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  Jeff Bailey   2/21/03,  6:56:10 PM
Updated Pivot Analysis Matrix ... Note that for many of the indexes, today's (Friday) trading range was THIS WEEK'S trading range. Too many correlation then in the DAILY/WEEKLY comparisons to be of much use on Monday. Only correlation that I see right now from the MATRIX is in the S&P Banks Index (BIX.X) at MONTHLY Pivot, WEEKLY R2 and DAILY R2. Link

I've overlaid conventional retracement, WEEKLY and MONTHLY on the S&P 500 Index and currently find a "zone of support" for the SPX between 839.54 (61.8% on conventional) and 839.14 (61.8% from WEEKLY), which might identify SPX 839 as a level of support.

  Steven Price   2/21/03,  4:12:49 PM
Swing Trade Signals
I must say that trying to pick market direction over a period of a few days in the current environment has been frustrating lately. It seems that some news event always pops up that changes the daily trends in sometimes unpredictable fashion. I think our readers are both educated and have valid market opinions. I hope by presenting both sides of the argument to go either long or short, readers will be able to judge whether to follow a particular signal or not and where to place stops.

  Steven Price   2/21/03,  3:57:33 PM
Swing Trade Signals
Here is another reader response on why to be long:

Some possible reasons for going long:

Markets are oversold on a weekly basis...as former contributor Austin Pessamonte used to say...” the weekly chart leads the daily”.

1. Dow bullish% at 16% leaves little reward and lots of risk for bears.

2. NASDAQ composite bullish% at 34% leaves little reward and lots of risk for bears.

3. Daily chart patterns suggest a bullish break of the developing wedge pattern.

Just a few reasons I could come up with. In all fairness, I have been whip-sawed so badly over the last week that I have moved to the sidelines. While I recognize the items above, I haven’t the conviction to vote with $$. Maybe after today’s action, I can feel more confident that the bullish set up is in fact developing.

  Jeff Bailey   2/21/03,  3:49:20 PM
The 3:15 PM Intraday Update has been posted. Link

  Steven Price   2/21/03,  3:47:59 PM
Swing Trade Signals
The rally has faded some, but is still holding above Dow 8000 for the moment. the SPX is back under 850 and the OEX below 430. I am going to hold the position with my stop set at 8170. Conservative traders who chose to follow the signals may wnat to reduce the position (currently 3/4) on the hold over 8000. I still think the resistance at 8150 is solid and we failed to register a PnF reversal back up. However, everyone must consider how much risk they want to assume over the weekend.

  Linda Piazza   2/21/03,  3:42:00 PM
The OEX most definitely has now fallen below the five-minute 21-pma, as well as falling back beneath that descending trendline. On the 60-minute chart, the 5(3)3 stochastics have begun to roll, although only the fast line has completed the roll. The 21(3)3’s look to be hinging over a bit. On the 60-minute chart, the 21-pma lies below at 427.16. I’d mentioned that level as possible resistance as the OEX headed out of that regression channel this morning, but the OEX moved right through it. Let’s see if it moves back as easily going the other direction.

  Jonathan Levinson   2/21/03,  3:38:10 PM
Thanks, Linda. I wouldn't get too excited by this failure at the highs just yet, though. Although I share Steven's view 100%, any moves today have that "Etch-a-Sketch" feel to them. I'd be surprised to see much of a downside violation of QQQ 25 today. Next week, however, should be another story. I'll be holding all of my puts over the weekend.

  Linda Piazza   2/21/03,  3:33:31 PM
First flags, now wedges, first one pattern and then another: It looks as if Jonathan might have been right on target with his bearish wedge on the COMPX and the QQQ’s. On the five-minute QQQ chart, I show prices having broken out of that wedge. Great job, Jonathan.

  Linda Piazza   2/21/03,  3:21:15 PM
For the first time since breaking out of the bull-flag channel this morning, the OEX is falling beneath the 5-minute 21-pma. Here’s a chart showing the bull-flag channel (blue parallel lines) and the descending line from late January (red descending line at the top of this five-minute chart). The green horizontal lines are historical S/R lines I’ve had drawn on this chart for a long time. Link Of course, in the time it took me to upload the image and type this entry, the OEX has moved back above that five-minute 21-pma, currently at 430.70, but I thought I’d show the chart anyway to show what I was watching.

  Jonathan Levinson   2/21/03,  3:11:27 PM
What's good for the goose is good for the gander, or something like that. I believe I'm seeing a rising wedge on this latest wave up printed today off open and the day lows, easiest to see on the 15 minute candles. It could project to a high off approx 1355 COMPX or so, but it's getting narrow near the top and, according to Bulkowski, is most likely to break to the downside. I have a feeling that the close will see us closer to 25.00 QQQ than we are currently, but it needn't be exact to satisfy the Etch-a-Sketch (tm) artists currently drawing the charts we trade.

  Linda Piazza   2/21/03,  3:06:15 PM
The OEX did reach a level of 432.12, not quite reaching the February 18 high of 432.71, before turning down toward that descending trendline again. Bears might begin to breathe again with a fall back through the trendline, currently crossing at about 430, although the target for the bull flag breakout would predict a higher move.

I’ve been watching this bull-flag pattern for a day or so now, wary that the channel I was seeing might be a bull flag, so I wasn't unaware this might happen. The information about bullish percents presented by the reader also puts me on alert. Still, I agree with Steve and Jonathan and remain wary of committing my money to a bet on continued upside. During the course of this bear market, I’ve seen too many bullish Thursdays and/or Fridays, especially during opex week, only to see prices resume their fall the next week. When we see how the markets react early next week, we can make better judgments.

  Mark Phillips   2/21/03,  3:04:02 PM
VZ $35.75 (+0.99) Traders looking for a favorable bearish entry may do well to focus on new OI Put play VZ. We were looking for a failed rally below the $36.25 level to provided for new entries into the play, and it looks like that is what is playing out this afternoon. Lifting with the broad markets, VZ made it all the way up to $36.25...exactly...before rolling over. After falling back under $36, the slide has picked up speed and with daily and hourly Stochastics tipping bearish once again, the picture looks favorable to the bears.

  Jeff Bailey   2/21/03,  2:53:32 PM
QQQ $25.27 +1.16% ... if for some "chance" another news event comes out today, would be looking long the QQQ on a pullback into the $25.13-$25.03 zone of support.

Disclosure... I currently hold bearish position in QQQ (again) from $25.29 level.

  Steven Price   2/21/03,  2:52:04 PM
Most readers responding to my last question were in agreement that their bias was still down. However, this was a very well stated response for the bulls.

Hi Steven, the reason for being short term bullish may be based on some observations according to the Bullish Percent Indices.

As I've already told Jeff 3 on Feb. 18th we saw a big increase in the total number of stocks currently on a P&F sell signal but with chart in "X" (source for fresh buy signal candidates), here are the data:

Index / Sell Signal with chart in "X" on 14th / ... on 18th / ...on 19th / ... today

S&P 100 11 25 25 26

Nasdaq 100 11 24 31 31

S&P 500 46 80 95 104 (!!)

There was only very little movement in the total number of stocks currently on a P&F buy signal but with chart in "O" (source for fresh sell signal candidates).

So since Tuesday in S&P 100 and Nasdaq 100 we've more stocks on a P&F sell signal but with chart in "X" than stocks on a P&F buy signal but with chart in "O"s what may lead to the fact that it will take a few more bearish days to add another "O" to the according bullish percent indices (a lot more stocks have first to erase all their gains and a little bit more to see a fresh sell signal) or may hint to a (timely restricted) potential status change to Bear Correcting (if we see a continuous upward movement in the indices, because a lot of stocks were very close yesterday to see an upward 3 box reversal and would minimize the total number of stocks which could see a fresh sell signal).

So I'm convinced we'll see a status change to Bear Correction and Bull Confirmed very soon. The data shown above is a good "early watch" indicator.

(Sorry for not being a native speaker)

Kind regards Frank

  Jonathan Levinson   2/21/03,  2:37:42 PM
Steven, I have to agree. The only reasons I see to be long are on the charts themselves, and most particularly the breakout of the bull flag/wedge on the daily candles. However, a good part of that move is now played out, and at current levels, a good argument can be made to the effect that the COMPX is printing a distribution top. The action at current levels is critical. If the NDX can break away from its 200 dma and then 200 ema, then bullish positions will look a lot better. In the meantime, cash is not a bad position, and if shorts look better, then keeping a tight leash on them is in order.

  Linda Piazza   2/21/03,  2:32:38 PM
The OEX did have an hourly close above that descending trendline mentioned in my previous postings. Now it approaches that 432.71 February 18 high. A move and close above this level will show a higher high on the hourly chart.

  Steven Price   2/21/03,  2:30:42 PM
Swing Trade Signals
As I said earlier I am trying not to be a died in the wool bear. If there are any subscribers that have a good reason they'd like to be long, I'd be interested in hearing it. I really cannot imagine why anyone would buy this market, but I'm open to hearing any theories that seem to make sense. It is always easy to find reasons why something happened in hindsight and I'm sure someone will come up with a way to explain today's bounce.

  Jeff Bailey   2/21/03,  2:21:21 PM
The 1:00 PM Intraday Update has been posted. Link

  Jonathan Levinson   2/21/03,  2:21:14 PM
The proximity of the NDX 50 and 200 dmas indicates either the toppiness of this current move higher, or an impending buy signal if the shorter moving average crosses the longer one. However, that bullish cross would be on a gradual sideways move on the 50 dma, and not an aggressive upsloping move, which would mitigate the bullishness of the signal. Nevertheless, the NDX is in an interesting position. The TRINQ is currently reading .82, neutrally bullish, TICK.NQ +415 showing broad based buying. FVX is down 4.2 bps showing moderate selling in treasuries as teh QQQ prints new highs above 25.30.

  Linda Piazza   2/21/03,  2:15:28 PM
At 1015.36 as I type, the NDX has just moved above its simple 50-dma at 1014.94. Just overhead lies the simple 200-dma at 1016.92. Today’s 986.73 low bounced from the simple 21-dma at 987.

  Kent Barton   2/21/03,  2:00:57 PM
PI long play CYTC ($12.80 -0.29) recouped a good chunk of its morning losses after initially spiking down to a low of $12.24. There was no apparent news to explain the sudden downward move. The stock was looking quite strong yesterday after it moved above short-term resistance at $13.00. During the last two hours we'll be looking shares to move back towards that level. Some traders may want consider closing out a portion of their bullish positions if CYTC moves below intraday support at $12.75, which is most readily visible on a 5-minute chart.

  Steven Price   2/21/03,  1:53:16 PM
Hi Steve, I find it interesting that we are hovering around max pain in many issues...ibm (75), Dow (8000), NDX (1000), qqq (25), expe (65). SPX max pain is around 850 and it sure has been trying to hit today. Anyway, this is one of the reasons I am not buying this rally. Just wondering what your thoughts are on max pain. It seems like we hit them 70 percent of the times..oddly enough, those are the times I don't expect them to hit:-( Shoreh

It does seem as though we are testing these levels fairly often. It has been very difficult to know what the international situation will throw at us next. I have had a terrible habit of punting too early on what would be successful signals if held a little longer. The latest news that Iraq wants to negotiate with the U.S. was certainly unexpected and I actually would have expected a little more of a rally on such news. This environment has been very difficult to predict and often times I have thought about simply throwing in the towel until the Iraq situation is behind us, rather than attempting to pick direction for more than a couple of hours. However, since we have eventually headed in the direction that seemed apparent, I have stayed involved. No one likes to take the pain and this is not an environment for anything but aggressive traders playing with risk capital. I simply cannot envision why anyone would go long, other than asset allocations between bonds and stocks, and that is why I am not looking at going long. The fact that the bullish percents have not yet reversed either also has me bearish overall. I am trying not to be a died in the wool bear, but it is difficult to do, as so many rallies have failed recently.

  Linda Piazza   2/21/03,  1:51:32 PM
The bull flag pattern seen on the intraday S&P 500 and 100 charts appears to be fulfilling its promise as these indices push above the descending trendline that has been in place since late January. If the OEX manages an hourly close above the trendline, currently crossing just over 430, the next test is the 432.71 high from February 18.

  Linda Piazza   2/21/03,  1:45:49 PM
All European markets closed higher, with the FTSE 100 closing up 39.90 points or 1.08%, the CAC 40 closing up 25.34 points or .90%, and the DAX closing up 43.04 points or 1.66%. Even with today’s gains, however, the DAX closed the week below January lows and near February lows. The CAC also closed the week near February lows.

  Jonathan Levinson   2/21/03,  1:37:10 PM
The COMPX is printing a new high of the day above 1340, as QQQ trades at 25.14. The only fear is of missing the next rally. FVX +2.7 bps, TRINQ 1.06, TICK.NQ +176 and TICK 971. I remain confident that a breakout above QQQ 25 will be difficult to sustain, given the opex gravitational pull as the market makers and specialists draw the charts on the Etch-a-Sketch tablets. HUI currently -3.21, XAU -1.67.

  Jeff Bailey   2/21/03,  1:35:08 PM
Treasuries now sharply reversing course and seeing buying on news that Iraq may be ready to talk with U.S. if U.S. drops its war plans.

  Linda Piazza   2/21/03,  1:31:31 PM
The VIX is again below 35, currently at 34.76.

  Jeff Bailey   2/21/03,  1:31:27 PM
10-year YIELD ($TNX.X) 3.858% here. Just after the refinery fire news hit the wire, this bond's YIELD fell to 3.86%, right near these levels. I've benchmarked this "time/level" as that refinery news was an "event" that brought some emotion into the markets. My thinking here by benchmarking this level is that as the market has now processed today's news, it begins looking forward again after the emotional reaction from news has been absorbed and should have been compensated for by now.

  Jeff Bailey   2/21/03,  1:27:30 PM
QQQ Just studied today's 5-minute chart, trying to figure out why QQQ didn't fall to 61.8% retracement from DAILY pivot analysis. That pullback after break back below the $25.03 level came to $23.97, which was a penny above WEEKLY R1 of $24.96. This $24.96 becomes a "hurdle" for sure to my last chart post of 12:41:10 and target back to the DAILY S1.

Day-trader's "bond alert" here with 30-year YIELD dipping below the intra-day low YIELD that came after the refinery news. May signal some coming weakness for equities. On the alert here.

  Linda Piazza   2/21/03,  1:26:03 PM
A scan of volume patterns shows a definite shift from this morning. Advancers now lead decliners on both the NYSE and Nasdaq, with a 2.01 adv/dec ratio on the NYSE and a more modest 1.30 ratio on the Nasdaq. Up volume is 2.7 times down volume on the NYSE, while up/down volume is nearly even on the Nasdaq. New lows continue to predominate, although not by margins as great as those seen last week. Volume stands at 756 million shares on the NYSE and 750 million on the Nasdaq.

  Linda Piazza   2/21/03,  1:13:20 PM
The S&P’s continue to test that descending line from late January and continue to fail in their efforts to move above the line. While they’re testing, 60-minute 5(3)3 stochastics have been zooming up again from oversold almost all the way back to overbought levels. 21(3)3 stochastics haven’t moved as much, but still have moved rather quickly for these more stable stochastics. When I wrote this morning that trading was likely to be choppy until the stochastics synchronized their directions, I should have just extended it to say trading would be choppy no matter what direction the stochastics were going. After all, this is opex week and one in which geopolitical developments and fears will sway markets unduly.

  Steven Price   2/21/03,  1:03:18 PM
What started out with a big news event has turned into a slow news day and CNBC has chosen to fill this time with live musical performances ahead of the Grammy Awards. We are considering the same strategy. I am currently working on a webcast of John Seckinger's karaoke efforts from our Halloween and Christmas parties.

  Steven Price   2/21/03,  12:56:20 PM
Swing Trade Signals
As we continue to hold gains, I think I may be taking a little more pain on this short. While we have been range trading for the past hour, we have not rolled over, either. My biggest concern comes from the techs, which had been down all morning, in spite of the uptrend in the broader indices ahead of the refinery scare. they are holding in positive territory and I'd expect them to give back gains first, since they were the weakest group early on. So far, that is not happening.

Current levels: Dow 7993/SPX 846.37/OEX 428.87/COMP 1338

  Jonathan Levinson   2/21/03,  12:48:29 PM
The decline on the COMPX 5 minute candles looks more like a bull flag than a breakout of a bear flag. Bears, watch your stops.

  Mark Phillips   2/21/03,  12:41:50 PM
TRMS $43.65 (+0.91) Our other bullish Biotech play, TRMS, is looking pretty good today as well, launching through the $43 resistance level as the markets took off. Today's move got the stock solidly back over the 20-dma and 50-dma and our focus now turns to the $45 level as the next likely resistance. Note that additional resistance will be provided by the 200-dma at $45.48, and I would suggest that traders who took advantage of the latest dip near the $40 level should look to harvest some gains on a test of that $45 level. Now that we're back over $43, stops should be raised to $41.

  Jeff Bailey   2/21/03,  12:41:10 PM
QQQ Updated 5-minute chart and thoughts... Link

  Mark Phillips   2/21/03,  12:33:03 PM
AMGN $53.97 (-0.02) In what has been a rather volatile and news-driven morning session, AMGN has continued to perform rather well. First launching through the $54 level at the open, the stock ran out of steam at 454.35 and then dropped sharply with the rest of the market. Dipping down to the $53.50 level during the selloff, the stock then rebounded through the $54 level again, and is now trying to decide whether it is going to find some support near $54. In the big picture, today's range is rather tight, but I think the continuation to a slightly higher high this morning, along with the continuing series of higher highs and higher lows is constructive for bullish positions. My primary concern with the play is the fact that the BTK index is still struggling below resistance ($327-330). AMGN has been trading much better than the BTK, but I have the feeling that the index is holding our play back. I'll feel a lot better about the position if the BTK can show some strength and get through that resistance, confirming the bullish action in AMGN.

  Linda Piazza   2/21/03,  12:32:15 PM
So far, at least, the S&P’s have pulled back from their test of the descending line formed from January to the present.

  Jonathan Levinson   2/21/03,  12:32:11 PM
The US Dollar Index took a run at 100.00 but stopped just short of it, while the COMPX made it up to 1340 before reversing. Guess where QQQ is trading? Yup. Another golf clap for the market makers and specialists who have parked the index right where they want it, to within pennies of the price that will cause the greatest number of options they wrote to expire worthless. One could call this a free market, but it would be an aggressive stetch of that word we all hold dear to our hearts. HUI has faded, now -2.82 on the day, for reasons I can only guess. The flat CPI data, pointing to low price inflation, has presumably contributed, but the imperviousness of the market to what was suspected to be a terror attack for nearly one hour must have also weighed in. Of course, news is noise to technicians, but I can almost hear Paul Kangas tonight saying it. The 5 minute COMPX candles are testing support on the ascending trendline off the day lows as I type, currently 1337. TRINQ now 1.32, just above neutral.

  Jeff Bailey   2/21/03,  12:29:48 PM
Short-term Trader's thoughts ... OK , markets look to have calmed down a bit. Short-term bears that may have shorted the intra-day lows on "rush to judgement" type of trade, probably "squeezed" out by now, or looking for pullback cover points when the news hit the wires.

I'm not talking about "swing trade signals" either, where a trader had already set entry points on breaking of support levels. I'm talking about traders that look to trade news events without regard to having any idea where a stock or index may be trading (levels, moving averages, bullish support trends, etc.).

  Linda Piazza   2/21/03,  12:25:28 PM
The VIX punched below 35 this morning, reaching a low of 34.78 before pushing back above 35 again. It’s amazing to me that volatility could have dropped so quickly on such a choppy trading day, especially with Rumsfeld seemingly out pounding the war drums last night.

  Steven Price   2/21/03,  12:22:01 PM
what do you trade on expirtion Friday? Aren't March options too expensive now? Don't say futures, please. Many of us don't trade futures. Thnks Sharlene

Because I am looking at a time frame of more than just today, and many index options stopped trading yesterday, I have moved out to March. They are a little expensive, but they are basically front month options.

  Jonathan Levinson   2/21/03,  12:07:03 PM
Here's an excellent photo of the Manhattan skyline this morning: Link

  Steven Price   2/21/03,  12:05:28 PM
Swing Trade Signals
Back over 8000, looks like we are heading higher. Conservative traders who took sugested stops over 8000 should be out now, but given the recent news in the economy, I have a hard time imagining this rally holding. PnF dDow reversal comes at Dow 8050, OEX at 430.

Current levels: Dow 8004/SPX 847.72/OEX 429.53/ COMP 1339. COMP now up 8 points, suggesting market wide buying.

  Linda Piazza   2/21/03,  12:03:26 PM
Here’s another possibility to put on your radar screen. Several of us have been watching the Russell 2000, as the small caps hadn’t seemed to perform as well as the big caps of late, according to some measures. Here’s a 60-minute chart of the Russell, with the red line marking a possible reverse H&S formation, with a neckline confirmation occurring on a move just above 365. The Russell’s daily chart shows conflicting oscillators as the Russell consolidates at current levels, but 5(3)3 stochastics have made a bearish kiss. The Russell has not yet tested its 21-dma, as have several other indices this week, with that 21-dma currently at 365.85, so that level gains extra importance as it would mean a push above this MA as well as a move above that neckline. Link

  Jeff Bailey   2/21/03,  11:58:04 AM
The 11:00 AM Intraday Update has been posted. Link

  Steven Price   2/21/03,  11:55:22 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the 1/4 short position when the dow traded 7994 at 11:54:20. We are now short a 3/4 position with stops set at 8170. (1/4 entries at 7989, 7994, 7884)

  Jonathan Levinson   2/21/03,  11:50:52 AM
Although this is typical opex week action (known in some circles as "scam week"), the market feels awfully light. It took a refinery explosion to print a -1000 TICK, and nothing at all to print a +1396 TICK. Fear is stronger than greed, and that remains the case, but as we've seen for months, the only fear in the market is of missing the next rally. Bears, please be careful. The market can remain irrational longer than you can remain solvent. I believe that might have been from John Maynard Keynes or John Kenneth Galbraith. Either way, don't forget it.

  Linda Piazza   2/21/03,  11:49:36 AM
Here’s an updated chart of the SPX, showing the upside break out of what I must now assume was a bull-flag pattern. The SPX currently challenges the descending trendline that has been in effect since late January. Link I caution that opex week trading can be choppy, however, and I wouldn't be surprised to see the S&P's turn around and head right back down.

  Steven Price   2/21/03,  11:47:52 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Just over 8000 now. I'm going to add to the short with another 1/4 position if we fail here. Go short a 1/4 position at Dow 7994. This will give us a 3/4 short position.

  Steven Price   2/21/03,  11:44:34 AM
Swing Trade Signals
Dow really getting some legs under it - 8000 should be next test (now 7991)

  Steven Price   2/21/03,  11:40:14 AM
Swing Trade Signals
Given this morning's drop on the refinery scare, I'm not sure why anyone is buying. Even though this was not terrorism, it simply highlights the dangers of being long in a very jittery environment. Ican't argue with what I see, however, and so far we are solidly in the green in the Dow/OEX/SPX. COMP remains close to unchanged. The reason I cancelled the stop at 7905 is that I have been looking for a short entry. I did not like the fact that I entered on the news event, however, getting out and then back in a little higher didn't seem to make sense, given the bid-ask spread sacrifice. I decided I wouldn't have been that much better off and possibly worse if the rally faded. We continue to climb and I am second guessing that decision. Still, if I want to be short here, I'll stick to the current 1/2 position, even if the second entry point was less than desireable. We were climbing before the big drop, so I am going to erase that action from my mind and assume that for the moment the intraday trend is higher.

  Linda Piazza   2/21/03,  11:39:16 AM
The OEX did close above the regression channel on the hourly chart, and now it challenges the 21-pma at 427.23. This 427 area is also the midline area of the larger-than-normal white candle from February 18 and of historical S/R. If the OEX is going to be turned back into that channel, this is the first line of defense. Hourly 5(3)3 stochastics now cycle up, and 21(3)3’s have made a bullish kiss, although the slow line has not yet turned up.

  Jonathan Levinson   2/21/03,  11:21:34 AM
The climb off the COMPX lows is printing either a bear flag or a bear wedge on the 5 minute candle, but I find that as timeframe shortens, so does reliability of chart patterns, and 5 minute bars are pretty short. Still, the TRINQ has dropped off to 1.65, TICK.NQ climbed to -13, FVX up to +1.5 bps from flat earlier, and HUI is -1.34. Spot gold has barely budged through all this, again showing the developing resilience of the market to externalities.

  Linda Piazza   2/21/03,  11:16:55 AM
The S&P’s currently push up out of the regression channels that have been containing their prices. On the OEX, this push comes after the OEX fell to 421.26. I’ve been mentioning that if this is a bull flag pattern, the breakout should occur before the OEX hit 420, so now I’ll be watchful for an hourly close above the channel, not drawing any conclusions until I see that close. If the OEX should achieve an hourly close above the channel, it will soon face the down-sloping hourly 21-pma at 427.43.

  Jeff Bailey   2/21/03,  11:12:53 AM
QQQ $24.79 -0.72% ... recovers back to DAILY S1 here and most likely has some day trader "shorts" near DAILY S2 looking for some cover on a day trade basis. Could give QQQ a bid back near DAILY Pivot, where a day trade short might look for good entry points.

  Steven Price   2/21/03,  11:11:54 AM
Swing Trade Signals
Back in the green and climbing as news that the explosion was caused by a tanker collision hits the wires. Take a deep breath. The SOX is still in the red, as is the COMP. As I have noted numerous times, trading in the current environment is awfully sensitive to geo-political concerns and black billowing smoke over Manhattan would qualify. So does news that it isn't terrorism.

  Linda Piazza   2/21/03,  11:11:39 AM
While XOM might be dropping due to the explosion, small refinery company Valero Energy has gained $1.55 since the news of the explosion broke. Valero pushed above its 200-dma’s (both) as well as its simple 22-dma and 50-dma. It’s interesting, too, that Valero had just touched its ascending trendline from mid-January when the news hit and so the move up was a bounce from that trendline. However, the increase pushed Valero back into a zone that’s been difficult for the stock of late. The 37.50 level marks the neckline of a reverse H&S formation, but each time Valero pushes above this level, it hits the 38.50 level and falls back again. Although both daily and weekly 5(3)3 stochastics cycle up, and although it’s currently on a P&F buy signal, I would be hesitant to enter a call play here just ahead of that resistance, especially on a news-related spike. I do acknowledge that this news-related spike will also change fundamentals for Valero.

  Jonathan Levinson   2/21/03,  11:09:05 AM
The Coast Guard has closed the Arthur Kill Waterway at Staten Island.

  Mark Phillips   2/21/03,  11:05:29 AM
MHK $48.29 (-0.98) This new OI Put play took off to the downside this morning, leaving behind a small gap between $49.36-48.85. Along with the broad market, the stock is trying to regain some of its early losses, but having a hard time making any headway. Now we need to watch where this weak rebound runs into resistance. Should the opening gap provide resistance later today, the subsequent rollover (ideally in the $49.00-49.25 area) can be used for entries into the play.

  Jeff Bailey   2/21/03,  11:00:29 AM
Insurance quickly checking my q-charts "hot list" for insurance sector. "Big names" seeing some selling in the property/casualty are Chubb (CB) $47.55 -0.91%, MGIC Inv. (MTG) $41.19 -0.77%, Hartford (HIG) $37.18 -0.5%.

  Steven Price   2/21/03,  11:00:21 AM
Swing Trade Signals
Oh sure, just as I cancel the stop, the FBI announces there was no terrorism involved. Conservative traders should be out here as the Dow has crossed above 7905.

Current levels: Dow 7912/OEX 424.38/SPX 837.43/COMP 1325

  Jonathan Levinson   2/21/03,  10:58:52 AM
Traders reporting 49 to 60 people thought dead at the fire site.

The COMPX continues to hold above the gap, TRINQ 2.83, TRINQ -94. It appears that the markets have grown more accustomed to external disruptions, and are showing strength in the face today's events. FVX is flat, not even net buying in bonds.

  Steven Price   2/21/03,  10:57:28 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
I am highlighting this in green just to clarify the current position. We are short a 1/2 position in the broader markets, with a stop set at Dow 8170. Conservative traders can leave a stop on the second 1/4 position, entered when we broke down after the fire, at 7905. I apologize for any confusion, but the Oil Refinery fire made for some tricky trading and I want everyone to be clear where the current position sits.

  Linda Piazza   2/21/03,  10:56:22 AM
Volume stands at 330 million shares on the NYSE and 362 million on the Nasdaq. Decliners lead advancers on both, with a .81 adv/dec ratio on the NYSE and a .76 ratio on the Nasdaq. Down volume is about 1.5 times up volume on the NYSE and about four times up volume on the Nasdaq. New lows lead new highs on both.

  Jeff Bailey   2/21/03,  10:56:15 AM
Exxon/Mobil (XOM) $33.61 -0.02% ... just turning red after CNBC reports that Staten Island refinery is a XOM refinery.

  Steven Price   2/21/03,  10:54:24 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Really struggling now at 7900. I actaully think the failure to bounce back looks weak. Cancel the stop at 7905. Conservative traders can leave it in place, but I like the 1/2 short position here. I realize we were triggered on the news event and that's why conservative tradres can exit now, but I'm going to stay 1/2 position short now.

  Jonathan Levinson   2/21/03,  10:48:17 AM
The CRB has jumped, led by natural gas and crude oil futures, +6% and 3.43% respectively. COMPX back to 1324, QQQ 24.72.

  Linda Piazza   2/21/03,  10:46:17 AM
Here’s an update of yesterday afternoon’s SPX 15-minute chart, showing the regression channel I’ve been watching. The chart for the OEX looks similar. Note how the SPX tried to push out of the channel this morning, only to fall back inside. Note also how the quick drop fifteen minutes ago was arrested at the bottom of the channel. These actions confirm that the regression channel might be important to watch. If this is a bull-flag pattern (by definition, a series of lower highs and lower lows in a tight pattern that moves counter to the previous sharp move up), prices should soon break out of the channel. Since I deem the long-term direction as down, I’m not predicting an upside breakout, particularly since the pattern formed as the SPX tested and then fell away from its descending trendline, but I mention the possibility of this being a bull flag pattern in the interest of staying alert to all possibilities. Link

  Steven Price   2/21/03,  10:45:39 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Not going to play with fire here. Set a stop on the second 1/4 position at Dow 7905. If that drop was just an overreaction to the Staten Island fire, I'm not going to wish and hope for it to resume. The bounce failed at 7900, but if we head higher and break back over 7900, I'll step aside.

  Jeff Bailey   2/21/03,  10:42:41 AM
S&P Banks Index (BIX.X) 274.54 +0.10% ... on index on our nightly pivot analysis that didn't trade DAILY S1 of 273.11 (to be exact) with session low of 273.14.

May give some sign that MARKET not thinking oil refinery fire being terrorist related at this point.

  Jonathan Levinson   2/21/03,  10:37:13 AM
It seems that there have been quite a number of explosions at different plants lately, or perhaps I'm just more sensitive to it lately. The COMPX reversed its slide just after entering the gap at 1320.

  Jeff Bailey   2/21/03,  10:35:29 AM
QQQ $24.70 -1.2% ... rebounds from DAILY S2 after dipping to session low of $24.51. Most likely market now informed of refinery fire.

Bond market doing the same with 10-year YIELD edging back up from 3.86% to 3.88%

  Linda Piazza   2/21/03,  10:34:37 AM
Perhaps the police scanner is a good idea. When Jonathan was reporting the fire or explosion, I happened to be scanning several news stations, looking for confirmation of the rumor that the U.S. and U.K. troops were taking over Iraqi oil fields, and none of them had yet reported the explosion or fire. (CNBC now has.) I haven’t been able to find confirmation of the Iraqi rumor, either.

  Steven Price   2/21/03,  10:32:34 AM
Swing Trade Signals
Did we just get faked out by traders watching the smoke rise from a Staten Island refinery, apparently due to a propane explosion?

  Jeff Bailey   2/21/03,  10:32:06 AM
CNBC Showing live picture of refinery fire in Staten Island. Has LARGE smoke cloud and may be seen from long distances. May have some remembering dust cloud from 09/11 and creates some jitters.

  Jeff Bailey   2/21/03,  10:28:38 AM
QQQ $24.57 -1.68% .... "whack" ... trades DAILY S2 here.

  Jonathan Levinson   2/21/03,  10:28:19 AM
News from a trader who trades with a police scanner in New York. It takes all kinds. QQQ breaking out of the range to the downside as the news spreads.

  Jeff Bailey   2/21/03,  10:27:03 AM
Sharp reversal in Treasuries in last 15-minutes and seeing buying. Good Alert! from Jonathan Levinson at 10:22:50 and bonds reacted too with some defensive buying.

10-year YIELD ($TNX.X) fell from 3.9% to 3.86%.

  Steven Price   2/21/03,  10:25:47 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the second 1/4 position when the Dow traded 7884 at 10:24:44. We are now short a 1/2 position.

  Jeff Bailey   2/21/03,  10:22:59 AM
QQQ $24.77 -0.84% ... 5-minute close below the DAILY S1 of $24.79. Per last night's Index Trader Wrap, maybe the market is coming to its sensens in tech?

Day trader now licks his/her chops for a day trade short back near $24.92, stop just above $25.03 or DAILY pivot and target's DAILY S2.

(see 10:18:24)

  Jonathan Levinson   2/21/03,  10:22:50 AM
Word of an explosion on a bridge in NYC- unconfirmed trader talk.

  Steven Price   2/21/03,  10:21:45 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Back in the red and the ten year yield rolled hard from yesterday's intraday high. I'm going to add a 1/4 position to the short side at Dow 7884.

  Jeff Bailey   2/21/03,  10:18:24 AM
QQQ ... Can't draw up charts quick enough, but this might be helpful to a day-trader in the QQQ. Link

  Linda Piazza   2/21/03,  10:16:46 AM
While 60-minute 5(3)3 and 21(3)3 stochastics give mixed messages on the OEX, they don’t on the SOX. Both have begun to roll down, with the 21(3)3’s not quite below 70 yet. The 5(3)3’s have rolled down from below overbought levels, setting up bearish divergence (higher highs on the prices, lower highs on the stochs) if the rollover in price and stochastics continues. At 290.61 as I type, the SOX sits right on its 21-pma at 290.58, and traders should watch for a fall and hourly close beneath this MA as confirmation of weakness.

  Jonathan Levinson   2/21/03,  10:14:33 AM
The CRB is sinking today, currently below 246 and down .26%. Despite unconfirmed rumors of alliance forces taking over oil fields near the Kuwait border, oil prices are in the green today.

  Steven Price   2/21/03,  10:11:01 AM
Swing Trade Signals
Traders will note that this last spike failed below yesterday morning's spikes in the SPX/Dow/OEX, which came at 843.39/7961/427.67

  Steven Price   2/21/03,  10:08:06 AM
Swing Trade Signals
So much for resistance at the top of the opening range. We have moved above that level and indications from here are for a move higher. After yesterday's numbers I'm not sure who would want to buy this market, but COMP is now green as well. Will we gravitate toward 8000 on expiration? Very possible.

  Jonathan Levinson   2/21/03,  10:05:41 AM
The opening put to call ratio came in at .64. Confused yet? Just more rangebound trading so far as QQQ climbs back toward the 25.00 expiry target.

  Linda Piazza   2/21/03,  10:05:33 AM
From early December until early February, CSCO traded in a wedge, breaking down out of that wedge in early February and then beginning to climb again after reaching a relative low on February 7. I like to keep old lines on my chart for a while because it’s amazing how often they come into play again. Here’s a 60-minute chart of CSCO, showing how CSCO now trades as it challenges that former support line. On the bottom of the chart, notice the 5(3)3 stochastics. Several days ago, I mentioned that the 5(3)3’s on CSCO were perhaps forming their own H&S pattern. The stochastics fell through the neckline of that pattern yesterday morning, ahead of the time that CSCO fell through that trendline this morning. That stochastics pattern break hinted that CSCO might have trouble with the trendline. Note how the stochastics came up this morning to test the neckline again and have since fallen back, as CSCO also tests the trendline. These factors, together with the fact that CSCO now trades beneath its 21-pma on the hourly chart, hint at further weakness. This is option expiration week, however, and anything can happen, as demonstrated by the fact that CSCO is again moving above the trendline and above its 21-pma as I type. I’m not suggesting a trade on CSCO, but rather posting this chart for educational purposes only, to show how trendlines and chart formations, even on oscillators, can hint at or confirm price direction. Link

  Jonathan Levinson   2/21/03,  10:01:51 AM
The Fed has just drained 5.75B by adding 4.5B in 13 day repos. FVX continues to climb, and this should have bears expecting a further rise off the day lows on the COMPX, given that the larger money of the bond market is leaving the relative safety of bonds. Nevertheless, +2.3 bps is not a huge rise, and so direction is still up for grabs. The COMPX remains below 1328, QQQ just above 24.80 support.

  Steven Price   2/21/03,  10:00:56 AM
Swing Trade Signals
We continue to struggle at the top of the opening range (7941) and have yet to finish a 5 min candle above. The most aggressive traders may want to add to short positions on this failed rally.

Current levels: Dow 7935/COMP 1328/SPX 839.79/OEX 425.50

  Jeff Bailey   2/21/03,  9:57:55 AM
10-year YIELD ($TNX.X) 3.871% ... seeing some selling in Treasuries after a mixed open for stocks. May be some profit taking in Treasuries, but may also help put some firming into the equity indexes after a rather mixed opening trade.

QQQ $24.84 -0.52% here and has traded its DAILY S1 of $24.79, but I didn't see a 5-minute bar chart close below that level. This may portend a rather tight range-bound session today.

  Steven Price   2/21/03,  9:57:12 AM
Swing Trade Signals
10-yr yield pushed above resistance from yesterday afternoon and the 5-yr is pushing but has yet to clear. Still getting bullish signals from the bonds.

  Steven Price   2/21/03,  9:49:31 AM
EMC $7.95 (-0.30) My charts are showing a spike down to $7.01 on the opening candle, but I think this is a bad tick. I don't like the move back below $8, after the stock has found support there the last two days. While it certainly does not amount to a major reversal, I am not recommending new entries until I see some support. A reversal that holds anywhere above $7 prevents the pnf reversal down and may actually give us another entry point. I'd just like to see that support first.

  Linda Piazza   2/21/03,  9:45:26 AM
I still show the OEX trading in a downward-sloping regression channel this morning, a channel similar to the one on the SPX chart I posted late yesterday afternoon. There's a possibility this could be a bull flag pattern, but, if so, the OEX should break out of the channel before prices drop below 420. On the hourly chart, the 5(3)3 and 21(3)3 stochastics give mixed messages, with the 5(3)3’s trying to turn up from oversold levels while the 21(3)3’s slope down. In my past experience, mixed messages like this can result in some chop without clear direction, so be careful. Oscillators might not be giving the best clues as to direction, however. I also note that OEX is below its 21-pma on the hourly chart, and that this MA is now beginning to flatten after moving up since last Friday.

  Steven Price   2/21/03,  9:43:35 AM
Swing Trade Signals
I'm looking at a possible entry below 7900, but right now yields are positive and not giving any confirmation. I'm going to watch the bond market for a confirmation sign, but aggressive traders may want to target a short below yesterday afternoon's bounce point near the end of the day. If yields confirm, I would look to short under Dow 7889.

  Mark Phillips   2/21/03,  9:43:14 AM
CB $47.50 (-0.49) The early going has Oi Put Play showing some notable weakness, with the $47.50 level just starting to crack. The stock is now below the intraday lows from last week and aggressive traders looking to enter the play can take advantage of the weakness this morning to do so. Those who prefer a more cautious approach will want to wait for the next failed rally attempt after this breakdown, ideally in the $48.00-48.50 area.

  Jonathan Levinson   2/21/03,  9:38:17 AM
A quick drop to below 1328 COMPX, as QQQ tests 24.80 support. The TRINQ has risen to 2.36, but yields are not confirming, FVX +.5 bps.

  Jeff Bailey   2/21/03,  9:33:06 AM
The 9:00 AM Intraday Update has been posted. Link

  Jonathan Levinson   2/21/03,  9:31:18 AM
The COMPX opens flat at 1330, TRINQ 1.15, QQV +.65, QQQ 24.90.

  John Seckinger   2/21/03,  9:29:24 AM
Note: I will be in the Futures Monitor all day today.

  John Seckinger   2/21/03,  9:28:55 AM
Breaking News (grin) I have a NEW pivot formula that I am working with. It have more variables, and I plan on talking about it on Tuesday in my Futures Corner article. I cannot guarantee this NEW pivot formula will be better than the last one, but, as always, I will continue to strive to put together a more polished trading vehicle. I am in the backtesting phase now.

  Jonathan Levinson   2/21/03,  9:28:55 AM
Al Green is due 10.25B in expiring overnight repos today. We await the morning announcement.

  John Seckinger   2/21/03,  9:24:51 AM
Intra-day Pivot/Levels for Friday (02/21/03)...

INDU : S2= 7812, S1= 7863, P= 7945 , R1= 7997 , R2= 8080

SPX : S2= 828, S1= 833, P= 841, R1= 846, R2= 854

OEX : S2= 419, S1= 422, P= 426 , R1= 429, R2=433

NDX : S2= 990, S1=996 , P= 1005, R1=1011 , R2=1021

QQQ : S2= 24.60, S1= 24.79, P= 25.03 , R1= 25.22, R2= 25.46

  Steven Price   2/21/03,  9:18:55 AM
Swing Trade Signals
We are currently short a 1/4 position with stops set at Dow 8170. More conservative traders can set stops just over 8000. More aggressive traders can set stops above 8200. We are hovering close to unchanged and I'm not going to set an entry point until I see the opening range. I think a move back below Dow 7900 looks bearish and I'd like to see that move and then a failed rebound at that level. We have seen some bullish Fridays recently, so I'm not going to predict anything at this point with no clear directional indication from the futures.

  Linda Piazza   2/21/03,  9:05:40 AM
In the U.S., the CPI rose 0.3% last month, in line with expectations. Economists pointed to a 4% increase in energy costs as one reason behind the 0.3% increase. The core number, excluding food and energy costs, increased 0.1%. Economists had predicted a 0.2% increase in the core number. Economists point to discounts on cars, computers, and clothing as being responsible for the lower core number. December’s CPI had been 0.1% and the core had been 0.2%.

  Jonathan Levinson   2/21/03,  9:03:02 AM
Yields are currently flat with FVX -.6 bps and TYX +.9 bps, as QQQ trades 24.91. The US Dollar Index has slipped below 99.6 again, and gold is holding just below 353/oz.

  Linda Piazza   2/21/03,  8:55:10 AM
All European markets other than the MIB 30 currently trade down. The FTSE 100 is down 18 points, the CAC 40 is down 18.70 points, and the DAX is down 4.89 points. European commentators mention the low volume and the unwillingness of market participants to commit to a position, even over a weekend. Donald Rumsfeld’s statement last night that the U.S. forces were ready to proceed against Iraq, and particularly the part of his statement when he noted that the U.S. would go in with a large coalition, gets lots of airplay this morning. In company-specific items, Reuters is in the news (pun intended). After Reuters’ (RTR.L) disastrous earnings announcement earlier in the week, shares have tumbled, but today it was one of the FTSE’s top gainers in early trading, on speculation that it will sell some of its smaller, non-core assets. Even with today's gains, Reuters remains down by a hefty percentage for the week.

  Jonathan Levinson   2/21/03,  8:15:19 AM
The US Dollar Index has recovered from 99.40 to 99.60, but gold is holding the 353/oz level. NDX futures bottomed overnight below 1000 but are now trading 1003 after touching a high of 1020 yesterday. SPX futures are trading 838.

  Linda Piazza   2/21/03,  7:08:23 AM
Good morning. Yesterday’s troubling U.S. economic reports might not have caused tidal waves in U.S. markets, but the waves they did cause were broadcast throughout the world. The Nikkei had fallen 1.4% by midday, with exporters such as Toyota, Nissan, Samsung, and Matsushita Electric Industrial, a consumer electronics maker, leading the market down. The Nikkei closed down 1.59%. In other Asian markets, Taiwan Semiconductor and United Microelectronics both rose in early trading, however, echoing the strength seen in the semis in the U.S. markets.

As of this writing, European markets were mixed, with the FTSE 100 down 8.40 points or .23%, the CAC 40 down 7.47 points or .27%, but the DAX up 2.11 points or .27%. Network problems delayed the opening of trading in Parish, Amsterdam, and Brussels today. The French economy grew by only 0.2% in the last quarter of 2002, according to the GDP number released today. Economists mentioned growing unemployment, concerns about an Iraq war, a decline in corporate investment, and the rise in the value of the euro against the dollar as factors in the low GDP number. When the euro rises against the dollar, exporters suffer. This GDP number, added to a contraction in Germany’s Q4 GDP, increased worries that the Eurozone economy may contract in the first quarter of this year. In company-specific news, Standard and Poor’s today cut the credit rating of ThyssenKrupp, Germany’s largest steelmaker, on the ubiquitous concerns about the cost of funding pension programs. The company denies problems financing its pension programs. Gainers included some insurers and oil companies.

Geopolitical news included a search of five Iraqi sites that produce the Al Samoud 2 missiles, and a report that Blix will ask Iraq to destroy the missiles. Yesterday, U.S. Defense Secretary Rumsfeld claimed that troops were ready to attack as soon as told to do so, with his statement prompting a rise in crude oil. Speaking at an Atlanta high school yesterday, President Bush talked of acting “decisively in a just cause.”

I will be taking a couple of days off early next week. For those seeking news about European and Asian markets, Bloomberg television and CNBC World, for those of you with access to this channel, deliver coverage of these markets.

  Jeff Bailey   2/20/03,  11:56:57 PM
The Index Trader Wrap has been posted: Link

  John Seckinger   2/20/03,  11:56:49 PM
The Futures Trader Wrap has been posted: Link

  Steven Price   2/20/03,  11:56:43 PM
The Swing Trade Game Plan has been posted: Link

  Steven Price   2/20/03,  11:56:02 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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