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  Jeff Bailey   2/5/03,  11:48:17 PM
Shoot Looking at some charts tonight and reviewing last night's Index Wrap. I missed an observation today that the OEX traded a session high of 435.62, which (gosh darned it) was Wednesday's DAILY R1 of 435. This lack of coverage by myself is frustrating and should have seen it at 12:45. I may have been working on the 01:00 update, but still, frustrating to me to not be on the alert.

Also.... this rally in the OEX came about 20-minutes after the 10-year YIELD had "filled its YIELD gap lower," from Monday night to Tuesday morning's open. This too a bit frustrating as I discussed this in Wednesday night's Index Wrap.

This observation tonight, combined with tonight's wrap and thoughts of "buy support and sell resistance" has me watching bond YIELDS pretty close tomorrow morning. If I don't see some type of buying in bonds tomorrow and get 10-year YIELD back below 4.0%, then I've got to be cognisant of OEX support of tomorrow's DAILY S1 of 422 or WEEKLY S1 of 425 (support range 422-425).

My thinking here is that today's OEX low was 425.19, and this would have been just above today's (Wednesday's) DAILY S1 of 424 and "smack dab" on the WEEKLY S1 of 425. (Hmmmm.... tonight's Index Wrap Link has us observing Dow Indu. WEEKLY S1 support too).

Here's the Link from Tuesday evening wrap for quick review. While this may be "rear-view" mirror driving, I think it important to perhaps try and understand what levels were traded today, what I "should have been seeing," and perhaps look for similar action tomorrow.

  Jeff Bailey   2/5/03,  10:21:14 PM
Datek / Ameritrade merger.

I just found this out tonight. I have a trading accout with the old "Datek" that was merged with Ameritrade and tonight, my trading account is being switched over to Ameritrade.

Partially my fault, but I didn't understand their "warning" that my account would be FROZEN from internet access for at least 3 days as they snail-mail my account password to me!!!!! I should have opened up a new Ameritrade account beforehand, gotten it set up (account and password), then transferred current open positions overnight.

I'm now "STUCK" not being able to control my account through the Internet trading system, and I'm not happy about this. If you have an account at the old "Datek" that is about to get swithced over to the new Ameritrade system, then be advised!!!

Note: This is not an endorsement of any online broker/dealer.

  Jeff Bailey   2/5/03,  10:15:35 PM
Pivot Analysis Matrix is posted at this Link

  Jeff Bailey   2/5/03,  5:00:22 PM
Expedia (EXPE) $59.05 +5.2% ... reported Q4 EPS of $0.48 per share (excluding charges), which was 7-cents better than Multex consensus estimates of $0.41. Company said revenues rose 100.4% year-over-year to $163.9 million versus the $162.1 million consensus.

Board of Directors approves a 2:1 stock split and authorized repurchase of up to $200 million in EXPE stock (3.3 million shares based on close of $59)

Looking forward, company sees Q1 adjusted EPS of $0.44, which is slightly above Multex consensus of $0.43 per share.

Stock traded lower at $57.70 after company's CEO and founder Richard Barton resigned. EXPE said North American president Erik Blachford will assume role as CEO.

  Linda Piazza   2/5/03,  4:02:18 PM
On the OEX 60-minute chart, the series of three lower highs from the 29th until today, and the horizontal support at about 424.50 are setting up the potential for a bearish right triangle. That's just potential, however, until that supporting line is firmly broken.

  Steven Price   2/5/03,  3:49:44 PM
Swing Trade Signals
The reversal has us back in the middle of the recent range and I'm not planning on entering a trade at this point. For those traders short from 8150, the current sentiment seems to be in your favor, but I'd tighten stops as we head toward Dow 7950.

Current levels: Dow 7998/COMP 1305/SPX 845.11/OEX 426.83

  Jonathan Levinson   2/5/03,  3:49:18 PM
Trader talk of the ECB dumping gold throughout the day. HUI is back to its lows, -6.01, XAU -3.41.

  Linda Piazza   2/5/03,  3:45:55 PM
Reader Question: When has gold been down, bonds down and stocks down at the same time?

Response: In October, all three markets declined, although they didn't all reach their October lows at the same time. Pring says that during certain parts of a market cycle, all three do decline in concert with each other.

  Jeff Bailey   2/5/03,  3:40:58 PM
The 3:15 PM Intraday Update has been posted. Link

  Mark Phillips   2/5/03,  3:34:34 PM
CEPH $48.28 (+2.16) Stock looking awfully strong into the close, as it is up more than 4.5% on volume that is easily more than double the ADV. With the stock clearly bucking the trend of the broad markets and even the BTK index, I would be hesitant to enter new postions here. I see no news on the stock that would be causing the relative strength, and earnings (2/19) are too far away to be the catalyst. Will note that the company is scheduled to present at the Tenth Annual Emerald Groundhog Day Investment Forum, scheduled for Thursday, February 6. Perhaps shorts covering in case of some possible good news tomorrow?

  Jonathan Levinson   2/5/03,  3:34:02 PM
The COMPX is back above 1300 and trying to retake 1303, which was previous double bottom support today. HUI and XAU are getting sold again, with spot gold trading at new lows just above 371/oz.

  Kent Barton   2/5/03,  3:29:23 PM
Reader question: I'd love to see your analysis of how much down side potential is left in DGX. Seems to have met P&F targets but charts still look ugly. Ray

Response: Ugly is right, Ray! Quest beat earnings by four cents on January 23rd, but this news was overshadowed by the company's downward guidance for the first quarter. It's been downhill ever since and shares are now threatening to break down below psychological support at $50.00. The daily stochastics (5,3,3) are showing a bearish reversal, indicating that the stock might indeed have more downside potential. Looking at the weekly chart, we see that shares moved below this level in the second half of both 2001 and 2002 before finding buyers in the $48-$49 region. With the 200-week moving average also at $48.57, it looks like this area could offer some support. Still...The stock is moving lower on bad news and the current market environment is favorable for the bears. If the $48.00 level gives way a move down to $40.00 wouldn't be out of the question.

Traders already sitting on a sizable gain might want to strongly consider taking profits if DGX bounces from $50.00. Those with a longer-term timeframe could hold on in anticipation of a breakdown below the underlying support levels. Would I enter a short position in DGX now? Probably not. The stock looks weak, but there are more attractive bearish plays out there.

  John Seckinger   2/5/03,  3:26:45 PM
Here is what I am looking at in the Dow. Please see link: Link

  Linda Piazza   2/5/03,  3:18:38 PM
A clarification of my 2:46 post: I'm not suggesting that news does not move the markets, but only that the underlying strength or weakness of the markets tempers its reaction. If markets were primed to turn down again, as the OEX chart I'd posted indicated was the case for that index, at least, then negative news may affect those markets more strongly. If markets had been primed to move up, negative news may not have moved the markets as strongly.

  Jonathan Levinson   2/5/03,  3:14:25 PM
It's also been a dramatic day for precious metals, with gold, silver and platinum all down, HUI -3.88 and XAU - 2.08, recovering some of their earlier losses. Sugar, OJ, lean hogs and oil are among the winners, with the CRB Index currently down 0.25%.

  Jonathan Levinson   2/5/03,  3:09:25 PM
The put to call ratio has just printed .74, while the TRINQ has risen 1.30, TICK.NQ -345. The failure at 1300 didn't hold for long, but the bounce has so far been shallow. NDX volatility is up to 41.43, +.19. A dramatic day so far for the COMPX.

  John Seckinger   2/5/03,  3:02:52 PM
Following up on my last few posts, I would now use the aforementioned 8010 level and the pivot at 8018 as a "zone of resistance" going forward. Objective? Right here at 7976, and then much lower at 7913.

  Steven Price   2/5/03,  3:02:18 PM
Swing Trade Signals
That was one heck of a fade and I'm beginning to wonder if Jim, who emailed earlier with the possibility that we would add another "O", rather than register a PnF reversal, was on to something. We are now negative after that rally and traders short at 8150 can give themselves a pat on the back. COMP testing support at 1300.

Current levels: Dow: 7987/COMP 1300/SPX 843/OEX 425.93

  Jeff Bailey   2/5/03,  3:01:54 PM
10-year YIELD ($TNX.X) 3.995% ... just dipping back below the 4.0% level here ahead of its 03:00 PM EST close. Tough call here, but with equities starting to show further deterioration, I'd want to have some short/put action ahead of the close. Again.... stock action may be choppy into close after bond market close, but things setting up almost "inverse" of yesterday, where YIELDS closed session low, then stocks rallied. Currently, YIELDS are looking to close session high, but near. Dollar still hanging onto gains, but I tend to think today's action in Dollar was more likely short-covering than anything. Quick check of XAU.X 77.53 -2.64% shows it recouping some of earlier losses and holding mid-portion of uppward trending regression channel. Looks bullish here on the pullback.

  Linda Piazza   2/5/03,  2:57:37 PM
On the OEX, the hourly 5(3)3 and 21(3)3 stochastics are now in full bear roll. It will be interesting to see if the OEX and other markets stop at recent lows again, maintaining the current range.

  Kent Barton   2/5/03,  2:55:40 PM
EBAY ($73.73 +0.63): Last night we set up an alternate entry point for this OI/PI long play. In December a pullback to the 50-dma was met with eager buyers. We think another test of that moving average might present a buying opportunity.

We're also maintaining our original action point at $75.51. Shares are currently holding on to a 1% gain, in spite of the NASDAQ sell-off that's taken place over the past two hours. That's a sign that EBAY might be able to inch its way back towards the relative highs.

  Steven Price   2/5/03,  2:48:06 PM
Good morning Steven: Qcom 25.70, your comments Friday 8/09/02, over the weekend downgrade by Barron, stock still holding strong, are still looking short/put on the stock, should we wait to take action after FOMC meeting, if no rate reduction by Feds assume QCOM would continue its down trend. Appreciate your comments. Thank you, Michael

Qualcomm (QCOM) $36.55 (-0.05): Hmmm. Bringing up something I said back in August - is my wife in the room with you (GRIN)? QCOM has been trading between $36 and $40 since the end of December, a $4 rectangle pattern. We have seen a series of lower highs on the last few rebound attempts and a descending trendline can be drawn from the December 2 high through the tops of the last few failed bounce attempts. Things aren't looking very bullish, but it still remains above that $36 support. A break below would indicate a $4 move down based on the rectangle formation, which would coincide closely with the 200-dma at $32.21 that provided support in Oct-Nov. One other downside support level looming just below $36 is the 100-dma at $35.59 and a bounce off that average is a possibility. A trade of $36 is a Pnf reversal into a column of "O" and a trade of $35 is a triple bottom breakdown.

  Linda Piazza   2/5/03,  2:46:01 PM
CNBC is characterizing this latest swoop down as being news-driven, occurring after 2:00. You decide. Here's an update of the OEX 60-minute chart I first put up at 1:06, about an hour before the supposed news that drove the markets down. I mentioned then that I had been watching this trendline that I'd had on my charts since late fall. OEX had already touched that line at 1:06 and begun moving back from it. While news may have precipitated the fall, the OEX was already primed to make a move lower. Link

  John Seckinger   2/5/03,  2:40:27 PM
The Dow did bounce from its daily pivot, but saw resistance at 8057 and a retracement from R2 to S2. Bears should like this likely close under 8120, and aggressive shorts should look for an extended move once under the 8010 area (half the retracement from 8120 to 7902. I realize it was a bear trap this morning at 8010, but there should be more confidence with the speech over and direction a little bit clearer. Dow at 8033, so hasn't traded 8011 yet.

  Linda Piazza   2/5/03,  2:38:38 PM
Assumptions and presumptions, unnamed sources, incorrect information: that's how Iraq characterizes the information Powell presented today.

  Jonathan Levinson   2/5/03,  2:38:36 PM
The bounce from just above the day lows has so far been turned back by the 1310 s/r zone. The bearish cross on the 60 minute 10(5) stochastics hasn't been undone, though part of it has "undrawn" itself as it is often wont to do with a candle that blows off into a spike.

  Jeff Bailey   2/5/03,  2:30:37 PM
10-year YIELD ($TNX.X) 40.05, or 4.05% .... wouldn't be trying to aggressively short the recent pullback in major equities as bond market doesn't seem to be "confirming" this last little pullback in the Dow. Would look for "rally resistance" in the Dow near 8,100, with Dow 8,045 here.

  Steven Price   2/5/03,  2:26:40 PM
Steven, Wouldn't it be interesting if the spx turns here and prints 840? Since PnF "prints" at end of day, and the column already active takes precedence, an 840 print would negate the "reversal" we've seen today and actually create a new sell signal. Interesting to see how it plays out. Jim

Exactly right Jim. Good point!

  Linda Piazza   2/5/03,  2:25:44 PM
Those same 5(3)3 and 21(3)3 stochastics bearish kisses (from my post about the SOX) are showing up on hourly charts for other indices, too.

  Mark Phillips   2/5/03,  2:24:39 PM
Good morning Mark: XMSR 4.11 - .03 -0.84%, tested 4.00, actually broke down to 3.95 and rebounded, we at the moment are long, it somewhat filled the gap from late last week 4.80's, if that is the case, do you see consolidation or possible as bounce rebounding above 4.00. your input on MM is welcomed as always. Thank you

I think I commented on this stock a few weeks back, as it broke above the $4 level, pointing out that the near-term upside would likely be limited to the $5.25 level, with the PnF bearish resistance line coming into play along with the 200-dma. Sure enough, the stock ran out of steam in mid-January just below the 200-dma and then again earlier this week, rolling at a lower high. The PnF picture has changed significantly over the past few weeks, as the stock is now on the cusp of generating a new Sell signal. Link While the $4.00 level is providing support right now, a trade at $3.75 would be a bad omen. For long positions, I would set stops just below $3.75, as a break below that level would expose the stock to downside risk to the consolidation base at $2.50.

  Jonathan Levinson   2/5/03,  2:23:31 PM
The drop is almost too fast to keep up with. TRINQ .99, TICK.NQ -675. FVX +6.7 bps, off its highs. 1300 is next support. We have a bearish cross on the 60 minute 10(5) stochastic.

  Steven Price   2/5/03,  2:22:21 PM
what to do with this play? add to positions here or get ready to bail or just hold? above top last gap but below resistance of 10dma.

Cabot Micro (CCMP) $43.91 (+0.74) CCMP looks a lot like the COMP, with the big boost fading and falling below intraday support at $44.30. We do seem to be in consolidation mode after the recent drop and the boost in the SOX is fading as well. So far the last bounce took us to a lower high, but it didn't do much yesterday in a falling market. The SOX barely moved as well. Without a SOX breakdown, I might not add to the position at this point, but I'm in no rush to close it, either. The trend remains down and a bounce to a lower high doesn't really change that fact. I like the new relative low it set yesterday and the inability to hold its gains today.

  Jonathan Levinson   2/5/03,  2:19:02 PM
1310 COMPX is the next s/r zone we've been watching all week, and it's also the 76.4% fib line from the day's high. The TRINQ has risen to .42, TICK.NQ -745.

  Linda Piazza   2/5/03,  2:12:53 PM
The SOX 60-minute chart now shows bearish kisses on both the 5(3)3 and 21(3)3 stochastics. If they do complete the roll with prices going down, there's been bearish divergence on both stochastics intervals. I caution that kissing K and D lines can unkiss.

  Jonathan Levinson   2/5/03,  2:09:45 PM
The COMPX has just broken below 1319 support and is approaching the 61.8% retrace from the intraday high at 1314.99. While the TRINQ is .22, the TICK.NQ is showing broad selling at -636, which gives you an idea of the concentration and intensity of buying on the COMPX. FVX is still close to its highs, up 8.9 basis points today. HUI and XAU are attempting to recover their losses, with HUI now -4.09 and XAU -2.26.

  Steven Price   2/5/03,  2:09:00 PM
Swing Trade Signals
Can it really be as easy as shorting Dow 8150 and buying 7950? Short the PnF reversals up and buy the reversals down? It certainly looks that way right now. Those aggressive traders who took a suggested entry short at 8150 are sitting with a nice down move right now. A break back down through 8065 takes us below the 5 min opening range and a close under that level would be bearish. COMP back under the 1319 support level and a different feel than we had a couple hours ago.

Current levels: Dow 8075/SPX 852.97/OEX 430.93/COMP 1317

  John Seckinger   2/5/03,  2:02:52 PM
I imagine it all comes down to short-covering and ability to clear significant technical levels. A daily close above 8120 should get bears nervous, as well as a close in the dollar above 100. Neither would happen if the markets closed now, and note that the last rally in the Dow did NOT get back to 8120.

  Jeff Bailey   2/5/03,  1:59:26 PM
The 1:00 PM Intraday Update has been posted. Link

  Kent Barton   2/5/03,  1:58:29 PM
Cytyc (CYTC) $12.01 +0.26 This stock popped up during our pick meeting yesterday. Although it tends to be a relatively slow mover, CYTC has staged an impressive rally off the $10.50 area over the past week. What's technically interesting is the fact that shares of the medical device company have moved above resistance at $12.00. Other than the late-June high of $12.20, there aren't any major obstacles until the $14.00 region. More substantial resistance looms at $16.00. The recent trend of relative strength suggests that CYTC could really get moving to the upside if the Dow and NASDAQ are able to build on today's gains.

  Mark Phillips   2/5/03,  1:51:19 PM
CEPH $47.22 (+1.10) Biotechnology stocks have staged an impressive rebound from their early lows, along with the broad market indices. OI Put play CEPH has rebounded to solid resistance just over $47, and it is looking like make-or-break time. If this rally attempt is going to fail, it should happen from this level. However, as the BTK index has fallen back with the rest of the market over the past hour, CEPH is holding right at its high of the day. This looks like relative strength and new shorts at this level look to carry a higher level of risk. If compelled to try to fade this rebound, I would only consider partial positions and then look for confirmation of weakness with a drop back under $46. The better entry point still looks like a rally failure up closer to the crossing 10-dma and 200-dma near $48.50.

  John Seckinger   2/5/03,  1:38:11 PM
The dollar has put in its biggest gain against the euro in 5 weeks, and the Dow just barely got above the February 3rd high of 8151.99 (intra-day high of 8152.53). Now where? The blue chips are back at the 8100, and will most likely have to fall under the 8075 area before weakness takes over. For bears, it would be nice if the 8120 area is not tested again. As noted, this is the 50% retracement area of the move from October to December.

  Linda Piazza   2/5/03,  1:37:39 PM
Reader Question: What setting do you use on MACD?

Response: MACD isn't my favorite oscillator, so I tend to use the default settings on the current charting service I'm using. Here's what Pring says, though: "MACD's can be used for an infinite number of different time periods. Gerald Appel . . . who has done a considerable amount of research on the subject, recommends that buy signals on a daily chart be constructed from a combination of 8, 17, and 9 exponential MA's, but he feels that sell signals are more reliable when triggered on the basis of a 12, 25, and 9 combination." That's too much manipulation for me, but the linked chart shows one way I do like to use MACD. Note that the green line indicates a series of higher lows on the MACD and that the trend was broken in late January. That broken trendline confirmed the weakness that was becoming apparent in the OEX at the time. Link I might also note divergences and the general thrust of the MACD.

  Kent Barton   2/5/03,  1:36:20 PM
We're getting some downward action in the VIX.X as the broader market moves higher. The volatility index maxed out near $41.00 last Monday when it ran into the 61% retracement level (October lows to November highs) and the long-term trend of lower highs. Since then we've gotten a lot of sideways action with the VIX trading slightly above the 38% retracement, which acted as resistance in December.

This sideways action isn't giving much of an indication as to where the market might be headed. At this point traders might want to set an alert for a rally above $41.00. The rising fear indicated by such a move would be a negative sign for the major indexes.

  Jonathan Levinson   2/5/03,  1:31:51 PM
The latest put to call reading just came in at .73. The falling p/c ratio with the falling COMPX here looks good to me, but then, the intraday p/c ratio is of limited accuracy in timing intraday moves as we've seen this week.

  Jonathan Levinson   2/5/03,  1:17:17 PM
The market is rallying because France Russia and China are not supporting the U.S. Therefore the chances are U.S. may not go to war without security council approval. Wall street likes this and so the market is rallying.Wall street wants any excuse to buy when thre is 5 trillion Dollars waiting on the side line and the interest rate are so low.

Thanks, Amir.

  Steven Price   2/5/03,  1:12:29 PM
Swing Trade Signals
The Dow once again tested 8150, trading as high as 8152, before pulling back. Aggessive traders can think about a small short position from these levels. However, we now have PnF reversals back up in the Dow, SPX and OEX. What does that mean? So far, nothing. We've seen almost daily reversals over the last week, with each being a sign of an opportunity to enter a trade in the opposite direction.

In trying to decipher the rally, I think back to a lesson that I've quoted here before. A law school professor told me that when deciphering Supreme Court decisions, look at what they do, not what they say. In essence, Colin Powell did nothing new. He once again presented evidence, but did not say "we're going in with or without you." The reaction from other countries was a big "whatever." They are still holding the line on wanting additional inspections and therefore we do not seem all that much closer to action than we did before the speech. That doesn't mean we aren't going in, just that the timeline hasn't really changed. It is my best guess for why we are up on the day, but we are still rangebound and also seeing nothing really new in the market.

  Jonathan Levinson   2/5/03,  1:11:20 PM
I sold out of GG before Powell's speech and made $500 on my trade. I wanted to thank you for your support. After being badly burned in trading I did not place a trade for two years. This was my first and a real confidence booster. Thanks. In looking at playing GG again I think you mentioned the 12 level may be a good entry point? Any thoughts?

I'd be looking for an entry between 11.80 and 11.90, but would place the stop close underneath. Next supports underneath are in the 11.45 and 11.10 areas. Link

  John Seckinger   2/5/03,  1:08:38 PM
The dollar continues to rally, rising over 100 and taking equities higher as well. This, accompanied with the drop in gold, appears to be the catalyst for stocks. Will the Dow stay above 8120 and the 50% retracement level of the move from October to December? The answer most likely lies in the DX00Y contract (Greenback).

  Linda Piazza   2/5/03,  1:06:15 PM
I leave too many lines on my charts, so that they end up looking like pick-up sticks, but I'm always afraid that a previously broken line of support will become resistance somewhere down the line or a previously broken line of resistance will become support. I've cleaned up this OEX 60-minute chart to show only one line I'm watching. The line extends back into trading late last fall, but has been providing resistance for the OEX since late January. Yesterday and today, I've been waiting to see how the OEX performs on a test of this line. Link

  Jonathan Levinson   2/5/03,  12:58:32 PM
For the life of me, I have no clue why the market is rallying today. Would someone explain to me what we should feel good about!!! I, too am frustrated. This may be a day for a long walk!

This appears to me to be a "buy on the cannons, sell on the bugles" phenomenon. No, not the low fat corn snacks :) We see 1328 providing support here on this move off the highs just above 1332 COMPX. The put to call ratio is at .75 and the TRINQ .21, with the TICK.NQ staying near unchanged at +89. Bonds continue to sell off, with FVX now 9.4 bps. HUI and XAU are off their worst levels of the day, but still down significantly.

  Mark Phillips   2/5/03,  12:53:16 PM
PNRA $28.89 (-0.02) With the broad market moving strongly into positive territory in the wake of Colin Powell's UN presentation this morning, shares of PNRA still looking notably weak and just barely trading above the low of the day ($28.80).

  Mark Phillips   2/5/03,  12:50:26 PM
SYMC $48.25 (+1.35) Here comes that test. Watch for rejection or a breakout at $48.30.

  Linda Piazza   2/5/03,  12:47:17 PM
Currently trading at 13.54, CSCO again makes another test of its simple 200-dma, also at 13.54.

  Jonathan Levinson   2/5/03,  12:44:21 PM
With spot gold down over 4$/oz, we have HUI reversing all of yesterday's gain, currenly -6.14 to 143.99 and XAU -3.31 to 76.33. The COMPX is fighting with the 1328 resistance level, and has just printed 1329.99.

  John Seckinger   2/5/03,  12:44:03 PM
At first, the Dollar didn't had much of a reaction to Powell's address to the U.N. Security Council as he pretty much stuck to the script; however, since 10:40, the dollar has rallied from 99.01 to 99.50 and helping stocks in general.

  Steven Price   2/5/03,  12:41:18 PM
Swing Trade Signals
The Dow trade over 8100 revered yesterday's column of "O" on the PnF charts back up into a column of "X." We are now testing the higher end of the recent range. and the next buy signal would come at 8200. The SPX would require a trade of 860 to reverse up and the OEX reversed up at 432.50 (2.5 box) and a trade of 440 gives a buy signal. On the traditional 4-point OEX PnF, we don't get the reversal until 440 and still have a bullish support breakdown.

Current levels: Dow 8123/SPX 859.01/OEX 434.33/COMP 1327

I'd be very careful about going long if we get buy signals, as there is a significant amount of previous support in the Dow 8300 range, which could now act as resistance.

  Jeff Bailey   2/5/03,  12:39:34 PM
Gold/Silver Index (XAU.X) 76.40 -4% ... at session low, and just the inverse of 10-year YIELD, XAU.X has filled to the downside its "gap higher" from yesterday.

Thinking here based on future observation is if XAU.X continues decline and 10-year YIELD moves higher (sell in the bond) then equity rally currently at hand has legs. Conversely, a bid back into gold and renewed buying in Treasuries could signal that current rally in stocks is more short-covering from jittery bears that didn't get the "smoking gun" they thought Secretary Powell might present.

  Linda Piazza   2/5/03,  12:36:07 PM
Current volume patterns show that advancers lead decliners, with a 1.42 ratio on the NYSE and a 1.17 ratio on the Nasdaq. Up volume measures 1.75 times down volume on the NYSE and 5.26 times down volume on the Nasdaq. New lows still lead new highs on the Nasdaq, however. Total volume traded is 591 million shares on the NYSE and 632 million shares on the Nasdaq.

  Jeff Bailey   2/5/03,  12:34:58 PM
10-year YIELD ($TNX.X) 39.97 or 3.997% ... per last night's Index Trader Wrap, 10-year YIELD has filled yesterday's gap lower in YIELD and "technical filling" of gap completed.

Index traders will look for resistance here in YIELD and equity bears would want to see some buying at slightly higher YIELD here, and find resistance in the indexes at their weekly Pivots.

Market response after conclusion of Powell's address to U.N. has been positive, and comments from Russia, UK depicted that of conviction that Hussein has not been honest in regards to weapons.

French Foreign Affairs Minister now responding to Powell's "findings." The French have opposed any type of "war efforts" in recent weeks, wanting to see the U.N. continue weapons inspections.

  Steven Price   2/5/03,  12:18:03 PM
Swing Trade Signals
As Jonathon said, it is possible to spin things just about any way you want if you try hard enough. The event is over and we are holding gains from earlier this morning. So much for a breakout or breakdown. Back to range trading. As long as we remain below Dow 8200-8300, I still think we are bearish, but with no real movement, I'm staying on the sidelines. If we do get another run to 8150-8160, I'll be interested in watching that move to the top of the recent range. The fact that we will have built on gains after the speech will have me less aggressive in shorting the level, or if I do, then keeping a tight stop.

Current levels: Dow 8072/COMP 1320/SPX 853.65/OEX 431.35/QQQ 24.51

  John Seckinger   2/5/03,  12:16:18 PM
Here is what I am looking at, and notice that the Dow has just broken underneath the wedge. The daily pivot is below at 8017. Link

  Jonathan Levinson   2/5/03,  12:11:53 PM
Listening to William Hummer of Wayne Hummer & Co. discuss how a war will be bullish, and that the woes of economy are the result of geopolitical uncertainty has me too frustrated to type. The spin appears endless, as does the ability of pundits to separate related issues such as debt, interest rates, currency flows, the national and state deficits, inflation, deflation, unemployment, balance of trades, equity valuations, etc. I'm going to look at the charts and try to relax.

  Jonathan Levinson   2/5/03,  12:02:12 PM
The COMPX continues to hold just above 1319 support, with the TRINQ still in the basement at .21m TICK.NQ -26, while the FVX is climbing agian, now +6.3 bps. NDX volatility is down, with the QQV off .30 at 40.94.

  John Seckinger   2/5/03,  11:58:13 AM
The 30-year is lower by '08 ticks to 112'17, after eclipsing a series of daily highs above the 112'28. Yesterday, I spoke of resistance at 113'05, but the intra-day high has only been 113'01. The bond market is not in danger of losing its intermediate-term bullish trend, but should still be watched for equity direction post-speech. Support at 112'08. Ticker: ZB03H. Lower bond prices should mean higher equity prices.

  Jeff Bailey   2/5/03,  11:55:08 AM
Secretary Powell concludes his address to the U.N.

DOW= 8,075, SPX=853, OEX=431, COMPX=1,320, NDX=987

  Linda Piazza   2/5/03,  11:52:36 AM
Are there signs of the ultimate direction of the markets? I'm scanning everything, noting that daily 5(3)3 stochastics are beginning to roll on the Russell 2000, and have made bearish kisses (just barely) on the S&P's. I note contradictory signs on the Dow, where the daily 5(3)3 stochastics had started to roll, but now clearly have turned up again. These twitchy stochastics can redraw themselves, and the contradictory information across the indices is further proof of the confusion some of us have been feeling, too.

  Jeff Bailey   2/5/03,  11:47:53 AM
The 11:00 AM Intraday Update has been posted. Link

  Linda Piazza   2/5/03,  11:38:57 AM
Powell showed an Iraqi test of a UAV, an unmanned, automated vehicle that could deliver biological arms. The test showed that the UAV could be flown 500 km, far more than the allowed distance. Iraq did not reveal that the test had been conducted or its results, Powell said. Able to fly those distances, the UAV could deliver biological arms to its neighbors. Powell now concentrates on linking Iraq with other terrorist groups.

  Steven Price   2/5/03,  11:37:19 AM
Cephalon (CEPH) $45.80 (-0.32) OI put play CEPH, initiated at $46.53, set another relative low at $44.65 and sits right on top of PnF bullish support line at $44. It has rebounded with the broader markets in the last hour and conservative traders may want to wait for a break below that bullish support line for new entries from this point. The continuing series of lower lows still looks bearish and those traders in the play can appreciate the relative weakness in light of the broader market staying in the green so far.

  Linda Piazza   2/5/03,  11:33:23 AM
Currently at 2168.83, the Dow Jones Transportation Index today has challenged the 2180 level that has been capping upward moves for the last week. All the evidence that I and the other writers have gathered today indicates that many bellwether stocks and indices are poised just above or just below key levels.

  Linda Piazza   2/5/03,  11:27:50 AM
GE trades at 23.17 as of this writing, just below its 11/19 low of 23.20 and just above its 7/24 low of 23.02.

  John Seckinger   2/5/03,  11:27:07 AM
The Dow is at 8049 and exactly at the 50% mark of today's range. Still waiting for a directional move.

  Linda Piazza   2/5/03,  11:25:14 AM
CSCO tested its simple 200-dma at 13.54 this morning, but so far has failed to stay above that level. CSCO currently trades at 13.39.

  Steven Price   2/5/03,  11:23:44 AM
Swing Trade Signals
The earlier bullish action that began with Powell's speech faded some, but has held up. We should get a better idea of true reaction when he is done speaking.

  Jonathan Levinson   2/5/03,  11:22:40 AM
FVX seems to be coming down from its highs, now +3.7 bps, yet the TRINQ is still very low at .21. The decline from the highs on the COMPX continues in its bull flag formation, finding support at 1319.

  John Seckinger   2/5/03,  11:13:35 AM
The Treasury Refunding Announcement stated that the 5-year note will be issued eight times per year, and that the 3-year note will be reintroduced. There will be a $42 bln refunding with $24 bln 5s and $18 bln 10-year notes. The current refunding will raise $20.4 bln of new cash. The 3-year auction refunding will take place in May.

  Mark Phillips   2/5/03,  11:10:33 AM
SYMC $47.93 (+1.02) As Secretary Powell's presentation continues to give a bid to equities, we see that SYMC is continuing its recent pattern of an early dip and then a strong rebound immediately afterwards. After dropping just enough to fill the opening gap, SYMC skyrocketed to the $48 level and is now within striking distance of the 1/16 high at $48.30.

  Linda Piazza   2/5/03,  11:08:42 AM
Adv/dec figures remain rather neutral this morning, with a 1.06 ratio on the NYSE and a 1.09 ratio on the Nasdaq. Up/down volume and new highs/new lows remain even on the NYSE, too, with a 152/157 up/down ratio and 30 new highs to 30 new lows. On the Nasdaq, new lows outnumber new highs, with 18 new highs and 33 new lows, but up volume is 5.6 times down volume. Volume is light with 320 million shares traded on the NYSE and 385 million on the Nasdaq.

  Jonathan Levinson   2/5/03,  11:05:24 AM
Chilling discussion of the virulence of anthrax and the quantity allegedly held by Hussein.

  Jonathan Levinson   2/5/03,  11:02:52 AM
The most recent put to call ratio is again .78.

  Jonathan Levinson   2/5/03,  11:00:15 AM
HUI and XAU are getting sold, -2.71 and -1.45 respectively. Spot gold is off $2 to 376.50.

  Jonathan Levinson   2/5/03,  10:58:06 AM
It's difficult to believe what I'm seeing, but it looks like the handle of a cup and handle formation. The handle is printing a bull flag so far, between 1319 support and 1328 resistance. The TRINQ is buried at 1319, TICK.NQ +58.

  Linda Piazza   2/5/03,  10:52:32 AM
Powell now shows satellite images of banned materials being moved ahead of inspections.

  Jeff Bailey   2/5/03,  10:52:18 AM
Stocks making a quick move higher here and seeing a pickup in selling of Treasuries. Secretary Powell has been playing a tape of Iraq communications that hints of moving mobil weapons facilities around and "hiding" weapons, but that's about it.

Dow=8,080 , SPX=854, OEX=431, COMPX=1,325, NDX=992

  Linda Piazza   2/5/03,  10:51:13 AM
Currently at 280.35, the SOX now trades firmly above last week's gap and now challenges the previous resistance in the current area. As it does so, the hourly 5(3)3 and 21(3)3 stochastics have all moved up into overbought zones, but have not hinted at a downturn.

  John Seckinger   2/5/03,  10:48:48 AM
The old adage "trade what you see" seems to be coming into place at the moment. The Dow is going higher, and could be headed towards R1 just above 8100. The pivot is below at 8018. It appears to be more of a range trade than anything else, but least resistance at this minute appears higher.

  Jonathan Levinson   2/5/03,  10:48:22 AM
The COMPX has printed a high at 1320 so far, TRINQ .19, TICK.NQ 204.

  Linda Piazza   2/5/03,  10:43:59 AM
Powell plays a tape between an Iraqi general and another person, a conversation that talked about materials evacuated ahead of the UN inspections to begin the next day, November 27. The conversation mentioned a modified vehicle they did not want found.

  Jeff Bailey   2/5/03,  10:42:02 AM
30-year YIELD ($TYX.X) 4.786% .... "darts below" yesterday's low YIELD here, first alert to potential weakness in equities is my thinking. A bit of a "defensive" looking move here.

  Jonathan Levinson   2/5/03,  10:40:48 AM
You can listen to Powell live at Link

  Linda Piazza   2/5/03,  10:40:36 AM
Powell makes the point that some of the sources for the information he will present are countries other than the U.S.

  Jeff Bailey   2/5/03,  10:38:16 AM
Secretary of State Powell begin address to U.N.

Dow=8,023, SPX=847.79, OEX=427, COMPX=1,308, NDX=957. (all unchanged or fractionally mixed up/down).

  Linda Piazza   2/5/03,  10:37:07 AM
Colin Powell begins his presentation now.

  Jonathan Levinson   2/5/03,  10:36:31 AM
The put to call ratio is up to .78, with the TRINQ down to .36 on this push higher. TICK.NQ -4. FVX is +2.6 bps. The recent chop has scattered the 10(5) stochastics, making direction even more difficult to predict. For this reason, I'm watching the s/r zones and intraday retracement levels. These continue to multiply, but the major areas are 1300, 1306, 1310, and 1319 COMPX.

  Linda Piazza   2/5/03,  10:27:15 AM
Yesterday afternoon in the Market Monitor, I mentioned that I had been interpreting the rise in daily stochastics on the indices during recent price consolidation as somewhat bearish. My thought was that, if prices continued to consolidate until the stochastics rose into overbought territory, they might be likely to turn down when the stochastics did, too. I also based this on the knowledge that prices often consolidate midway into a movement, and the prior movement was a down movement. Last night in his wrap, Jeff offered his judgment that this was bullish divergence. Aware as all of us are of Jeff's acumen and surprised by our varying viewpoints, I went on a search of various sources and was taken aback to learn that there's quite a bit of divergence on the theory of divergence. Several sources commented that indicators or oscillators were better predictors of price trend than prices themselves and that price usually resolved in the direction of the indicator. Others, such as Martin Pring, whose TA book appears on our bookshelves, noted that bullish divergence occurs only on downswings (oscillator and price bottoms diverging on those downswings) while bearish divergence occurs only on upswings (oscillator and price tops diverging on the upswings.) I'd been adhering to this theory, as Buzz Lynn appears to have done in the linked article: Link Buzz, a former engineer, speaks to the physics person in me as he explains that oscillators measure the momentum behind a movement. If oscillators indicate that the indices are being given a big shove to the upside and yet they aren't moving to the upside, they're more resistant to move than they should be and something's wrong. Of course, I could carry this analogy further and say that, if they finally did give, prices might shoot up with all that pent-up momentum behind them, which appears to be the thinking behind the other theory.

So, there you have it. Divergent theories about divergence. However, while the action we've been seeing (consolidating prices during an upswing in daily stochastics) is divergent at this time, stochastics haven't yet topped out and the consolidation hasn't yet broken out one direction or another. My comment yesterday about interpreting this action as somewhat bearish was meant to indicate only that prices weren't responding in the usual manner to the momentum being indicated by the oscillator and not to indicate whether we'll eventually see divergence as the stochastics top out. These different theories point to the need to let price action guide your buy and sell decisions, while using indicators only for the purposes of managing risk and preparing for likely moves. It's a risky business to make buy and sell decisions on the basis of indicators alone, as all of us writers have advised at one time or another.

  Jeff Bailey   2/5/03,  10:24:34 AM
30-year YIELD ($TYX.X) 4.793% .... slightly in the red on YIELD here, and first of 5, 10, 30 yields to show a little red. I'm on a 10-minute price delay, but 30-year futures (us03h) 112'20 -0.13% still sees marginal selling. Have an upside alert on this bond's price just above yesterday's high of 112'26 to alert to buying.

  Steven Price   2/5/03,  10:17:14 AM
Swing Trade Signals
We are now red across the board in the equities. It is too bad we were stopped out on the open, but aggressive traders using the secondary stop could be seeing some nice profits by the end of the day. The break below the opening range looks bearish from here. Note, however, the converging 50-pma and 100-pma on the 5 min chart at Dow 8000 that could give support at that round number level.

  Jonathan Levinson   2/5/03,  10:16:44 AM
The 1306 level has just cracked, bringing into target next support at COMPX 1300. The TRINQ has edged up to .42, TICK.NQ -374.

  Steven Price   2/5/03,  10:14:43 AM
Swing Trade Signals
I am tempted to short this opening fade. We were unable to get a single 5 min close above the opening range high of 8065.46 and faded hard. I am going to wait until after the Powell speech to consider adding positions, since the unpredicatable nature of Iraq reactions has led to big swings, but if I were going to enter it would be short.

Current levels: Dow 8017/SPX 846.98/OEX 428.63/COMP 1308.60

The bounce in the COMP still took us below that 1319 previous support level and as far as I am concerned, the bouces were are seeing still come below the head and shoulder neckline breaks. That is bearish to me and I can't see playing long from here, unless trying to scalp bounces within the last week's range.

  Linda Piazza   2/5/03,  10:14:22 AM
Yesterday, I kept noting that the SOX and SMH were not confirming the market weakness, as they refused to fall beneath last week's gap. This morning, they're edging above the upper limits of that gap, and I'm watching to see whether they'll be able to maintain those levels or will fall back again.

  John Seckinger   2/5/03,  10:12:29 AM
Note: U.S. Secretary of State Colin Powell will make his presentation to the UN Security Council at 10:30 a.m. I believe it will last 90 minutes.

  John Seckinger   2/5/03,  10:10:29 AM
Hearing that the war premium in Gold could be as high as $50. That seems extremely high. Note: The January ISM services index came in at 54.5%, close compared to December's reading of 54.2% and the consensus of 54.0%.

  Jonathan Levinson   2/5/03,  10:04:00 AM
The put to call ratio has tumbled to .73 for the first half hour.

  Jonathan Levinson   2/5/03,  10:02:15 AM
Al Green must have dialed 911 on the bat phone, as the fed has just announced an 8.75B overnight repo. I can see the cropdusters and water bombers warming up behind the Marian S. Eccles building as they forklift the cash in, to be dumped just past the corner of Wall and Water Street... this repo refunds the 4B expiring today, for a net addition of 4.75B in liquidity. Link

  John Seckinger   2/5/03,  9:56:13 AM
Looking at the Dow, the 50% retracement of the move from October to December comes in at 8120. A 61.8% retracement falls at 7902. That is the intermediate range. I split this range in half and get a level of 8011. This is just a few points under today's low. The pivot comes in at 8019. Therefore, I do expect weakness underneath the area from 8011 to 8019.

  Jonathan Levinson   2/5/03,  9:54:38 AM
Interesting: the 61.8% retrace off today's opening high on the COMPX is 1310 as well. 1313 was the 38.2% retrace, which provided a pause for a few minutes on the way down.

  Jonathan Levinson   2/5/03,  9:52:19 AM
The COMPX is approaching 1st support at 1310.

  Steven Price   2/5/03,  9:46:22 AM
Swing Trade Signals
For those traders using the higher stop over 8105, notice that today's R1 of 8103 coincides closely with yesterday's pivot of 8105. I'd probably give it a ten point cushion above those levels. Also recall that the top of our recent range is right around Dow 8150. An entry at that level short (we entered our second 1/4 short at 8125) would have been good for over 200 points to the downside intraday yesterday. If we reach that level again, I'd consider entering short, and very aggressive traders still short can rely on the original stop of 8230, as well.

  Jonathan Levinson   2/5/03,  9:45:39 AM
Al Green is owed 4B in expiring repos today. We await the announcement with respect thereto at 10AM.

  Linda Piazza   2/5/03,  9:41:16 AM
All European markets currently trade in the green, with the FTSE 100 up 1.25%, the CAC 40 up .50%, and the DAX up 1.50%.

  Jonathan Levinson   2/5/03,  9:39:49 AM
The TRINQ at .19 is showing extreme buying pressure. The word "hysteria" wouldn't be out of line. The TICK.NQ at +3 tells me that this hysteria is being focused in a relatively few stocks.

  John Seckinger   2/5/03,  9:37:53 AM
With the first five-minutes behind up, the range in the Dow is from 8014 to 8065. 50% of that area is roughly 8040. Look to see if the market pauses at R1, or 8103.

  Jonathan Levinson   2/5/03,  9:37:21 AM
For those asking about the composition of the US Dollar Index (dx00y and USDX), here's a very detailed discussion: Link

  Jonathan Levinson   2/5/03,  9:33:27 AM
1319 is first resistance, with 1311, 1306 and 1300 as COMPX support.

  Jonathan Levinson   2/5/03,  9:32:27 AM
8 point gap up open to COMPX 1314, TRINQ .19, QQV +.85 to 42.09, TICK.NQ +61.

  Steven Price   2/5/03,  9:31:20 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were stopped out on the 1/2 short, entered at an average of 8077.50, when the Dow traded 8025 at 9:30:12

While I hope conservative tradres utilized yesterday's stops, taking profits at lower levels, I think we may still see another rollover and traders hanging on to the stop above 8105 may still have a chance for a nice gain, particularly if we get the triple bottom breakdowns highlighted in last night's Swing Wrap. We would need trades of Dow 7900 and SPX 840 for those breakdowns.

  John Seckinger   2/5/03,  9:31:09 AM
Intra-day Pivot/Levels for Wednesday (02/05/03)...

INDU : S2= 7846, S1= 7934, P= 8019 , R1= 8103 , R2= 8189

SPX : S2= 829, S1= 839, P= 850, R1= 859, R2= 870

OEX : S2= 418, S1= 424, P= 430 , R1= 435, R2=441

NDX : S2= 954, S1=963 , P= 969, R1=978 , R2=983

QQQ : S2= 23.64, S1= 23.95, P= 24.12 , R1= 24.43, R2= 24.60

  Jeff Bailey   2/5/03,  9:29:26 AM
Hotels.com (ROOM) $38.60 Link ... stock has been under some heavy selling pressure in recent weeks, but jumps to $41.60 in pre-market trade after reporting EPS of $0.37 per share, which missed estimates by a penny. Company said revenues rose 92.4% year/year to $272.6 million, which was above consensus.

Has Expedia (EXPE) Link $56.12 seeing pre-market gains at $57.81 in pre-market.

  Jeff Bailey   2/5/03,  9:26:44 AM
The 9:00 AM Intraday Update has been posted. Link

  Steven Price   2/5/03,  9:22:04 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
I tightened up the stop yesterday when the 1/2 short position went in our favor. When the Dow was trading down below 7950, the stop was lowered to 8025 (trade originally entered at an average level of Dow 8077.50). I advised more conservative traders to take some chips off the table, while more aggressive traders could use a stop above 8105. It appears we will be stopped out on the open, with a continued bounce from yesterday's lows ahead of the Powell speech. My plan is to re-enter from the short side at some point, since I still believe the overall trend is down. However, I will let things shake outthis morning and likely wait until after the Powell speech at the very least.

Stops are set at Dow 8025

  Jonathan Levinson   2/5/03,  9:19:02 AM
Bonds continue to sell, with FVX now +5.2 bps, TNX +3.9 and TYX +2.1 bps. QQQ is trading 24.38 on Island ECN.

  Jonathan Levinson   2/5/03,  8:50:26 AM
The US Dollar Index has been sold down to just over 99.80, and gold touched 388/oz last night currently trading just below 382/oz. Futures sold off but have recovered, with QQQ trading 24.35, NDX 979.50 and SPX 850.80. Bonds are being sold, with FVX +1.9 bps, TNX +2.5 and TYX +1.2 bps.

  Linda Piazza   2/5/03,  7:22:11 AM
Good morning! Hit by increasing fears over Colin Powell's presentation today, the Nikkei fell in early trading. Exporters such as Sony and Canon dropped, but by the end of the day, the Nikkei had recovered its losses, closing up 0.77%. Exporters such as Sony, Honda, and Nissan contributed to the Nikkei's end-of-day gains. Toyota dropped ahead of its earnings announcement, but that announcement included profit that almost doubled. Toyota attributed the rise in profits to sales of Landcruisers and Lexus GX470's, among other reasons. Although January U.S. sales fell, the company feels it is positioned well to weather any downtick in U.S. car sales, and plans to open a new plant in Texas.

Today saw the release of a Germany unemployment number that proved higher than expected, reviving recession worries. The number tagged the unemployment rate at 10.3%, with the increase in the numbers of unemployed being twice as big as expected. Adjusted to EU standards, the rate is pegged at 8.6%. Many blame Chancellor Gerhard Schroeder's program of increased taxes for inhibiting growth in Germany's economy and look toward the ECB for hope that lowered interest rates may increase growth. The ECB meets tomorrow, but many predict that the ECB will maintain current rates at this meeting. Since Germany depends on exports for a third of its GDP, Schroeder also hopes to see exports increase, a hope that has been dimming as growth slows in other economies. As of this writing, the European markets were mixed, with the FTSE 100 up 0.44%, the CAC 40 down 0.45%, and the DAX up 0.14%.

  Jeff Bailey   2/5/03,  1:39:53 AM
S&P futures (sp03h) settled out at 844.50. Actually seeing some trades here at 842.50, so about 2-points below settlement.

Man.... I hope they don't go to 24-hour trading. I think things would be pretty quiet at this hour.

  Jeff Bailey   2/4/03,  11:49:10 PM
The Index Trader Wrap has been posted: Link

  John Seckinger   2/4/03,  11:49:01 PM
The Futures Trader Wrap has been posted: Link

  Steven Price   2/4/03,  11:48:50 PM
The Swing Trade Game Plan has been posted: Link

  Steven Price   2/4/03,  11:48:12 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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