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  Jeff Bailey   2/10/03,  5:53:05 PM
Pivot Analysis Matrix for tomorrow. Link

  Linda Piazza   2/10/03,  3:57:18 PM
The SOX did break the H&S neckline on its five-minute charts, with a projected target near 260, depending on where you drew the line. Readers also noticed similar five-minute formations on the QQQ’s. The SOX moved down to 262.37, not quite meeting that five-minute target before moving up again. However, five-minute charts aren’t as reliable as longer-term charts, as we’ve all mentioned from time to time. The SOX has been rising to test resistance again. On the hourly chart, both the 21(3)3 and 5(3)3 stochastics have hinged and have made bearish kisses, although the kiss on the 21(3)3 stochastics is a bit suspect as of yet. The 21(5)3 stochastics kissed in mid-rise, while the 5(3)3 stochastics had moved all the way up toward overbought levels on today’s minimal moves. I note, however, that the VIX is near the lows of the days, not yet predicting a move down in the markets.

  Steven Price   2/10/03,  3:54:20 PM
Swing Trade Signals
Ramping back up into the close. My stop remains set at Dow 8062, but I'd much prefer a close below 7900. I'm going to stick with the 1/2 short position, rather than shorting the news event, which is what the bear on my left shoulder is telling me to do.

Current levels: Dow 7912/OEX 421.55/SPX 834.74/COMP 1294

  Linda Piazza   2/10/03,  3:50:50 PM
Trading a low of 22.23 today, GE is below its July low, but remained above its October low. So far today, it appears to be printing a doji below the real body of Friday’s candle. This can be the first two candles of a potential three-candle reversal pattern, but it requires confirmation from the third day’s candle. I would expect GE to encounter resistance again as it tries to move past the consolidation levels from the last couple of weeks, so I’m not confident that, even if there is a third candle to the morning-star formation, that the move would be big. As I scan other charts, I notice inside days (or harami’s) and other signs of indecision. There certainly hasn’t been an explosively positive reaction to the news that Iraq will allow the flights.

  Jonathan Levinson   2/10/03,  3:28:01 PM
The narrowness of today's action continues to astound me given the various tensions and forces at work. The COMPX is up less than 10 points on the day, but the oversold bias on the intraday stochastics has been eliminated, with the 10(5) daily showing the beginning of a bullish cross from oversold. The TRINQ has been verging on extreme low readings, not quite there, but showing strong buying pressure. Precious metals continue to get sold, with HUI -5.93 at 133.73. Tomorrow's another day, but for the moment, that 1300 level looks critical to bulls and bears alike.

  Steven Price   2/10/03,  3:20:14 PM
Swing Trade Signals
Back where we started... The rally faded and we are close to unchanged across the major indices. Techs held green, while the Dow/SPX/OEX all ticked briefly into the red, but have gotten a bounce.

Current levels: Dow 7870/SPX 830.52/OEX 419.25/COMP 1287

  John Seckinger   2/10/03,  3:19:26 PM
We finally got our five-minute close below 7881, and ideally for bears would be a settlement underneath 7872 (a long-term retracement level). It is interesting how equities seem to wait until the bond market closes before making a directional move. Keeping with the intermediate-term theme, support is not seen until 7750. The weekly pivot was never tested today: 7948.

  Steven Price   2/10/03,  2:54:47 PM
Swing Trade Signals
That 7881 level in the Dow is turning out to be pivotal. It was Friday afternoon's resistance level, this morning's opening range high, and so far we have been unable to achieve a 5 min close beneath it. We are just below as I write, but we'll have to wait and see where this 5 min candle closes.

  Jonathan Levinson   2/10/03,  2:53:17 PM
The US Dollar Index touched 100.40 and is currently trading just north of 100.20. HUI and XAU are both down big today, with HUI -5.55 to 134.11 and XAU -2.09 at 72.46.

  Mark Phillips   2/10/03,  2:46:40 PM
AZO $62.93 (-1.22) That was quite a drop AZO suffered this morning, falling as low as $61.75 and coming pretty close to filling its gap. Since then, we've seen a pretty healthy rebound from the lows, with the stock now bouncing aroudn the $63 level. Right now, I'm using the $53.50 level (site of Friday's intraday low) to gauge action in the play, as this is also the site of the descending trendline that connects the intraday highs from Weds-Friday. This level should provide solid resistance unless there is more to this rally attempt than currently meets the eyes. Those still looking for an entry point can use a rollover below $63.50 (possibly near current levels) to initiate new positions.

  John Seckinger   2/10/03,  2:42:38 PM
Interesting side note: President Mohammad Khatami says that Iran plans to develop uranium mines, and will use their advanced nuclear technology in order to produce electricity. The United States has said it believed Iran was about to embark on a nuclear weapons program.

  Mark Phillips   2/10/03,  2:36:41 PM
PNRA $26.95 (-0.51) Driven by the broad market weakness this morning, PNRA fell to $26.52 this morning before rebounding a bit. Traders that neglected to harvest gains this morning just might get another shot at the lows, with the stock continuing to post lower highs and lower lows since 1pm ET. At this point in the play we aren't looking to initiate new positions, just manage existing ones. To that end, conservative traders may want to lower stops to $27.25, just above the afternoon high. At a minumum though, stops should now be lowered to $27.75, just above today's opening high.

  Jonathan Levinson   2/10/03,  2:34:21 PM
The put to call ratio bottomed today at 1.25 and just printed 1.30. The TRINQ is still low at .41. Little changed on most indicators as the COMPX tests 1290 support off the highs. A lot of Rolaids are probably being consumed for such a narrow day on the indices.

  Steven Price   2/10/03,  2:32:19 PM
Current levels: Dow 7920/OEX 421.66/SPX 835.05/COMP 1291

  Steven Price   2/10/03,  2:31:30 PM
Swing Trade Signals
I am not-so-secretly hoping that we are not stopped out on the short position. I expect the euphoria to fade and for the direction to eventually continue downward. The move to allow the U2s seems an obvious ploy to prolong the inspection process four days ahead of the next inspection report. However, that does not mean we can't climb higher on expectations that it will work. If I was simply trading my own account right now, I might raise my stop loss to allow for a little more wiggle room after the latest announcement, but I am going to let traders determine their own risk parameters and adjust as they see fit. A break-even stop at this point, given the event risk, seems the most prudent to allow variance for both sides..

  Linda Piazza   2/10/03,  2:26:16 PM
On the 60-minute chart of the SOX, the longer-term and more reliable 21(3)3 stochastics have clearly turned up and moved through the 30-level, while the shorter 5(3)3 stochastics have moved all the way to overbought levels on today’s move. Those 5(3)3 stochastics haven’t yet turned down, and the SOX currently trades just above the 21-pma at 264.96. Offering a warning, however, is the five-minute chart, where the 21-pma at 265.73 has been capping movements and helping to form what appears to be a right shoulder of a H&S formation, with the neckline just under 264. Bulls want to see the SOX reject that H&S formation and move above the five-minute 21-pma, even if the formation is on a five-minute chart, while bears want to see the SOX move down below that level and back toward the day's lows.

  Jeff Bailey   2/10/03,  2:18:55 PM
Bank Index Thoughts ... I didn't read your comments last Thursday, but did read this am's comments on the BIX.x. I started following the daily activity of the Regional Bank Holders (RKH) on 1/2/03. High during that time was 109.25 on 1/6 with a low of 97.55 on 2/7; pivot 98.45. Current price +/- 98.58. In addition to RKH, I've been following the top 5 holdings. They are all weak, but not yet showing a short signal. However, I am closely following the puts waiting for a signal. I guess, based on your comments, I should just continue to watch and be ready to move one way or the other. Or, just use these stocks as an overall direction indicator. I guess I'm just trying to comfirm my thought process.

I personally am using the BIX.X as more of an "observation" sector right now. Some have seen me talk about how the market and various indexes/sectors within the market move like a "snake" or an "inchworm." Right now, the relative strength chart tells me the BIX.X. is a STRONGER sector and perhaps the "head" of the snake/inchworm that is "turning back" to see what is pulling on it. Per prior comments, I would view the Semiconductor Index (SOX.X) and more specifically the semi-equipment stocks as a group that is at the "tail" of the snake/inchworm.

Here are some links to past thinking of "snake/inchworm" Link

Here's one where my analysis was "partially wrong." This was written on 02/07/01 Link . There I tried to show COMS as "head", CIEN "mid-portion" and EXTR as "tail." I say partially wrong as the not long after the above was written I showed an intra-day update again on COMX/CIEN relationship with CIEN was classified as "weaker" than 3Com (COMS) at the time. Day's later, the WEAKER CIEN began falling..... "The rest is/was history." Link

Here is more of a "graphical" representation of what I'm trying to get across. Link as it relates to Software and Biotech having larger weightings in the QQQ/NDX.X>

  Kent Barton   2/10/03,  2:18:05 PM
Dude! That shredding sound you hear is Dell tearing up Benjamin's contract. What's next...Is Jared of Subway gonna be busted trying to steal cars?

  John Seckinger   2/10/03,  2:07:03 PM
For a bearish reading, I should have said "five-minute close" under 7881 for the Dow, which did not take place. I keep looking at the ZB03H contract (30-year) for some type of confimation on direction; however, the 111'31 low clearly did not break any significant support (111'00 much stonger, and will most likely not be tested today). If the Dow does move lower and away from its daily pivot, I would like to see bonds rise above 112'16 and make it clear the recent asset allocation is shifting once again. ZB03H currently at 112'07. If the Dow moves higher, I will be surprised with a move above 7948.

  Jonathan Levinson   2/10/03,  2:05:43 PM
Dude! I'm hearing that the Dell guy, Benjamin Curtis, was arrested last night for possession of marijuana.

  Jonathan Levinson   2/10/03,  2:03:26 PM
So far it looks like the neckline retest on the 30 minute COMPX failed, as the bounce topped out just below 1300 and turned back lower, coinciding with a failure at the retest of the longer bull flag upper trendline on the same timeframe. Confused? 1300 was a line in the sand on several different chart patterns, and has held so far. The TRINQ is low and the TICK.NQ is neutral. Yields are holding near their highs, precious metals near their lows. Volatility has fallen off as expected, but QQV is still up .80 on the day, reflecting that a residue of fear remains in the QQQ option market.

  Steven Price   2/10/03,  1:59:58 PM
Swing Trade Signals
In trying to guess were we are headed from here, I'm with John in thinking that a move below 7881 is needed to turn the tide. I do note, however, that the rally found the COMP turned back at 1298, just below the previous 1300 support level. The rally certainly faded, but has not gone into reverse and we are still 100 Dow points above the low. While my overall sentiment is down, I think being stopped out at the 7962 break-even level is still a possibility.

Current levels: Dow 7896/COMP 1290/OEX 420.41/SPX 832.93

  Kent Barton   2/10/03,  1:58:40 PM
For all its nervousness about the approaching war with Iraq, Wall Street seems to think that we're headed for a repeat of 1991, when the allied coalition destroyed Hussein's forces in a matter of weeks. Take a look at the DFX.X and DFI.X defense indexes. While there's not a whole lot of historical information available (the indices were created in 2001), it's certainly interesting to see that they're both trading near all-time lows. Investors don't appear to have much confidence that the recent ramp-up in Pentagon expenditures will be sustainable. This comes in spite of speculation of a 10-year long "nation-buidling" process in Iraq (which would no doubt require the presence of military forces) and increasingly hostile rhetoric from the reclusive Marxist regime in North Korea.

Another sign that investors are expecting a short war can be seen in oil stocks. The strong uptrend in crude futures (the cl03h pushed above $35.00/barrel today!) has not led to any sustainable rally in either the OIX.X oil index or the OSX.X oil service index. One would expect more upside action in oil stocks as the commodity becomes more expensive. In this case, however, traders seem to be thinking that a quick U.S. victory will lead to a rapid deflation of the "war premium." This is exactly what happened in 1991, when oil sold off shortly after the first shots were fired in Gulf War I.

  Jeff Bailey   2/10/03,  1:58:12 PM
The 1:00 PM Intraday Update has been posted. Link

  John Seckinger   2/10/03,  1:29:57 PM
I am still waiting for the Dow to test the area from 7939 to 7948. The daily pivot at 7898 is at the bottom of an aggressive bullish regression channel (five-minute chart from today's lows), and is currently being tested as I type. Only a move under 7881 (high during the first five-minutes) will, in my opinion, put daily sentiment back into bearish mode.

  Kent Barton   2/10/03,  1:26:36 PM
Nordstrom (JWN) $17.04 +0.19: Finding some buyers here after tagging a new multi-month low of $16.75. The stock saw some heavy selling following the breakdown below support at $18.00, so it's not too surprising to see the price action stabilizing with the RLX.X retail index. Short-term traders who entered our Premier Investor short play at $17.98 might want to consider closing the play at current levels, for a gain of roughly 5%. We're looking for shares to eventually reach our downside target of $16.06.

  Jonathan Levinson   2/10/03,  1:20:27 PM
If my memory serves me, do you still feel that GG at 11.10 is a good place to add ?

My chart still shows support in that area. However, I'd want to see at least a bottoming in the oscillators before jumping in. Bear in mind that GG was well below 10 less than 3 months ago. I like to buy low and sell high (though not always in that order). The 11.10 area will be a place to watch for a possible reversal, and for some confirmations of a short term bottom. Here's what I'm looking at: Link

  Linda Piazza   2/10/03,  1:16:27 PM
Current volume patterns show that advancing and declining issues are neck-and-neck on the NYSE and decliners are only slightly ahead on the Nasdaq. Up volume is 1.6 times down volume on the NYSE and about 3.4 times down volume on the Nasdaq. New lows still vastly outnumber new highs.

  Jonathan Levinson   2/10/03,  1:07:57 PM
This looks like a test of the neckline of the h&s pattern on the 30 minute COMPX candles identified last week. The breakdown never reached the projected 1250 level. A break above 1300 COMPX would be a victory for the bulls here.

  Mark Phillips   2/10/03,  12:59:13 PM
AT $44.48 (-0.02) After continuing lower to set a new low of $43.71 this morning, shares of AT have rebounded with the rest of the market, now threatening to go positive for the day. the picture in the XTC index remains about the same as we've seen for the past week, as the index continues to hug the down-sloping 200-dma, now at $429.46. This play still looks good for the bears, and a rally failure near the $45 level could provide another solid entry.

  John Seckinger   2/10/03,  12:55:59 PM
Looking at a daily chart of the ten-year yield, there is a good chance that today is a solid bear trap in yields. Please see Link

  Jonathan Levinson   2/10/03,  12:55:33 PM
We are witnessing either a breakout from a descending wedge on the 30 minute COMPX bars, or a revisit to the upper descending trendline of a bull flag on the same time frame. The TRINQ is very low at .33, the TICK.NQ neutral at +55, and HUI continuing to sell, now down 4.7 to 134.96, with XAU -185 to 72.70. FVX has added to its gains, +6.8 bps and QQQ is returning to its highs of the day, currently going green as I type at 24.16.

  John Seckinger   2/10/03,  12:41:56 PM
Assets clearly shifted from bonds to equities on the news, and a friend of mine at the CBOT sent me an email that read "Steepener". This just means that he is seeing traders looking for bids in the five-year sector and aggressively selling both 10 and 30-year notes. Maybe this explains why bonds were underperforming all session.

  John Seckinger   2/10/03,  12:36:31 PM
It is also reported that Iraq will enact laws within the week banning illegal arms. And I might be hit by an asteroid in the next minute. Same odds of happening (grin).

  Steven Price   2/10/03,  12:34:31 PM
Swing Trade Signals
How quickly fortunes can change. We appear to be headed higher after pulling back from the Iraq rally. I lowered the stop to the break-even level, rather than locking in gains below, or giving us more room to bounce again. It certainly seemed prudent at the time, as we tested support at Dow 7800. If not for the news, the bounce off that level appeared weak and I would have guessed that it was only a matter of time before we failed and headed lower. All bets now off, conservative traders who took lower stop loss suggestions may already be out and aggressive traders can give the reaction more room, possibly above last Thursday and Friday's highs, with a stop just over 8000.

Current levels: Dow 7903/SPX 833.56/OEX 421.10/NDX 966/COMP1291

  Jonathan Levinson   2/10/03,  12:32:26 PM
HUI is printing 136.45 currently, which is below channel support at 137.11 identified earlier on the daily chart. On the weekly view, we see that HUI is still trading with a congestion zone to 125. Shorter term gold bulls should be defensive here given today's action below 137. However, the intermediate to longer term trend remains intact.

  Linda Piazza   2/10/03,  12:28:23 PM
At the risk of boring readers, here’s a chart of the VIX. As Mark mentioned, I’ve drawn my descending line as a “best fit” line. The VIX’s approach to this line and failure to push through on Friday forewarned of a potential rally to relieve oversold pressure today, and I put it up again only because the VIX failed this morning’s test of that level, too. Note that the daily 5(3)3 stochastics are making a bearish kiss, too. It’s possible that today the VIX can still push up through that descending line or the slightly higher one Mark has drawn, of course, so readers might watch the VIX’s behavior as one more clue as to how lasting this morning’s rally will be. Link

  Steven Price   2/10/03,  12:20:03 PM
Swing Trade Signals
If one thing is clear, it is that our news event risk is alive and well. It certainly appeared that the trend remains down, however, we cannot predict when we will get concessions from Iraq or tough talk from the U.S. This just highlights my recent theme - RISK CAPITAL ONLY!

  John Seckinger   2/10/03,  12:13:26 PM
Following news that Iraq will "unconditionally" accept U-2 flights overflights, the Dow is above its daily pivot and next resistance is seen above from 7939 to 7948.

  Jeff Bailey   2/10/03,  12:11:22 PM
The 11:00 AM Intraday Update has been posted. Link

  Linda Piazza   2/10/03,  12:09:16 PM
The SOX, one of the first indices to show strength this morning, now faces its first important test--the 60-minute 21-pma at 265.97. The SOX briefly moved above that level, but has fallen back a bit and now trades at 265.42. Seeing how the SOX behaves near these important tests may give us a heads-up to how the other indices might behave. I still have a long-term bearish outlook, and Friday merely stepped out of the way of a potential attempt at a bear-market rally today, in hopes I could find new entries once that rally plays out.

  Steven Price   2/10/03,  12:03:23 PM
Swing Trade Signals
Not sure if that bounce at 7801 is going to be a new reversal signal, but we are seeing quite an impressive rally and with no real breakdowns this morning, it is possible that we are getting at least a short term reversal. We got a 5 min close above the opening range high and conservative traders can think about closing short positions.

Current levels: Dow 7896/SPX 833/OEX 420.80/COMP 1292.

The news that Iraqwill allow U2 flights is likely the impetus and as I've said, geo-political events can continue to whip us around.

  Jonathan Levinson   2/10/03,  12:01:04 PM
The COMPX has printed a new high at 1290, QQQ at 24.07. The TRINQ is down to .32 on this surge, TICK.NQ positive at 162. Selling in bonds has accelerated, with FVX +3.8 bps.

  John Seckinger   2/10/03,  11:49:28 AM
We never did get that 7800 print in the Dow, and it is interesting that the 30-year did not rally as stocks came under pressure. Lower by '10 ticks to 112'23, the intra-day high in the 30-year is at 113'00. There should be a nice bid once 113'05 is cleared. The objective above 113'05 would be 114'00. Only a move underneath 111'00 will change sentiment towards more neutral readings. I believe we need a 114'00 print to trap some longs as equities might find a short-term bottom at the same time.

  Jonathan Levinson   2/10/03,  11:48:05 AM
Thanks to Wes who has reminded me of the US Dollar Index, which has broken 100.15, up all morning. We see selling in bonds as well with FVX now up 2.4 bps today. The TRINQ is down to .51 and QQQ is back above 23.74, currently 23.81 and unchanged on the day. COMXP is above 1280 and should find near resistance at 1284.

  Linda Piazza   2/10/03,  11:43:37 AM
With its 60-minute 5(3)3 stochastics still turned up, the SOX now trades at 261.03, in the green by $.11. If I squint hard at the screen, I can see the tiniest hinge upward in the 60-minute 21(3)3 stochastics, too.

  Steven Price   2/10/03,  11:31:21 AM
Swing Trade Signals
While the market certainly feels awfully bearish, we are still seeing a ratio of 10:20 ADV/DEC Dow stocks, with still only SBC (-1.11) moving more than a dollar.

  Steven Price   2/10/03,  11:29:29 AM
PNRA PNRA $26.74 (-0.75) PNRA bounced off our $26.50 target, with a low of $26.52. We'll be deciding whether to close this position for a profit tonight based on the day's trade, but we are approaching support at $26.00 and taders can take chips here with a $5 (approx) move in their favor.

  Jonathan Levinson   2/10/03,  11:25:28 AM
The stratospheric put to call ratio, last at 1.63, has not brought us more than a dead cat bounce so far, as the COMPX becomes more oversold. The TRINQ remains bullish at .70, reflecting heavy buy volume in few stocks, with the TICK.NQ at 158. 1277 acted on resistance on the most recent bounce higher, and 23.74 QQQ which served as support on Friday is now resistance today. HUI and XAU are modestly lower today, but seem to have stabilized at their current levels for the past hour.

  Jonathan Levinson   2/10/03,  11:16:48 AM
Leigh has been quoted in Thom Calandra's latest article at this Link

  Mark Phillips   2/10/03,  11:12:41 AM
After we talked last week, I redrew my trendline on the VIX, Linda. I left the old one in place too. I think you've connected the tops of the candle bodies on 7/24 and 10/10, while I've connected the tops of the wicks on those dates, which accounts for the slightly different trendlines. I think they are probably both valid, and I note that the lower trendline (39.50) was broken this morning, while the upper trendline (40.85) will likely be tested later on today, if the decline in the markets continues. The other important level to note is 40.89, which is the intraday high on 1/27. Add in the fact that the PnF chart of the VIX will generate a fresh double-top Buy signal at 41, and I think we can see the significance of the 41 level.

  Linda Piazza   2/10/03,  11:11:49 AM
Currently at 356.91, the Russell 2000 is less than 3 points away from its July 354.11 low.

  Steven Price   2/10/03,  11:11:46 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Yields look to be setting a base as the Dow is finding support at 7800. I'm going to lower the stop to the breakeven mark of Dow 7962. Conservative traders can take a profit here if so desired.

  Jeff Bailey   2/10/03,  11:09:39 AM
S&P Bank Index (BIX.X) 269.00 -0.49% ... This is a DOWNSIDE ALERT (Index trader wrap) Link to me that things are really starting to deteriorate and put added pressure on the S&P 500 and S&P 100 Index.

  Jonathan Levinson   2/10/03,  11:07:49 AM
MSFT has just gone negative, printing a new low of the day at 46.55. The TRINQ is now dead neutral at .96, TICK.NQ -418.

  John Seckinger   2/10/03,  11:06:18 AM
Note: Looking at P&F studies, since the Dow is currently in a column of "O's" and giving a sell signal, a trade of 7800 would move the bearish objective from 7500 to 7400. Only a three-box reversal would keep the bearish objective in-check, while a move to 8200 would nullify this objective.

  Linda Piazza   2/10/03,  11:02:16 AM
The VIX has moved above 40, and above the trendline I’ve drawn on my chart, although Mark might argue that it more properly be drawn a bit higher. More interesting than a brief push above the 40 level and that descending trendline would be a close above those levels.

  John Seckinger   2/10/03,  11:00:02 AM
Per 9:42 post, the Dow has reached 7800 (well, 7801.29) after falling under 7850 and not testing the daily pivot near 7900. S1 is at 7796. Aggressive traders could look for a pause if 7830 is cleared, while support under 7800 is seen at 7750. Why 7830 area? The last wave lower started at 7825 and this is half of the move from 7850 to 7800 - which are based on some long-term retracement studies.

  Jeff Bailey   2/10/03,  10:58:02 AM
Forest Labs (FRX) $49.83 -0.1% ... As you know FRX traded below its 50 day dma. Are you still bullish on those May 55 calls? (I am holding 1 contract purchased at $2.60)

Yes, I'm still bullish and still hold two of these MAY 55 calls, purchased at different times. My net cost is more than yours.

My continued decision to to hold is that I feel I'm risking roughly $580 dollars, is the only position right now that gives me upside under a market rebound condition, but also gives me potential upside if FDA decision for Alzheimer Drug is favorable. I believe in the latter and will continue to hold. Relative strength of FRX vx. SPX is strong, so current observation is that FRX may be trading with the SPX, but not declining at the "faster" rate of speed as the market. Link

  Jonathan Levinson   2/10/03,  10:49:02 AM
The put to call ratio rose to 1.35 for the past half hour as the COMPX sits just above its lows, currently trading 1380. I'm seeing oversold readings on most timeframes with the 10(5) stochastics, and while the bounce has yet to happen, it's unreasonable to expect one to appear sooner or later. However, as John put it, shorts might as well prosper in the meantime. The TRINQ has remained low throughout today, and MSFT continues to stay in the green.

  Steven Price   2/10/03,  10:43:56 AM
PNRA $27.03 (-1.56%) With a low of $27.00, PNRA still holding that support by a thread, but inching closer to the $26.50 target. As I said earlier, profit taking is a definited possibility here, but as we test $27, I'm getting more curious about how far a break will take us.

  Steven Price   2/10/03,  10:41:02 AM
Swing Trade Signals
Not getting much downside momentum here and conservative traders may want to think about taking some chips off the table. So far no bounce, either, so I'm going to continue to observe and maintain the current position. With a low of 7817 in the Dow, 7800 looks like the next critical level, as well as SPX 825/ OEX 416.

Current levels: Dow 7825/SPX 826.36/ OEX 417.00/ COMP 1279

  Linda Piazza   2/10/03,  10:41:02 AM
Early morning trading shows more decliners than advancers on both the NYSE and the Nasdaq, with ratios of .91 and .68, respectively. Down volume leads on the NYSE, with an .81 up/down ratio, but up volume leads on the Nasdaq, with a 1.05 up/down ratio. New lows far outnumber new highs on both the NYSE and the Nasdaq. Volume stands at 188 million shares traded on the NYSE and 250 million on the Nasdaq.

  John Seckinger   2/10/03,  10:39:50 AM
There is a highly-watched economic newsletter out of Washington stating that the U.S. economy would expand 2.7 percent this year. In January, the prediction was at 2.8%. Asked if the Fed would raise rates in 2003, 84 percent said "yes." The article also said both the financial markets and the economy would get a rise if we go to war with Iraq.

  Linda Piazza   2/10/03,  10:33:16 AM
While the SOX and SMH test recent lows, the 5(3)3 hourly stochastics have turned up on both. The 21(3)3 hourly stochastics are deep in oversold territory, but have not yet made an effort to turn up. Stochastics can and do redraw themselves, but bears should be watchful as recent lows are tested.

  Jonathan Levinson   2/10/03,  10:32:01 AM
It looks like MSFT is the lifeline supporting the COMPX.

  Steven Price   2/10/03,  10:30:14 AM
Swing Trade Signals
While we set new relative lows in equities, bears should note yields remain in the green - a red flag for shorts, even though they have been sliding lower throughout the morning.

  Steven Price   2/10/03,  10:26:06 AM
Swing Trade Signals
As we continue to flirt with Friday's lows, the Dow sees an ADV/DEC ratio of 10:20, wiht the only stock showing more than $1 of movement SBC (-1.51). SBC is being sold on talk it has gotten into the bidding for Direct TV.

  Jeff Bailey   2/10/03,  10:22:58 AM
S&P Banks Index (BIX.X) 270.52 +0.13% ... Thanks to several subscribers for pointing out that the www.stockcharts.com symbol for this index is $GSPBK

  Linda Piazza   2/10/03,  10:22:10 AM
Trading at 259.31 as I type, the SOX has dipped briefly below Friday’s 259.43 low. The SMH dipped briefly below the 20.44 January 31 low.

  Jonathan Levinson   2/10/03,  10:21:14 AM
The COMPX has an intraday low of 1278, testing support from Friday. The TRINQ is awfully low for this action, currently .65. It shows very concentrated buying with the TICK.NQ -492. When those few issues, such as MSFT, let go, we could get a whoosh effect.

  Steven Price   2/10/03,  10:17:29 AM
Panera Bread (PNRA) $27.50 (+0.04) OI put play PNRA, entered at $31.55, has found support at $27 for the second straight day, with lows of $27.15 and $27.17. While the chart looks anything but bullish, it is approaching our target of $26.50 and conservative traders may want to think about taking some profits on a $4 move in our favor.

  Jonathan Levinson   2/10/03,  10:13:10 AM
Correction: the reverse repo replaces the old MSP, and so results in a refunding of the money drained on Friday. We therefore have 2.5B returned plus 4.75B added today, for a total of 7.25B in liquidity added today.

  Linda Piazza   2/10/03,  10:12:53 AM
A reader brought up an interesting point this weekend. John had mentioned and I had confirmed that Friday’s QQQ candle was a bearish engulfing candle. The reader had pointed out that bearish engulfing patterns occur when prices have been moving up and the Qubes haven't been moving up. When a candle pattern like that occurs during a downswing rather than during an upswing, it can be a reversal pattern—a last engulfing candle pattern. I’d taken a look at the chart, though, and noticed that the QQQ often produced bearish engulfing candles during downswings and they didn’t tend to be reversal signals. For example, note the bearish engulfing candles on January 30, December 5, and September 17. Those bearish engulfing candles also occurred during downswings. The next day’s candles were often white, but couldn’t be considered reversals. For that reason, I didn’t mention the possibility that it might be a last engulfing candle, even though I did mention that possibility with the VIX’s bullish white engulfing candle. Today is young and the Qubes may change their pattern. If they do, we'll factor that into their behavior if we see those patterns repeat in the future, but for now, the Qubes tend to pause rather than reverse their falls when they produce bearish engulfing candles during downswings.

  Mark Phillips   2/10/03,  10:11:33 AM
AZO $63.45 (-0.70) Jack be nimble, Jack be quick! If you missed an entry into this OI Put play on Friday, you got an early opportunity again this morning as the stock hovered near the $64 level for a few minutes before plunging earthward. While the broad market continues to vacillate near the unchanged level, AZO is picking up speed in its quest to fill its gap down to the $61.20 level. With the stock now below its 10-dma and and the top of that gap, new entries here look attractive, with an initial target of $61. With the solid breakdown under $64, I would suggest lowering stops to $66.25.

  John Seckinger   2/10/03,  10:08:54 AM
A Wall Street investment house is out this morning, suggesting that shots fired in Iraq should result in "a rally in equities and a sell off in fixed income." I do believe that is the general consensus. If that scenario isn't going to happen today or tomorrow, shorts might as well prosper. As noted, a move back above 7900 could have shorts covering temporarily.

  Jeff Bailey   2/10/03,  10:08:33 AM
Index Trader Wraps ... I've "re-done" my Dow chart with this WEEK'S retracement. I left my "thick" red and yellow horizontal levels on from last week, but added a new "green" band where I see correlative levels from the WEEKLY and MONTHLY retracement. Link

I would view this WEEK's range as being between YELLOW and GREEN as a risk assessment and account/trade management view. As the week progresses, bearish trader holding puts can assess RISK to the 8,025-8,056 area, against potential REWARD near 7,750.

  Jonathan Levinson   2/10/03,  10:06:36 AM
The put to call ratio has just printed 1.12 for the first half hour. I no longer have much confidence in the p/c ratio given the huge moves we've been seeing with that transaction from last week. Nevertheless, it's a high and ordinarily short-term bullish reading, but its predictive ability has been "broken" for the past week as we've seen.

  Steven Price   2/10/03,  10:05:33 AM
Steve: Are you using current month in (or at) the money options to trade these swings? Lemme hear, y'hear. Best wishes, Jerry

For swing trading purposes, which is only set-up to cover a few days, I prefer front month ITM options. They capture the moves more closely, with higher deltas. However, they also assume more risk when the trade goes against us, and each trader needs to assess just how much risk they are willing to take and trade accordingly.

  John Seckinger   2/10/03,  10:01:23 AM
It is rumored that SBC will be acquiring DIRECTV for about $10 billion. This compares to the recently failed $11.2 billion merger of DirecTV and EchoStar (DISH).

  Jonathan Levinson   2/10/03,  10:00:49 AM
If my guess is correct, we should see treasury yields limited in their upside today.

  Steven Price   2/10/03,  10:00:24 AM
Swing Trade Signals
We've been on both sides of the even line this morning and Dow followers can look for a 5 min close over 7881 as a bullish sign. That was resistance on Friday afternoon's late bounce and the top of this morning's opening range

Current levels: Dow 7874/OEX 419.59/SPX 831.51/COMP 1286.45

  Jonathan Levinson   2/10/03,  10:00:09 AM
Sure enough, Al Green has just loaded up the cropdusters with 4.75B of fresh money for the markets via overnight repo.

  Jonathan Levinson   2/10/03,  9:58:26 AM
Next near resistance is 1290 COMPX/ 24 QQQ.

  Linda Piazza   2/10/03,  9:58:16 AM
Scanning the VIX chart again this weekend, I noticed again that the VIX had formed and then confirmed a double bottom pattern. I'd commented on that pattern a couple of weeks ago, but forgot it in Friday's discussion. The pattern was formed with November and January bottoms near 26, and was confirmed in late January. The confirming area (between 33.75-34.75) was tested again in early February and held. If the VIX should pull back, I’d watch for a pullback to stop ahead of its simple 200-dma at 33.85, a level that also coincides with the confirming level of the double-bottom pattern. Today, the VIX again tests the descending line that has been capping its upward movements of late. I show that line just a hair under 40, but be forewarned that Mark’s line shows a slightly higher cross, so it’s possible that I’ve erred in drawing the line.

  Linda Piazza   2/10/03,  9:48:50 AM
At 22.43 as of this writing, GE inches below its 22.45 January 31 low and threatens to fall toward its 21.40 October 10 low. It’s already moved below last July’s low. It’s still early in the morning, so it’s possible that we could see a bounce from these levels, but daily oscillators aren’t giving clear clues yet.

  Jonathan Levinson   2/10/03,  9:45:16 AM
The COMPX is fighting with the lower end of the trading range from Friday, and so far remains just underneath it. This coincides with a fib level of 23.91 also from Friday. The TRINQ is at. 46 now, QQV still higher at 42.85.

  Steven Price   2/10/03,  9:43:47 AM
Swing Trade Signals
No sooner did I press send than the upside move began to fade and we failed to get a 5 min close above the top of the opening range. Still in the green, but not as decisive.

  John Seckinger   2/10/03,  9:42:19 AM
The range after the first five-minutes is only from 7881 to 7865, but bears should like the fact that the daily pivot has not been tested as of yet. Selling pressure should pick up if 7850 is taken out, while short covering could materialize if the 7898 pivot is cleared. I don't see much support under 7850 until the 7800 area. Above the pivot, resistance is felt from 7940 to 7950.

  Steven Price   2/10/03,  9:39:52 AM
Swing Trade Signals
Beginning to print highs of the day and we have moved above the opening range highs. This would indicate continued bullishness at this level, unless we take out the opening range lows. It's still early, but the indication is that the short position will be taking some heat.

  Jonathan Levinson   2/10/03,  9:31:42 AM
COMPX gaps up 4 points to open at 1286, TRINQ .19, QQV +2.56 to 43.31.

  John Seckinger   2/10/03,  9:30:26 AM
Intra-day Pivot/Levels for Monday (02/10/03)...

INDU : S2= 7727, S1= 7796, P= 7898 , R1= 7967 , R2= 8070

SPX : S2= 815, S1= 822, P= 834, R1= 841, R2= 853

OEX : S2= 411, S1= 415, P= 421 , R1= 425, R2=431

NDX : S2= 932, S1=945 , P= 964, R1=976 , R2=996

QQQ : S2= 23.17, S1= 23.49, P= 23.97 , R1= 24.29, R2= 24.77

  Jeff Bailey   2/10/03,  9:30:22 AM
The 9:00 AM Intraday Update has been posted. Link

  Steven Price   2/10/03,  9:24:21 AM
Swing Trade Signals
We are currently short a 1/2 position in the broader markets entered at Dow 7949 and 7974, for an average of 7961.50. I gave several suggestions on Friday for different stops, including profit taking ahead of the weekend. Looks like we'll be getting a bounce on the open and I'll be watching possible resistance at 7900, 7950-7975 and 8000. Any of these levels can be used by aggressive traders as points to add, or by conservative traders as stops to get out if broken. I'm going to let things shake out after the weekend and watch the bond market in making a decision whether to add or stay put.

  Jonathan Levinson   2/10/03,  9:22:51 AM
Yields are off their opening highs, with FVX +2.2 currently. QQQ is trading 23.88, down 5 cents from its earlier morning highs.

  Linda Piazza   2/10/03,  9:14:19 AM
I was just discussing a reader’s interesting perspective on the possible reasons behind Germany’s opposition to the U.S. position with regard to Iraq. I've wondered if the respective economies of Germany, France, and Russia might not be one factor for their opposition, too. If you've been reading the early-morning updates, you know that Germany's economy, in particular, is in dismal shape, and today’s economic numbers further confirm that weakness. Schroeder is coming under attack because of his economic policies, and his party is losing support in key districts. Perhaps his opposition is on ideological grounds, but even if he agreed with Bush’s position, I question whether he has the political clout or the desire to take the kind of stand that Blair has taken. We might question at times why we should pay attention to the economies of other countries, but their economies impact ours and also impact other world events. In one example of the relatedness of these various issues, Bloomberg links the decline in U.S. bonds today to Blix's statement that Iraq was being more cooperative this weekend.

  Jonathan Levinson   2/10/03,  8:47:43 AM
We're seeing selling in bonds this morning, with FVX +4.7 bps, TNX +4.8 bps, and TYX +4.4 bps. I will be very surprised if we don't see a repo from the fed this morning to bring some buying into bonds.

  Linda Piazza   2/10/03,  8:37:36 AM
An hour away from the opening of our markets, European markets are mixed. The FTSE 100 is now up 22 points or .61%, while the CAC 40 is down .89 points or .03%. According to CNBC World, the DAX touched a six-year low today, but has since moved off that low and now trades up 13.48 points or .52%.

  Jonathan Levinson   2/10/03,  7:56:39 AM
After withdrawing liquidity from the system via its reverse repo on Friday, there are no expirations today. Any amounts added (or drained) by the fed will be net amounts impacting the markets today.

  Jonathan Levinson   2/10/03,  7:50:55 AM
Gold touched a top of 373/oz overnight while the US Dollar dipped briefly below 99.60, and is now trading above it at 99.70. Equity futures have risen slightly with QQQ trading up 12 cents from its 23.81 close at 23.93 on Island ECN.

  Linda Piazza   2/10/03,  6:58:21 AM
Good morning! Geopolitical developments garner the most attention in early-morning market talk as Germany, France, and Belgium this morning dealt a blow to the U.S. plan to protect Turkey. France vetoed a NATO proposal to guarantee Turkey a defense against a possible Iraqi attack, with Germany and Belgium concurring. Turkey expects retaliation from Iraq, and the U.S. had asked for Patriot missiles and AWACS reconnaissance planes. The French Foreign Ministry characterized the plan as being supportive of a military operation in Iraq, and beat the deadline by an hour with its veto. After the request was blocked, Turkey asked for emergency consultations under NATO’s mutual defense treaty, believed to be the first time any nation has done so. This weekend, Germany and France said they would present a proposal to the U.N. Security Council for more vigorous inspections and to send U.N. soldiers to disarm Iraq, according to a Sunday ABC report, but Colin Powell dismissed their plan. Russia’s Putin reportedly has lent his support to the German-French plan.

Despite these concerns, the Nikkei closed up .44% in Monday’s trading. A January economic number showed that Japanese bank lending was down 4.7% year-over-year, but Monday’s trading resulted in foreign brokers buying more stock than they were selling.

In Europe, British Airways reported net Q3 income of 1.2 pence/share, up from the 13.4 pence/share loss in the same period last year. Sales rose 1%, but the CEO also focused on the company’s attention to cost-cutting measures such as dropping unprofitable routes, cutting jobs, and selling three Boeing jets. In Germany, an economic number released thirty minutes ago showed industrial production down 2.6% in December. Although the German government pointed to the tendency for German workers to take December holidays and indicated that as one cause of the lowered production number, the number far exceeded the expected 1.5% decrease, lending more credence to the believe that Germany is dropping into another recession. Also in this morning’s European news was the report that Roche, the world’s biggest medical-test maker, will buy Disetronic, the world’s second-largest market of insulin-injection pumps. Disetronic’s injection systems division will not be included in Roche’s purchase. As of this writing, the FTSE 100 trades down 5.70 points or .16%, the CAC 40 trades down 17.16 points or .61%, and the DAX trades down .88 or .03%.

  John Seckinger   2/9/03,  7:31:23 PM
The Futures Trader Wrap has been posted: Link

  Jeff Bailey   2/9/03,  7:25:17 PM
The Index Trader Wrap has been posted: Link

  Steven Price   2/9/03,  7:23:36 PM
The Swing Trade Game Plan has been posted: Link

  Steven Price   2/9/03,  7:23:13 PM
Friday'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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