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  Jeff Bailey   2/19/03,  6:06:31 PM
Pivot Analysis Matrix for tomorrow. Link

Interesting comments from Jonathan Levinson at 04:38:07 that perhaps explained reasons for traders buying Treasuries throughout the session. This coupon pass first hit the news wires around 10:38 a.m. EST, having a total size of 2.016 billion. The last coupon pass was on February 10th, and then December 3rd. The coupons bought were from 16-21 months, and the Fed has a history of extending duration as the week progresses. This is bearish for stocks, and helps explain John Seckinger's 10:57 post that was just after today's coupon pass. The late rally from the 03:00 hour in equities may have been short covering in stocks because of the perception that bond traders were not buying fixed income securities. Note: When the Fed is actively buying Treasuries, it is pumping some liquidity toward the banks. John, thanks for your help (grin).

  Jonathan Levinson   2/19/03,  4:43:48 PM
Just spoke with a travel agent who's being notified of a risk of flight cancellations due to preemption of commercial flights to transport military personnel.

  Jonathan Levinson   2/19/03,  4:38:07 PM
Sounds like Reuters has been following my postings in the Market Monitor. Didn't I characterize it as a "whopping" 15B yesterday?

NEW YORK, Feb 19 (Reuters) - The Federal Reserve said on Wednesday it added $994 million in permanent bank reserves by buying U.S. Treasury coupons dated June 30, 2004, through November 30, 2004, only its second such purchase this year.

Delivery was set for Thursday.

Earlier, The Fed added $9 billion in temporary reserves through a round of overnight repos, a net drain of $6 billion after the central bank had added a whopping $15 billion of overnight repos a day earlier.

But analysts at Wrightson Associates said the Fed would likely need Thursday to add the biggest amount of temporary reserves since the emergency actions after Sept. 11, with the amount of repos in place falling from $34.5 billion to just $12 billion. Another coupon pass injecting permanent reserves might also be necessary.

  Jonathan Levinson   2/19/03,  4:35:07 PM
Al Green added permanent bank reserves around 3PM today, in the amount of 994M.

  Jeff Bailey   2/19/03,  4:19:34 PM
OmniVision Tech. (OVTI) $16.53 -4.17% ... stock jumps to $17.71 in after-hours after reporting EPS of $0.17 (excluding charges), which was 7-cents better than consensus estimates for $0.10.

  John Seckinger   2/19/03,  4:02:34 PM
Note: Tomorrow we will have Initial Claims, PPI, Trade Balance, LEI, and the Philadelphia Fed report. Claims should rise from 377 to 385k (not good for the economy), while the PPI is expected to increase from -0.1% to 0.5%. The core-component is expected to rise from -0.5% to 0.1%. Economists expect a narrowing trade balance; -38.6Billion from -40.1 bin, and the Leading Economic Indicators most likely fell from 0.1% to 0.0%. The Philly Fed is the wildcard. Economists are looking for a fall from 11.2 to 11.0, but I have a feeling that number will be closer to 9.0. Just my opinion.

  Linda Piazza   2/19/03,  3:55:52 PM
Never sure exactly where to place the H&S neckline for the $SOX, I’ve drawn two possible necklines. Yesterday, I noted that the SOX opened at the lower of my two possible necklines and closed at the higher of the two. Today’s action pushed prices slightly above that higher neckline, only to fail at that level. It hasn’t yet fallen below the lower one, now crossing at about 280.79. The behavior near the higher of the two leads me to believe it’s the more credible of the two possible necklines, but should the SOX test that lower possible neckline and bounce from there, I’ll perhaps have to rethink my conclusion.

  Jonathan Levinson   2/19/03,  3:52:23 PM
There is fear in the markets today, regardless of what the volatility indices are saying, with bonds and gold closing at their highs, and spot gold reopening in the green again, challenging the 350/oz line.

  Linda Piazza   2/19/03,  3:44:27 PM
Reaching a low of 425.13 this afternoon, the OEX did appear to bounce from near its 21-pma on the hourly chart. That MA currently measures 425.26 (although it was slightly lower last hour when the OEX reached its afternoon lows) and still slants strongly upward. I guess I would have been safer predicting a bounce from that slanting MA this time than I was when I was a new writer for the Monitor and the price action proved me wrong within moments.

  Steven Price   2/19/03,  3:44:07 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggerd on the 1/4 short position when the Dow traded 7989 at 15:43:12

  Jeff Bailey   2/19/03,  3:43:01 PM
The 3:15 PM Intraday Update has been posted. Link

  Steven Price   2/19/03,  3:40:26 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Struggling at 8000, go short a 1/4 position at Dow 7989. Set stops at 8170

  Jonathan Levinson   2/19/03,  3:40:17 PM
Back up from the lows and into the trading range again, as the TRINQ drops back to 1.35 and the TICK.NQ rises to positive territory. HUI and XAU have retraced some of their gains, but are still well up on the day. QQV and VXN remain down .71 and .76 respectively. Once again, hours' worth of declines were erased in approximately 10 minutes, showing that the greatest fear in the markets at the moment is of missing the next rally.

  Linda Piazza   2/19/03,  3:39:16 PM
Here’s an update of the daily OEX chart that’s been posted several times since January. Blue lines (one now out of vision) had marked similarities between January’s oscillator configurations and those near the May tops last year. The January configurations were more congruous to those in May than to any other period I found in recent months. I was looking at positions of the various oscillators in relationship to each other, and noting such factors as whether the MACD was cycling up from a deeply oversold level or rather from a brief dip below zero, as was the case in this instance. The green lines noted similarities in the three-candle formations from last week and from the June 13-17 period, along with similarities in the configurations of the oscillators. While the similarities didn’t predict that the OEX would decline today, the similarities did suggest that a decline was possible, despite the bullish-looking candlestick formations, the upward move in the stochastics and RSI, and the bullish kiss on the MACD. Trading profitably requires pattern recognition. While I’m not using the congruent elements to predict that the OEX will continue to fall, I did use it to avoid drawing too many bullish conclusions from those bullish-looking formations.Link

  Steven Price   2/19/03,  3:36:49 PM
Swing Trade Signals
That was quite a reversal we jsut saw and I'm not sure exactly what to make of it. John's guess seems best so far and I'm going to stay on the sidelines for the moment.

  Mark Phillips   2/19/03,  3:26:18 PM
Here's an interesting story I found this afternoon. We've all heard at various times in the past couple years about various shareholder lawsuits related to the IPO frenzy that engulfed the NASDAQ a few years ago. The WSJ reported that a federal judge has ruled that many of the shareholders who filed more than 1000 lawsuites alleging fraud in IPOs during the technology bubble can proceed with those claims. The phrase in the report that caught my attention was that the judge said the plaintiffs presented "a coherent scheme by underwriters, issuers, and their officers to defraud the investing public". Wow! That certainly doesn't sound good for the defendants at the outset does it? Among those defendants are 55 underwriters, 309 tech-related issuers and thousands of individuals. Cast a wide net, and you're bound to catch something, I guess. If anything, I think this has the potential to exert more downward pressure on the Brokerage sector in the months ahead.

  John Seckinger   2/19/03,  3:23:54 PM
It is a coincidence that the Dow sold off until the bond market closed, only to rally as bond traders exited the trading floor (grin)? As Jeff says, "A funny thing happened when the bond market closed."

  Mark Phillips   2/19/03,  3:18:06 PM
Today looks like nothing more than a slow, unenthusiastic give back of a portion of yesterday's gain. I've struggled all day to find any meaaningful developments in the OI play list and here we are less than an hour from the close and the only thing I see is that most are drifting along near their lows for the day, similar to the major indices. The big question is whether we'll get another rebound tomorrow or if this oversold bounce has already run its course. Having no conviction either way, I'm happy to be going home flat tonight.

  Steven Price   2/19/03,  3:16:53 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Back through 7950, cancel the last signal for a 1/4 short position. I am going to look for a better entry.

  Steven Price   2/19/03,  3:13:59 PM
Swing Trade Signals
We traded below the Dow S1, tried to bounce to 7950 and failed. It doesn't appear I will get my entry at 8150 and I am going to start with a small short position here on the failed bounce.

Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Go short a 1/4 position in the broader markets at Dow 7944. Set stops at Dow 8170

  John Seckinger   2/19/03,  3:07:04 PM
Had to open up my computer and play with some connections, but should be fine now. A subscriber asked about the significance of SPX at 839. Using long-term, intermediate, and short-term retracements, I achieved a range from 839.50 to 848. Under 839.50, the objective was about 812. Well, we already got that objective last week. The SPX is now back inside this range (840), and a move under 839.50 should have bears trying to duplicate the last move lower. The subscriber also wondered where the contract could be by Friday. Then I would turn to pivot analysis. The weekly pivot is at 828, and this will most likely be a bears' objective if 839 is cleared. The article is found at this Link

  Linda Piazza   2/19/03,  3:05:27 PM
While other intraday 21-pma’s have turned down on the OEX, the hourly 21-pma has not yet down so. If I squint, I can just imagine that it’s flattening a slight amount. That hourly 21-pma now crosses at 424.47, and should be an important test for the OEX if prices should fall that far this afternoon. Some technical analysts theorize that prices are likely to bounce from a MA that slants so strongly, but the last time I mentioned that possibility, shortly after I began writing for the Monitor, prices moved cleanly through the MA within five minutes of my writing the post, so I’ll make no such prediction today!

  Jonathan Levinson   2/19/03,  3:03:44 PM
An Iranian plane carrying 290 passengers on board has lost contact with air traffic control, according to government officials. The plane was travelling between two cities in southeastern Iran. A government official said it is not yet clear whether the aircraft has crashed.

The bond market is closed, with FVX going out at its low of the day. The COMPX has 1320 support with its low of the day so far at 1323. The TRINQ at 2.83 is showing moderate selling pressure, while QQV remains negative, down .64 on the day. Still no fear in the QQQ option pits.

  Linda Piazza   2/19/03,  2:57:30 PM
Never recovering after the U.S. markets opened, European markets all closed in the red today. The FTSE 100 closed down 71.20 points or 1.91%, the CAC 40 closed down 79.44 points or 1.91%, and the DAX plummeted a whopping 115.49 points or 4.21%. Here’s a three-month chart of the DAX from Bloomberg.com, showing its precipitous fall of late. The chart has not yet updated to show today’s close, moving back toward February lows. Link

  Kent Barton   2/19/03,  2:53:51 PM
BellSouth (BLS) $21.74 -1.30: BLS has broken support at $22.00. Investors are bailing out ahead of tomorrow's crucial FCC ruling on whether or not to change regulations that force the Baby Bells to give network access to competitors at wholesale rates. Technically, it looks like the bears could really sink their claws into BLS if the government's decision is not viewed as favorable. The daily chart shows possible support at $20.00, with more substantial support down at the September lows near $18.50.

  Jeff Bailey   2/19/03,  2:47:14 PM
S&P 500 Index (SPX.X) 839.51 .... Trades DAILY S1 here. Follow's S1 trades in DIA, SPY, NDX, QQQ and BIX from earlier this afternoon.

Dow Industrials (INDU) 7,941 -1.23% traded its S1 of 7,941.60 just minutes ago.

  Linda Piazza   2/19/03,  2:44:59 PM
The Russell 2000 continues to fall without having closely approached its simple 22-dma. Daily RSI has clearly rolled, while 5(3)3 stochastics have yet to do so. Currently at 359.44, the Russell has moved below the 360 level that does have slight historical significance, but probably more psychological than historical significance. Last week, the Russell dipped to 351.78, a few points lower than its July 24 low of 354.11. Currently, the Russell is less than 10 points from retesting those levels again, so that it’s possible that the Russell might give the markets a first glimpse of the way the indices might act when approaching last week’s lows.

  John Seckinger   2/19/03,  2:39:34 PM
With the Dow unable to make it up to the 7969 level (7967 the last relative high on five-minute chart), this consolidation at 7950 is more bearish than anything else. However, the SPX index has not went into the 839 area (currently down 10.55 to 840.62). The objective for the Dow is still only 7925, so risk reward at current levels is not that appealing. When the bond market closes in 20 minutes, we should get a nice move. Yield curve not currently giving any indication of equity movement.

  Steven Price   2/19/03,  2:36:24 PM
Once again the VIX comes into play. While the repeated failures at 40% last week gave us an indication that bears were running out of steam, we once again bounced off 35% as the bulls couldn't hold gains adn the rally hit at least a temporary ceiling.

  Jonathan Levinson   2/19/03,  2:30:45 PM
News that the US national deficit will run up against its legal limit tomorrow, possibly forcing Congress to take evasive action.

  Jonathan Levinson   2/19/03,  2:24:54 PM
The Semiconductor Holdrs (SMH) is printing a low of the day. Kudos to Morgan Stanley with its rush of upgrades on the sector this morning. Dan Niles would be proud!

  Linda Piazza   2/19/03,  2:22:53 PM
I’m watching a potential H&S formation on CSCO’s hourly 5(3)3 stochastics. Oscillators can form patterns just as prices can. While I wouldn’t make trading decisions based on an oscillator pattern alone, especially with the twitchy 5(3)3 stochastics, a completion of that H&S pattern might alert me to the possibility of weakness ahead. Link

  Steven Price   2/19/03,  2:20:41 PM
Trimeris (TRMS) $42.17 (+0.37) OI call play TRMS is just holding onto earlier gains, in spite of the sinking market around it. I like the relative strength here, but would probably not receommend new entries at this level, with resistance stting above at $43.00 from the last rally attempt. The sinking 50-dma coincided with that level ($43.01) on thelast rally attempt and now sits at $42.84. I would hold off on entering until we break above $43.00 more decisively, possibly at $43.50.

  Jonathan Levinson   2/19/03,  2:19:10 PM
The US Dollar Index has just slipped below 100.00.

  Jeff Bailey   2/19/03,  2:12:13 PM
The 1:00 PM Intraday Update has been posted. Link

  Jonathan Levinson   2/19/03,  2:08:00 PM
Volume is very light again today, with 844M shares traded so far on the NYSE, and 757M on the COMPX.

  Kent Barton   2/19/03,  2:03:36 PM
EBAY $76.69 +0.20: Here's a stock that falls into the "one that got away" category. Last week we had EBAY on our OI/PI bullish play list. After seeing a lot of sideways action it looked like a bounce from the ascending 50-dma might be a good entry point. However, the moving average was never tested and our long play was never activated. Fast forward a few trading days, and EBAY is trading at new 52-week highs! Traders who managed to buy the dip last week have been rewarded with some rapid gains, thanks in large part to the broad-based equity rally. The stock is showing good relative strength today after tagging a morning high of $77.00.

The weekly chart shows that there's possible resistance at $77.50 (late-2000 highs), $79.25, and $82.00. As tempting as today's breakout is, long entries at this point are probably better left to aggressive traders. The bulls are sitting on some large gains, and with the daily stochastics (5,3,3) approaching the overbought extreme its easy to see how some profit-taking could set in at current levels. The most prudent strategy would probably be to wait for a pullback and rebound from the $75.00 level to offer a potential action point.

  Jonathan Levinson   2/19/03,  2:02:01 PM
The COMPX bounced at 1326 and is currently back at 1328, as the TRINQ, TICK.NQ and QQV settle back toward neutral territory. I'm looking for a lower high at 1333 COMPX to confirm today's weakness.

  John Seckinger   2/19/03,  2:00:24 PM
As noted at 1:28, the 7940-50 level appears to be holding. The bond market does not close for one more hour, so there could still be some buyers of bonds looking to sell a rally in equities (may not be seen until the 7969 area). The SPX index is currently at the bottom of a range between 839 to 848 (841.62), so bears might now be waiting until the low of 840.72 is taken out before getting involved again.

  Jonathan Levinson   2/19/03,  1:49:10 PM
April gold has just closed at 350/oz, +5.70/oz.

  Jonathan Levinson   2/19/03,  1:42:49 PM
The COMPX has just broken 1328, now headed for 1318-20 support. The TRINQ is up to 1.87 on this move, showing selling pressure but far from extreme. TICK.NQ -441 shows broadening negative breadth, and FVX is sinking slowly, now -4.4 bps as more money bids bonds. QQV is up .15- apparently they're still snoozing in the options pits.

  Linda Piazza   2/19/03,  1:41:17 PM
The OEX now sits right on the mid-point level of yesterday’s larger-than-normal white candle and appears to be moving below that level as I type. (See my 12:10 post.) A close below this level is bearish, but we didn’t need a big white candle to tell us that today's action is bearish, did we? It's nice to have visual and quantifiable confirmation, however.

  Steven Price   2/19/03,  1:35:27 PM
Swing Trade Signals
Heading to new lows of the day again and bears appear to be in control. I've still seen little to suggest anything bu bearish plays today. In spite of the last few days' activity, bullish percents never bounced far enough to reverse higher and I'm beginning to wonder if I am going to get a shot at the 8150 range I was hoping to short.

  Kent Barton   2/19/03,  1:35:05 PM
Air Products (APD) $39.08 -0.73: Looking awfully weak here, trading at new 52-week lows. The stock has consistently found resistance at its descending 21-dma. That moving average kept a lid on yesterday's intraday rally above $40.00. Now that shares are breaking down, we'll now be looking for APD to move towards the 2001 lows in the $32-$33 region. Traders thinking about adding to short positions could watch for a volume-backed breakdown below $39.00. Another failed rally at the 21-dma ($40.77) might also yield an entry point.

APD is currently a Premier Investor short play. Link

  Jeff Bailey   2/19/03,  1:32:57 PM
Indexes at their lows of the session right here. All lined up. SPX and OEX have just barely violated sessio lows. DOW and QQQ matched equally. Looks lower here.

10-year YIELD ($TNX.X) 3.898% just off its low YIELD of the session, which was 3.885%.

  Jonathan Levinson   2/19/03,  1:32:54 PM
Spot gold is now up 6.50 and HUI is up 3.98, XAU 1.65 as the COMPX breaks to new lows of the day. I'm hearing rumours that Britons are being advised to leave Kuwait.

  John Seckinger   2/19/03,  1:28:08 PM
With the Dow trying once again to fall underneath the 7969 level, support below is seen from 7940 to 7950. This area incorporates the 200 EMA on a five-minute chart, the daily S1 reading, and the half-way mark to the next significant retracement area of 7925.

  Jonathan Levinson   2/19/03,  1:26:56 PM
QQQ has moved down to 24.93 as the COMPX prints new lows at 1331. The TRINQ is up to 1.36, TICK.NQ down to -327 showing broader selling. FVX remains steady -4 bps on the day.

  Jeff Bailey   2/19/03,  1:23:13 PM
Boots&Coots (WEL) $0.33 -2.94% ... "big" cross of stock has been going on this morning at $0.34 and looks to have printed out 596K in last 5-minutes. This is bit of intra-day volume spike and looks suspicious here.

  Steven Price   2/19/03,  1:11:15 PM
Swing Trade Signals
As the Dow has crept higher in the last hour, we broke the 5 min 21-pma for the first time since dropping below 8000. The descending 50-pma on the same chart now sits at 7996 and that should be our next test. We have been setting marginally higher highs and higher lows, but as I type, that pattern could be changing. I am resisting the temptaion to short here, looking for a better entry a little higher, closer to 8150, but continued failure below 8000 on the bounce looks bearish.

  John Seckinger   2/19/03,  1:09:59 PM
I read an article on the likelihood of recession in the next six months as it relates to Metropolitan areas. Atlanta has a 32% chance of a recession, Boston 32%, Chicago 30%, LA (33%), NYC (22%), and San Fran at 26%. On a state-wide basis, Vermont has a 34% chance, while Minnesota only has a 17% chance of a recession.

  John Seckinger   2/19/03,  1:04:55 PM
Patiently watching the Dow here, as the 22 EMA on a five-minute chart is actually trying to hold the blue chips up (average currently at 7985). The 50 EMA is above at 7995 and is usually a stronger average. Bonds have sold off slightly from 113'19 to 113'10, so we could see another short-term pop here. Nothing conclusive as of yet.

  Linda Piazza   2/19/03,  1:02:21 PM
Indecision again: once again, the candles on the 60-minute OEX chart grow smaller than the previous candles, indicating indecision as market participants can’t decide or are unable to drive prices lower or higher. The 21-dma still slants upward and hasn’t yet begun to flatten, and the 5(3)3 stochastics attempt a bullish kiss from below the 30 level while the 21(3)3's slope down gently and as-yet unconvincingly from overbought levels. Perhaps there will yet be another attempt at this morning’s higher levels while the 5(3)3's try to cycle up again.

  Jeff Bailey   2/19/03,  12:48:43 PM
10-year YIELD ($TNX.X) .... here's an intra-day chart of 10-year YIELD on 5-minute bar interval. Retracement shown here is from WEEKLY pivot analysis where last week's HIGH, LOW and CLOSING YIELD are used. Link

  Jonathan Levinson   2/19/03,  12:47:20 PM
QQQ volatility has rallied back to unchanged, currently +.07 on the day. Guess where QQQ is... you guessed correctly, 25.02. The oscillators are all chopped up on different timeframes because of the aimless chop we've been in since yesterday morning, and so direction is difficult to predict short term. The TRINQ is just north of neutral at 1.23, TICK.NQ -35, and FVX -4.4 bps.

  Linda Piazza   2/19/03,  12:39:19 PM
At 14.39, CSCO still challenges yesterday’s high.

  John Seckinger   2/19/03,  12:23:36 PM
With the Dow still under the pivot, but trying to bounce from the 7969 level (support noted in 9:39 post), some more economic revisions hit the street. The CPI 0.1% gains over the last two months were unrevised, but the the core was revised higher in December and revised lower in November. No real movement out of either the bond or equity market. Getting back to the Dow, if you split the difference from the pivot (8008) to the 7969 level, 7990 is roughly the level. Therefore, bears can look for the Dow to keep under the 7990 level.

  Jeff Bailey   2/19/03,  12:20:58 PM
QQQ here is quick "screen capture" of what I see in QQQ. This also important for Dow, SPX and OEX traders. NDX/QQQ has been STRONGER based on pivot levels, and BEARISH Dow, SPX and OEX want to see "strength" turn to weakness, so that BEARISH Dow, SPX and OEX feels weakness builds. Link

Should QQQ/NDX hold firm, then that lessens probability of further Dow, SPX, OEX weakness.

  Linda Piazza   2/19/03,  12:10:32 PM
Here’s an updated chart from yesterday’s discussion of the larger-than-normal candlesticks seen on the 60-minute OEX chart (also seen on other indices). The mid-points of those larger-than-normal candles can provide support, as did the candle from Thursday’s trading. That midline support was tested Thursday afternoon and Friday before markets began to climb to yesterday’s highs. I’ve also marked the midline of yesterday morning’s larger-than-normal candle (427.22 if the shadow is also included in the computations, 426.83 if only the body is included). Bears want to see this support broken, particularly as a study of the chart shows that level has been important at other times in the past month’s trading. Bulls want to see it defended. Link Expectations would be that the midline support would be broken to the downside, especially as the 60-minute 21(3)3 stochastics attempt to turn down from overbought levels and the OEX was turned away from its test of the descending line from late January. Less reliable 5(3)3 stochastics have already cycled down into oversold levels, however, and the 21-dma has not yet turned down or flattened, indicating caution in drawing too many conclusions just yet. Since my long-term outlook is still bearish, my instinct is to interpret yesterday and today's market behaviors in a bearish light.

  Jonathan Levinson   2/19/03,  12:10:02 PM
QQQ is hanging at 25.01, as the QQV sinks, now -.70 on the day, signalling that at last the QQQ options market has simply passed out from boredom. It's perhaps growing obvious to the options market that the Qubes will be manipulated as much as necessary to avoid the price straying from 25. Or, perhaps it's simply a lull in volatility :)

  Jeff Bailey   2/19/03,  12:07:41 PM
QQQ $25.00 -0.99% .... session low has been $24.91, and did see a 5-minute close below that level. Pivot analysis trader looks to short here, stop above $25.31 or day's high, and look to target $24.50.

Disclosure: I currently hold a bearish position in the QQQ

  Jeff Bailey   2/19/03,  11:56:39 AM
The 11:00 AM Intraday Update has been posted. Link

  Steven Price   2/19/03,  11:39:18 AM
Swing Trade Signals
We continue to methodically stair step lower and we are into yesterday's "vaccuum" range in the Dow between 7909 and 7985.

Current levels: Dow 7974/COMP 1333/OEX 428.04/ SPX 844.02/NDX 1004.35

  John Seckinger   2/19/03,  11:35:28 AM
With the Dow finally staying away from its pivot, I looked at the Federal Funds futures contract and found that traders are expecting a 1.225% Fed Funds rate in March. This means that there is about a 24% chance of a 25 basis point rate cut at the March meeting. For May, traders are looking for a 1.165% Federal Funds rate. That means that traders are pricing in a 42% chance of a 25 basis point rate cut in May. For July, there is a 48% chance that the Fed will cut rates by 25 basis points by July (so, at the June meeting).

  Jonathan Levinson   2/19/03,  11:34:36 AM
SOX and QQQ lows of the day.

  Steven Price   2/19/03,  11:24:48 AM
Swing Trade Signals
We have now seen our fourth lower high of the day on the intraday chart. So far no indication for anything but bearishness from here on the short-term charts.

  Jonathan Levinson   2/19/03,  11:24:42 AM
For traders frazzled from yesterday and today's narrow range on the COMPX and hoping for a big move, recall that during op-ex week, prices have a habit of gravitating toward round numbers coincident with high volume option strikes. QQQ 25 is one such price level, and while there are other, stronger forces at work, with 2.5 sessions to go until Friday's close, I wouldn't be the least bit surprised to see QQQ wind up right here at the end of the week.

For Matt, who's speculating that Al Green is trying to leverage this effect with this week's repos, it's an interesting idea. As I've discussed before, I believe that Al Green is mostly interested in the bond markets at this point, and not in stocks. For this reason, I doubt if he's concerned with how the SPX performs this week, either higher or lower. However, there's no telling what his short term agenda is through the fed's open market ops. Could well be, Matt.

  Linda Piazza   2/19/03,  11:21:49 AM
This morning, decliners lead advancers, with a current adv/dec ratio of .55 on the NYSE and .63 on the Nasdaq. Down volume is 2.3 times up volume on the NYSE and 1.8 times up volume on the Nasdaq. New lows have a slight lead over new highs, but as Jeff mentioned in his article last night, there’s been a definite change in the balance of new highs to new lows from last week’s numbers, when new lows predominated by a large margin. Current volume is 312 million shares traded on the NYSE and 407 million on the Nasdaq.

  Jeff Bailey   2/19/03,  11:07:35 AM
QQQ $25.05 ... also making this observation. DAILY retracement, if set from DAILY R2 and S2 of $25.75-$24.43. This has 50% (pivot) of $25.09 and lower 61.8% at $24.93. This $24.93 is SAME as the $24.93 from last night's Index Trader Wrap and WEEKLY retracement of 80.9% at $24.93. Aha!.... intra-day support between the two.

  Jeff Bailey   2/19/03,  11:03:09 AM
QQQ $25.06 -0.79% ... tested the $24.96 level in last 5-minutes, which is this WEEK's R1 and found buyers at that level. This $24.96 along with 80.9% retracement of $24.93 from our WEEKLY retracement is first "hurdle" a QQQ bear looks to be broken.

This is important observation in my opinion for QQQ DAY TRADERS to understand. If you're shorting 1,000 shares per trade, then don't be doing it when QQQ approaches a past level of resistance, that should serve some support on a near-term basis.

  Jonathan Levinson   2/19/03,  11:02:29 AM
It looks like the BoJ might have made one too many calls on the Batphone- news that the USD is at 3 week lows relative to the yen despite Japan's warning that it would devalue the yen: Link

  Jonathan Levinson   2/19/03,  10:57:25 AM
The US Dollar Index below 100.20 has spot gold up 4.40 and HUI +2.93 currently. The COMPX is back to yesterday's routine, currently 1336. While the temptation to add to shorts here is strong, the memory of yesterday's and last week's sudden jumps has me humble and cautious.

  John Seckinger   2/19/03,  10:57:14 AM
Looking at a five-minute chart of the Dow, 11 out of the last 12 five-minute periods tested the pivot at 8008. Bears should definitely try to keep prices underneath both 8008 and 8000 if they are going to gather momentum. Bonds are rallying, the dollar is falling, and the Utility Index (UTY) is at 236 and under some solid resistance at 240. Usually this is enough for bulls to step aside, but a 'weird' underpinning bid seems to linger in the equity markets.

  Linda Piazza   2/19/03,  10:44:02 AM
On the 60-minute charts of the S&P’s, the 5(3)3 stochastics have cycled all the way down to the low-30 levels on this minimal decline, but the 21(3)3’s remain up at overbought levels. It may (with emphasis on may) require another cycle up on the 5(3)3’s or at least an attempt at one before we see the 21(3)3’s cycle down in concert with the 5(3)3’s. Bears want to see prices hold steady or even continue to decline while those 5(3)3's attempt to cycle up. Bulls want to see prices move up in concert with the 5(3)3's.

  Mark Phillips   2/19/03,  10:41:20 AM
Now that MSFT has completed its split, I looked at the redrawn PnF chart last night and came to the conclusion that the currently listed entry strategy for this LEAPS Watch List is too stringent. The bullish support line currently sits at $23, so if we're looking to enter on a dip, it seems reasonable to expect the stock to find strong support at that level. I'm modifying the entry target to $23.00-23.50. This is still pretty aggressive, but if filled should give us a very attractive entry on a risk/reward basis, as our stop will initially be set at $21.

Just in case we get that entry setup before the weekend, here are the LEAPS symbols I will be listing in the weekend column.

JAN-2004 $25 Call (LMF-AE) and JAN-2005 Call (ZMF-AE)

  Jonathan Levinson   2/19/03,  10:37:24 AM
The COMPX is approaching 1333 support but back into its interminable range from yesterday. I will await a break below 24.88 QQQ to get excited by this decline, as price spent hours ping-ponging around the current range yesterday.

  Steven Price   2/19/03,  10:34:12 AM
Swing Trade Signals
We continue to test the bottom of today's range but have yet to get a 5 min close below 7995. The last bounce did fail at the pivot of 8008 and bears looking to step into positions shuold have these levels on their radar.

  John Seckinger   2/19/03,  10:28:12 AM
With the 30-year higher by '20 ticks at 113'08, the bullish objective should be for a test of the 114'00 area in the near term. Since September 24th, levels just under 114 acted as solid resistance on four occasions (until February 13th when the high was 114'07). This 114'00 area appears to be the top of a massive wedge, and I do think we will see more upside price action. Then we will have the big failure lower (read: higher yields). If prices fail to rise above 114, look for support at 112 and 111. Then look for a failed attempt back to 114. Note: Bond prices should move inversely with equity prices, at least in this environment.

  Linda Piazza   2/19/03,  10:27:34 AM
Currently at 14.31, CSCO is above its exponential 200-dma at 14.11, and trying to push above yesterday’s 14.39 high. So far, it’s having trouble with that level. CSCO traded as high as 14.46 before falling back to current levels. The day is still young and CSCO might be a good stock to watch. If the big caps led the rally, with the Russell’s failure to test its 22-dma perhaps showing that small caps haven’t participated as strongly, then a failure of the big caps to follow through on previous gains could be significant. If the big caps do follow through, perhaps they’ll pull the small caps along with them. Should be interesting to watch, anyway.

  Jonathan Levinson   2/19/03,  10:27:28 AM
NDX and COMPX lows of the day as COMPX drops below 1338. TRINQ 1.17, QQV +.74.

  Jeff Bailey   2/19/03,  10:26:54 AM
Dow Industrials (INDU) 7,996 -0.55% ... looks vulnerable here to 7,905.

  Steven Price   2/19/03,  10:22:33 AM
CNBC beat me to it, announcing a few minutes ago as I was typing that CAT is the only Dow stock showing more than $1 movment either way. It is up $1.12 following an upgrade.

  Linda Piazza   2/19/03,  10:20:04 AM
European markets trade near the lows of the day, with the FTSE 100 currently down 17.70 points or .47%, the CAC 40 down 51.34 points or 1.75%, and the DAX down 59.54 points or 2.17%. The DAX has again dropped below the 2700 mark and trades now at 2680.60.

  Steven Price   2/19/03,  10:18:55 AM
Swing Trade Signals
We got a break below Dow 8000 and note the 38.2% 5 min fitted retracement at 7995 coincides with yesterday's pullback low. A 5 min close below that level, which also falls below today's pivot, continues to look bearish, particularly with the VIX holding above 35%.

  Jonathan Levinson   2/19/03,  10:18:30 AM
We have a whipsaw breakout from the 5 minute wedge, forming the heralded "Finger" formation with a quick return to the 1340 level on the COMPX. HUI and XAU have added to their gains in the meantime, with the TRINQ back to .78.

  Linda Piazza   2/19/03,  10:16:19 AM
Yesterday, CEC Entertainment (CEC), operator of Chuck E. Cheese’s restaurants, lowered expectations on Q1 profit by $0.03/share due to the winter storm that hit the East Coast this week. We might see other companies making similar announcements.

  Mark Phillips   2/19/03,  10:13:52 AM
Mystery Ships As the debate rages on about Iraq's compliance or lack thereof with respect to UN resolutions and the necessity for military action, this story caught my attention this morning. Link According to the story, there are 3 giant cargo ships, currently being tracked by US and British intelligence on suspicion of carrying weapons of mass destruction. The ships left port in late November (just a few days after Hans Blix and his team began inspections again) and have been sailing the oceans for the past 3 months, while maintaining radio silence, a clear violation of maritime law.

  Jeff Bailey   2/19/03,  10:10:45 AM
ImClone (IMCL) $12.67 +14% ... stock higher on heavy early morning volume of 1.7 million shares.

  Jonathan Levinson   2/19/03,  10:05:57 AM
Al Green has just announced an overnight repo in the amount of 9B, which effectively drains 6B from the system from the 15B expiring. Wish I had 22 brokers to call and say, "Arrange it amongst yourselves, but I'm withdrawing 6B today." The COMPX is coiling into a neutral wedge or pennant at 1340 on the 5 minute candles, QQQ 25.11. The TRINQ remains neutral, FVX has slipped a bit, and HUI and XAU are at highs of the day, +1.88 and +.87 respectively.

  Steven Price   2/19/03,  10:02:24 AM
Swing Trade Signals
After breaking down below the opening range and then failing on a rebound at that level, I am leaning short from here. However, the last time we were in this range, the best entry still came at 8150 and I found myself jumping the gun, rather than being patient. I am going to try to be a little more patient this time, but aggressive traders may look to start entering shorts with stops above the highs in this range around 8160.

  Linda Piazza   2/19/03,  10:00:39 AM
Despite the lower markets, the VIX is down .49 points, to 35.07 as of this writing.

  John Seckinger   2/19/03,  9:59:55 AM
Few side notes: Roughly 500 gas stations are charging $2 or more per gallon of gas. Also, Freddie Mac is expecting refinancings to fall by one-third in 2003. Turning to the bond market, yesterday's flattening continues (selling fives and buying longer-term bonds) as profit taking is mentioned and not representative of traders looking for higher equity prices (usually the case). On a relative basis, the curve is still very steep and this is normally bearish for stocks and representative of a weak economy.

  Jeff Bailey   2/19/03,  9:57:19 AM
DAILY Pivot Matrix Major Indexes all holding just above their DAILY pivot levels here.

QQQ $25.10 -0.59% just under DAILY pivot of $25.09 for brief "spurts," but no 5-minute close at this point.

Dow Industrials (INDU) 8,004 -0.45% same type of action under its DAILY pivot of 8,008.

Bears like the BUYING in Treasuries and the WEAK U.S. Dollar Index (dx00y) 100.32 -0.2% to help squash the recent 2.5 session rally in equities.

  Linda Piazza   2/19/03,  9:56:22 AM
While most indices tested their 22-dma’s yesterday, the Russell 2000 did not, showing that the small caps underperformed in this category, at least. Currently at 363.21, the Russell 2000 still has not tested its 22-dma at 368.86.

  Steven Price   2/19/03,  9:52:56 AM
Swing Trade Signals
It looks like we are going to get our first 5 min close below the opening range, indicating bearishness for the day. We are still above the daily pivots.

  Jonathan Levinson   2/19/03,  9:52:51 AM
The US Dollar Index has recovered to the 100.30 level after selling off preopen, and we're seeing gold and the miners suffer accordingly, with HUI off its highs to a .77 gain at 134.49, and XAU +.16 at 72.46.

  Steven Price   2/19/03,  9:49:47 AM
Amgen (AMGN) $53.80 (+0.18) OI call play AMGN once again testing $54, although unable to break through, with a high of $53.92. I like new entries if we can break that level decisively, possibly looking for a trade of $54.25. A trade of $54 creates a new PnF buy signal.

  John Seckinger   2/19/03,  9:44:49 AM
I really do like to talk about Bullish Percent, and I actually put MORE weight in bullish percent charts than P&F analysis. Example: Index giving buy signal but Bullish Percent is over 70% and high on a historical level; therefore, maybe only look for a quarter-position long. However, if Index in "Bear Alert" Status and just rolled from very high historical levels, a trader can get aggressive with a sell signal via P&F studies and put on a full position. "Understanding Risk Is Key," as Bailey says in this Link

  Linda Piazza   2/19/03,  9:43:12 AM
CNBC World tends to feature more technical analysts than our version does. This morning, the channel featured dueling technical analysts with one proposing that the U.S. markets, at least, bottomed in October. He called the recent bond buying as a buying capitulation and also pointed to the possibility of a reverse H&S formation on U.S. indices. This possibility is one that has been mentioned in the market monitor, too, both with respect to the indices and to individual stocks, such as the charts of OSUR and CSCO that I’ve posted in recent months. He felt that the markets were in the process of forming the right shoulder of that reverse H&S formation. However, the other analyst pointed to the lack of volume confirmation in recent days and other facets that indicated that even if markets were in the process of bottoming, that process was likely to take at least another six months to complete, negating the potential of that reverse H&S formation. She also pointed out recent weakness in the FTSE and other world markets. As has been discussed in the Market Monitor in recent months, the targets projected by the current H&S formations and other formations conflict with the potential for the reverse H&S formations to be confirmed. We must be aware of both possibilities, however, and watchful for signs that the reverse formations are likely to be confirmed. By the way, if you haven't yet read Jane Fox's wonderful article on H&S formations, check it out. Link

  Jeff Bailey   2/19/03,  9:42:10 AM
Neurobiological (NTII) Update ... only news I found is yesterday's announcement that the company's CEO will speak at the February 26th BIO CEP & Investor Conference.

  Jonathan Levinson   2/19/03,  9:41:33 AM
The TRINQ is neutral (for the first time this week) at 1.15, QQV +.66, VXN flat, and TICK.NQ +149. FVX is -2 bps, HUI and XAU both positive. The COMPX found support at 1338. Next support is at 1333, then 1328, 1318-20, and so on.

  Steven Price   2/19/03,  9:39:22 AM
Swing Trade Signals
We made a run at the top of the opening range and failed. Sentiment still remains down for the day and the Dow pivot of 8008 is the next downside level to watch.

  John Seckinger   2/19/03,  9:39:02 AM
The first-five minutes in the Dow didn't tell us much this morning. The range was 8039 to 8017. I see good resistance at 8062 and then higher at 8120. The daily pivot is the nearest support area at 8008. Underneath 8008, 7969 should be the next objective.

  Jeff Bailey   2/19/03,  9:33:46 AM
Neurobilogical Tech (NTII) $7.14 +6.56% ... stock on the move early. This is "partner" stock with Forest Labs (NYSE:FRX) $48.51 -1% for Alzheimer drug. Will search the news wires to see if news is out, but NTII pop interesting.

  Jonathan Levinson   2/19/03,  9:31:37 AM
COMPX opens down 3 points at 1343, TRINQ .99, QQV -.1.

  Jonathan Levinson   2/19/03,  9:29:46 AM
US announces air strike in Iraq no-fly zone: Link

  John Seckinger   2/19/03,  9:28:44 AM
Intra-day Pivot/Levels for Wednesday (02/19/03)...

INDU : S2= 7842, S1= 7942, P= 8009 , R1= 8108 , R2= 8175

SPX : S2= 828, S1= 840, P= 846, R1= 857, R2= 864

OEX : S2= 419, S1= 425, P= 429 , R1= 435, R2=439

NDX : S2= 981, S1=998 , P= 1007, R1=1024 , R2=1032

QQQ : S2= 24.43, S1= 24.84, P= 25.09 , R1= 25.50, R2= 25.75

  Jeff Bailey   2/19/03,  9:23:38 AM
The 9:00 AM Intraday Update has been posted. Link

  Steven Price   2/19/03,  9:21:02 AM
Swing Trade Signals
After the rally of the past three days, I expect to see some profit taking, but I'm going to let the opening range set in before I try to determine if we have seen the end of a short covering rally, or if we still have some legs. I'd still prefer to enter short closer to Dow 8150, if we can get another leg higher. Dow 8000 failed to hold as resistance yesterday and 8150 would be the next strong horizontal level. However 8100 may also attract my attention, as it coincides with the 38.2% retracement of the drop from mid-Jan highs. We are currently flat.

  Jonathan Levinson   2/19/03,  8:44:44 AM
Building permits for apartments and multifamily homes fell in that same housing report. Here's the Link

  Jonathan Levinson   2/19/03,  8:35:03 AM
Bonds are being bought at the open, with FVX currently -1.7 bps, TNX -1.8 and TYX -2.5 bps.

  Jonathan Levinson   2/19/03,  8:33:39 AM
News that US Housing Starts hit a 16 year high in January at 1.85M units, with US single-family permits at a record 1.415M in January.

  Jonathan Levinson   2/19/03,  8:25:48 AM
The Fed has its massive 15B overnight repo expiring today. The consensus amongst those with whom I discussed it last night was that Al Green provided that liquidity to insure smooth clearing for banks with the east coast storm. Apparently most cheques are still delivered physically through the clearing system, and with planes unable to take off and ground delivery severely compromised, the fed money could have been necessary to insure short term liquidity. I have no idea, but that could explain the fact that there was no evidence of 15B hitting any of the tapes that I watch. We'll find out today when that repo money matures and is returned to the fed.

  Jonathan Levinson   2/19/03,  8:16:04 AM
The futures ramped up to their highs starting at 7AM EST, with QQQ currently trading 25.35 on Island ECN, NDX 1021 and SPX 850.75. The US Dollar Index has recovered from 100.20 to its current 100.40, while gold retreats from just below 348 to just below 347/oz.

  Linda Piazza   2/19/03,  7:22:13 AM
Good morning! Remember when you studied statistics and learned that four combinations were possible when you had two permutations for each of two items? On the Nikkei, those four combinations of late have been financials down, exporters down; financials down, exporters up; financials up, exporters down; and financials up, exporters up. Wednesday morning’s trading demonstrated the banks down, exporters up combination. In the news all week because of its plan to sell $2.5 billion in preferred shares, Sumitomo Mitsui, Japan’s second-largest bank, led the decline. The Nikkei dropped in early trading, but then traded in the green by 0.2% in mid-afternoon, only to fall into negative territory again by the close. It closed down 14.53 points or 0.17%.

European commentators mentioned several pressures on the markets today, including Bush’s intention to seek a second UN resolution or act without one, news that Iraq was sending troops toward its northern border, and an unverified and strange rumor that three Iraqi ships have been circling to avoid UN weapons inspectors. These pressures on the US dollar may hinder US recovery, and may also hinder recovery of European exporters. European markets also reacted to other pressures. Earlier this week, ECB President Wim Duisenberg indicated that interest rates were appropriate but left open the opportunity for reductions if a war with Iraq created further economic pressures. Today, ECB member Klaus Liebscher indicated that he would oppose lowering interest rates at the March meeting, perhaps further dashing hopes of lowered interest rates. Semi-conductor maker ASM International reported fewer orders than expected, with 35% fewer orders in Q4. This drop in orders echoes the slowdown in orders seen in yesterday’s book-to-bill numbers for the North American semis. Deutsche Telekom announced that it would sell mandatory convertible bonds that must be converted in three years as part of its plan to reduce debt. France Telecom had announced its own plans to reduce debt earlier this month. Reckitt Benckiser, a U.K. company that is the world’s largest maker of household cleaners, announced that its main investor would sell as much as $1.1 billion in stock in order to buy out a shareholder. Today saw yet another insurer fall on concerns that continued stock market declines might create a shortfall in its pension plan. Countering all this bad news was the news that U.K. millionaire Hugh Osmond was considering a takeover offer of Six Continents, the world’s second-largest hotel company. As of this writing, the shares of Six Continents had jumped 10%, even though no offer has yet been made. The enthusiasm for Six Continents’ stock didn’t carry over to other stocks, however, as all European benchmarks currently trade down, with the FTSE 100 down 11.30 points, the CAC 40 down 37.17 points, and the DAX down 53.50 points.

  Jeff Bailey   2/18/03,  11:57:54 PM
The Index Trader Wrap has been posted: Link

  John Seckinger   2/18/03,  11:57:47 PM
The Futures Trader Wrap has been posted: Link

  Steven Price   2/18/03,  11:57:41 PM
The Swing Trade Game Plan has been posted: Link

  Steven Price   2/18/03,  11:56:57 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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