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  Steven Price   2/13/03,  4:00:43 PM
Correction: I refered to short-covering rallies before the last Blix report and Colin Powell's presentation, but listed the wrong dates. They were Jan 27 (morning rally) and Feb 5. Not Feb 5 and Feb 14 (I haven't yet figured out how to see into the future, but I promise my trading record will improve when I do).

  Linda Piazza   2/13/03,  3:58:51 PM
Those who are fans of candlestick theory know to watch for white (or dark) candles that are much bigger than normal candles. We’ve just seen those types of candles on the 60-minute charts. Usually, support can then be found halfway down that big white candle. The halfway mark on the last hour’s OEX candle was 411.92. A move below that halfway mark would be considered bearish, but that move has not happened so far. This information, along with the VIX's retreat from that descending line, may hint at that bounce Steven Price mentioned ahead of Blix's testimony, but technical analysis alone can't do as good a job of predicting market action these days as it might in other times.

  Jeff Bailey   2/13/03,  3:51:08 PM
Dow Industrials (INDU) 7,736 -0.28% or -22.5 points. Has dipped back below WEEKLY S1 of 7,745. If the recent move higher was "too much" for shorter-term bears, look for a Dow pullback to 7,705-7,691 for support into close.

  Steven Price   2/13/03,  3:49:24 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the second 1/4 position when the Dow traded 7744 at 15:47:14. We are now short a 1/2 position, but as I said this is high risk and could be subject to another rally tomorrow morning ahead of or during the Blix testimony at 10 a.m. e.s.t.

  Linda Piazza   2/13/03,  3:46:58 PM
That 21-pma on the OEX 60-minute chart stopped the OEX in its tracks . . . so far, at least. Keep watching.

  Steven Price   2/13/03,  3:40:15 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Looks like that short covering ahead of the Blix report that I was talking about may have just panned out. I'm thinking about adding to the short position, but a candle with that long of a tail could be a reversal signal. I'm going to add another 1/4 only to the short position on a move back below 7749. Go short a 1/4 position at Dow 7744. Consider this high risk and leave stops in place.

  Linda Piazza   2/13/03,  3:33:19 PM
On 60-minute OEX charts, the OEX now races up to test the descending 21-pma at 416.23, just above this morning’s consolidation. 5(3)3 stochastics moved up strongly on this latest move, and 21(3)3 stochastics have also turned up and moved out of oversold territory. If this 21-pma holds back the OEX, the move has at least relieved some of the oversold pressure, but if prices continue to move up, OEX shorts may get scared out of their positions.

  Jonathan Levinson   2/13/03,  3:32:17 PM
1280 has held so far on this advance, but the climb was sudden and strong. TRINQ now .75, neutral bullish, and the TICK.NQ is +210. QQV has fallen, though not much, now 43.24. We'll see how this level does as resistance- 1280-82.

  Jeff Bailey   2/13/03,  3:27:26 PM
McKesson (MCK) $25.00 -5.41% ... released for trading. Would look 2-months expiration out in the $25 puts.

  Jeff Bailey   2/13/03,  3:11:09 PM
Buy Program at $prem.x $0.54

  Linda Piazza   2/13/03,  3:11:05 PM
With a low of 407.79 today, the OEX came close to that 407 possible support that I’ve had marked on my charts for months. (See my 11:12 post.) That adds to the nervousness I’m feeling today as the VIX challenges that descending line and as the SOX refuses to fall through Monday’s low. I note that the VIX has fallen below yesterday’s 39.42 resistance on the five-minute charts, which some might have expected to provide support today. None of this means that you should immediately exit all bearish trades, but it does mean that you should, as always, make appropriate account management decisions if this bounce should carry the markets up further, especially if you’re holding February options. My overall outlook is still bearish and I still target much lower levels, but those holding February options now look to lose three days of premium decay this weekend, and that should be factored into decisions about waiting out a bounce until the downward movement resumes.

  Jeff Bailey   2/13/03,  3:10:37 PM
Doing this for first time ... Bond market is closed now, with 10-year YIELD ($TNX.X) finishing out at 3.871%. I've been "plugging in" the YIELD (H,L,C) levels on this YIELD in recent sessions, but not sure if this is as "significant" as what we've seen in stocks and indexes. I have correlative YIELD for the 10-year at DAILY S2 and WEEKLY S1 of 38.81 or 3.881%.

This gives me "impression" based on levels that current Dow levels in play are 7,688 (DAILY S2) and (WEEKLY S1) of 7,745.

  Jonathan Levinson   2/13/03,  3:04:36 PM
There appears to be something to this latest bounce, which is currently trying to chew through the 1268 resistance zone (current 1269 price). TRINQ has fallen to neutral at 1.16 and QQV is lower at 23.49. TICK.NQ still -155. 1280 looks like stronger upside resistance from here.

  Jeff Bailey   2/13/03,  2:59:51 PM
McKesson (MCK) $24.25 -8.24% ... Stock lower by $2.00 from 02:00 PM EST and currently halted with news pending.... Disclosed in 10-Q that the U.S. Attorney's Office for Souther District of Illinois is conducting an industry wide civil and criminal investigation into the marketing, sale, and Medicare reimbursement of enternal nutritional products. MCK indicated that it and 2 of its employees are subjects of the investigation. Link

Bearish triangle was triggered at $25.00. According to Professor Davis' study, pattern profitable for bearish trader 87.5% of time, average gain of 33% over 2.5 month time span. If resumed trading above $23.40, looks short/put with target of $16.75, which would be 33% decline from $25.

  Jeff Bailey   2/13/03,  2:47:36 PM
Johnson&Johnson (JNJ) $51.30 +3% ... stock jumping $2.00 in last 10-minutes and gives Dow a lift from the lows. Bloomberg reports that Medicare chief Thomas Scully told a congressional panel that JNJ's Cypher drug-coated stend is likely to win FDA approval within the next month.

  Jonathan Levinson   2/13/03,  2:37:19 PM
Very light volume for the COMPX, 889M, vs. 1.2B for the NYSE. This seems to support Jeff's observation of the BPINDU being bottomy... I expect light volume in the middle of a decline, higher volume near the bottom. The BPNDX is nowhere near the low levels of the BPINDU.

  Linda Piazza   2/13/03,  2:34:50 PM
Here’s an excerpt from the London Times online, sent by a helpful reader. Note that I’d mentioned in an earlier posting (now deleted) that the incident had occurred at Heathrow, when instead it had been a different UK airport. A man has been arrested under the Terrorism Act after being stopped with a live grenade at Gatwick Airport. The 37-year-old Venezuelan arrived on a British Airways flight from South America and the grenade was found when his luggage was searched. He was held by Sussex Police and was being taken to a central London police station where he will be quizzed by anti-terrorist detectives. The man arrived on flight BA 2048 from Bogota in Colombia. The flight made a stop in Caracas in Venezuela. It was not known in which city the man got on.

  Jonathan Levinson   2/13/03,  2:29:58 PM
"Exquisite" is an adjective that comes to mind. The decline we're seeing is exquisitely gradual, a very orderly decline. The QQV is being kept low for this reason, still below 44. TRINQ is staying below 2. HUI and XAU are near their highs and FVX is near its low. Just no velocity on the selling- very gradual.

  Linda Piazza   2/13/03,  2:26:49 PM
Volume stands at 895 million shares for the NYSE and 854 for the Nasdaq. Adv/dec ratios are .43 for the NYSE and .47 for the Nasdaq. Down volume is now 4.7 times up volume on the NYSE and 4.2 times up volume on the Nasdaq. New highs/new lows figures show a 17:184 ratio for the NYSE and a 30:129 ratio for the Nasdaq. Those new highs/new lows patterns have been a leading indicator of late, and now I'm watching them carefully, as I know Jeff does. I'm wondering now if they're not looking a bit overextended, as they were in the opposite direction during the January rally.

  Mark Phillips   2/13/03,  2:18:35 PM
Russell 2000 (RUT.X) $352.01 (-3.37) This index is getting clocked again today, now trading below the July intraday low of $354 and looking really ugly. If it breaks under $350, then I'd look for the other indices to accelerate their decline. Correspondingly, that pickup in selling will liklely lead the VIX to finally break out over the 41 level and things could really get exciting...at least for the bears.

  Jonathan Levinson   2/13/03,  2:10:17 PM
Israel is calling up its air defense reservists: Link

  Jonathan Levinson   2/13/03,  2:04:43 PM
Looks like we got our h&s breakdown on the 1 minute COMPX. GE is printing new lows of the day here at 21.92. TRINQ 1.99, TICK.NQ -422.

  Jeff Bailey   2/13/03,  2:03:03 PM
The 1:00 PM Intraday Update has been posted. Link

  John Seckinger   2/13/03,  2:02:42 PM
Least resistance still seems to be lower. The SPX is under 912, the 30-year well above 113-05 at 113'22 and up a full point on the session, and the Dow still near the lows of the session. The yield curve is flat, but that is most likely because of the corporate squeeze as noted in my 1:44 post.

  Mark Phillips   2/13/03,  1:57:55 PM
TRMS $40.24 (-0.96) That pattern of higher lows came to an end yesterday, and the selling has continued today, knocking the stock back nearly 2.5%, while the BTK index is "only" off 2%. I really don't like the current weakness, as TRMS has now given back all its recent gains and is right back at the $40 support level. Aggressive traders might consider a small position on a rebound from this level, but I would rather pull the plug and move on.

  Jonathan Levinson   2/13/03,  1:56:52 PM
We might be seeing a h&s breakdown on the 1 minute COMPX charts here, to get us out of this 5 minute candle bear flag.

  Steven Price   2/13/03,  1:55:58 PM
Swing Trade Signals
As we head further into oversold territory, we have to be aware of the short covering rallies we have seen the last time we had a U.N. report. It happened as Hans Blix spoke on February 5 and again as Colin Powell spoke on Feb 14. This is one of the reasons I am only risking a 1/4 position down here. I am weighing two options that traders can use in the current environment.

1) Close out the short position on any sign of a rally and wait to get back in if that rally fails.

2) Hold the small position through any rally and add to it on the rally failure.

Right now I am favoring the second, but that could change. I suggested an earlier alternate stop of 7710, but looking at the 50% 5 min. retracement John mentioned earlier at 7712, a stop above that level might be a better alternative.

  Linda Piazza   2/13/03,  1:50:50 PM
A reminder: The markets will be closed Monday, February 17. The bond market will close at 2 p.m. ET tomorrow, Friday, 2/14, and will be closed for the full day Monday, February 17.

  Kent Barton   2/13/03,  1:46:05 PM
Tractor Supply (TSCO) $32.60 +1.27: Launching higher on no apparent news. Some bears may have decided to take profits after this morning's failure to produce another relative low. The stock had suffered some large losses over past week, so it's not too surprising to see some short-covering above psychological support at $30.00. A 10-minute chart shows that TSCO has moved above short-term resistance at $32.50. There's additional overhead resistance in the $33.00-$33.50 region.

  Jonathan Levinson   2/13/03,  1:44:32 PM
There a bad tick on the COMPX chart that has thrown off the stochastics on the shorter timeframes.

  John Seckinger   2/13/03,  1:44:10 PM
In the bond pits, it looks like there are a number of corporate bonds coming to the marketplace; therefore, traders are forced to short bonds and go out to either 10 or 30-year. Well, bonds rally and these same traders get squeezed and bonds continue to go higher. I only bring this up because there is a chance that bonds will continue to rally today if stocks rally. Just something to think about.

  Jonathan Levinson   2/13/03,  1:42:11 PM
Zooming out, I see 1280 as stronger resistance on the COMPX if current levels get taken out to the upside.

  Jonathan Levinson   2/13/03,  1:36:25 PM
The COMPX is trading 1266, just below nearterm resistance of 1268 on the 5 minute chart. The TRINQ has eased back to below 2., currently 1.88, TICK.NQ -262. A print above 1268 could imply further upside, but so far this bounce has been creeping upward with little momentum. FVX still low -9.6 bps. A move higher would surprise many traders watching the descending channels on the 5 and 10 minute candles.

  Mark Phillips   2/13/03,  1:34:01 PM
AZO $62.85 (-1.38) Finally! AZO has been holding above the $63 level for most of the morning, but that support is finally starting to crack. While we might get another weak rebound as the bulls try to get back over that level, I'm now eyeing the the $62.50 level and then the lows from earlier in the week at $61.75 as the next targets on the downside. Still looking for that gap to fill down to the $61.20 level.

  Steven Price   2/13/03,  1:26:28 PM
Swing Trade Signals
Traders looking for intraday signals can watch the sinking 21-pma on the 5 min chart. With only one exception, it has put a ceiling on the SPX/Dow/OEX all day.

  Kent Barton   2/13/03,  1:25:22 PM
BTK.X Biotech index (317.74 -7.69): following the NASDAQ to fresh multi-month lows. This sector weakness has pushed IDPH ($29.19, -1.07) below what had been solid support at $30.00. Premier Investor's short play was triggered at $29.99. The stock gave a triple-bottom p-n-f sell signal up at $31.00 and does not have any immediate underlying levels of support. In other words...It's looking pretty ugly for the bulls. We'll now be watching for $30.00 to provide resistance.

Meanwhile, the past two days of losses in AMGN have left our OI/PI long play un-triggered. This pullback might actually present an entry point if shares bounce near the ascending 50-dma at $50.59.

  John Seckinger   2/13/03,  1:24:40 PM
Touching on the retail sector, UBS Warburg analyst Richard Jaffe downgraded Gap Inc. (GPS) to "neutral" from "buy," citing a transition period for new management and an uncertain outlook despite improved holiday performance. Jaffe also cut Limited Brands Inc. (LTD) and Pacific Sunwear of California Inc. (PSUN) to "neutral" from "buy." Shares of GPS are lower by 3.29%, LTD down 3.47%, and PSUN down 4.13%.

  Jeff Bailey   2/13/03,  1:10:19 PM
S&P Banks Index (BIX.X) 265.23 -0.81% ... has traded WEEKLY S1 of 266.10 today and signal of weakness. Has not yet traded DAILY S2 of 264.50 at this point, with day's low of 264.94. Of pivot matrix index/sectors I show each night in Index Trader Wrap, only one to not yet trade DAILY S2.

  Jeff Bailey   2/13/03,  12:57:24 PM
Boots&Coots (WEL) $0.53 +10.41% ... getting upside alert here on this "oil service" company that provides services to put out oil well fires. This is level where stock was trading just prior to an announcement that it had received notice of default on 01/31/03.

Action here per prior comments hints of "heightened" concern from market on potential "scortched earth" policy in Iraq, on thinking Saddam might blow up oil fields prior or during a war.

Disclosure: I currently hold a bullish SPECULATIVE position in WEL

  Jonathan Levinson   2/13/03,  12:56:24 PM
The COMPX failed to retake 1265, as I watch new lows print for C, JPM, and IBM. TRINQ is 2.95, showing moderate selling pressure, TICK.NQ -407, QQV back above 44, +3.1 to 44.52.

  Jeff Bailey   2/13/03,  12:47:07 PM
NASDAQ-100 Index (NDX.X) 940.86 -1.66% ... right near session lows of last 10-minutes here. Only index we follow in pivot matrix that hasn't yet traded WEEKLY S1 of 393.60. Session low for NDX has been 939.84.

Never "know" for sure that some institutional programs aren't set up to buy this level.

Speaking of programs... I have yet to get a "premium alert" from my HL Camp settings today.

  Jeff Bailey   2/13/03,  12:43:24 PM
QQQ $23.40 -1.76% ... trades our short-term trader's target of $23.35 from yesterday, which is also our WEEKLY S2. Short-term traders can lock in gains here, or move stop-profit lower, just above $23.60.

Quick check on the Dow shows session lows, so "weakness leading weakness" here and strategy of trailing stop in QQQ might allow for further downside. I also like the "odds" of further QQQ downside after SOX break lower.

  Jonathan Levinson   2/13/03,  12:40:42 PM
A new rush of selling, with TRINQ now 2.83, TICK.NQ -556, and 1265 violated to the downside so far. C also hit a day low, and QQV barely budged, +2.13 at 43.52. HUI is near its highs of the day, FVX -10.4 bps confirming equity weakness.

  Linda Piazza   2/13/03,  12:39:47 PM
The SOX is finally dropping toward Monday’s 258.56 low. In my earlier posts, I’ve referred to this as a low from last week, but it was actually from Monday. The SOX is at 259.84 as I type.

  John Seckinger   2/13/03,  12:38:30 PM
7626 here we come. There is still no reason to look for a move higher (maybe if 7712 is cleared), and my account confirms my bearishness. However, I do want to bring up an article I wrote back on December 18th. In the first chart, I show the potential massive Reverse H&S formation. Just something to remember. Please see Link

  Jeff Bailey   2/13/03,  12:37:18 PM
Novellus (NVLS) $27.64 -1.91% ... making a move lower here after holding intra-day support at $27.75, which is/was a level I just couldn't figure out for buying at. Move here comes after SOX.X broke to morning low. NVLS looks good short/put still, with stop above $28.85 for swing-traders. Target of $25 near-term.

  Jeff Bailey   2/13/03,  12:31:06 PM
Semiconductor Index (SOX.X) 260.77 -1.38% ... session low here. Lots of semiconductor stocks have been holding some "impressive" intra-day lows, but weakening a bit. SOX.X action should have some NDX/QQQ weakness coming in.

  Steven Price   2/13/03,  12:29:54 PM
Steve, 1-3 strikes ITM meaning, Mar, Apr, or May options? I'm a little brain dead today and need clarification, thanks. John

Let me clarify - when I say 1-3 strikes ITM, I mean vertically (i.e. if DIA trading 77.00, then puts at 78-80)

  Mark Phillips   2/13/03,  12:19:32 PM
AT $42.95 (-0.65) And the beat goes on, with OI Put play AT trading a new low for this move, breaking the $43 level for the first time since October 15th. Note that the XTC index finally kissed its 200-dma good-bye a couple days ago, accelerating its decline, which is likely helping to pressure AT lower as well. Look for next support in the XTC index to come in around $395-400, which shoudl coincide with potential support for AT near the $42 level.

  Jonathan Levinson   2/13/03,  12:13:26 PM
News of a plane crash in Colombia, possibly containing 5 americans.

  Jeff Bailey   2/13/03,  12:11:47 PM
Pivot Matrix ... Short-term traders may have noticed that Dow Industrials (INDU) 7,673 -1.09% is only large index that has really traded its DAILY S2 of 7,687 so far.

SPX and OEX have come within "decimals" of trading their DAILY S2s.

Meanwhile NDX is just now "darting" lower from 945 to 942 and looks to seek out DAILY S2 of 942.30. If QQQ/NDX start "leading" some technical weakness to the downside (they are doing it on a percentage decline basis) then look for Dow, OEX and SPX to follow.

If NDX/QQQ start firming a bit at their DAILY S2 like Dow, OEX and SPX have done, then short-term bearish trader closes out QQQ, waits for some further signs of levels being broken, then lines up to short on rally back to what would have been current exit point. Should indexes bid back to their S1 or Pivots, can look short/put again.

Note: This would be for more active and short-term traders.

  Jonathan Levinson   2/13/03,  12:09:50 PM
Traders were discussing the duct tape recommendations, and noted that if we duct tape ourselves into an airtight room with plastic sheeting, there will be no way to obtain fresh oxygen. I'm not up on bomb shelter design, but I share John's sentiment. I miss pre 9-11 too.

  Linda Piazza   2/13/03,  12:09:10 PM
At 261.43 as I type, the SOX sits just above the day’s low of 261.37.

  John Seckinger   2/13/03,  12:07:39 PM
Bizarre note: My parents just called from Pittsburgh, wondering if I had purchased Duck tape in case of a biological attack. I said "no," and they have not either. Another surreal moment to mark on the calendar. What will the next phone call be, "John, do you have your surface-to-air missles ready?" I miss the days before September 11th.

  Jonathan Levinson   2/13/03,  12:07:25 PM
QQV dipped to 43.44, but the TRINQ has stayed up there today, still in neutral territory at 1.28, TICK.NQ -308. Very little strength on this latest bounce attempt. FVX now -6.2bps. None of this looks at all bullish to me. HUI is back up near its highs of the day, +4.09, and the USD has been smoked, with dx00y at 99.65.

  Jeff Bailey   2/13/03,  12:03:16 PM
The 11:00 AM Intraday Update has been posted. Link

  Linda Piazza   2/13/03,  11:53:08 AM
The Dow Jones Transportation average dropped below its July 2090 lows this morning and current measures 2073.96. There’s light support below at about 2060. Daily 5(3)3 stochastics show a slight upward hinge from oversold territory, but that 37.48 ADX shows that we can’t trust “buy” signals from the stochastics just now.

  John Seckinger   2/13/03,  11:52:25 AM
What are your thoughts on Gold?

Response: After doing a number of retracement studies, I like the XAU index above the 70.96 to 71.89 area. Levels above include 73.25 (current level) and 75.95. The index is currently higher by 2 points on Thursday, and reward to 75.95 with risk at 71.89 isn't fantastic; however, the support level below is more intermediate term, while resistance is more short-term. Therefore, the real reward should be for a test of either this week's R1 at 78.4 or back to 80 and a significant resistance level. Is today a turning point in the XAU? It definitely looks that way. Looking at shares of GFI, I would like to see a move above 13.05 first. Or a test of solid support from 12.08 to 12.21. Reward is 14. Looking at shares of GG, Resistance zone from 12.22 to 12.35, while a support zone is below from 10.85 to 11.18. Shares are at 11.94 currently, but has a bullish bias.

  Linda Piazza   2/13/03,  11:39:03 AM
Several of us have posted daily charts of the VIX showing that descending line that the VIX is once again challenging today. Here’s a five-minute view of the VIX, showing an interesting trendline: Link By the way, if you haven’t yet read Mark Phillips’ article from last night’s newsletter, here’s an interesting perspective on the VIX. Link

  Jonathan Levinson   2/13/03,  11:38:45 AM
I'm watching QQV drop from its highs, now 43.77 as the market grows "quiet" near its lows. This could be setting up for another bounce attempt on COMPX 1273. Difficult to read so far. FVX is slipping more, -4.5 bps now, and this is reassuring to a bearish trader.

  Jonathan Levinson   2/13/03,  11:29:13 AM
Never made it to 1273 on the bounce. TRINQ is back to 1.11 and TICK.NQ -348. QQV still above 44, currently +.42. Precious metals are holding most of their gains but off their highs. FVX is back down to -4 bps on the day.

  Linda Piazza   2/13/03,  11:25:12 AM
As the VIX drops below 40, I’m again watching the SOX to see how it’s behaving since it’s diverging from the other indices. It did drop out of that bear-flag pattern on the five-minute chart this morning, and has since risen to test the bottom of the channel. So far, the slanting-lower 21-pma is capping upward movements of the SOX and it hasn’t been able to break back above the former supporting line of the bear-flag pattern. However, I’ve also got a longer-term descending regression channel marked on the five-minute chart. The SOX bounced from the lower line of that channel this morning. Here’s what I’m watching: Link

  Steven Price   2/13/03,  11:20:44 AM
When you go short, which index do you play and how deep in the money and how far out do you go? Tom

I personally like the slightly ITM DJX or DIA options in the front month for short-term trades. The bid-ask isn't too wide and the risk is somewhat limited if you are not too far ITM. Still, I stick to 1-3 strikes ITM to capture more movement with a higher delta. Traders are free to use any option they want depending on their time frame and risk level. The further ITM you go, the more risk you take, as premiums are higher. In the current market, which I consider to be high risk due to geo-political events, that is a definite concern. Also, by going further out in time, a trader can avoid getting whipped around on short-term news events.

  Jonathan Levinson   2/13/03,  11:14:56 AM
A bounce on the COMPX has us off the lows, with TRINQ back below 1 and COMPX above 1270. I see 1273 as first weak resistance, but given the lack of strength today, we'll see how it does at that level. Word that Heathrow Airport has been closed for security concerns.

  John Seckinger   2/13/03,  11:12:12 AM
It is nice to see Elliot Wave and myself finding some of the same levels (808 to 812 area in the S&P 500). In fact, I remember that Elliot Wave wouldn't let 9077 be cleared to the upside if long-term bearish. Made a ton of sense via other technical analysis as well, including retracements and pivot analysis. It is rare that I have seen the bottom of the fitted retracement area taken out (7666), and this lines up well with the bulls 'last line of defense.'

  Linda Piazza   2/13/03,  11:12:07 AM
I’ve had OEX 407 marked on my charts for a long while, as it’s been the site of opens, closes, lows, and highs quite often over the last year. For example, during late September and early October, a couple of candles opened or closed in this area, defining it as support, support that then became resistance as markets fell toward October lows. For that reason, I’ll be watching carefully as/if the OEX approaches 407.

  Steven Price   2/13/03,  11:07:44 AM
Swing Trade Signals
For conservative traders, alternate stops are 7710, which is just above the recent rally highs and 7765, above today's high. Either of these fit the argument that if we are going to bounce, traders can get out of the way and wait for a rally failure. As I've said, there is definite risk in shorting an oversold market, which is why I am only risking a 1/4 position at this point.

  Steven Price   2/13/03,  11:04:37 AM
Steve, FYI Elliott Wave analysis has the last line of defense for the bulls as: 808-812 SP500 407-410 OEX 7585-7593 DOW Keith

Thanks Keith!

  Linda Piazza   2/13/03,  11:02:01 AM
Volume patterns show selling, as expected. Adv/dec ratios show a .54 number for NYSE-traded issues and a .51 number for the Nasdaq. Down volume is 3.8 times up volume on the NYSE and 2.66 times up volume on the NYSE. These numbers can be sustained. What’s particularly interesting, though, is the number of new lows on the NYSE. Figures show 138 new lows and only 12 new highs, so that this ratio is beginning to be overextended, perhaps. New lows number 85 on the Nasdaq, with 20 new highs. Volume is light, with 308 million shares traded on the NYSE and 349 million on the Nasdaq.

  Jonathan Levinson   2/13/03,  10:57:05 AM
Claims of a new tape from Osama Bin Laden are circulating: Link

  Jonathan Levinson   2/13/03,  10:55:39 AM
Spot gold is up 3.20 to above 355/oz, HUI +4.27, XAU +2.7. Near the lows of the day on the COMPX, the TRINQ is up to 1.46, which is beginning to reflect neutral to light selling pressure, TICK.NQ -431. FVX is near its lows -3.7 bps. Still looking for 1365 COMPX. QQV is just above 44.03, adding some premium to those QQQ options.

  Steven Price   2/13/03,  10:54:02 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the 1/4 short position when the Dow traded 7675 at 10:51:44. Risk factors include the VIX hovering near resistance and oversold conditions; also Bilx testimony tomorrow - leading to a 1/4 position only. In our favor is the breakdown below S1 and S2, as well as overwhelming downtrend.

  Mark Phillips   2/13/03,  10:53:54 AM
PII $47.24 (-0.57) Well, it certainly looks like holding onto our PII put play on Tuesday was the right move, with the stock getting sold pretty hard the past couple sessions. We didn't quite get there yesterday, but today the stock is breaking below the $47.50 level. While there is the possibility of support in the $46-47 area, I'm now eyeing support near $44.30 as the next solid level that might support a solid rebound. Stops should now be trailed to $50, as the 10-dma (which has provided solid resistance for the past month) has now fallen to $49.44.

  John Seckinger   2/13/03,  10:52:52 AM
Using "fitted retracements," the lowest retracement level is 7667. Underneath this area, the only support seen is 7626. Resistance is seen 7712, the 50% retracement of the 'fitted retracements.'

  Linda Piazza   2/13/03,  10:49:35 AM
At 262.71, the SOX tests the bottom of a bear-flag pattern (on the five-minute charts) that’s been containing its movements today. The SOX had been worrying me because it is staying above recent lows while the other indices are making new recent lows. The SOX still remains above its 258.56 low from last week, so still shows divergence from the other indices, but may be breaking through that bear-flag pattern as I type.

  Steven Price   2/13/03,  10:47:31 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Got that 5 min close below S2 and resistance at the 19.1% fitted retracementat 7684, let's go short a 1/4 position at Dow 7675. Stop set at 7870, just above yesterday's high.

  Jonathan Levinson   2/13/03,  10:45:16 AM
We have a low print at 1269 COMPX, just 4 points off the h&s target from our 15 minute pattern. A break below 1265 brings the next downside target of 1225 into view. No need to get there quickly if at all, but that the next significant support level.

  Jeff Bailey   2/13/03,  10:45:03 AM
Dow Industrials (INDU) 7,676 -1.05% ... taking out morning lows here, and below DAILY S2. This has Dow vulnerable to WEEKLY S2 of 7,626.40 by session's end. Dow should NOT trade back above DAILY pivot of 7,788.80.

Per Index Trader Wrap last night, OEX at 410.17 and just below the 411 level discussed. If we were to see stagnation here for next hour or so, then OEX take out morning low of 409.82, could get a little "ugly" to the downside of WEEKLY S2 by tomorrow's close.

  Linda Piazza   2/13/03,  10:44:26 AM
At 40.40, the VIX now has moved slightly above the descending line that’s been capping recent movements. The next hurdle is for the VIX to clear the 40.48 February 10 high and then the 40.89 January 27 high. It soon faces resistance between 42-42.80, but the confirmed double-bottom pattern predicts an eventual move higher than that. Today’s movement is difficult to predict since recent tests of that descending line have been unsuccessful and have prompted brief, weak rallies in the equities.

  Mark Phillips   2/13/03,  10:44:10 AM
AZO $63.54 (-0.69) Whatever the catalyst for yesterday's rebound in shares of AZO, it seems to have faded from view this morning, as the stock is back under $64, and looking to fill Tuesday's gap in the near term. Traders that took advantage of the failed bounce just below $65 yesterday are looking good this morning. We'll need to watch for possible support near $63 (bottom of Tuesday's gap), but I'm still looking for a complete fill of the late January gap down to $61.20 before seeing any strong support.

I got an email from a reader last night, pointing out the fact that the exponential 21-dma (currently $64.82) has been capping rallies the past couple days. That observation lines up well with that descending trendline from the January 30th high, which has now fallen to $64.85. For those traders currently in the play, I would recommend lowering stops to $65 at this point.

For what it's worth, competitor AAP really didn't seem to have anything significant to say that would affect our play, as the company reported 43 cents per share of earnings, a penny ahead of consensus estimates, guiding essentially in line for Q1, with estimates of 70-75 cents per share, vs. consensus estimates of 75 cents.

  Jonathan Levinson   2/13/03,  10:43:06 AM
HUI and XAU continue to catch a bid, XAU +2.4 to 73.64, HUI +3.5 to 136.75.

  Jonathan Levinson   2/13/03,  10:40:43 AM
Further rumour that all UK airports on high alert.

  John Seckinger   2/13/03,  10:40:12 AM
Geopolitics: Rumor that 2 men were arrested at Heathrow International Airport under the terror act

  Steven Price   2/13/03,  10:30:04 AM
Swing Trade Signals
I lost my charts just as we took out the Dow and SPX S1 levels. I certainly wish I had not been stopped out on the short during Al's speech on Tuesday, but not much to do about it now. Those traders still short can feel pretty good about the drop below Dow 7700. It does not look like I'm going to get the bounce I was looking for. I am concerned that we could get a rally during the Blix testimony tomorrow if it appears the U.S. will get a coalition together, particularly after such an extension over the past couple of days. The last bounce to 7700 appears to be faling and aggressive traders can add to positions on that failure. Id like to see abounce to 7800, which has been previous support and the bottom of the previous range and then enter there, but I'm willing to risk a very small position on a move below the S2 that we bounced at earlier. I'd like to see a 5 min close below S2 (7687 and then I'll be looking for an entry trigger)

  Jonathan Levinson   2/13/03,  10:27:10 AM
I'll apologize up front for the length of this letter. I don't know how it "feels" to be in Montreal away from the terror threats, but the mood here (Tampa) has definitely deteriorated in the last week. Maybe other cities are more relaxed, but we are close to 3 "possible" targets (Disney world, 60 miles, Busch Gardens, 5 miles and the biggest, Mac Dill Air Force Base, 15 miles). While I will still travel and haven't changed my life at all, I like to give you a perspective about my daughter's (13) life.

All school field trips are cancelled. Yesterday the school was evacuated (5th time this school year) because of a bomb threat. Each student is supposed to put together a "disaster kit" to bring to school. (Not easy to do right now - no duct tape or plastic to be found in my area. Bottled water is scarce.) They are having weekly "evacuation" drills.

I tell you all this to get to another point. With such tension out there right now, where can this market possibly go but down? If the tension is so bad here, can you imagine what it feels like to be in New York where they actually lived the nightmare of 9/11 while the rest of us just watched?

On top of this we still have Iraq and North Korea, plus the economy. As hard as I try, I just can't make a case for the bulls.

Barb, I agree. However, the thinking has always been to "buy on the bombs, sell on the bugles." In the meantime, I am sticking to the charts, and praying for a peaceful outcome to the ongoing crises. Bull or bear, we're all people, and nobody wants tragedy. These situations are terrifying, and are no doubt contributing to market weakness. But the markets were struggling anyway, and this external "noise" only adds confusion such as we've been seeing. Thanks for the info, which doesn't appear readily from the headlines we're following.

  Linda Piazza   2/13/03,  10:22:41 AM
At 353.25, the Russell 2000 is below its July 354.11 low.

  Jeff Bailey   2/13/03,  10:21:35 AM
QQQ $23.60 -0.92% .... from yesterday's following of Tuesday night's Index Trader wrap... should look for resistance to be building now at/near the $23.82 level, which is 61.8% retracement of WEEKLY. Traders short from $24.20, just before the "France Advance" that took the Q's to $24.33 can lower a stop from $24.65 to just above WEEKLY 50% retracement of $24.11.

  John Seckinger   2/13/03,  10:20:27 AM
The intra-day low was S2 in the Dow. Who says pivot analysis doesn't work? (grin). Of course, in this market environment, a trader only has to wait only a few minutes for selling pressure to take out the lows. The 30-year got above the 113'05 resistance level at 113'07, but profit-taking took hold and the contract is higher by 9 ticks at 112'31. I think equity bears will get even more aggressive if 113'05 is taken out again.

  Jonathan Levinson   2/13/03,  10:14:53 AM
Complete absence of strength on the COMPX. The TRINQ is rising very slowly, now 1.22. This tells me that we're getting decent "traction" to the downside. The TRINQ at levels above 3 or 4 indicates a near term bottom, but we're nowhere near that. Breadth seems to continue to favor further downside. I have the 15 minute h&s target at 1265 COMPX, but after that I see an "airball" zone to 1225.

  Linda Piazza   2/13/03,  10:13:40 AM
Despite major indices trading a new recent lows, the SOX holds above its 258.56 low from last week.

  Jim Brown   2/13/03,  10:12:33 AM
Those same readers should be happy about AMZN today. We finally got the break on the Feb $22.50 put play. Just in time.

  John Seckinger   2/13/03,  10:12:26 AM
The 'vertical' move lower continues, as the Dow quickly reaches the 7700 level. Remember, if S2 is hit at 7688 (five-minute close underneath), it will be time to go to "fitted retracements" of the first five-minute period. Technically, there is still no reason to look for higher prices.

  Jim Brown   2/13/03,  10:10:13 AM
Dow just broke my target of 7700. All my Editors Plays readers should have sold those DJX $85 puts this morning when our target was hit.

  Jeff Bailey   2/13/03,  10:10:09 AM
General Electric (GE) $22.06 -0.8% ... Jeff: I saw your comment yesterday regarding GE's daily pivot levels and when it broke its short-term support shorted 200 shares. What do you think about selling out the money puts at strikes near weekly or monthly levels?

This is a great idea and use of the pivot analysis formulas. I haven't taken the time to calculate weekly/monthly levels for GE, but I'd try and look for correlative levels from your calculations, and look to tie in with retracement at point/figure data. Bearish count on GE is $18. Perhaps looks to see if anthing ties in with that level at this point.

  Jonathan Levinson   2/13/03,  10:10:08 AM
The put to call ratio has come in at .83. On this latest dip, the TRINQ crept up to just above 1.10, now back to .95. This looks like a drift lower so far, TICK.NQ -469. HUI and XAU continue to find bids.

  Jonathan Levinson   2/13/03,  10:04:00 AM
News of Iraqi movement of explosives toward the south, speculation that it's intended for bombing oilfields.

  Jonathan Levinson   2/13/03,  10:01:04 AM
The fed has just added 4.75B via 7 day repo. This is a net addition, and could find its way into equities or bonds.

  Jonathan Levinson   2/13/03,  9:59:29 AM
The QQV is "rallying", up 2.65 to 44.07, showing the first fear spike I'v seen in many moons in QQQ options. FVX is down 3.3 bps, and the bounce at 1275 has been shallow so far- just a pause. The TRINQ is bullish at .85, and it's either a bullish divergence or just a lack of significant selling yet. TICK.NQ at -349 says the buying is concentrated, as we've been seeing lately.

  Jeff Bailey   2/13/03,  9:58:29 AM
American Electric Power (AEP) $19.10 -4.2% ... weak once again. No news that I can find. On January 24, AG Edwards upgraded to "hold" at $25.11 based on valuation is last news I see from Briefing.com.

Yesterday, I rolled out of my Aug. $25 puts to August $20 puts. Same number of contracts, but wanted to lock in some gains, free up a little cash as position got a little too big for my business plan.

  Linda Piazza   2/13/03,  9:56:37 AM
Today, the VIX again tests that descending line that’s been capping its movements since early last July. It’s tested and actually moved above that line (the way I have it drawn) several times in the last several weeks, but hasn’t had a close above it, so don’t draw too many conclusions about this test as of yet.

  Linda Piazza   2/13/03,  9:53:34 AM
I entered a bearish OEX play yesterday afternoon, but closed it out and took my profit at the end of the day, afraid of the overextended markets. It also appeared that opinions might be shifting regarding the U.S.’s position on Iraq. Blix is reputedly going to say that Iraq has been in violation in its weapons program. We heard those rumors about France. Yesterday, I read an editorial that hinted that Germany’s stance in opposition to the U.S. worries some of Schroeder’s critics and may cause more problems for this official, already unpopular for his tax policies. I don’t usually daytrade, but each of us should be managing our accounts with care right now, as none of us can predict which rumor will next hit the markets and when the next bounce or downdraft will ensue. Be careful out there and don't overleverage either direction.

  Jeff Bailey   2/13/03,  9:53:10 AM
Treasuries seeing some buying this morning. 10-year futures contract (ty03h) $114'315 at upper end of Bollinger band, but breaking above January 24th relative high of $114'310. This has 52-week high of $115'175 from December 31st in play.

Only reason I see to buy Treasury at this level is if I perceive the risk in equities and other investments "too risky."

  John Seckinger   2/13/03,  9:52:13 AM
From my "Developing a Bias" article a few weeks back (which was bearish), it was shown that the SPX would look to test 812 if 839 was broken. This 812 level is getting close, with the SPX index currently lower by 2.19-points to 816.50. The 'support zone' mentioned was from 804 to 812. If curious on how I came up these levels, please see Link

  Jonathan Levinson   2/13/03,  9:49:59 AM
Weakness in the SOX could be attributed to CHTR's announcement that it is laying off 14% of its workforce.

  Jonathan Levinson   2/13/03,  9:48:07 AM
HUI and XAU finding bids, JPM seeing selling. So far, there's no bounce on the COMPX at the lows- just a pause.

  Linda Piazza   2/13/03,  9:47:35 AM
The VIX has just moved above 40.

  John Seckinger   2/13/03,  9:45:13 AM
Once again, Treasuries are finding bids as weak asian stocks and continued flight to quality is seen. Washington Post is reporting ground troops in Iraq, and this accompanied with a solid 10-year auction yesterday is keeping shorts away. Moreover, Freddie Mac is doing a buyback between 10 and 11 a.m., and I would not be surprised to see bids coming in to bonds as hedges are lifted.

  Steven Price   2/13/03,  9:44:41 AM
Swing Trade Signals
Note S1s and could give us a bounce are close below (see John's 9:30 post)

  Jonathan Levinson   2/13/03,  9:44:11 AM
Weakness in the COMPX, current low at 1276, but the TRINQ is still neutral at .93, TICK.NQ -393, QQV +1.88 at 43.3. Finally seeing some volatility pickup.

  Steven Price   2/13/03,  9:43:38 AM
Swing Trade Signals
Right now I am trying to balance risks of enetering short here with where I would place a stop. With the July low in the Dow at 7532, that shuold be the initial target on positions from this level. Unfrotunately, I also think the most logical stop loss based on the most recent strong resoistance is 8000, which doesn't make for a very good risk/reward ratio. I would love to see a failued bounce at a previous day's ressitance level to get a better idea of where to place a stop that allows for a bounce, but also gives a good risk ratio. I do think we are headed down from here and aggressive traders can enter on that last failed bounce at the top of the opening range if they choose. I am still hoping for a better entry but that could change if things don't improve.

  John Seckinger   2/13/03,  9:40:13 AM
With the first five-minutes behind us, the Dow has traded in a range from 7740 to 7757. Solid support is felt below at 7700. The "support zones" for Thursday are not as obvious as seen yesterday, but the daily S1 is at 7723 and should be monitored. Resistance is felt at the daily pivot of 7789.

  Jeff Bailey   2/13/03,  9:37:46 AM
The 9:00 AM Intraday Update has been posted. Link

  Linda Piazza   2/13/03,  9:33:01 AM
Yesterday, the Russell 2000 closed at 355.38, a dollar above its 354.11 July low and roughly equal to its late-September support. Below these levels, there’s light but probably not consequential support at 347, and then it’s a dash back down to October lows near 325. The Russell hasn’t yet risen to retest the 366 former support from the continuation pattern from late January to early February. Candlestick theory and common sense reveals that this index is overextended to the downside and perhaps needs a bounce to relieve oversold pressure before falling toward the lows predicted by its H&S pattern. That may not happen, but proper account management might dictate not being overleveraged in bearish plays on the small caps.

  Steven Price   2/13/03,  9:31:11 AM
While Intel is trading higher, JP Morgan's comments on semiconductor stocks include: " recommend against purchase of U.S. semiconductor stocks due to sluggish end demand, high valuation and our belief that semiconductor fundamentals will erode in the first quarter of 2003, resulting in negative pre-announcement."

  John Seckinger   2/13/03,  9:30:06 AM
Intra-day Pivot/Levels for Thursday (02/13/03)...

INDU : S2= 7688, S1= 7723, P= 7789 , R1= 7824 , R2= 7890

SPX : S2= 809, S1= 814, P= 823, R1= 828, R2= 837

OEX : S2= 409, S1= 411, P= 416 , R1= 418, R2=422

NDX : S2= 942, S1=950 , P= 964, R1=971 , R2=985

QQQ : S2= 23.43, S1= 23.62, P= 23.98 , R1= 24.17, R2= 24.53

  Jeff Bailey   2/13/03,  9:29:47 AM
Intel (INTC) $15.15 ... stock gaining $0.21 to $13.36 after Wall Street Journal reports that Intel is betting that its new Manitoba chip, which combines functions that usually requires at least three or more different wireless chips, can make up for Texas Inst. (TXN) and Qualcomm's (QCOM) lead in the wireless chip area.

  Steven Price   2/13/03,  9:25:11 AM
Swing Trade Signals
We are really not seeing much of a bounce at all after the sell-off of the last couple days. As I have said, I'd rather wait to enter short on a bounce since I don't want to chase a big drop and get caught short near the bottom. However, we aren't really getting that bounce so far. Traders still short from the aggressive stop loss on the last signal (1/2 short) are looking good right now, but might want to trail their stop and harvest some gains if we do bounce. I'm going to let the opening range settle in before deciding whether to chase.

  Linda Piazza   2/13/03,  9:20:02 AM
Since bouncing from early lows, European markets struggled to stay positive on the day, but currently trade down, with the FTSE 100 currently down just over 21 points, the CAC down almost 8 points, and the DAX down almost 3 points.

  Jonathan Levinson   2/13/03,  9:09:22 AM
Retailer May Department Stores Co. (NYSE:MAY - News), parent of Lord & Taylor and Filene's, on Thursday reported its eighth straight quarter of declining profits, dragged down by sluggish holiday sales.


  Jonathan Levinson   2/13/03,  9:06:54 AM
The fed has just rolled its 28 day repos expiring with 4B added so far. There are no other expiries today, so we'll wait for the 10AM update to see if Al Green adds any more.

  Jonathan Levinson   2/13/03,  9:01:54 AM
I expect to see COMPX resistance at the falling 50 period MA on the 10 minute candles at 1290.

  Jonathan Levinson   2/13/03,  8:54:43 AM
Buying is coming into bonds, with FVX -3.8 bps, TNX -.8 bps and TYX -2.3 bps.

  Jonathan Levinson   2/13/03,  8:52:24 AM
The Commerce Department (news - web sites) said retail sales fell 0.9 percent in January after a revised increase of 2.0 percent in December. The January decline was larger than the 0.6 percent drop expected by analysts. However, retail sales excluding motor vehicles and parts soared 1.3 percent, the largest increase since matching that in September 2000 and beating expectations for a 0.5 percent rise.


  Jonathan Levinson   2/13/03,  8:38:38 AM
HUI closed 6 points above its 200 dma, which is at 126. The 200 day EMA is at 122. Both XAU and HUI are on sell signals on the stochastics and macd, and for this reason I'm not adding to my own positions. However, above the 200 dma, these continue to be in a bull market. On the last equity rally to the 200 dma, we saw the COMPX break its 200 day sma but not the ema. I will therefore watch both, but the EMA seems to be the maginot line here. I prefer to have buy signals before I buy, and will watch for a crossover of the 13 dma by the 5 dma, which tends to give reliable signals for longer term positions.

  Jonathan Levinson   2/13/03,  8:21:37 AM
The US Dollar Index got sold to the 99.80 level and is now back to 100.20. Gold got whacked, trading down to 348/oz, but is back above 352/oz. Futures are up this morning, with QQQ trading 23.90, NDX 963 and SPX 820.

  Linda Piazza   2/13/03,  6:32:29 AM
Good morning. On expectations that the U.S. retail sales numbers will be down when released today, exporters such as Sony, Toshiba, and Hitachi fell in Asian markets. Car manufacturers led the decline. Prompted by a second day’s climb in Mizuho Holdings, banks rallied, but that wasn’t enough to offset other declines. The Bank of Japan began a two-day meeting today, but is not expected to change its monetary policy. With the Iraqi and North Korean situations also weighing on the Nikkei, it closed down 64.51 points or 0.7%. Other Asian markets also fell.

Banks also attempt to lead the FTSE 100 up from its early morning losses. Many banks report this week, and the theme has been relief that they’re not doing worse after having lowered expectations previous to this week’s reports. Barclay and ABN reported no expectations of a sustained economic recovery and said that slowing economic growth could negatively impact their earnings, but banks still lead the sector gainers in the FTSE today. Car manufacturers across Europe suffered after a report that showed Western European car sales dropped 7%. Currently, the FTSE 100 trades down only 7.60 points or .21%, the CAC 40 is down 8.63 or .31%, and the DAX is down 1.84 or 0.07%. The FTSE 100 has moved up 45 points from its lows, the CAC is about 28 points up from its lows, and the DAX is up about 30 points from its lows. It was only a few weeks ago that I was reporting each day that the DAX was threatening to break the psychologically important 3000 level, and now this morning's low was 2535.04. The CAC also broke through that psychologically important 3000 level, but did so later than the DAX and has maintained higher levels since, with today's low at 2727.03.

Geopolitical developments continue to dominate the news and to impact global economies. In Germany, many begin to fear that Schroeder's strong stance against the U.S. may impact exports to the U.S., a major portion of the German economy. In addition, reports of a second, longer Osama bin Laden audiotape are coming in this morning. In this one, he supposedly predicts that this year, he will become a martyr. It’s anticipated that Hans Blix, chief United Nations weapons inspector, will report that Iraq failed to reveal its banned weapons, a report that many fear will bring war closer.

  Jeff Bailey   2/12/03,  11:57:31 PM
The Index Trader Wrap has been posted: Link

  John Seckinger   2/12/03,  11:57:23 PM
The Futures Trader Wrap has been posted: Link

  Steven Price   2/12/03,  11:57:14 PM
The Swing Trade Game Plan has been posted: Link

  Steven Price   2/12/03,  11:56:32 PM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

Disclaimer: Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in many cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.


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