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 Jeff Bailey   2/7/03,  21:46:04
Updated Pivot Matrix Pivot levels for DAILY (Monday's trade) along with WEEKLY (02/10-02/14) trade have been updated. The MONTHLY levels do not get updated until the close of trade February 28. Link

 
 
 Jonathan Levinson  2/7/03,  20:05:40
I can't keep this to myself. It's an article from Jim Cramer published Jan 23, 2001, entitled Top Ten Tells Why This is a Bull Market. The link is below. Here's the parting quote: You know I have been adamant that this is a new bull market. You know that I went on record blasting those Nasdaq 1500 sirens. But there are still persistent emails from people asking me if this is just one more big bear spike. To which I say, give me a break. Tape this checklist to your forehead if you can't remember it and nail-gun it to the bears in your firms and households. It might put them out of their misery for good!

I have no comment. As ever, Mr. Cramer speaks most eloquently for himself.

Link

 
 
 Jeff Bailey   2/7/03,  19:42:31
Pivot Analysis Comments .... Here is the pivot analysis matrix, BUT this one still has this WEEKS levels and today's DAILY levels. Link

Color coding of levels for DAILY, WEEKLY and MONTHLY are... Green: Never traded and deemed potential support. Blue: Level was traded. Red: Level was never traded and deemed potential resistance.

Daily Analysis: Bulls made the push higher this morning, trading as high as R1 in the shorter-term DAILY levels. Bears then got the upper hand, pushing bears back to S2 levels only to see modest rebound into close from correlative S2 levels in the SPX and OEX at 827 and 417 respective. It would appear buyers may be gathered at correlative support levels of WEEKLY and DAILY support levels.

Weekly Analysis: R1 levels were a wall of resitance this week. Will take note and mark WEEKLY R1 for next week as a "wall of resitance." If R1 on WEEKLY is traded, will be alert to strength, but look for bears to defend that level. Weekly matrix recap has us observing brief trading at SPX and OEX S2's. This may be a "systematic" level where buyers outnumer sellers, but may then think the opposite true when indexes see strength back near their pivots and approach WEEKLY R1 levels. From Pivots, bears have better abilit to assess risk as they target S2, with risk to R1. Greater bearish success for example was to short Pivot, stop above R1, and target S2. SPX example had trader shorting 855, stop 873 (risking 18) and targeting 827 (reward 28). Risking 18 to potentially make 28 represents rather unfavorable risk/reward and most likely would have had trader needing to utilize combination of DAILY, WEEKLY and even MONTHLY Pivot analysis levels, looking for correlative levels of resistance for stop placement. Observation for support made earlier in the WEEK between SPX S2 (827) and MONTHLY S1 (819) may have developed a bearish target range of 819-827, with observation that upper end of support range was a MAXIMUM bearish target range.

Monthly Analysis: Solid wall of resistance at/below MONTHLY pivot was untested for first week this month. Solid wall of support at/above MONTHLY S1 yet to be tested.

 
 
 Jeff Bailey   2/7/03,  16:27:11
Pivot Analysis Traders, or traders that may be using some of the daily/weekly/monthly levels from the pivot matrix.

Here's something I'm starting to "pick up" on as it relates to how things seem to be traded.

There seems to be a "stagger" between the OEX and Dow Industrial levels.

Here's what I see happening and may look for next week.

Near the close.... OEX trades WEEKLY S2 of 417, rebound takes OEX back between DAILY S2 and S1 of 421, so rebound level a bit "sloppy."

However... my "prediction" for Dow close of 7,825, which was DAILY S2 of 7,825 doesn't get traded today (like OEX DAILY of 418 did). So, thinking is that the "reason" Dow 7,825 didn't get traded was that OEX support levels did, some institutional computer buying stepped in and I didn't get a Dow level traded. However, rally into the close saw the Dow stop "dead in its tracks" at 7,880, as if DAILY S1 of 7,879 has some institutional computer selling being the trigger.

As a result... OEX backs off of 419 almost exactly when the Dow traded its DAILY S1 (makes some sense as a support level in Dow daily pivot analysis then becomes somewhat of a "sell" level).

 
 
 Steven Price  2/7/03,  16:10:52
Steve, Any suggestions for a short entry if one's not already on board? Post your idea on MM if possible. Thanks, D

I apologize for listing this email after the bell. It got lost among a bunch that came in together, but certainly has relevance. I like the failure at the daily S1 on the afternoon rebound attempt. However, it happened so late in the day that it didn't seem to make sense to add just ahead of the weekend and absorb time decay with little time to benefit from the entry. I think we need to let the weekend pass, now that we've absorbed so much activity this week and let Monday morning's action shake out. Looking at the intraday resistance levels, I'll be watching for a failure at 7900 or 7950 as possible addition points. If we hit a PnF reversal at 8000 again, wehre we failed this morning I'll reassess but may add there as well. On the downside, I still haven't seen an intraday resistance point I like, but a move below 7800 may change my mind.

 
 
 Jeff Bailey   2/7/03,  15:59:24
The 3:15 PM Intraday Update has been posted. Link

 
 
 Jonathan Levinson  2/7/03,  15:53:05
Although I'm quite nervous about a sudden bounce, I see no buy signals on my daily QQQ chart- only sells. The MacD is the only signal not yet confirmed. Most persuasive to me is the moving average crossover seen on the blue and red lines earlier this week. Link

 
 
 Steven Price  2/7/03,  15:52:48
Swing Trade Signals
We got a bit of a bounce from the Consumer Credit data and as I've said earlier, we are ahead on the trade and those traders not wanting to risk a bounce, particularly in light of the VIX conversation Mark and Linda have had, may want to close out. I'm going to stick with the plan, and leave my stop at Dow 8065. Keep in mind that could be a 200-point swing against us and each trader neeeds to assess just how much they are willing to risk. I simply feel that most of my trades that have been stopped out for minimal gains or outright losses were correct in their directional sentiment, but had stops a little too tight.

 
 
 Linda Piazza  2/7/03,  15:34:01
I’m cautious about the implications of that bullish engulfing candle I pointed out to Mark in our earlier conversation. Here’s why: I’m also noting that the 5(3)3 daily stochastics show a hinge downward, but not yet a bearish kiss. I counter that with the fact that the ADX shows that the trend is still strong in the VIX, and the VIX’s trend of late has been upward. Then, although this does not fit the classic definition of a last engulfing top, in which yesterday’s candle would have been a dark candle, I’ve found that it’s sometimes wise to think “non-classically” if non-classic patterns occur near support or resistance. In any case, non-classic or not, I would use a candlestick formation as a warning to pay attention only. Adding further doubt is the size of the candles. After January 27, the red candles have had bigger real bodies than the white candles, a somewhat troublesome sign. Backwards and forwards: some technical analysis points to one conclusion and some to another. If I’ve confused you with contradictory information, that’s because I’m confused, too, by this contradictory information. I would have felt far more certain if the VIX had broken through that descending trendline today. I've actually drawn mine somewhat differently than Mark has his, so that the cross would have been accomplished at a touch under 40 today, which means that on my chart, the VIX tested that line.

 
 
 Jeff Bailey   2/7/03,  15:24:06
Boeing (BA) $29.98 -1.86% ... Jeff:FYI- If you had not already observed, BA printed $30.00 at 1:45 EST. This puts BA on a fresh sell signal and another 3.33% lower in the $BPINDU.

Good observation and you're are correct. Good level to watch in BA here is $29.75. Waaaay back on 09/20/01, after September 11th terrorist attacks, BA closed at $29.75. Other than a couple dips below this $29.75 level to $28.50, stock has found support around $29.75.

I've been more "bearish" on BA Link over the course of the past several months from a technical perspective.

Might be a good stock to "understand" as it relates to bearish vertical counts. Last bearish vertical count was $32, dating back to a sell signal at $44 in April. Stock eventually traded $29 before giving recent reversal "buy signal."

Well... that buy signal (BELOW TREND) negated today and reversed. Bearish vertical count of $24 currently in play.

Trying to get in the mindset of "what impact BA at $24 might have on the Dow?"

Thinking too.... if BA can hange out above $28 when the Dow Bullish % falls to 3.33% like it did in October, could mark a bottom in the Dow. Link

 
 
 Jonathan Levinson  2/7/03,  15:22:44
That was a good one, Pali. Here's that photo again of the Marriner S. Eccles building with what I suspect to be Al Green's trowsers flying from the second flagpole in what might have been a boyish prank by recent inductee and fed "rookie", Governor Bernanke: Link

 
 
 Jonathan Levinson  2/7/03,  15:14:30
Just like you we have all been amazed at the low VXN and QQV levels in the face of such plunging NDX and QQQ values. Could it be that the large QQQ contract you mentioned yesterday has skewed the QQV figures? Its just a thought. Thank you for the incredible job you are doing on the MM and the humor you inject makes for an enjoyable day at the computer. I loved the one about Al Greenspan's trousers flying on top of the Fed Reserve building!

Thanks, Pali. Flattery will get you everywhere. The "off the charts" put and QQQ volume trades this week could have made waves that would be affecting the volatility values on the contracts they measure, but I believe that the VXN and QQV give shorter term readings than that. I truly can't figure it out, except that the gradual nature of the bulk of this afternoon's action seems to be the cause. Also, with word of a snowstorm in New York sending many traders home early and keeping volume down, we might simply be seeing a slowing of activity being reflected in low volume and low volatility. It loooks bearish to me either way, but in case we're both wrong, that's what stops are for.

 
 
 Jeff Bailey   2/7/03,  15:13:01
S&P 100 Index (OEX.X) 417 -1.48%... Making some notes here. While it is the end of the week, current trade is at this WEEK's S2 level.

Benchmark this against BIX.X trading 269.78 and getting pretty close to that 269.00.

I'm trying to think how I will word this, but, should we see in the FUTURE the OEX breaking to all-time lows, I will also be using last night's Index Trader Wrap observations, and BIX.X comments to my "benefit." Using the BIX.X perhaps as a "weight and measure" scale to control a bearish, or potentially bullish trade in the OEX.

 
 
 Mark Phillips  2/7/03,  15:09:50
Linda and I have been talking about the VIX this afternoon, but I don't know if we've learned anything. I see the market breaking down (gradually), but the VIX refusing to move higher. Today's highs in the VIX are below those from yesterday, not to mention those posted on January 27th. We still haven't tested the descending trendline from the July highs, which is currently at 41.05 (the way I've drawn it). Linda points out that we're going to post a bullish engulfing candle on the VIX, which could set us up for an explosive move higher in the VIX next week. But right now, I'm not getting any strong indications from this metric of market volatility. My primary concern from the lack of upside in the VIX today is that we could be setting up for a bounce early next week and the VIX is telling us that in its refusal to move higher. It is not showing a sharp increase in fear (even with broken support across the broad market) and that makes me think there is something I don't know, which is being hinted at by the lethargic move in the VIX. I guess the one conclusion I would draw is that (as many of us have pointed out today) it would be prudent to harvest gains ahead of the weekend and look for more clarity next week.

 
 
 John Seckinger  2/7/03,  15:07:04
If a trader is looking at the Dow and pivot analysis, a WEEKLY retracement from R2 to S2 (7801 to 8283) gives us a retracement from 19.1% to 0% of 7880 to 7801. I then cut this range in half, and get a level of 7840. The longer the Dow stays under 7840, the more probability we have of continued weakness today. The Dow is just underneath at 7836.

 
 
 John Seckinger  2/7/03,  15:03:39
With the bond market closing, yields on the ten-year note have fallen through some significant support levels on Friday, and this close should give equity bears even more ammunition into the last hour. The 3.924% area in the 10-year note now gives an objective of a move lower to 3.838% level. This should be a solid move in the bond pits, and should have fund managers rolling out of stocks and into bonds.

 
 
 Jonathan Levinson  2/7/03,  15:03:05
I'm holding Feb $24 puts. The option price has moved very little. Is that because of volatility or lack thereof?

Yes. As we approach third friday op ex, the premium decay will accelerate.

 
 
 Jonathan Levinson  2/7/03,  15:00:38
Amazingly, the QQV and VXN are still negative as the QQQ and COMPX break to new lows of the day.

 
 
 John Seckinger  2/7/03,  14:55:36
Breaking News: Hijackers in Istanbul reportedly takes two air stewards hostage.

 
 
 Linda Piazza  2/7/03,  14:55:06
Reader Question: Would you please take a look at ELX?

Response: I don't know anything about the fundamentals of Emulex and so don't know how it might be impacted by current market developments. With that said, ELX's chart looks like a lot of others I'm watching today. It's fallen beneath support, but just barely. It's got next support about 15.90-16.40, but that's an area of congestion and so it could stop anywhere near there. That 15.80 area is interesting, because it's midway through the big white candle from October 25. Midpoints of those candles often serve as support. As ELX tests recent lows today, the 5(3)3 stochastics are in oversold territory, but haven't yet turned up. MACD and RSI are somewhat inconclusive, except that MACD has been forming that same series of higher lows I'm seeing on other charts. In this case, it's also forming a series of lower highs. A breakout in either direction could confirm or perhaps even precede a break in price.

Of particular interest, however, is the fact that if ELX closes at or below current levels, it's completed or confirmed a double-top formation with a target roughly at 12.30. (I was using a log chart, and on those you measure an equal distance down rather than subtract. The subtraction method would actually give a lower target.) I'm uncertain about that target, though, because the shorter-term averages pushed up through the 200-ema (bullish) but have now turned down (bearish). I'm getting mixed signals, then.

Unfortunately, there's not yet enough information on the weekly chart to get a good reading of that. It's on a P&F sell signal, with a current target of 14, although it hasn't yet reversed into a column of X's, so we don't know what the ultimate target will be. However, it's also above its bullish support line, which is at 13.50, leading me again to question whether it's going to reach that target predicted from the double-top break. So, there it is, mixed signals and all. The preponderance of information (P&F, double-top) points to more downside for Emulex, but several signs confuse the issue and especially the issue of whether it will reach its projected target. The oversold stochastics indicate there may be a bounce along the way, too.

 
 
 Jonathan Levinson  2/7/03,  14:49:02
The COMPX seems to be sniffing out the lows of the day again, with little reaction from the indicators on this quiet day. The QQV is actually up .31, a very minor move, FVX still down. HUI has gone flat, +.09 with XAU -.40. The lack of any kind of bounce and the low volume here at the lows doesn't look bullish to me.

 
 
 Kent Barton  2/7/03,  14:20:18
RJR and MO are popping higher on news that the companies have been absolved of any wrongdoing in a California lawsuit.

 
 
 Steven Price  2/7/03,  14:19:44
Swing Trade Signals
One more thought on stops. We are entering a weekend and I have no problem with traders electing to take a gain, rather than absorb time decay in a risky market.

 
 
 Jonathan Levinson  2/7/03,  14:16:41
Of note is the tumble taken by the FVX, which is now down 4.2 bps after being up nearly 7 bps this morning. Other than that, little has changed, although I'm coming to the conclusion that they must be spiking antidepressants into the water supply of option traders, as the volatility indices continue to utterly ignore the damage being down to the COMPX and NDX. The VXN is down .18 and the QQV is up .17. Just another neutral, bullish day as far these options markets are concerned.

 
 
 Steven Price  2/7/03,  14:15:56
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
I have gone back and forth about where to lower our stop loss on the current short signal. We entered at 8049 and 8074 and have some gains here. We have failed twice at 8000 and the current stop sits at 8170. I certainly don't want to give up 300 Dow points from here to the current stop at 8170, but I'd like to give us some bounce room. Conservative traders can set it above 7900, but I'm going to lower it to just above 8050, which would be one box above a PnF reversal. Those reversals on the upside have been good short entry points and I'd hate to be stopped out where I'd think about shorting.

Lower the current stop loss to Dow 8065

 
 
 Jeff Bailey   2/7/03,  14:15:47
Correction to 01:00 Update regarding preliminary WEEKLY SPX pivot analyis levels.

I used today's high and "low", not this week's.

Weekly range so far has been H=864.64, L=828.58.

Preliminary is... S2=802, S1=816, P=840, R1=853, R2=878.

 
 
 Kent Barton  2/7/03,  14:15:42
Anyone else get the feeling that there's a major buyers strike going on? The key indexes are bleeding slowly lower as the day wears on, with nary a solid bid to be found. The orderly nature of this downtrend isn't indicative of a "rush for the exits" by the bulls. And as Linda and Jonathan discussed earlier, there just isn't a lot of volume backing this downward move. Instead, it seems like investors are simply unwilling to make any large bets on a Friday afternoon. It's awfully tough to justify holding over the weekend when the government is warning of possible terrorist attacks, tensions are heating up on the Korean peninsula, and the war clouds are gathering over Iraq. It's hard to imagine that a strong rally will take place during the final 1:45 of trading with these concerns looming overhead.

 
 
 John Seckinger  2/7/03,  14:08:13
Shares of AOL Time Warner are lower by 0.35 cents to 10.46, and not reacting too much to word that Ted Turner sold $5 million shares a few days after the world's largest media company announced he was stepping down. Turner sold 450,000 common shares for $11 to $11.26 each - according to a filing with the SEC. He also gifted 1.7 million additional shares as part of his pledge of $100 million a year, for 10 years, to causes supported by the United Nations. Turner still holds more than 117 million shares. A weekly chart looks horrible, but retracement analysis showed some support at the 10.50 area (might hold on closing basis). The objective is 8 dollars a share. Resistance is seen at 11.50.

 
 
 Steven Price  2/7/03,  14:07:55
Trimeris (TRMS) $41.24 +1.06 This is one of my pet stocks I keep an eye on somewhat regularly. it is basically a company that has a hot new HIV drug that will most likely be approved next month, when its fast track status at the FDA period ends. The company's problem is that it has had a hard time producing enough of the drug to meet earnings projections. We've discussed it as a call possibility in our lat couple of meetings, playing a bounce from support at $40. It is a high risk play, but I like the entry here, with a stop below $39.50. The 50-dma sits at $43.39 and could give bulls problems, but I like the potential to the 100/200 dmas at around $46. It is definitely a play against the sinking tide and should be played with risk capital only. Still, if traders are looking for a bounce play, I like the action here.

 
 
 Mark Phillips  2/7/03,  14:05:04
AZO $63.85 (-0.15) We've been watching this new OI Put play throughout the day and it does look like the stock is weakening. It finally broke below $64 about an hour ago, dropped to $63.71 (just satisfying our entry trigger) and then rebounding to just below $64. After a bit of consolidation taking place between those two price levels, the stock once again pushed higher, breaking above the descending trendline that has been in place since the opening highs. I read the action in AZO the same as I read the action in the broad markets today -- muddled, as has become the norm on Fridays. Another failed rally below the lunchtime high (near $64.35) can be used for initiating new positions, but for those not yet in the play, I would only consider partial positions today and look to round out to full positions on further weakness next week.

 
 
 Jeff Bailey   2/7/03,  14:02:55
The 1:00 PM Intraday Update has been posted. Link

 
 
 Steven Price  2/7/03,  14:02:26
Steve, I am holding oex feb puts from two levels. I have about 25% profit now. My plan was to exit today but with threat level rising and mkt trying to break down, How would you look at risk/reward to decide to sell today or hold. Time decay was why I was going to sell but this could be changed by present conditions.

A conservative approach would be to take some of the profits and let the rest ride after the breakdowns we've had that I pointed out in the last Swing Trade post. Things are looking ugly, but I tend to lean in favor of taking some chips off the table when we get them in the current market, especially over a weekend that carries event risk. With the terrorism alert raised and a failed rally, I can see a "news already out" rally, but it's hard to argue with all the technical damage we've seen, so I'd want to let at least part of the position ride.

 
 
 Linda Piazza  2/7/03,  14:02:13
In reference to Jonathan’s post about the low volume today: I’m a big believer in volume confirming a move, but not necessarily a downward move. My texts, at least, say that volume confirmation of a down move isn’t as necessary as it is with an upward move, although I’ve learned this week that even authoritative texts can diverge in these opinions. If volume is too high on a decline, that may even signal capitulation and then accumulation by more in-the-know investors. I believe John may have written about this recently.

 
 
 Linda Piazza  2/7/03,  13:58:24
At 75.12, the XAU is now moving back above its simple 50-dma at 74.93. A close above that level today would constitute a successful, if possibly tentative, test of that MA. The XAU also tested the midline of a regression channel it’s been trading in since August. Since December, it’s been touching only that midline before it bounces back up again—a sign of strength. If the XAU moves up from here, it’s also made a higher low. Link However, a glance at a weekly chart (not shown) shows the troubling bearish divergence made recently when weekly 5(3)3 stochastics made equal highs in September and late December-early January while prices were making higher highs. Those weekly 5(3)3 stochastics and RSI are now in full roll downward. Weekly ADX is barely over 20.92, perhaps hinting that MA’s are better measures of the XAU’s behavior than are the oscillators, but I’d feel more comfortable in that conclusion if the ADX were a bit higher.

 
 
 Steven Price  2/7/03,  13:55:29
I still have a connection to GNSS off an old OI play and can't find any news to explain today's tanking. Do you know?

Genesis Microchip (GNSS) $11.55 (-2.18) Genesis was downgraded this morning by CEUT, citing checks in Korea that indicate a potential loss of market share and possible ASP erosion in second half 2003. The company was later defended by Pacific Growth, which said that ASP erosion should be less than implied by CEUT and saw GNSS gaining market share.

 
 
 Jonathan Levinson  2/7/03,  13:51:57
Many bears are worrying about the light volume today, but I'm not among them. COMPX volume is 765M, NYSE Volume 943M. Or at least, according to Quote.com. Doubtless that other feeds will differ as they usually do concerning volume. In any event, light volume declines vaporize wealth by lowering prices without freeing up liquidity, thereby taking out supports without adding cash for eventual bids. Bear market declines "recruit" volume on the way down, and volume spikes usually signal the reversal as cash gets freed up with which to bid the market back up. Volume today is quite light.

 
 
 Kent Barton  2/7/03,  13:50:08
Grainger (GWW) $45.22 -0.78: This new addition to the OI and PI short lists hit our entry trigger of $45.59 this morning after shares dropped to new multi-month lows. The stock is trading near the worst levels of the session, and underperforming the Dow with a 1.7% loss. We'll now be looking for GWW to make its way to the next level of possible support at $44.00.

 
 
 Steven Price  2/7/03,  13:49:08
Swing Trade Signals
With the Dow trade of 7850 and OEX trade of 420, we added additional boxes below yesterday's triple bottom PnF breakdowns. This should get us past the bear trap possibility, however, given current global conditions anything is possible. The SOX is sitting right on support at 260 and the NDX broke down below its daily and weekly S1s.

Current levels: Dow 7852/SPX 829/OEX 418/COMP 1284

 
 
 Linda Piazza  2/7/03,  13:40:11
On GE’s 60-minute chart, the candles get as GE struggles to maintain levels above that 1/31 22.45 high. Currently trading at 22.50, the pressure is building, and GE should break out or break down soon. On a five-minute chart, it looks as if GE is trading in a bearish right triangle with the horizontal support at the levels of that 1/31 low. A break through there should send GE down to test October lows. That October low isn’t so far below current levels, however (21.40), so I’m not suggesting a put entry here. I’d be personally loathe to enter a put trade this afternoon with so little potential reward before an attempt might be made to bounce. I mention this only as a gauge of overall market sentiment.

 
 
 Jonathan Levinson  2/7/03,  13:33:15
They call them "orderly" declines when the volatility indices stay flat despite significant drops. Both the VXN and QQV are flat to negative despite 16 points down through "critical" support. The TRINQ shows moderate selling pressure, almost neutral, at 2.09, TICK.NQ -343. The FVX is down 2 bps. HUI and XAU are of their lows but still negative. The conflicting chart patterns make prediction difficult, but if we get a downside break from here, my 15 minute h&s should be in play for a visit to 1250. Current price levels go back to November 2002 supports.

 
 
 Linda Piazza  2/7/03,  13:26:05
John, is that ever a bearish engulfing candle in the Qubes!

On a side note, I’ve suddenly noticed that I’m not getting any email today, which leads me to suspect that I am, in fact, getting email but it’s not being delivered due to some mix-up in the way I set up my new computer. If you have emailed me and I haven’t answered, be assured that I’m sorting out the problems, but if you need a timely answer, you might ask one of the other writers.

 
 
 John Seckinger  2/7/03,  13:13:25
If the Dow does close at 7825 (as Jeff predicts), then we would have a WEEKLY pivot at 7934, S1 at 7716, and S2 at 7607. The weekly R1 would be at 8043, and R2 at 8261. I am using 7825 as the weekly low.

 
 
 Jonathan Levinson  2/7/03,  13:13:21
JaPalM (NYSE: JPM) is printing new lows below 22, currently down 1.66% at 21.94.

 
 
 John Seckinger  2/7/03,  13:10:38
Jeff...we are in the same camp. And I am sure Linda would say, "That is a daily bearish engulfing candlestick in the QQQ's" (grin).

 
 
 Jeff Bailey   2/7/03,  13:09:02
Prediction Dow closes today's session at 7,825. Dow trading 7,862 here.

 
 
 Jonathan Levinson  2/7/03,  13:07:41
Coinciding with Jeff analysis, I have a 38.2% fib retracement level off the intraday lows at 24.05. I agree with Jeff's read entirely. The 50% line is at 24.12.

 
 
 Jeff Bailey   2/7/03,  13:00:48
QQQ $23.92 -1.23% ... should find a lid on Q's at $24.03. Aggressive bear can be looking short near $24.03 and shouldn't have to take much heat above $24.10.

 
 
 Jonathan Levinson  2/7/03,  12:59:40
Citing a slowdown in volume from retail option traders, Goldman Sachs has announced that it is laying off 20% of its options workforce. Link

 
 
 John Seckinger  2/7/03,  12:53:37
Talking to Bailey about the QQQ's, and the daily high on September 11th, 2002 really seems to be the barometer for bears and bulls. This relative high comes in at 24.35, and matches up well with the 50% retracement area of the move from October to December (24.27). The QQQ's opened today at 24.36, and a weekly close underneath this area should still give bears a good risk/return opportunity.

 
 
 Jonathan Levinson  2/7/03,  12:47:21
The COMPX has parked at 1289, the TRINQ at 1.58, TICK.NQ -377, QQV actually down .44 as QQQ option trades say "what, me worry?" Biotechs seem to be supporting the QQQ, with BTK +4.67 to 331.6. FVX is down .5 bps.

 
 
 Mark Phillips  2/7/03,  12:36:37
AZO $64.27 (+0.27) Interesting how the bears couldn't really break the $64 support level. I noted in the play update last night that we ought to wait for a break of $63.75 before entering on weakness, and it looks like that was prudent advice. AZO fell right to $64, fractionally broke that level and then caught a little pop in the past half hour. This stock is really behaving as a good proxy for the rest of the market, testing support and looking weak, but unable to break down. Barring significant news event later today, I would be suprised if we get that breakdown ahead of the weekend.

 
 
 Steven Price  2/7/03,  12:34:23
Swing Trade Signals
We continue to test the low end of today's range, but the NDX is not giving up 960 after the bounce. 10 and 30 year yields still green, but the 5 year has rolled into the red. The VIX is also stretching toward 40, but has been unable to breakthat level. Another leg down should be signaled by a decisive VIX breakout over 40.

Current levels: Dow 7880/SPX 832.76/OEX 420.17/COMP 1291

 
 
 Linda Piazza  2/7/03,  12:31:20
How are the small caps performing? The Russell 2000 broke down from its consolidation range this week when it closed beneath 366. Daily ADX shows that the Russell is strongly trending and it appears headed for a retest of its July 354.11 low. There’s some slight historical support in the 360 area, and that might be expected to provide psychological support, too. A break of this morning's low would be confirmation of continued weakness. Note that the 5(3)3 and 21(3)3 hourly stochastics are in oversold territory.

 
 
 John Seckinger  2/7/03,  12:28:19
As Jim notes, we will have a news conference on the terror alert at 12:30. Attorney General John Ashcroft, Homeland Security Secretary Tom Ridge and FBI Director Robert Mueller should be speaking at this conference.

 
 
 Jeff Bailey   2/7/03,  12:12:47
NASDAQ-100 Index (NDX.X) 965.37 -0.53% ... will make note of session low 958.94. Look at the 5-minute chart and see the "rebound" right there. This is from the WEEKLY S1 level of 960 a bears wanted to see broken. Wait and see game here. Link

 
 
 Jonathan Levinson  2/7/03,  12:09:03
The COMPX is back above 1292, though not by much, and I'm seeing what looks like a bull flag on the 60 minute candles that forms the tail end of a falling wedge on the daily candles, which falling wedge looks like the right completed shoulder of a sloppy head and shoulders pattern also on the daily candles. Within this Picassoeque biology session, I see the 15 minute head and shoulders nested within the tail end of the 60 minute bullflag, and though it looked like that 15 minute head and shoulders was about to shrug the COMPX down to new lows, these prints above 1290-1292 seem to be at the very least delaying the breakdown, if not invalidating it. Moreover, if the 60 minute bullflag plays out, we should see a rebound from today's lows to approximately 1315 COMPX.

 
 
 John Seckinger  2/7/03,  12:00:34
The compression within the equity markets continue. To me, there is the 'feeling' that prices will bid. However, I would be slightly surprised to see the pivot at 7935 taken out. On a five-minute chart, MACD has just crossed higher. With prices now rising, I will look for weakness back under the 7885 area. The five-minute "breakout" of the compression has a low of 7888, so longs should try to defend this area. That is how I came up with 7885.

 
 
 Linda Piazza  2/7/03,  12:00:14
Currently at 74.48, the XAU has dropped below its simple 50-dma at 74.91. The simple 200-dma lies below at 71.85 and the exponential 200-dma is just below that at 70.26

 
 
 Jeff Bailey   2/7/03,  11:56:08
Gold/Silver Index (XAU.X) 74.53 -1.51% ... a little defensive today and looks to want to test support near $73. "Gold bugs" look for firm support at 72.00 in the index for certain. Link

As mentioned in recent sessions, Dorsey/Wright's "precious metals" sector bullish % (BPREC) is "bull confirmed," but higher level of risk for sector bulls at 76%.

Potential "head/shoulder top" formation present should XAU.X break much below the 72.76 level, as neckline can be found there. This probably has bulls sitting on their hands at current levels and taking a "wait and see" approach near 73.00. (L shoulder- 80.00, H-82.50, R shoulder - 80.00)

Link

I would think good sector to at least monitor and offset with the S&P Banks Index (BIX.X). If banks "break down" then I would think XAU.X would bid.

May get interesting if XAU.X approached 73.00 and BIX.X nears 270.

 
 
 Linda Piazza  2/7/03,  11:48:57
Current adv/dec ratios are .64 for the NYSE and .65 for the Nasdaq. Down volume is 1.6 times up volume on the NYSE and 2.4 times up volume on the Nasdaq. New lows far outrank new highs on both indices, with a 16:71 new highs/new lows ratio on the NYSE and a 27:62 ratio on the Nasdaq. Volume stands at just over 450 million on the NYSE and just over 500 million on the Nasdaq.

 
 
 Steven Price  2/7/03,  11:43:36
Swing Trade Signals
I've thought about adding further to the short position as we have failed on several bounce attempts intraday. However, yields remain in the green and it will take a further reversal in the treasuries to take out the Tues-Wed yield lows. I'd also like to see the NDX see resistance under 960, its daily and weekly S1 level. We also have weekend risk in both directions with world events and it will take an aligning of the stars for me to add.

We are short an at average level of Dow 8061.50 and traders looking to protect positions can use the break-even level as an alternate stop.

Current levels: Dow 7886/OEX 420.79/SPX 833.63/COMP 1292.10/QQQ 24.00/NDX 964.04

 
 
 Jeff Bailey   2/7/03,  11:42:35
The 11:00 AM Intraday Update has been posted. Link

 
 
 Linda Piazza  2/7/03,  11:35:15
This morning, the SOX dipped to 261.21, pennies below the 1/31 low of 261.38. On the 60-minute chart, the past hour’s just-completed candle was a doji sitting right on that previous support. If I squint just right, I can see that the 5(3)3 stochastics slant slightly up, but the longer-term 21(3)3 stochastics haven’t even begun to turn. The 21-pma still slants down. There’s reason for SOX bears to be cautious here, but not alarmed.

 
 
 Steven Price  2/7/03,  11:32:39
Cabot Micro (CCMP) $42.40 (-0.74) Not hard to see where the next support level will be in CCMP, with a low today of $42.00. Our initial target on the put play, picked at $44.83, was around $40, as there is minor support at $40 and again between $38 and $39. However, if we can get the SOX back below 260 (262.90) and heading toward its next support around 240-245, I can see CCMP testing the Oct lows at $32.50. Still, new entries from this level need to be aware of that possible support just a couple of dollars below. I would target a move under $42 for a partial position for new entries and then wait until it clears that support to add to the position.

 
 
 Jonathan Levinson  2/7/03,  11:32:33
Hi Jonathan,

The last 2 times Al drained, 2 days later he flooded, using the whipsaw to reverse the market.

I'm playing what I see, but am staying alert for a whipsaw Monday or Tuesday. If it comes I'll take my lumps, but won't fight it.

My guess is Al respects the need of the market to go down occasionally, but is primarily trying to "bend" the channels at the turning points -- bringing the turns upward early and delaying the turns downward. Once the turn is made, he follows through for a few weeks, and then drains money so he has ammo for the next round.

How does he know when to turn? The fed is one of the bigger employers of Chartered Market Technicians -- they tell him when his mojo isn't working anymore, and he backs off and lets the market run a bit. my $0.02 ;-)

It's as good an analysis as any I can come up with, Matt. I too assume that Al Green's mandate and goal is to bring stability to the markets, though I also assume that he's fallen into the habit of thinking in the short term. With the increasingly unpredictable moves from the fed, your prudent course of action is well advised. I find it impressive and surprising that he was able to drain that amount today without sparking a selloff in bonds and a rally in yields, which I think is his ultimate fear. Bernanke's comments support this view, as does my own thinking that a sustained rally in yields would cause catastrophe for the mortgage and credit bubbles. It looks to me as if Al Green has managed to add 2.5B to the fed's arsenal with no negative repercussions for the bond markets so far. The outcome for equities today remains to be seen, but I'm quite confident that equities aren't his main priority.

 
 
 John Seckinger  2/7/03,  11:32:31
As the Dow graviates around the 7900 level, I continue to look into the jobs report. There were massive seasonal adjustments in January, and the household survey showing job gains of only 1.1 million does seem to throw up a red flag to the reliability of the data. This number really just seems too high, and with the market selling off I think they are in aggreement. What today's report seems to imply is that the manufacting sector is just pausing in this time of never-ending massive layoffs.

 
 
 Mark Phillips  2/7/03,  11:25:43
AZO $64.25 (+0.25) Throughout today's session, new OI Put play AZO has been holding up rather well, as you can see with it still trading positive relative to yesterday's closing low. But the stock is moving to new lows for the day here and the opening gap has now almost been filled. Traders that took advantage of the early bounce and failure above $65 are looking good here and hoping for a break below $64. Those waiting for confirmation will want to wait for a drop under $64 before entering the fray. If that support level fails to give way this morning, then I would look for an afternoon short-covering rally to drive the stock up into the $65-66 area again, where risk is easier to manage on new positions.

 
 
 Jonathan Levinson  2/7/03,  11:20:32
HUI and XAU are losing steam, with XAU now lightly in the red and HUI in the green, even as the CRB sets new highs above 249. FVX has crept up to +1.9 on the day, echoing the slight rise in the COMPX off its lows. TRINQ is 1.41 and TICK.NQ -231, showing a slight concentration of buying. QQV is up just .14, as QQQ option traders remain calm with the support that has held in the 1290 area.

 
 
 Mark Phillips  2/7/03,  11:13:07
SYMC Spoke too soon? No sooner did I comment on SYMC's failure to rebound from the $46 level, than it did so. Stock once again showing some resilience on the slightest hint of a rebound in the broad market. Not what I would call a strong bounce, but enough to get SYMC back over that $46 level, as well as the 20-dma ($46.21), which has been providing support over the past couple weeks.

 
 
 Jonathan Levinson  2/7/03,  11:08:14
If you were selling 25 QQQ contracts, would you put "all or none" or just let them go with whatever quantity goes? Was wondering if "all or none" helps or hurts when selling.

I've never had a problem with quantities up to 50, but it depends on how tightly you squeeze the price. I've had problems before with "all or none" because it was deemed a "special order" and didn't print on the bid / ask spread, according to the broker with whom I spoke that day. I never figured it out to my satisfaction, but that's what I was told that day.

 
 
 Mark Phillips  2/7/03,  11:05:15
GS $66.40 (-0.25) Is support finally giving way on GS? Both in late December and late January, the $67 level provided consistent support for this Financial stock. Yesterday's $66.65 close marked the stock's first close below $67 since October 14th, and price is now moving into the gap left behind on October 15th. Filling the gap should take GS down to just above $65 for its next chance at a bounce. But with the PnF chart clearly in its bearish mode (breaking bullish support line and new PnF Sell signal with a trade at $66) by then, I would expect significantly lower prices ahead. Note also that the Brokerage index (XBD.X) has now lost the $380 support level and now looks to be headed to $360 before finding support again.

 
 
 John Seckinger  2/7/03,  11:01:35
There is an article in the UK Independent today that is titled "Intercepted call linked Saddam to al-Qaida terror cell." From the first paragraph, "Using a satellite phone, the senior al-Qa'ida operative excitedly called two associates and congratulated them on their cold-blooded assassination of an American diplomat."

 
 
 Linda Piazza  2/7/03,  10:57:16
The FTSE 100, CAC 40, and DAX currently all trade in the red, by 0.06%, 1.15%, and 1.93%, respectively. The DAX is now below 2600 again, trading at 2597.83.

 
 
 Jonathan Levinson  2/7/03,  10:55:01
Copper, cotton, frozen concentrated OJ and soybeans are the only commodities showing read as the CRB marches to 12 month high at 249.02.

 
 
 Mark Phillips  2/7/03,  10:50:38
SYMC $45.90 (-0.63) While this OI Call play has been holding up strongly over the past couple weeks, with the broad markets looking like they are breaking down this morning, the bulls' resolve appears to be weakening. Note how the $46 level was repeatedly defended in the first hour of the day, and has since given way. Not a rush of selling volume, but today's action is a marked departure of what we have seen recently. Of late, the stock has rebounded sharply from early selloffs, and we are not seeing that action repeated here today. The next area to look for strong support and a possible bounce is near $45.30, the site of support last week, as well as the ascending trendline that has been in force since the October lows.

 
 
 Jeff Bailey   2/7/03,  10:47:01
Regional Bank HOLDRS (RKH) $98.64 +0.29% .... time and sales shows a 10K share trade at $99.00 today. Looks to have been on an up-tick.

 
 
 Linda Piazza  2/7/03,  10:45:09
The Dow Jones Transportation Index (TRAN) appears to be failing from yesterday’s test of the 2200-2220 historical S/R level. The daily 5(3)3 stochastics have made a bearish kiss, although they’ve done that several times as the index rounded up and tested that level. The 21(3)3 hourly stochastics have also begun to roll down, and 5(3)3 hourly stochastics are in full bear roll, and in fact are approaching oversold levels although not yet turning up. On the hourly chart, the index has been moving in an upward-slanting regression channel since January 28th, and would break down out of that channel with a move (and close) under 2140 or so. Normally, I would characterize an upward-slanting regression channel that occurs after a steep fall as a bear flag pattern. That’s the definition of one—a counter move with higher highs and higher lows in a tight range. However, this one has carried on a bit too long to consider it a bear-flag pattern in the strictest sense.

 
 
 Jeff Bailey   2/7/03,  10:42:22
S&P 500 Index (SPX.X) 831.15 -0.83% ... taking out yesterday's lows here and defensive.

BIX.X 271.04... still above 269, but session lows here too.

 
 
 Jonathan Levinson  2/7/03,  10:39:31
The put to call ratio is back to .77 after yesterday's tour of the stratosphere. Treasury yields are now near flat but still showing green. Precious metals have ceased to rise but are holding their gains. The COMPX has just printed a new low below 1290. If this is the head and shoulders breakdown I was expecting yesterday, then it implies a downside target of 1250.

 
 
 Linda Piazza  2/7/03,  10:36:55
Volume patterns can be distorted in early trading, but I was surprised to find that, on the NYSE, advancers are ahead of decliners, and up volume is ahead of down volume. The opposite is true for the Nasdaq. Adv/dec ratios are 1.19 for the NYSE, still a rather neutral number, and .70 for the Nasdaq. Up volume is 1.47 times down volume on the NYSE, and down volume is almost twice up volume on the NYSE. New lows are far ahead of new highs on both, though, with 29 new lows to 8 new highs on the NYSE and 44 new lows to 16 new highs on the Nasdaq.

 
 
 Linda Piazza  2/7/03,  10:31:04
CNBC is announcing that the terror alert will be raised to orange today.

 
 
 Steven Price  2/7/03,  10:30:21
Swing Trade Signals
We tested OEX 420 and Dow 79000 successfully, bounced back to right around unchanged and faded slightly. If that's the top of the bounce from those levels, it could get ugly. Of course we'll have to breakthrough those first. The COMP still below 1300 is encouraging for shorts.

 
 
 Jeff Bailey   2/7/03,  10:29:09
Interesting... Dow Industrials (INDU) 7,922 -0.07% ... session high was 8,001.08. However, note that 5-minute bar chart closes have been 7,991. Hmmmm.... DAILY R1 for Dow is 7,990.

Session low has been 7,899, easily above the DAILY S1.

 
 
 John Seckinger  2/7/03,  10:24:53
If you are a trader that likes pivot analysis, I highly recommend doing a retracement between MONTHLY and WEEKLY R2 to S2. Then see if some levels line up with daily figures. If they do, significance should be increased.

 
 
 Jeff Bailey   2/7/03,  10:23:16
Regional Bank HOLDRS (AMEX:RKH) $99.00 +0.66% .... was trying to find a chart of the BIX.X, which is more of a regional bank index, where the KBW Bank Index has exposure to more conglomerate/multi-nationals.

Ran across the RKH and here too, I see what looks to be some "historical" type of "key" support at $98. When the $97 level has been traded, it hasn't been "pretty" for sector bulls. Link

 
 
 Linda Piazza  2/7/03,  10:21:53
At 39.61, KO also sits just above last-ditch support in the form of its 1/31 low of 39.15.

 
 
 John Seckinger  2/7/03,  10:21:36
I expect some slight support at current levels (Dow at 7900), but I haven't seen any bids come in as of yet. The 'vertical' late-day weakness yesterday in the Dow that took prices under 7900 and then immediately back up USUALLY isn't broken until a higher low is in place. With that said, I expect to see a move to 7950 and then most likely a break lower. Just thinking outloud.

 
 
 Mark Phillips  2/7/03,  10:20:59
Where's the Fear, Baby? All right, markets are threatening their lows from yesterday, so where is the expected rise in the VIX? Just hasn't happened yet. With the VIX only up fractionally to 38.72, as compared to yesterday's high of 39.64. Don't get me wrong, as if we break the lows from yesterday (Dow 7881/SPX 833), then I would look for a quick rise to test the 40 level on the VIX and give us another test of that descending trendline that Linda, Kent and I have been talking about.

 
 
 Jonathan Levinson  2/7/03,  10:20:52
Commodities as measured by the CRB are up to 248.20, +.32%.

 
 
 Linda Piazza  2/7/03,  10:14:41
Today finds GE at 22.60 and once again sitting just above its 22.45 (last week’s low) last-ditch support before heading down to October lows. Daily 5(3)3 stochastics are rolling from mid-rise.

 
 
 Jonathan Levinson  2/7/03,  10:13:17
Jeff with food on his chin, Al Green removing money from the system... today's full of surprises. Spot gold is currently up 4.50 to 373.80, HUI and XAU positive, while the FVX is down 1.6 showing a bid in treasuries. COMPX is below 1300, heading for 1292 support.

 
 
 Steven Price  2/7/03,  10:12:47
Swing Trade Signals
Slightly red across the board.

 
 
 John Seckinger  2/7/03,  10:10:12
Breaking news: Government officials have recommended that President Bush raise the national threat level to "orange"

 
 
 Linda Piazza  2/7/03,  10:09:29
On the OEX, I see the possibility of slight support at 418-420. On August 5 and 6, the OEX stopped its retracement at that level and then turned around and headed back up to its late August highs. I closed my put position just ahead of that level yesterday to see what happened (as I often do at important junctures) and the OEX did attempt a bounce yesterday from just above that level. It may not bounce from those levels today, but I’m watchful of that possibility.

 
 
 Steven Price  2/7/03,  10:08:07
Re: Linda's post about Jeff's story - I'm actually more in awe of the fact that for once Jeff didn't have food on his chin (GRIN).

 
 
 Steven Price  2/7/03,  10:06:24
We got quite a fade and went briefly into the red in the major indices, except in the Dow.

Current levels: Dow 7954/SPX 839.97/OEX 424.19

I've changed this entry three times as we've bounced around.

 
 
 Jonathan Levinson  2/7/03,  10:04:23
Al Green has just blown me away, announcing a reverse repo of 2.5B. This is not a Matched Sale-Purchase agreement that requires an infusion of capital later. This is just the fed simply taking money out of the system. Shocking given that M2 money supply grew by over 20 Billion Dollars for the week Jan 27. We therefore have a net drain of 10.75B today.

 
 
 Jeff Bailey   2/7/03,  10:04:20
NASDAQ-100 Index (NDX.X) 968.93 -0.29% .... I would have thought if market was really going to "bid" today, this would have been the index to really show some type of muster after holding tough yesterday. Bears may be licking their chops here, but looking for some breaks of "key" levels.

 
 
 Jonathan Levinson  2/7/03,  10:01:18
Well put, Linda. It's reminiscent of that scene in T2 when Arnold as The Terminator tells young John Connor that he's sorry, but he must sink himself into the molten metal. I teared up at that one :)

The COMPX is sinking to new lows, but this remains rangebound action. We're back to 1300 even, with the TRINQ up to 1.26.

 
 
 Linda Piazza  2/7/03,  09:58:10
Jeff, my brain is still foggy and I just read your first post this morning. I somehow missed it earlier. Thanks for sharing that story. We’re all in so much awe of your acumen that it’s nice to know you’re human, too!

 
 
 John Seckinger  2/7/03,  09:55:24
Equity mutual funds reported net cash outflows totaling $4.3 billion for the week ending Wednesday 2/5/03. More that half of that amount came out of domestic growth/value funds and technology funds. On the other hand, taxable bond funds saw inflows of $2.8bln (split between corporates and Treasuries). Moreover, International & global debt funds saw their eighth consecutive week of inflows.

 
 
 Jonathan Levinson  2/7/03,  09:51:59
I can recall reading Bulkowski's Encyclopedia of Chart Formations and his description of broadening formations as being somewhat wild. This bullhorn formation being printed so far this morning is just that, printing 2 new sets of highs and lows so far. I see spot gold has just jumped up to around 373, while the HUI has recovered and is now in the green with XAU close behind it. As John pointed out, yields hit resistance, and FVX is now up just 3.9 bps. Still little direction, but I suggest a golfclap for the action this morning- it certainly isn't dull. 1310 COMPX remains the pivot of reference, with support at 1300 then 1292 and resistance above at 1319 then 1328.

 
 
 Jeff Bailey   2/7/03,  09:51:53
Forest Labs (FRX) $50.08 +0.18% ... I read a subscriber question last night regarding FRX and what to do with Feb. $50 calls?

This is tough question, as I profiled May expiration to allow ample time to get some type of FDA news on Alzheimer's drug. I have no idea when FDA panel will comment. It could be tomorrow, it could be a month from now.

I don't "like" the Feb. expiration based on my previous outlaid scenario. Personally, if looking to play the Alzheimer/FDA review, would sell the Feb calls, and roll out expiration.Link

In my view, I think the recent "softness" in FRX largely attributed to broader market. I've been monitoring FRX relative strength chart vs. SPX and still holding up at 59.34 reading. Link

Disclosure, I currently hold a bullish position in the FRX May $55 calls.

 
 
 Linda Piazza  2/7/03,  09:51:35
The 60-minute OEX chart also shows that today’s high tested the 21-pma and fell away from that level. I add my cautions that any move into the market this morning is high risk. Will bears want to cover this weekend? Will bulls flee ahead of the weekend?

 
 
 Steven Price  2/7/03,  09:48:54
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the second 1/4 short position when the Dow traded 7974 at 9:47:06. We are now short a 1/2 position with a stop set at Dow 8170.

 
 
 Linda Piazza  2/7/03,  09:47:35
Here’s what I’m watching on the OEX five-minute chart. The red line is a former supporting line that began forming yesterday morning. It was broken and retested yesterday afternoon, and prices are now failing at a second test of that line. The stochastics are 21(3)3 (top) and 5(3)3 (bottom). Link

 
 
 Steven Price  2/7/03,  09:47:10
Yields are also into resistance, which increases my confidence here. Once again, all entries in this environment are HIGH RISK

 
 
 Steven Price  2/7/03,  09:45:26
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Failed again at 8000 on a 5 min closing basis (3rd time). If we roll over, go short a 1/4 position at Dow 7974, just below the last pullback low. Stops set at 8174.

 
 
 Jeff Bailey   2/7/03,  09:44:27
Dow Components showing some positive breadth among the 30, with +27: -3. Johnson & Johnson (JNJ) $51.79 -0.63% Link on talk of potential merger of Scios (NASDAQ:SCIO) $41.90 +20% Link (see 09:00 update).

Eyeballing Citigroup (C) $33.50 +0.93% Link and J.P. Morgan (JPM) $22.43 +0.53% Link for a "feel" of banks. These two components are components of the KBW Banks Index (BKX.X) 723.21 +0.84% Link , and NOT in the S&P Banks Index (BIX.X) 274.49 +0.87% (no p/f BIX.X chart at stockcharts.com).

 
 
 John Seckinger  2/7/03,  09:39:28
After the first five-minutes of trading, we have a range from 7932 to 7991. Bulls would like to see prices at least stay above 50% of this range. That level comes in at 7962. Note: The weekly pivot is at 8042, and the daily R2 is at 8046. I would be surprised to see this area taken out.

 
 
 Jeff Bailey   2/7/03,  09:36:40
The 9:00 AM Intraday Update has been posted. Link

 
 
 Steven Price  2/7/03,  09:36:30
Swing Trade Signals
The Dow has so far stopped within a point of yesterday's high. Aggressive traders can think about adding short here, but I'm hesitant and would like to give it a few minutes. I hope I'm not missing an opportunity, but it's a possibility.

 
 
 Jonathan Levinson  2/7/03,  09:35:23
1312 COMPX in the opening chop looks like a failure of the head and shoulders pattern I've been scoping on the 15 minute COMPX candles. It looked like it would play out to the downside yesterday before the close, but no so anymore. Direction still looks very much up for grabs, but without a quick blowoff spike here, it looks like my nice pattern will be no more.

 
 
 Jonathan Levinson  2/7/03,  09:32:25
9 point gap up open on the COMPX to 1310, TRINQ at .28. 1310 continues to be a critical level, having stopped yesterday's bounce attempts and serving as a pivot all week.

 
 
 John Seckinger  2/7/03,  09:30:52
Intra-day Pivot/Levels for Friday (02/07/03)...

INDU : S2= 7825, S1= 7879, P= 7935 , R1= 7990 , R2= 8046

SPX : S2= 828, S1= 833, P= 839, R1= 844, R2= 850

OEX : S2= 418, S1= 421, P= 423 , R1= 426, R2=429

NDX : S2= 952, S1=961 , P= 970, R1=979 , R2=989

QQQ : S2= 23.65, S1= 23.94, P= 24.14 , R1= 24.43, R2= 24.63

 
 
 Mark Phillips  2/7/03,  09:24:57
Funny story Jeff! But here's the other funny part about it. I remember that incident where you mentioned the "Chinese" candlesticks, and I was sitting near the back of the room. Noticed several people snickering, but had NO CLUE why. It looked to me like you were doing a great correlation in your presentation and I couldn't figure out what was funny. I just let it go as one of those many mysteries of life that I'd never understand. At the time, I didn't 'get' the Chinese/Japanese error as I was just focused on the meat of what you were trying to convey. Thanks for clearing up one of those mysteries! GRIN

 
 
 Jonathan Levinson  2/7/03,  09:24:12
Indeed, Steve. Here we go again. Bonds are selling, with FVX and TNX +6.8 bps, TYX +5.4. QQQ is trading up 20 cents at 24.44. The fed has 8.25B expiring today, and we await the announcement.

 
 
 Steven Price  2/7/03,  09:17:29
Swing Trade Signals
Here we go again! We got some serious technical damage in the equities yesterday and I dipped my toes back in the water with a 1/4 short position. we are getting a boost on the economic data Linda mentioned and I'll be faced with deciding whether to add to the short on a rally, or wait for a possible re-test of the top of the recent range in the Dow 8150/SPX 860-865 area. If we make it back up to those levels, we'll be seeing the possibility of a bear trap on yesterday's triple bottom PnF breakdowns.

Our stop is set above the top of the range, at 8170 and right now we have a very small posiiton. Still, the current environment is risky for any directional play and I'm still suggesting risk capital only in the current geo-political environment.

 
 
 Linda Piazza  2/7/03,  09:05:59
That big spike in the futures a few moments ago came about after the release of the economic numbers showing that the U.S. jobless rate fell to 5.7% in January from 6% in December. Since 101,000 of the 143,000 added workers were in the retail sector, the number may not be as rosy as it first appears, but some may be cheered by the notation that the goods-producing sector did not lose any jobs. This is the first time that’s happened since October, 2000, a CBS report says. The report also noted 21,000 jobs added in the construction industry.

 
 
 Jonathan Levinson  2/7/03,  08:19:39
The US Dollar Index broke 100 briefly last night but is back below, currently trading 99.80. Gold seems to have recovered somewhat from the COMEX crush yesterday, now trading above 371/oz. NDX Futures are up 1 point, SPX +1.3, with QQQ trading down 1 cent at 24.23.

 
 
 Linda Piazza  2/7/03,  07:46:32
Good morning! The Nikkei fell .42% in Friday trading but still posted its third weekly gain this year. Bush’s “the game is over” speech yesterday afternoon sounded a somber note overseas and yesterday’s U.S. productivity numbers also impacted Asian trading. Investors fled to defensive stocks such as Tokyo Electric Power Company and other utilities, while exporters declined. Mizuho, a Japanese bank, announced an intention to ask its clients to buy 850 billion yen of preferred shares, asking them to participate in a bailout to rescue the bank from losses due to bad loans and declines in the values of its investments. Mizuho is expected to post Japan’s biggest corporate loss.

Buying defensive stocks tended to be the theme in European trading, too, as Vodafone and Deutsche Telekom rose. Investors thought those companies less economically sensitive, less affected by the dollar, and more likely to maintain a revenue stream. European investors fled to stocks such as these after Deutsche Bank surprised with a 105 million euro loss rather than a predicted 202 million euro gain and a U.K. economic report noted a manufacturing decline of 4% from the previous month. In a theme I report almost daily now, Deutsche Bank incurred its losses after writing down the value of investments. In its report, Europe’s largest bank also noted that it had reduced operating costs at a rate faster than its revenue had declined, and pointed to gains in its consumer banking business, private clients, and asset management business. That wasn’t enough to keep investors from focusing on the losses, however, and Deutsche Bank dropped in trading today. As of this writing, the FTSE 100 was up 17.30 points or .48%. The CAC 40 was down 9.39 points or .33%, and the DAX was down 6.35 points or .24%.

 
 
 Jeff Bailey   2/6/03,  01:24:38
Candle Stick/BIX.X Linda Piazza responded back to me. Here is her comments. Sounds "Greek" to me.

Hi, Jeff,

I got a new computer this evening, so I've been offline since the markets closed and didn't notice until I just now read your article that you'd asked for information about candlesticks. I noted that Jim had also sent you information about different reversal patterns, so I assume you don't need that information any longer.

While I'm not an expert on candlestick charting, I do think it valuable. One other factor in candlestick charting to consider is "record sessions." Perhaps you already know about this candlestick theory, too, but here goes a simple explanation: When a market makes a new low (or high, in a rising market), that's a "record." In candlestick theory, a market becomes extended when it reaches eight-to-ten consecutive or nearly consecutive record sessions. Those sessions don't have to be consecutive, but they shouldn't be separated by more than a couple of interruptions in the pattern. I look at the record sessions much as you might look at bullish percent patterns. It's not an absolute given that a market will turn around once it's had those numbers of record sessions, but it's certainly a warning that risk may be changing.

Two candles of a potential morning-star pattern, as you were seeing when you noted that doji forming after yesterday's red candle, also offer a warning, but not a prediction. Nison gives special weight to these patterns if they're forming near support, too.

I hope these rambling thoughts help. My brain is a little foggy after working on the new computer and setting up my programs all evening.

Linda

Thanks Linda! Funny bedtime story. At one of the OI seminars, I followed Mr. Nison's presentation on candlestick charting. I tried to follow his presentation, but was also trying to get my computer ready for my presentation on point and figure charting.

I heard Mr. Nison say something about a "hammer" pattern at a topping formation being some type of indicator for a potential reversal lower. So... during my talk, I thought I'd try and "tie in" a high bullish % reading for an index, where a trader might see a "Chinese" candlestick bearish pattern form and could be on the lookout for a major reversal coming.

A guy in the front row started laughing, and he laughed harder and harder each time I mentioned "Chinese" candlesticks.

Finally I asked him why he was laughing so hard. I thought I had food on my chin or something. Turned out, they aren't called "Chinese" candlesticks, but "Japanese" candlesticks.

Anyway.... Mr. Nison was sitting in the back of the room. He chuckled a little, but he didn't seem to find it as funny as the entire audiance. My face turned real red.

 
 
 Jeff Bailey   2/6/03,  23:41:00
The Index Trader Wrap has been posted: Link

 
 
 John Seckinger  2/6/03,  23:40:52
The Futures Trader Wrap has been posted: Link

 
 
 Steven Price  2/6/03,  23:40:45
The Swing Trade Game Plan has been posted: Link

 
 
 Steven Price  2/6/03,  23:40:11
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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