of the bear-flag channel on the five-minute charts. A move below 425.50 would provide further evidence of weakness, but I wouldn't be surprised to first see a move up to test the channel from underneath again.

  Jonathan Levinson   2/4/03,  3:02:07 PM
The COMPX bear flag is breaking down, while HUI and XAU are at new highs for the day, +7.29 and +3.82 respectively. FVX is now down 7.2 bps, near its low of the day.

  Linda Piazza   2/4/03,  2:57:05 PM
I'm having trouble gauging today's action, perhaps because I'm giving too much weight to the ability of the SOX and SMH to maintain support above last week's gap. However, a failure of the COMPX to maintain the 1300 level into the close and the Dow to maintain the 8000 level would be bearish. On the Dow Jones Transportation Index, I notice that the 5(3)3 daily stochastics have flattened in midrise, and there may be slightest hint of a hinge on the on the BIX 5(3)3 daily stochastics, too, although it may be my imagination at work there. On the other indices, I've been interpreting the consolidation in the prices while stochastics rise as somewhat bearish, too. The OEX tested the upper limits of its possible bear flag channel but stayed within it. The OEX hasn't yet risen past the 430 level that should probably delimit the breakdown point if the regression channel is in fact a bear-flag pattern. Nothing has happened yet to change my intermediate-term bearish outlook, but I have to keep reminding myself of that as I watch the SOX and SMH.

  Jeff Bailey   2/4/03,  2:50:23 PM
Expedia (EXPE) $56.28 -6.67% .... just traded a session low at $56.11 .... market makers to watch here on Level II are Goldman Sachs (GSCO) and Prudential (PRUS). Showing small size bid, but took a lot of stock at $56.11. If they start offering bids higher, then they may be looking for stock.

  Jonathan Levinson   2/4/03,  2:47:13 PM
1300 COMPX will now act as short term support. The Cisco Fear I'm feeling is no doubt gripping bulls as well, and 1300 is one of those lines in the sand for bulls and bears alike. John Chambers has traumatized more bearish traders than I can guess. I can almost see him swinging the bats around in the dugout, waiting to step into the batter's circle. Either that or he's hooking down a quick cognac :)

  John Seckinger   2/4/03,  2:41:47 PM
Note: Trading curbs will be removed at 8027. This should be area to look for sell programs, since computer trading will be allowed once again. -2.22 in the $PREM is the sell-program number today.

  Jonathan Levinson   2/4/03,  2:37:51 PM
The put to call ratio continues to inch lower, now .94. The other indicators are holding their ground within this narrow upward trading range. 1306 remains the next resistance level, and it hasn't been challenged yet. HUI and XAU are regaining lost ground, with HUI now +6.67 and XAU +3.42 on the day.

  Linda Piazza   2/4/03,  2:33:22 PM
CNBC is reporting that weapons inspectors have found yet-another empty chemical warhead in Iraq. This may not be market-moving news, since other similar warheads have been found previously.

  John Seckinger   2/4/03,  2:29:02 PM
With the Dow unable to really collapse underneath the 7950 area, the blue chips have been in a relatively tight upward regression channel. Since above the 7982 area, the objective will be for a test of 8023. Please see chart: Link

  Kent Barton   2/4/03,  2:25:16 PM
Take a look at the big-cap techs. CSCO, IBM, and INTC are all within striking distance of new relative lows, while MSFT continues its descent towards the $44.00 area. It won't be pretty for the NASDAQ if negative earnings news from Cisco forces these stocks below support!

  Jonathan Levinson   2/4/03,  2:09:29 PM
Good eye, Linda! The rise off the day lows is printing a bear flag on the COMPX 5 minute candles as well, but within a very narrow range.

  Mark Phillips   2/4/03,  2:08:57 PM
Dear Mark. Great stuff. Could you explain the importance of the slope of the moving average when a stock or index crosses thru it. If the stock or index crosses above that m.a. and the m.a. is still sloping "down", does that look bearish to you? Thanks JJ

JJ brings up a great question with respect to crosses of moving averages. While a cross up through a moving average is normally considered to be bullish, it really only becomes a strong bullish signal if the moving average is either flat or has a positive slope. A perfect example of what happens with an upward cross of a moving average that is still falling can be seen by looking at the daily chart of the NASDAQ-100. Both in November last year and January this year, the NDX broke above the 200-dma, which continued to slope downwards. Sure enough, those breakouts failed, and the NDX fell back under the 200-dma, which remains in its persistent downtrend.

A great example of a strong bullish cross of the 200-dma can be seen in the daily chart of the XAU index in December of 2001. That breakout was followed soon after by the 50-dma crossing up through the 200-dma, leading the XAU to a high near $89. Technicals in the XAU were looking somewhat similar in early December 2002. XAU rallied through its 200-dma (positive slope) and the 50-dma then turned up as well. Confirmation of the strength of that breakout came with the 50-dma crossing up through the 200-dma in early January and we can see what price action has done since then. XAU up nearly $9 since the 200-dma crossover and still looking quite strong.

As a side note, the bullish moves of the XAU through the 200-dma in August and early November of last year were much weaker signals due to the weak nature of the 50-dma, which was first falling (August) and then vacillating (November) failing to confirm the presence of a strong upward trend.

  Linda Piazza   2/4/03,  2:05:55 PM
So far, the OEX has failed in its attempt to make an upside break of the potential bear-flag formation. I'm paying special attention today, as the SOX and SMH refused to fall below the level of last week's gap and instead are now testing the top of today's more modest gap.

  Jeff Bailey   2/4/03,  2:03:11 PM
The 1:00 PM Intraday Update has been posted. Link

  Jonathan Levinson   2/4/03,  2:01:31 PM
The COMPX has broken 1300 resistance is now just below 1306. The TRINQ has dropped to 1.7, and the TICK.NQ is at -141. It wouldn't surprise me to see this range hold for the rest of the day, as CSCO is large wildcard out there. FVX remains at -4.8 bps on the day, and QQV has dropped a bit further.

  John Seckinger   2/4/03,  1:59:31 PM
Anyone want to Bid? Sotheby's Holdings Inc.(BID) said today that it would stop auctions on its sothebys.com site, taking a multimillion dollar charge. Reasons include an apparent liking to eBay's Inc. (EBAY) technology, and that Sothebys will try to change its current auction process. Shares are lower by 1% at 8.52.

  Steven Price   2/4/03,  1:56:09 PM
Current levels: Dow 8001/SPX 847.63/OEX 428.48/COMP 1304.53

My sentiment remains bearsih, but anything can happen in this range with Cisco's earnings and the Powell speech tomorrow. If I am stopped out here, I'll look to re-enter from the short side back over 8100.

  Steven Price   2/4/03,  1:53:53 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
The afternoon rally has continued and there is a good chance we will be stopped out at Dow 8025. More aggressive traders can set stops higher, above the pivot at 8105, or at the break-even level of 8078. We are short at an average of 8077.50.

  Linda Piazza   2/4/03,  1:52:07 PM
Hourly OEX charts show the first hint of bullish kisses on both the 5(3)3 stochastics and the 21(3)3 stochastics. On the five-minute charts, I show yet-another bear flag formation on the OEX, which should resolve before 430. The OEX is currently attempting an upside breakout of that possible bear flag formation.

  Kent Barton   2/4/03,  1:48:38 PM
Expedia (EXPE) $56.52 -3.81 As Jeff mentioned earlier, Expedia reports earnings after the bell tomorrow. We'll be closing out our Premier Investor short play ahead of the announcement. Some traders who used our original entry point may simply want to close out positions at current levels for a gain of more than 10%. Also bear in mind that we've set an exit target at $55.76.

  Steven Price   2/4/03,  1:44:11 PM
How do you view AMAT based upon its forecast? Thank you, George

Applied Materials (AMAT) $12.08 (+0.06) After AMAT's warning last week, the stock has suffered a major breakdown and now sits below most of the moving averages that I regularly watch (21, 50, 100, 200). However, both AMAT and the Semiconductor Index (SOX 269.03 -1.53) have both stabilized after recovering partially from the big drop following that warning. I see the next level of support on the PnF chart for AMAT at $10.50, with a bearish vertical count of $8. However, I probably would wait for the SOX to break below the 260 support level before jumping in. The trend still remains down in the sector, but with the consolidation we are seeing at the current level (in the broader indices, as well), I'd wait for a new round of selling to begin before entering new shorts in the chips. We are currently short CCMP and at this moment I am not seeing a good reason to close the position. However, that stock seems to have stabilized, as well and I'm not sure I'd recommend new entries there, either.

  Linda Piazza   2/4/03,  1:37:39 PM
Although still negative, the volume patterns have improved during the lunchtime lull. Adv/dec ratios show a .57 number for NYSE-traded issues and a .47 number for Nasdaq-traded issues. Down volume still trumps up volume, with down volume measuring 4.27 times up volume on the NYSE and 4.7 times up volume on the Nasdaq. New lows still outnumber new highs. Volume stands at 800 million for the NYSE and 820 million for the Nasdaq.

  Jonathan Levinson   2/4/03,  1:35:54 PM
Jonathan - Great stuff. Could you explain the importance of the slope of the moving average when a stock or index crosses thru it. If the stock or index crosses above that m.a. and the m.a. is still sloping "down", does that look bearish to you?

Any upward cross of a moving average is, on its own, a bullish event. However, the downward slope of the moving average reflects the prevailing downtrend in price on that timeframe, and so a bullish cross on a downsloping moving average will be a less bullish event than it would be if the m.a. slope were neutral or upward. For this reason, it's useful to follow price action in multiple timeframes and using multiple m.a.'s. I like to compare different moving averages on the same chart to create my own "oscillator" and look for signals that way in addition to the indicators I follow.

  John Seckinger   2/4/03,  1:30:40 PM
There is a refunding announcement tomorrow regarding US Treasuries, and this might be reason for traders to take long profits and bid equities on a temporary basis.

  Jonathan Levinson   2/4/03,  1:29:12 PM
The TRINQ is down to 1.96 on this push above 1300, still showing steady selling pressure, and the TICK.NQ is showing more advancers than decliners at +182. QQV has fallen below 42, now 41.83. FVX is off its lows, -4.6 bps on the day.

  John Seckinger   2/4/03,  1:21:50 PM
As the memorial service commences, the blue-chips remain between the range of 7985 to 7946. The Nasdaq is exactly at 1300. In other news, the US dollar has fallen to 3-year lows against the Euro, one day before the critical briefing to the UN by Secretary of State Colin Powell.

  Steven Price   2/4/03,  1:10:16 PM
Current levels: Dow 7968/OEX 426.41/SPX 843.73/COMP 1298

  Steven Price   2/4/03,  1:08:47 PM
Swing Trade Signals
Not getting a whole lot of clues here with the major indices still in a holding pattern. I think the next signal I'd be looking for is the SPX to roll over and give the triple bottom at 840. The COMP is still below 1300, which is the most bearish sign I'm still seeing. The Dow has put together a small series of higher highs and higher lows over the last couple hours, which tells me we are still simply rangebound in the same area we have been in for the last week.

  Jonathan Levinson   2/4/03,  1:06:55 PM
The put to call ratio has dropped to .98 on this bounce, which so far was turned back at first resistance of 1300. The TRINQ at 2.24 has room to fall, but then so does the TICK.NQ, currently +61. QQV has held above 42.15, and there's little short term direction at the moment. I continue to watch 1300 and 1306 as short term resistance.

  Mark Phillips   2/4/03,  12:54:56 PM
Watching bond yields during the lunchtime lull and noting that both the 10-year (3.961%) and 5-year (2.940%) are inching above their opening levels from this morning's gap down move. 30-year (4.813%)has yet to follow suit, as it needs to get over 4.816% to join the shorter maturities. As Jeff mentioned earlier, yields will need to improve (indicating selling of bonds) if the market is going to do more than just a dead-cat bounce and then fade into the close.

  Mark Phillips   2/4/03,  12:49:37 PM
Amen, Jonathan! I couldn't have said it better myself. If markets have really bottomed and are going to head up with any conviction, the first clue will be breaking above the 200-dmas, with confirmation coming from the 50-dmas crossing up through the 200-dmas. Isn't it interesing how the 50-dmas on this latest failed rally rolled over just below the 200-dmas. That's a big warning signal that Mr. Bloch is premature.

  John Seckinger   2/4/03,  12:48:23 PM
As a note: The memorial service for the Columbia astronauts will begin at 1 p.m.

  Linda Piazza   2/4/03,  12:48:18 PM
Commentators refer to AIG's write down as a primary reason for today's market action. These concerns have been cropping up in Asian and European insurers for quite some time now. As I mentioned earlier today, UBS Warburg lowered forecasts today for Munich Re, the world's largest reinsurer, due to worries about their holdings. What I didn't mention earlier today is that Munich Re's holdings include about half the stocks in the DAX. Trading just below 5500 last spring, the DAX's current level is 2634.08. It's down another 4.28% today and threatens to break through its October lows. Across the world, insurers are being forced to sell their holdings to maintain reserves.

  Jonathan Levinson   2/4/03,  12:43:50 PM
Regarding Linda's post about Ralph Bloch, it's tough to consider July a capitulation, in my opinion. Capitulation means to me that bulls throw in the towel. I've seen this in Argentina and on stocks like Enron or NT, but certainly not in the broader market. The very fact that Abby Joseph Cohen and others of her ilk still have their opinions published tells me that a true capitulation is far away. None of this is short term trading information, but with repeated failures to break the 200 dma's on the indices and continued bullish speculation as indicated in the put to call ratios and other breadth indicators, I'm sticking with the secular trend, which unfortunately remains down. Like you, I'll follow the charts. I don't derive any joy from my outlook- we just seek to trade what we see. Given the absence of bearish mutual funds in Canada and the plethora of bullish ones, I'll be much relieved when I can at last back up the truck in my retirement accounts and load up on some growth funds. But, I fear that I'll have to wait until everyone has already bailed out of the ones they're still holding.

Incidentally, take a look at the weekly candles on KO. A retest of the 45 level would be an excellent area for a put position, if we see it.

  Jeff Bailey   2/4/03,  12:40:23 PM
10-year YIELD ($TNX.X) 39.54, or 3.954% here.... monitoring YIELD on intra-day basis here. The 09:30 AM EST tick was 39.60, or right at current levels. If bond market doesn't like today's economic news and wants to stay defensive, should see buying in Treasury here and YIELD on the bond lower. If so, then look for Dow recovery, now off 136 points at 7,973 to fade.

If 10-year is going to fill its gap, then Dow may have enough to get back to down just 80-points and lift trading curbs. If that takes place, then will be interesting to see how computer programs react.

  Jonathan Levinson   2/4/03,  12:29:37 PM
It looks like Al Green might be a subscriber to the Market Monitor, as HUI and XAU continue to get knocked off their intraday highs, with HUI currently +5.70 and XAU +2.84. Spot gold is now 377.60, nearly 2$ off its highs of the day.

  John Seckinger   2/4/03,  12:28:36 PM
The tight range in the markets continue. Prices have gone above the top of the shown regression channel (see post 11:59), and we are starting to see some weakness in bond prices. More importantly, cash appears to be leaving the short-end of the yield curve and lesson the "fear" of lower stock prices. In other news, Kenneth Dam, the U.S. deputy treasury secretary from the beginning of the year until John Snow was sworn into office on Monday, is resigning. This should not be a great surprise to the markets.

  Linda Piazza   2/4/03,  12:27:49 PM
Jonathan and Mark, according to Ralph Bloch this morning on CNBC, we had our capitulation last July. The breadth indicators he follows convinced him that October's lows were not confirmed by a further fall in the breadth indicators. While he wasn't discounting the possibility of a Dow 7200, he did say that it would not be validated by the Nasdaq's behavior or by a confirming fall in the breadth indicators he follows. If I understood him correctly, he concludes that the markets may bump around a bit, but that the next Dow low will be the point at which we will have final confirmation that the markets will soon recover. Nice to know. I'll probably just wait and form my own opinion, however.

  Jeff Bailey   2/4/03,  12:16:53 PM
Program Trading Curbs In the 11:00 EST Update, I mentioned that program trading curbs have been put in place. For those using the pivot analysis levels, this should be understood in my option. It is my thought that many of the institutional computer programs are set up from the pivots, S2, S1, R1 and R2 as they measure inventory against order flow. When program trading curbs are put in place, I would expect and allow for trading to not be as "exact" as we will sometimes witness when curbs are not in.

Still, this doesn't mean a trader can't continue to trade his/her levels according to plans.

  Mark Phillips   2/4/03,  12:14:38 PM
Yes, Jonathan. It takes a thick skin to be bullish in any market that has just experienced a 20-year bear market. Do you think everyone was bullish US equities at the start of the 1980s? Heck no! They were all bullish gold and bearish stocks at exactly the wrong time. Such is the case with gold here -- reasonably new bull market in the yellow metal (rougly 2-years old) and for the most part, nobody believes it. That's just the nature of the beast. If we can learn to identify the pattern, we will know how to recognize the ultimate bottom in the stock market when it arrives. When the chart of the DOW looks like gold did in early 2001, it'll finally be safe for the buy and hold investors to come back into the game.

  Jonathan Levinson   2/4/03,  12:13:34 PM
The most recent put to call reading is 1.11. TRINQ 2.61, TICK.NQ -129. This bounce seems to have more conviction, but it will have to clear 1300 and 1306 first.

  Jonathan Levinson   2/4/03,  12:06:34 PM
Indeed! But I agree entirely and have been harping on this for awhile. Gold has been leading for years now- it's beyond a mere "accident" at this point. Those who have been holding since gold was in the 200's are well used to the naysaying by now.

  Mark Phillips   2/4/03,  12:03:33 PM
Thanks Jonathan! That would seem to make sense. One thought I did have after my last post is that the market is indicating its belief (a little anthroporphization there...) that the current surge in gold will be short-lived and hence won't have enough time at these elevated levels to have such a strong impact on the profits of the mining companies. I think that belief is dead-wrong, as it is a different way of saying that the price of gold is up due to the coming war. While the geopolitical situation is having some impact, the real underlying driver to gold's rise is currency weakness. But that's a topic best left for another time, eh? GRIN

  John Seckinger   2/4/03,  12:02:54 PM
As a reminder: Tomorrow features the UN report from Gen Powell, and on the docket for Friday is the January employment report.

  Jeff Bailey   2/4/03,  12:02:05 PM
The 11:00 AM Intraday Update has been posted. Link

  Jonathan Levinson   2/4/03,  12:00:51 PM
That would be one heck of spike, Linda. Not enough lead in or follow through for The Finger, as it's wont to be called, but certainly a baffling print. I observed a sharp dip in precious metals stocks and also the spot price of gold. Perhaps the Plunge Protection Team is making an appearance. Perhaps Al Green just hit "911" on the Bat Phone.

  John Seckinger   2/4/03,  11:59:46 AM
I have updated the five-minute chart I posted at 10:59. This one has a regression channel included. Link

  Jonathan Levinson   2/4/03,  11:57:37 AM
Mark, I've been reading a lot on this lately. Most are baffled by the divergence, but James Sinclair theorizes that it's hedge funds going long the commodity and hedging by shorting the HUI and XAU components. He posted short interest tables that seemed to confirm it. Alas, I no longer have the link.

  Linda Piazza   2/4/03,  11:55:43 AM
Here's a one-minute chart of the SMH. Jonathan, what would your former mentor name this formation? I note that the SOX did not show a similar aberration. Link

  Mark Phillips   2/4/03,  11:54:27 AM
Intersting action in the gold shares today. Jonathan has been pointing out the strength in the yellow metal this morning, with the latest spot price above $379. Even the Feb gold futures contract (GC03G) is north of $377 after once again pushing through resistance. What intrigues me is the lack of performance in the gold shares, with the XAU still below $80 (not to mention the January peak just below $83). Looking at the HUI index, I see the same sort of divergence. Despite the fact that the price of gold is well above where it was last month, the measures of the gold stocks just can't seem to follow suit. This could be due to the fact that gold stocks are still stocks and are responding to the incessant weakness in the stock market. Or it could be hinting at some sort of important divergence, the cause of which I just don't see.

  Linda Piazza   2/4/03,  11:51:17 AM
Some move in the SMH just now! It must have been a bad tick.

  Jonathan Levinson   2/4/03,  11:50:12 AM
The stochastic are showing a bounce attempt underway on the COMPX. I'm watching 1300 and then 1306 as short term resistance levels.

  Steven Price   2/4/03,  11:46:53 AM
Swing Trade Signals
PnF charts showing us on the verge of triple bottom breakdowns in the Dow at 7900 and the SPX at 840, while the OEX gives a double bottom sell at 422.50 (2.5 point box). Note the low in the SPX at 840.19 avoided that signal and we have bounced across the board.

Current levels: Dow 7962/OEX 425.80/SPX 842.76/COMP 1296

  Jonathan Levinson   2/4/03,  11:45:46 AM
Spot gold as quoted on kitco.com is above 379, up over 9 dollars today.

  Linda Piazza   2/4/03,  11:44:07 AM
Both the SOX and the SMH have so far clung to levels just above the bottoms of their gaps from last week.

  Jonathan Levinson   2/4/03,  11:41:48 AM
Teamster Freight Members Overwhelmingly Authorize Strike - More Than 95 Percent Endorse Efforts of Union’s National Negotiating Committee


  Linda Piazza   2/4/03,  11:41:35 AM
With volume of 500 million and 539 million shares respectively, the NYSE and Nasdaq show adv/dec ratios of .42 and .37. Down volume measures 6.9 times up volume on the NYSE and 7.8 times up volume on the Nasdaq. New highs/new lows show ratios of 28:69 on the NYSE and 23:74 on the Nasdaq.

  Jonathan Levinson   2/4/03,  11:38:38 AM
The put to call ratio continues to climb, now at 1.09. The absence of a bounce since yesterday tells me that despite the uptrend in the p/c ratio, the downtrend in stocks continues. As readers have been pointing out, the climb in the intraday p/c ratio points to the possibility of a reversal/bounce, but also the possibility that the options market is frontrunning further declines. This ambiguity is precisely why traders follow the moving average on the p/c ratio instead of absolute readings. Caution remains the order of the day (read, use stops) but the trends remain intact. I see nothing bullish on today's COMPX, and this is confirmed so far by action in precious metals and bonds.

  John Seckinger   2/4/03,  11:30:36 AM
GeoPolitical news: There is talk that US bombers are being put on alert to possibly head for N Korea. This is said to be done in case diplomacy fails.

  Jonathan Levinson   2/4/03,  11:28:53 AM
The COMPX continues to print lower lows, and the HUI is printing new highs, now up a whopping 6.87 to 149.25. XAU +3.40 to 79.42.

  Linda Piazza   2/4/03,  11:28:14 AM
Currently at 424.61, the OEX now dips just below Friday's low of 424.63

  Jeff Bailey   2/4/03,  11:26:06 AM
Expedia (EXPE) $56.37 -6.6% closing out 1/2 position in the March $65 puts here at $10.20.

  Steven Price   2/4/03,  11:20:26 AM
Swing Trade Signals
While we got a breakdown to new lows in the COMP, we are still within the past week's range in the Dow, with a floor at 7915/7900. Trader's weary of a bounce should have a profit here and should be aware of the possibility. With Cisco's earnings and the Powell speech ahead, continued swings in either direction are a definite possibility. Right now the OEX is holding 425 and the SPX 840

Current levels: Dow 7948/COMP 1295/OEX 425.31/SPX 841.85.

  Steven Price   2/4/03,  11:10:19 AM
Swing Trade Signals
We got the break below COMP 1300 and Dow 7950 and conservative traders may want to tighten stops to just above the failed rebound high of 7980, possibly with a stop of 7990. Very conservative traders can take some chips here.

Current levels: Dow 7941/COMP 1294/OEX 424.99/SPX 841.04

  John Seckinger   2/4/03,  11:09:42 AM
Side Note: It is being reported that British Prime Minister Tony Blair was unable to convince France to join coalition for quick action against Iraq.

  Jeff Bailey   2/4/03,  11:08:57 AM
S&P 500 Index (SPX.X) 841 -2.25% ... Weekly S2 tested here. To the decimal, bear would want to see a 5-minute interval close below 840.91. Looks bearish into the close and should close at a session low.

  Jonathan Levinson   2/4/03,  11:05:17 AM
The put to call ratio has risen to .98. Apparently option traders weren't too convinced by those bounce attempts either. TICK. NQ is now -655 showing broad selling on the COMPX, TRINQ 3.05.

  John Seckinger   2/4/03,  10:59:31 AM
Here is an illustration of how I used "fitted retracements" during today's session. Please see chart: Link

  Jonathan Levinson   2/4/03,  10:57:05 AM
The COMPX is printing fresh lows at 1300. The TRINQ is higher, showing moderate selling pressure at 2.52. TICK.NQ -207. FVX is down 6.6 bps, and precious metals are back up to near their highs of the day. The failure of the COMPX to put together even a 5 point bounce looks pretty weak from here. Obviously 1300 COMPX is new support level, but given the weakness at 1306 after a 40 minute bounce attempt, it doesn't look very strong.

  Linda Piazza   2/4/03,  10:54:38 AM
Currently trading just above 13.00, CSCO flirts with the possibility of confirming a double-top formation today. On the linked chart, I've drawn two possible baselines for this double top, one including a candle shadow and one not including it. The two baselines fall at 12.75 and 13.00. A fall through the baseline would predict a target of about 10.40 for CSCO, depending on the baseline. (15.60-13.00 baseline=2.60. Subtract 2.60 from 13.00 baselines=10.40 target.) Ordinarily, a confirmation of a double-top might induce me to enter a put play, but with CSCO's earnings announcement due today, that's not a risk I'd encourage anyone to take. Link

  Linda Piazza   2/4/03,  10:42:50 AM
Volume patterns confirm the weakness seen in the markets today. Adv/dec ratios stand at .41 for the NYSE-traded issues and .40 for the Nasdaq-traded issues. Down volume swamps up volume, with down volume almost nine times up volume on the NYSE and 4.7 times up volume on the Nasdaq. New lows come in at about twice the number of new highs. Volume is 269 million on the NYSE and 323 million on the Nasdaq.

  Mark Phillips   2/4/03,  10:40:39 AM
SYMC $47.24 (-0.07) Traders looking for relative strength haven't been disappointed with this OI Call play, as it continues along its path of higher lows. The heavy selling in the early going dropped the stock to just above the $46 level ($46.36) this morning, before it snapped back up above $47 again. It has been interesting to watch this stock over the past week, as each selloff in the broad market knocks it back to higher support before a strong rebound takes place. As long as the trend continues, buying on the dips will provide attractive entries into the play as we wait for a push back up to the recent high just over $48. Note that our stop was raised last night to $45, as a break of those intraday lows from last week would be a big warning signal that the trend has ended.

  Steven Price   2/4/03,  10:39:52 AM
Swing Trade Signals
More aggressive traders may want to use a wider stop than I have now set at Dow 8025. Today's pivot of Dow 8105 would be one alternative, as it allows for 8100 to be tested on a bounce. Considering the current wide intraday swings, I am trying to strike a balance between the most conservative and aggressive traders, however, I suggest traders consider alternative stops suited for their own profiles.

  Jonathan Levinson   2/4/03,  10:35:50 AM
The put to call ratio has risen to .86 for this past half hour. Precious metals are giving up some of their gains, still strongly up, and for a few minutes the HUI and XAU seemed to be going vertical. The COMPX is struggling to gain back some ground but needs to get above 1306. The TRINQ has dropped to 1.39 on this move, but the TICK.NQ continues to show net sellers at -207.

  Steven Price   2/4/03,  10:31:35 AM
Alltel (AT): $45.86 (-1.14) It seems I've grown a few more gray hairs waiting for this OI put play to break down below $46.00. We finally got the break this morning and the stock is currently attempting a bounce. I'd like to see that $46 level act as resistance now that it has been broken and I can see new entries if that turns out to be the case. One note of caution is the PnF bullish support line at $45 which is bound to provide some support in the $44-$45 range. A trade of $44 would be a breakthrough below that level.

  John Seckinger   2/4/03,  10:24:10 AM
Looking at the 30-year, prices are higher by '19 ticks to 112'24 and above support at 112'12. The objective is for a move to 113'26. There could be some slight resistance at 113'05. With that said, equities should be feeling assets roll into more productive assets, Treasuries. In other news, the dollar continued to come under pressure as Gold hit levels not seen since 1996. In the corporate bond arena, AOL bonds are getting crushed, and this should help pressure shares lower. Currently, AOL is down 0.43 to 11.12.

  Linda Piazza   2/4/03,  10:21:50 AM
Here's an update of the VIX chart I first showed a couple of weeks ago, depicting the descending trendline that has been capping the VIX as it moves up. It's possible that the VIX could again challenge that trendline today or tomorrow, as it now crosses just above 40 and will descend each day. Link

  Steven Price   2/4/03,  10:19:49 AM
Current levels: Dow 7954/SPX 842.73/OEX 425.86/COMP 1302/QQQ 24.10

  Jonathan Levinson   2/4/03,  10:19:40 AM
Precious metals continue higher, with HUI now +5.61 to 147.99 and XAU +2.83 to 78.87.

  Steven Price   2/4/03,  10:18:46 AM
Swing Trade Signals
Getting support at Dow 7950 and COMP 1300. With the current short 1/2 position entered at an average of Dow 8077.50 (8030 and 8125), conservative traders can think about taking some chips off the table. We are not really getting much of a bounce, but no downside follow through right now, either.

  Jonathan Levinson   2/4/03,  10:10:24 AM
We have definite spike in volatility on the COMPX, with VXN +2.15 to 48.19 and QQV +2.04 to 41.91. I'm not currently charting it, but I can't remember having seen the QQV print 42 in quite awhile. This tells me that we could be looking at downside break from here- a break to relative highs in volatility, be it the VIX, VXN or QQV tells us that fear is growing and investors could be starting to look for the exits.

  Steven Price   2/4/03,  10:09:37 AM
The only Dow stock still in the grren is SBC (+0.03). Even WMT, which had been up over a dollar earlier is now -0.86.

  John Seckinger   2/4/03,  10:07:57 AM
Nice to see the trend continue. I would have been surprised if the selling stopped on factory orders. It was always a 'third tier' report. Using fitted retracements in the Dow, support is seen at 7946 and then 7897. Resistance should be found at 7984, which is 50% of the retracement from 8023 to 7946.

  Steven Price   2/4/03,  10:06:48 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We are extending losses to the downside and I am going to lower the stop again to just above the opening range low.

Set stops at Dow 8025

Current levels: Dow 7958/COMP 1301/SPX 842/OEX 426.04

If the COMP breaks decisively below 1300, this could get ugly.

  Jonathan Levinson   2/4/03,  10:04:42 AM
The put to call ratio has dropped to .68 for the first half hour of trading.

  Linda Piazza   2/4/03,  10:03:00 AM
The Challenger report, just released, showed layoffs up 42% in January from December's number, according to CNBC. Factory orders came in up 0.4%, slightly better than the expected 0.3%.

  John Seckinger   2/4/03,  10:02:46 AM
Factory Orders rise 0.4% vs 0.3% consensus

  Jonathan Levinson   2/4/03,  10:01:00 AM
The fed has just announced an overnight repo in the amount of 4B, for a net addition of just .25B.

  Jonathan Levinson   2/4/03,  9:59:37 AM
The COMPX has looked stronger. It opened at the high of the day, just below weak support at 1311. I'll call that near-term resistance, before 1319, 1328, 1334, and 1340. Below, I don't see much before the 1280 level. The TRINQ is showing light selling pressure at 1.68, TICK.NQ -224. FVX continues to drop, now -6.9 bps as investor head for t-bills. HUI and XAU are holding their gains.

  Steven Price   2/4/03,  9:57:39 AM
Swing Trade Signals
Factory orders out in a few minutes. Conservative traders who do not want to risk a move back over Dow 8000 can lower stops ahead of that report.

  John Seckinger   2/4/03,  9:56:33 AM
Concerning factory orders, the 0.2% growth in December durable goods orders should make this report faily clear (famous last words). Economists are expecting a 0.3% rise in December, versus a fall of 0.8% in November. Not exactly forward looking; nevertheless, it is the only report today.

  Jeff Bailey   2/4/03,  9:54:20 AM
Expedia (EXPE) $57.71 -4.3% ... have mentioned this one as short/put candidate in recent weeks. I added 2 puts yesterday above $60, to average in from $63 level. Looking to close out 2 of 4 March 65 puts near $57.00, which is bullish support trend from p/f chart. Link

Pivot analysis levels has stock below all daily levels. Weekly has S2=$55.52, S1=$57.73, P=$61.02, R1=$63.23, R2=$66.52. Monthly has S2=$50.98, S1=$55.46, P=$63.29. Note some correlation at/near the $55.52/$55.46 levels.

EXPE reports earnings after the close of trading tomorrow. Analyst's looking for EPS of $0.41 per share.

  Mark Phillips   2/4/03,  9:49:18 AM
AIG $50.30 (-5.03) Insurance stock being taken apart again this morning following the company's pre-open announcement of $1.8 billion charge related to loss reserves. That news just exacerbated the stock's current weakness, as it has been trading poorly ever since gapping down on January 24th. Currently just above $50, the stock has already taken out the October lows and is nearing its July low of $47.61. Interestingly, the vertical count from the PnF chart points to a target of $47. With the proximity of that target, I wouldn't chase the stock lower here, but would wait for a failed rebound below $53 to provide entry. For those who found this play on their own over the past few weeks, I would look to get aggressive on stops, refusing to give much back to Mr. Market.

  Jeff Bailey   2/4/03,  9:49:10 AM
S&P 100 Index (OEX.X) 428.17 -1.72% .... per index trader's wrap, index sliced through the 432.50 level rather quickly and now below weekly retracement of 38.2%, which is 428.84. Very defensive look.

Expect some volatility after the 10:00 AM EST release of December Factory Orders, but would look for resistance to be firm back near 432.50.

  Jonathan Levinson   2/4/03,  9:46:42 AM
The TRINQ has dropped on this bounce off the lows, currently reading 1.84, with the TICK.NQ -222. The rapid drop given the shallowness of the "bounce", more of a pause, really, is good for bears hoping to avoid an extreme oversold reading on the TRINQ. Bonds remain strong, with FVX -6.1 bps.

  John Seckinger   2/4/03,  9:42:00 AM
Using fitted retracements, the next level of support is seen at 7946, and hten 7897. 8023 is the bottom of the first five-minutes, and should be slight resistance.

  Steven Price   2/4/03,  9:39:22 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Due to the recent swings intraday I am going to lower the stop loss to the breakeven entry level, which is an average of 8077.50. If we manage to recover from this drop, I'll let it go and look for re-entry. Set stops at Dow 8078.

  John Seckinger   2/4/03,  9:39:07 AM
After the first five-minutes of trading, the Dow has a range from 8023 to 8104. Therefore, a 50% retracement of this period is back to 8063 would temporarily cancel out this "open drive" lower day. Note: The pivot was at 8105. I doubt that was a coincidence. S2 is 8007, and we will soon have to go to fitted retracements. As a rule-of-thumb, a tight range from R2 to S2 usually is a day that has solid volatility.

  Jonathan Levinson   2/4/03,  9:37:36 AM
We have a big move in precious metals this morning, with HUI +4.78 to 147.16 adn XAU +2.48 to 78.52.

  Linda Piazza   2/4/03,  9:35:42 AM
The SOX gapped down to open at 267.79, well into the last week's gap down. A move below 265.40 will put the SOX below the level of that gap, a bearish development. That potential began showing up yesterday when the SOX moved back into its gap, but it won't be confirmed until the SOX moves below that level.

  Jonathan Levinson   2/4/03,  9:31:27 AM
13 point gap down open to 1310 COMPX, TRINQ 2.46, QQV +.92 to 40.77.

  Linda Piazza   2/4/03,  9:28:38 AM
As we approach the opening of the U.S. markets, the CAC and DAX extend their losses. The CAC 40 is currently down 2.27%, and the DAX is currently down 3.33%. The FTSE 100 trades down 1.27%, down only minimally from my earlier post.

  John Seckinger   2/4/03,  9:28:31 AM
Intra-day Pivot/Levels for Tuesday (02/04/02)...

INDU : S2= 8007, S1= 8058, P= 8105 , R1= 8157 , R2= 8204

SPX : S2= 851, S1= 856, P= 860, R1= 865, R2= 869

OEX : S2= 430, S1= 433, P= 435 , R1= 438, R2=441

NDX : S2= 973, S1=980 , P= 989, R1=996 , R2=1004

QQQ : S2= 24.14, S1= 24.32, P= 24.55 , R1= 24.73, R2= 24.96

  Jeff Bailey   2/4/03,  9:28:02 AM
The 9:00 AM Intraday Update has been posted. Link

  Jonathan Levinson   2/4/03,  9:27:28 AM
The fed has 3.75B in overnight repos expiring today. The update is due around 10AM. For those interested in learning more about the fed's open market operations and its repurchase agreements (repos), see my article on the fed in Traders Corner on the OIN website.

  Jonathan Levinson   2/4/03,  9:19:01 AM
Spot gold is now above 375/oz. FVX is -5.1 bps. QQQ 24.21.

  Steven Price   2/4/03,  9:04:25 AM
Swing Trade Signals
We are currenty short a 1/2 position in the broader markets. Stops are set at Dow 8230. Futures are down at the moment, but I'll let the opening range shake out before making adjustments. Cisco reports after the bell and we are a day ahead of Colin Powell's speech. Therefore, I still believe we are in high risk territory and only aggressive traders should be playing right now, or at least more conservative traders using risk capital only.

  Jonathan Levinson   2/4/03,  8:45:09 AM
General Electric to Buy Abbey National U.K. Lending Unit for $1.4 Billion

General Electric Co., the world's No. 2 company by market value, agreed to buy a U.K. lending unit from Abbey National Plc for about $1.4 billion in cash, adding more than 2 million clients in Europe's second-largest economy.

The link to the Bloomberg story is posted below. I'm going to permit myself to editorialize for just a moment. I originally began shorting GE using puts, because I wanted to short the INDU, having felt at the time that the Qubes, my favorite short, had seen too much recent selling, and GE was a good proxy for the INDU with less premium to buy than DJX puts. I made a killing, and kept playing it until the October rally blew me out of my last round of puts. My feeling at the time was that GE, a so-called industrial company, had really become more of a hedge fund, awash with debt and making too much of its profits from GE Capital. Because of my feelings on the amount of debt yet to be cleansed from the financial system, I felt that GE was set for a serious decline when rates eventually tick up and debtors begin to default. The above headline tells me that this scenario continues to be ignored, and that consequently, the risk remains to the downside, and not of missing a new bull market. It has nothing to do with war or other such geopolitical tensions. That said, it's just my own opinion and others certainly differ, and in any event I'm not currently short the INDU or GE. Here's the Link

  Jonathan Levinson   2/4/03,  8:33:18 AM
Bonds have just opened and they're being bought, with the five year treasury yield (FVX) down 4.2 basis points, TNX -3.8 bps and TYX -2.8. The US Dollar Index has been sold down to 99.45, and gold is above 374/oz, while futures have sold off with QQQ down 25 cents to 24.24, NDX 975 and SPX 851.

  Linda Piazza   2/4/03,  7:37:17 AM
Good morning! Benefited by a weaker yen, Toyota Motor and other exporters rose in early trading on the Nikkei. A report that Prime Minister Koizumi considers Nobuyiki Nakahara a candidate for the governor of the Bank of Japan contributed to the yen's weakness. Nakahara advocates the printing of more money and the buying of foreign bonds. Yesterday's U.S. manufacturing report, showing expansion and hinting that Japanese exporters may increase sales to U.S. companies, also boosted the Nikkei in early trading. In addition, NTT DoCoMo, a mobile phone company, announced Q3 subscriber spending that beat forecasts. The Nikkei opened up 63.36 points, but lost ground as banks sold equity holdings, closing down 0.19%. Sharp was one of the stocks closing in the red, but after the Nikkei closed, it reported Q3 profit up 209% from the same period a year earlier. Sharp attributed that increased profit to a 23% rise in sales, including sales of camera-equipped mobile phones and flat-panel televisions. Softbank, Japan's largest Internet investor according to Bloomberg, announced that that it had achieved the 2 million high-speed Internet subscribers it needed for profitability.

European markets trade in the red as of this writing, hit by an Alcatel warning, a downgrade of Ericsson after yesterday's earnings report, and the release of a French consumer confidence report. That French report showed numbers dropping from a minus 17 in December to a worse-than-expected minus 22 in January. Alcatel said to expect its telecommunications equipment sales to decline as much as 30%. Alcatel is Europe's biggest phone-gear maker. Morgan Stanley cut its recommendation for Ericsson, the world's largest maker of mobile-hone networks, to underweight from equal-weight. However, Epcos, a company that manufactures electronic components used by the top four mobile-phone makers, posted earnings that beat forecasts.

Yesterday, the U.K. insurers benefited after the U.K.'s Financial Services Authority agreed to let companies seek waivers from the reserve requirements to be held against potential claims, but that didn't help Munich Re. UBS Warburg lowered forecasts for the world's largest reinsurer, mentioning concerns about the company's assets after the disastrous performance of Germany's DAX and, in particular, the losses in HVB Group, a bank that comprises one of Munich Re's holdings. As of this writing, the FTSE 100 was down 1.33%, the CAC 40 had fallen 1.90%, and the DAX fell 3.01%.

War talk heated up today, too, with Powell's presentation nearing and with Blair reportedly planning to confer with French President Jacques Chirac, urging him to change his stance regarding Iraq. This morning, CNBC World was also reporting that an emergency UN Security Council meeting had been set to discuss the Korean nuclear situation.

  Jeff Bailey   2/3/03,  12:54:03 AM
The Index Trader Wrap has been posted: Link

  John Seckinger   2/3/03,  12:53:56 AM
The Futures Trader Wrap has been posted: Link

  Steven Price   2/3/03,  12:53:45 AM
The Swing Trade Game Plan has been posted: Link

  Jim Brown   2/3/03,  12:53:04 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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