Option Investor
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  Steven Price   2/26/03,  11:13:04 AM
Steve is out of the office today and will not be making posts to the Market Monitor

  Linda Piazza   2/26/03,  11:05:01 AM
With slightly more reliable volume figures than could be obtained in early-market trading this morning, the adv/dec ratios now read .77 for the NYSE and .73 for the Nasdaq. Down volume is not far ahead of up volume on the NYSE, but is almost 2 times up volume on the Nasdaq. Total volume is 346 million shares traded on the NYSE and 344 million on the Nasdaq.

  Jonathan Levinson   2/26/03,  11:04:33 AM
The put to call ratio remains low, last reading at .63.

  Jonathan Levinson   2/26/03,  11:01:02 AM
The US Dollar has sold off to the 99.70 area, and spot gold is above 352.50. There's speculation that the US will choose this weekend to attack Iraq over the moonless desert. The COMPX is back to the bottom of the range, now at 1321. The TRINQ is up to 1.32 on the move, which is a neutrally bearish reading, indicating that the selling really hasn't begun. FVX is sending the same message, -.8 bps on the day and off its highs. QQV is up, +.73, reflecting an increase in fear in the QQQ options market, but at 38.69, the absolute level is still nearer to the low end of the range we've been watching for the past few months.

  Linda Piazza   2/26/03,  10:55:09 AM
Best seen on the one-minute OEX chart, but also visible on the five-minute, is a potential double-top pattern in the OEX, with a top at 425.44 and a bottom at 421.74. A break through that 421.74 and confirmation of the pattern sets up a potential target of 418.04, but the OEX would first test the midline candlestick support at 418.75. (See 9:39 post for explanation.) These five-minute chart formations are not always reliable and this one has not yet been confirmed, but it's a possibility to watch.

  John Seckinger   2/26/03,  10:48:02 AM
Looking at a five-minute chart, there is a bullish regression line from the 7719 low on February 25th that can be drawn. Earlier today, a test of today's pivot would still keep the Dow within this regression line. If the daily pivot is tested now or later in the session, this regression line should be broken. I am more neutral here than anything; wondering if the last move higher was a bull trap or simply paving the way for higher highs and higher lows. Definitely watching the 30-year as well, which is up 3 ticks and still above 114 (slightly bearish for stocks).

  Linda Piazza   2/26/03,  10:47:07 AM
European markets trade as follows: The FTSE 100 trades at 3580.90, down 40.60 points or 1.12%; the CAC 40 trades at 2670.78, down 12.59 points or .47%; and the DAX trades at 2469.63, down 15.87 points or .64%. The FTSE is now about 20 points off its low and trying to move up, but still well below its high of the day. The CAC and DAX have turned down again, but both still remain above the day's lows. The DAX is now at a multi-year low, and the CAC and FTSE again approach multi-year lows.

  Jeff Bailey   2/26/03,  10:42:46 AM
News bulletin ... BBC reports that Turkey halted the movement of oil tankers through its border crossing with Iraq and told any tanker drivers already in Iraq to return to Turkey. Turkey's ambassador to Iraq left Baghdad, leaving no Turkish diplomats in the city. The Turkish Foreign Minister said the decision was taken "not to leave the embassy exposed to risk of uncontrolled attacks."

This news has found some selling in equities , Dow=-30 points, SPX=-2.82, OEX=-1.48, NDX = -5.3 and QQQ= $0.02 @ $24.73. Has also seen a reversal in the bond markets from selling to buying. 10-year YIELD ($TNX.X) 3.799%, after session high YIELD of 3.818% just prior to this news bulletin.

  Jonathan Levinson   2/26/03,  10:33:57 AM
It looks like there has been illicit frontrunning of the U of Michigan consumer confidence numbers: Link

  Jonathan Levinson   2/26/03,  10:30:38 AM
The COMPX printed a high at 1330, QQQ 24.92. The TRINQ appears to be back online for me, currently .53. This looks like a "real" move, with FVX now +1.3 bps. HUI and XAU have gone negative, -.63 and .47 respectively. COMPX 1333 is the next resistance on this move.

  Jeff Bailey   2/26/03,  10:26:30 AM
QQQ $24.86 ... stopped on short from $24.51 .... now bidding QQQ long at $24.83, targeting $25.12-$25.13.

  Linda Piazza   2/26/03,  10:26:24 AM
Although big-cap CSCO might be seeing some improvement in OBV, the small caps haven't seen a similar improvement. A check on the Russell 2000, currently trading less than six points above its July lows, shows that OBV has recently broken beneath a weekly horizontal support level and shows weakness on a daily chart, too. Of course, one could interpret this by saying that while OBV shows more weakness than it did at October lows, prices remain above those October lows, so that there's bullish divergence. My only problem with this interpretation is that volume tends to lead price, as it did with CSCO. The uptrend in OBV began near October lows with CSCO, for example, while the Russell shows a completely different pattern. Some improvement occurred near October lows, but then the Russell's daily OBV began a slight descent, with support levels broken in January. I'll be watching for daily OBV to steady near these levels and for some improvement for signs that the Russell's prices should also steady or move up.

  John Seckinger   2/26/03,  10:14:31 AM
Well, I had to call Jeff to ask what was the reason for the spike in the Dow; however, we are both at a loss. I will keep my bearish bias until we get a five-minute close above 7909, regardless of the eventual news. It easily might happen, since the recent bid was unexpected. As a trader, frustrating; however, easily managable as risk is clearly defined (yesterday's pivot on a five-minute close above).

  Linda Piazza   2/26/03,  10:13:45 AM
Yesterday, CSCO fell below its exponential 200-dma, but the afternoon bounce took CSCO within a few cents of that level. Trading at 13.96 as I type, CSCO remains beneath that 14.14 exponential 200-dma, as 5(3)3 stochastics cycle down, RSI has turned down and now measures 50.48, and MACD appears to be rounding over just after moving above zero. OBV (on-balance volume) has been showing strength in CSCO of late, making me cautious of a too-bearish interpretation of CSCO's behavior until there's some downturn in this indicator, however.

  Jonathan Levinson   2/26/03,  10:10:59 AM
The opening gap has now filled, but the pullback is so far shallow. The range remains intact for the moment.

  Linda Piazza   2/26/03,  10:05:21 AM
Currently at 291.75, the SOX challenges the top of the gap from Monday's close to yesterday's open. Monday's close was 291.93, and the SOX has climbed briefly above that level this morning, falling back as I type.

  Jonathan Levinson   2/26/03,  10:05:18 AM
The opening put to call ratio has come in at a tame .70. The TICK.NQ went positive on this move to the highs, still below 1328 resistance. Yields have gone flat, confirming the show of strength in equities.

  Linda Piazza   2/26/03,  10:01:44 AM
Early morning volume patterns show decliners leading on both the NYSE and the Nasdaq, with a .62 adv/dec ratio on the NYSE and a .48 adv/dec ratio on the Nasdaq. Down volume is 2.4 times up volume on the NYSE and 2.2 times up volume on the Nasdaq. New highs vs. new lows ratios are 5:21 on the NYSE and 11:22 on the Nasdaq. Early-morning figures can be misleading, especially as volume from which these values were calculated was only 44 million shares on the NYSE and 78 million on the Nasdaq. Use this information cautiously.

  Jonathan Levinson   2/26/03,  9:58:47 AM
The fed has just added 4.25B in overnight repos. There were no expiries today, as the fed took no action yesterday. So much for my hypothesis. That's a moderately large amount, though small compared to the much larger amounts we've seen in the past month.

  Jeff Bailey   2/26/03,  9:57:05 AM
QQQ Here's how a day-trader or swing-trader might be using both DAILY and WEEKLY retracement brackets anchored from S2-R2. Link

Two tight zones of resistance with first at $24.80-$24.81 and second higher at WEEKLY R1 of $25.12 and WEEKLY retracement 19.1% $25.13.

For now... QQQ considered "range-bound" from $24.81-DAILY pivot of $24.60.

Yesterday, at approximately the 03:00 PM (15 on chart) I implemented a short in the QQQ at $24.51 after a 5-minute bar chart close below the 80.9% retracement of $24.48. Still holding that position short at this point, but will undwind and keep loss small on 5-minute close above $24.81.

Need some buying in Treasuries pretty quick or this one looks to stop out.

  Jonathan Levinson   2/26/03,  9:54:35 AM
Thanks for the update on the TRINQ. Until I can get it to display something that looks right (currently reading .08 on my screen), I'll refrain from commenting on it.

  Mark Phillips   2/26/03,  9:54:08 AM
In, But Not Happy ABout It I had several emails yesterday afternoon about whether or not the LEAPS Portfolio would be adding a position for the listed DJX calls. My apoloigies for not posting a response yesterday. My charts died a couple hours before the close, leaving me blind right up to the closing bell.

I had commented earlier in the day that the DJX play was the only one of the listed bullish Watch List plays that I was considering an entry on, with the requirement being for a rebound and close over $78. That actually seemed an unlikely event yesterday morning, so the fact that it cleared $79 at the close did surprise me. What can I say...the volatile range continues. My concern with an entry at yesterday's close is that it may have just been another sucker's rally attempt, subject to subsequent failure in the days ahead.

Today is certainly starting out that way! But I'm sticking with the stated plan. The LEAPS Portfolio logged an entry into the play as of yesterday's close and we'll track it forward from here. Due to the wide and volatile range in the market, I'm starting out with a very wide stop at $74.50, which is just below the H&S bearish target of $75. Traders uncofortable with taking a full position up here have my full sympathy. I would recommend taking a partial position on this morning's early weakness and then look to round out to a full position on another dip and rebound from the $77.00-77.50 area.

An alternate level for stops that holds technical merit is at $76, just below the mid-February lows.

  Jonathan Levinson   2/26/03,  9:51:43 AM
I have confirmed that the TRINQ data I'm getting from quote.com is bad. TRINQ is at .55.

  John Seckinger   2/26/03,  9:49:05 AM
The pivot in the Dow at 7849 was not hit on that last move lower. My thinking was that a sell-off from Tuesday's pivot would at least reach this objective. In fact, I definitely like more weakness under the pivot as long as yesterday's pivots remain untested. This has to do will all indices.

  Linda Piazza   2/26/03,  9:47:07 AM
The $TRAN is down again today. Several writers mentioned the transports yesterday in the Monitor and in last night's newsletter, including Steve and Mark. October's low was 2008.31, a level exceeded yesterday, perhaps prompting a rise in the Dow when the Dow's level did not confirm the weakness in the transports. That bullish interpretation might be mitigated, however, if the transports again fall below October lows today. Traders might then conclude that the transports were leading the markets down.

  Jonathan Levinson   2/26/03,  9:47:01 AM
I was hoping to not have to write about the 1320-1328 COMPX range anymore, but here we are. The TRINQ is still at .03, and it better be bad data, or else there's a tidal wave building somewhere, and it will get resolved either to the upside or the downside- no way to know whether the buyers or sellers will blink first with that lopsided a situation. I suspect that it's bad data, but it's persisted for 16 minutes now and I'm anxious about it. FVX is -1.3 bps, everything else reflecting this narrow range on the COMPX.

  Jeff Bailey   2/26/03,  9:43:08 AM
Dow Industrials (INDU) 7,855 -0.67% (-51 points)... all components now open for trading. HPQ $16.24 -10.6% was delayed open.

  Linda Piazza   2/26/03,  9:39:48 AM
Yesterday, the OEX 418.75 level proved important, and I'll be watching how the OEX behaves around that area, should it continue to fall today. I always draw midline support levels on candles that are larger than normal, and Monday's five-minute chart produced one such candle with a midline at about 418.75. Here's a linked OEX five-minute chart, showing how the OEX has behaved around that midline level over the last two days. The blue MA is a 21-pma. The red ascending line is a trendline. Link

  John Seckinger   2/26/03,  9:39:39 AM
After the first five-minutes of trading, the Dow is in a range from 7907 to 7868, and bears should keep the Dow from retracing 50% of this area; or 7888. If this 7888 area is taken out, the objective is for a test of 7907.

  Jeff Bailey   2/26/03,  9:37:29 AM
Index Trader Wrap correction ... I would NOT risk a move above QQQ $22.35 or WEEKLY R1 of $25.52"

you said in the Index Trader wrap for 2/25/03.

Above 22.35 ? Is that a misprint. Either 22.35 is wrong or "Above" actually means below.

Yes, I typed in the wrong value. This should have read... $25.35.

  Jonathan Levinson   2/26/03,  9:35:49 AM
The TRINQ is now at ZERO. It says that there are no sellers whatsoever! Must be bad data.

  John Seckinger   2/26/03,  9:33:12 AM
Email Side Note: I had a problem with my email server yesterday for actually all of the trading session. I got a number of emails yesterday afternoon after the close, and I apologize for not being able to respond your question in a timely manner. The problem appears to have fixed.

  Jonathan Levinson   2/26/03,  9:33:01 AM
TRINQ is sticking... now .04 after dipping to .01. Is a tidal wave of buying occurring in one stock?

  Jeff Bailey   2/26/03,  9:31:42 AM
The 9:00 AM Intraday Update has been posted. Link

  Jonathan Levinson   2/26/03,  9:31:19 AM
6 point gap down to 1322 COMPX, QQV +.79, TRINQ .02 (must be a bad print).

  John Seckinger   2/26/03,  9:28:23 AM
Intra-day Pivot/Levels for Wednesday (02/26/03)...

INDU : S2= 7649, S1= 7793, P= 7850 , R1= 7980 , R2= 8051

SPX : S2= 811, S1= 825, P= 832, R1= 846, R2= 853

OEX : S2= 409, S1= 417, P= 421 , R1= 429, R2=433

NDX : S2= 958, S1=979, P= 990, R1=1011, R2=1022

QQQ : S2= 23.73, S1= 24.25, P= 24.60 , R1= 25.12, R2= 25.47

  Jonathan Levinson   2/26/03,  9:17:16 AM
A splash of red across the yield curve, with FVX -1.5 bps, TNX -1.3 and TYX -2.3. I suspect that fed repos will be slim again today, given that the desired buying is going into treasuries. I believe that the fed's main desire is to keep rates low (Bernanke told us so) and Al Green's money isn't needed when the market is flowing into t-bills on its own. Just my own little hypothesis.

  Linda Piazza   2/26/03,  8:55:41 AM
In an interview to be televised by CBS, Saddam Hussein denies that he will go into exile or burn Iraq's oilfields. In a separate statement, U.N. chief weapons inspector Hans Blix said that inspections may require a few more months, even with Iraqi cooperation, and that he's not clear whether U.N. inspectors will obtain that cooperation. Blair faces opposition today as the House of Commons prepares to vote on a non-binding motion stating that Iraq faces its final opportunity to disarm in order to avoid war. Although Blair has enough votes to secure the outcome, he faces opposition from about 1/5 the legislators from his own Labour Party, and the opposing Conservative Party plans to introduce an amendment saying that there is as yet no proven case for military action against Iraq. The U.S. took a step forward in securing Turkey's approval to use the country as a base in military action against Iraq, pledging to provide credit of $20-30 billion.

  Jonathan Levinson   2/26/03,  8:16:50 AM
The US Dollar Index continues to struggle below 100.00, and gold continues to struggle above 350/oz. NDX futures are trading 993.50, SPX 835.25. QQQ is trading 24.68, down 9 cents from its close. Fed governor Ben Bernanke has offered us the bgo(blinding glimpse of the obvious) that while business are having trouble, households have been doing better because of the wave of refinancings. He opines that the US economy is looking good and the recovery will be robust in the months ahead. You'll recall that he's the one who spoke brazenly about the fed "having a technology called a 'printing press'" that drove the last major stake into the heart of the USDX and put the "Greenspan Put" under gold and commodities. I could see him becoming the next fed chairman- the only who wish "push the envelope" trying to inflate our way out of the Kondratieff Winter. And with that, I'll dismount from my soapbox.

  Linda Piazza   2/26/03,  7:36:06 AM
As Prime Minister Blair answers questions this morning in the House of Commons, European markets continue to be pressured and move to session lows. Currently, the FTSE 100 is down 51.80 points, the CAC is down 12.86 points, and the DAX is down 23 points. On CNBC World, a discussion centers on the possible length of an Iraqi war, with conclusions being that although a war might be brief, it might take years and even decades to stabilize the region, at enormous costs to the U.S.

  Linda Piazza   2/26/03,  6:38:38 AM
Good Morning. Problems with banks and insurers punished European and Asian markets today. In Japan, troubled banking concern Mizuho Holdings was hit by the bankruptcy of theme park operator Huis Ten Bosch. Other banks fell on worries that they would face similar problems. The Nikkei closed down 0.04%, at 8356.81 and a new four-week low.

In Europe, markets erased earlier gains and now trade sharply down. One catalyst has been the ongoing conference call with the U.K.'s largest life insurer Aviva. Some believe that Aviva offered a warning, while the company denies that it has done so, but it's certain that the company's operating pretax profit was down from last year and below forecasts. Aviva's dividend will also be lower than last year's. Swiss Reinsurance Company, the world's second-biggest reinsurer, posted its second-annual loss and announced that it would cut dividends, blaming declining stock markets for its problems. Yesterday, Prudential announced that it would not honor its pledge to keep raising its dividend.

Also hitting markets was the news that Germany's GDP was unchanged from the previous quarter, when it had grown 0.3% in the previous quarter. Consumer spending grew only 0.1% in Q4. A report yesterday had shown an unexpected rise in German business confidence. Spain's GDP grew 0.3%, less than half the previous quarter's growth. As of this writing, the FTSE 100 is down 48.90 points or 1.35%, the CAC 40 is down 6.56 points or 0.24%, and the DAX is down 20.22 points or 0.81%. The DAX now falls beneath 2500, to 2465.28. The FTSE plummeted 80 points from today's highs to today's lows. The CAC fell 75 points, and the DAX fell about 75 points. All now have moved a little off those lows.

  Jeff Bailey   2/25/03,  10:46:15 PM
10-year T-note, June futures (ty03m) 114'170 +0.16% ... I'm looking at some of Dorsey/Wright and Associates point and figure charts. With all the talk among Treasury bond "analysts" and that many don't really see a bullish case for Treasuries, even on a "defensive" type of trade right now, the bullish vertical count for this futures contract is $115, and was put into play when the contract traded a double-top buy signal of $113'125 in early February.

Contract high was seen today at $115'020 and did see selling into its close of $114'170.

Earlier today I made mention of potential "asset allocation" shift, and just doing some investigating here, but 10-year may have run its course. Will be alert for/to further selling, which may have equities firming.

Again,.. bullish and bearish vertical counts can be used to assess further upside/downside in a longer-term move. However, if looking at this March contract for 10-year futures price, then 10-year may have run a near-term bullish course.

For those that subscribe to Dorsey's p/f charting service, he uses the symbol TYM3 for this bond futures contract. His scale is 0.125, which would be 4/32.

  Jeff Bailey   2/25/03,  6:08:21 PM
Pivot Matrix for tomorrow. Link

Only real level of correlation I see is in the Dow Industrials at DAILY R1 of 7,980 and WEEKLY Pivot of 7,982.80.

Today's trade (Tuesday) saw trading at WEEKLY S2's, which aren't all that far off from last weekls S1's. Here's a Link to last Thursday's Index Trader wrap where a trader can quickly review last WEEK's levels. MONTHLY pivot analysis levels remained the same, but trader's will note that this WEEK's S2, S1 and Pivot levels moved higher than previous week, while the WEEKLY R1 edged up modestly and R2's aren't all that different.

  Linda Piazza   2/25/03,  4:03:22 PM
The SOX candle shows that it sprang up from just above the 21-dma at 277.64, with a low of 281.40. The SOX did not challenge its simple 50-dma at 296.69, however, reaching a high of 292.20, its opening level. The SOX has been closing near these levels for six trading sessions now while the daily 5(3)3 stochastics and RSI begin to roll down from overbought territory. This sets up the potential for bearish divergence (equal highs on the oscillators with lower highs on the SOX). The SOX has been trading in a descending channel since its December 2 highs, and so far, has been turning down from the top of the channel each time as the oscillators cycle back down again. Recognize this pattern, but don't anticipate the price action. Patterns can change.

  Jeff Bailey   2/25/03,  3:57:40 PM
Hewlett Packard (HPQ) $18.18 +2.36% ... reports earnings after the close. Analysts are looking for EPS of $0.28 per share. Link

p/f chart has been choppy, but HPW remains in an upward trend. Vertical count currently bearish to $12. However, relative strength vs. the SPX has been improving and currently reads (buy signal, column of X) Link

  Jeff Bailey   2/25/03,  3:53:36 PM
The 3:15 PM Intraday Update has been posted. Link

  Jonathan Levinson   2/25/03,  3:28:32 PM
Well, a golfclap is in order for the bulls. The COMPX is now testing the bottom of last week's "Etch-a-Sketch" range, and showing inspiring strength so far. The TRINQ is still surprisingly high at 1.35, TICK.NQ +311. This is the healthiest looking advance I've seen in two weeks on these indicators.

  John Seckinger   2/25/03,  3:27:15 PM
Looking at the wedge pattern from this morning, I took the low from 7719, the high at 7801, and then added this difference (82 points) to the 7801 level (which was the daily S1 level). This gives us a possible objective of 7882, and is very close to the Weekly S1 level of 7889.

  Jonathan Levinson   2/25/03,  3:21:22 PM
The COMPX has filled its opening gap and is now at the top of resistance.

  Linda Piazza   2/25/03,  3:19:32 PM
As Wes and Jonathan mention, the Russell 2000 has again approached critical support, with today's 354.09 low only $.02 above the 354.11 July low. On February 13, the Russell dipped below its July lows, touching a low of 351.78 before climbing and back to close near the day's highs that day. On February 13, however, the 5(3)3 stochastics were beginning to cycle back up from oversold levels, while today, they're cycling down from overbought levels. On February 13, the 21-dma was far twenty points overhead, while today, the 21-dma sits just about 6 points above current levels.

  Linda Piazza   2/25/03,  3:06:55 PM
This afternoon, volume patterns show an interesting phenomenon. New lows have reached extremes again, with new lows numbering 167 versus 45 new highs on the NYSE, and with new lows numbering 107 versus 56 new highs on the Nasdaq. On the NYSE, advancing and declining issues are nearly even, but on the Nasdaq, decliners draw ahead, with a .80 adv/dec ratio. Down volume is 1.8 times up volume on the NYSE, while it's almost three times up volume on the Nasdaq. Total volume is just over 1 billion on both the NYSE and the Nasdaq.

  Jeff Bailey   2/25/03,  3:05:17 PM
Bond Market Closed with 10-year YIELD ($TNX.X) 3.808% and retraced roughly 61.8% of its moved from YIELD low of 3.755%. Dow off 40-points at 7,818 and not seeing much buying in equities at this point on bond market's close.

  Jonathan Levinson   2/25/03,  2:53:36 PM
I've been hearing of this rumor since this AM- it was then that Russia was helping Saddam head into exile, and that this plan was hatched in a secret weekend meeting between Sadam and Mr. Putin.

  John Seckinger   2/25/03,  2:47:43 PM
Breaking News: There is a rumor that Russia is brokering a disarmament deal with Iraq

  Jonathan Levinson   2/25/03,  2:47:19 PM
Thanks to Wes who points out that the July lows on the RUT.X remain critical support.

  John Seckinger   2/25/03,  2:44:11 PM
It is interesting that the Dow took out the opening level by less than 3-points before profit taking came back into the marketplace. I like to use a "10-point" cushion for confirmation, and that would have taken us to the 7866 level. The intra-day high is at 7859. On the phone with Bailey about shares of MSFT, and it is interesting how the Dow seemed to control the price action. Resistance in the Dow was seen at 7860, while that same kind of resistance was seen in MSFT at 24. MSFT seemed to be "forced" lower as the Dow fell slightly from 7860. As a good rule-of-thumb, I always like to glance at the Dow for confirmation. Sometimes it works well.

  Jonathan Levinson   2/25/03,  2:43:51 PM
Jim Puplava refers to the 5 minute pattern on the COMPX as a "flagpole rally", when the index is ramped straight up (the pole) and then just hangs at the top, consolidating (the flag). He notes further that most of these rallies originate in the SPX futures pit, where one or a couple of buyers put out bids at any price, ramping the price higher. His editorial comment, with which I have great sympathy, is that most buyers try to accumulate with stealth so as not to disturb the market, where as these flagpole rallies are caused by buyers who appear to deliberately chase the bid higher, as quickly as possible.

  Jeff Bailey   2/25/03,  2:43:03 PM
No news on the wires that I see to "explain" today's rebound, with Dow off 30 points here after rallying back to unchanged levels. Will note that very short-term 13-week YIELD ($irx.x) 1.175% is slighlty green here and signifies selling in very short-term Treasury, which is deemed "safest" of the YIELDS. Might signify that an asset allocation was or rebalancing to stocks was seen, but that's it at this point. Dow rally came to 7,859, which was just shy of WEEKLY S1 of 7,889.70. This would be a "key" level of resistance that bears need to see hold at this point.

  John Seckinger   2/25/03,  2:22:36 PM
Part of the rise in stocks and weakness in bonds can be attributed to PIMCO's McCulley saying that the Fed is in a "pre-emptive reflation" state. In other words, the FOMC will fight deflation aggressively. I don't believe this was the catalyst for the rise in stocks, but just added to the explosiveness.

  Jonathan Levinson   2/25/03,  2:20:35 PM
24.52 was the 38.2% retracement off the day low, and it has contained the advance so far. COMPX 1312 was the high on that index. Note that the TRINQ held up through the move, still at 3.13, and the TICK.NQ at +33 is not showing much action either. The 10 point move in a few minutes, erasing hours of prints, felt much larger than it was. FVX is higher, now -4.6 bps on the day. I am watching the day highs, and above that, 1318-20 COMPX and 24.65, then 24.79 QQQ.

  Jonathan Levinson   2/25/03,  2:03:43 PM
Here comes the upside break with a high of 1308 COMPX/ QQQ 24.40.

  Jonathan Levinson   2/25/03,  1:59:33 PM
Just a slow drift higher on the COMPX below 1305. Gap resistance is at 1308. The TRINQ at 3.09 continues to reflect a bearish bias, as does the five year treasury yield down 5.8 basis points today. The 5 minute COMPX chart pattern continuest to look more like a bearish continuation pattern than a bottoming or reversal pattern, but we won't know until the lows or the highs get taken out.

  Jeff Bailey   2/25/03,  1:52:52 PM
The 1:00 PM Intraday Update has been posted. Link

  John Seckinger   2/25/03,  1:30:24 PM
Another attempt at the 7800 level in the Dow, but we feel more in a range than anything else. S1 to S2, or 7800 to 7743. Will we get that breakout higher? The 30-year still says "no," and the Utility Index remains under 839 and still appears to be a factor keeping the rise in check. Patiently watching both the S1 and S2 level for confirmation of a possible afternoon directional move.

  Kent Barton   2/25/03,  1:30:15 PM
Nordstrom (JWN) $16.60 -0.03 Bouncing back towards break-even territory after testing the $16.00 level this morning. Premier Investor's short play was closed out for a hypothetical profit of 10.6% when shares reached our exit target at $16.06 - also the low of the day. This provides a nice illustration of why it's often a good idea to place stop orders slightly above/below obvious levels of support/resistance. In this case, it looks like bargain hunters started stepping in as JWN approached whole-number support at $16.00. Many bearish traders would've also taken this opportunity to cover short positions.

  Jonathan Levinson   2/25/03,  1:20:41 PM
The Semiconductor Holdrs (SMH) continues to show strength, and found support at the 13 DMA at 21.85. It's still on daily buy signals on the stochastics and MacD, and until 21.85 can get taken out to the downside, the QQQ will continue to show relative strength.

  Jonathan Levinson   2/25/03,  1:17:34 PM
We're seeing a bounce into the upper end of the range, with QQQ trading 24.29. I have fibonacci resistance at 24.35 off the day lows. The TRINQ is down to 2.66, TICK.NQ +73, QQV flat and FVX up to a loss of 5.9 bps on the day. HUI is down 1.5 and XAU -.45. The COMPX at 1302 remains below the equivalent resistance number of 1305.

  John Seckinger   2/25/03,  12:49:31 PM
Interesting possible double-bottom in the ten-year yield at the 3.759% area. Today's low was 3.755% before rebounding. Yield resistance is seen above at 3.83%. Note: There was a 3.775% low set on November 12th; therefore, this could be called a triple bottom. This bounce higher in yields should be a catalyst for cash to flow into the equity market, and this easily could be a reason for bears now getting a little concerned (read: temporary short covering). The daily close in the TNX.X will be the key, and should give a good indication going forward.

  Steven Price   2/25/03,  12:29:22 PM
Swing Trade Signals
The intraday reversal rolled over into a series of lower highs and lower lows, now breaking below Dow 7850. Yields look similar, but still have a way to go before hitting their intraday lows. If we do get a breakdown below the morning lows, then the next support levels I'm watching are Dow 7700/7625, SPX 817/806, OEX 414/407. COMP now back below 1300. A close below that level looks awfully ugly.

Current levels: Dow 7743/COMP 1297/SPX 820.70/OEX 414.98

  John Seckinger   2/25/03,  12:23:32 PM
The aforementioned wedge has broken to the downside, and the Dow is now back below the daily S2 level. The "open drive" theory comes back into play (grin). Bonds are back above 114 at 114'09, and bids continue to be seen in the five-year note. Nasdaq is also back under 1300 at 1297. There is also talk that corporate spreads are under pressure today, with GMAC and F seeing the most deterioration. Shares of GM and F are both lower on the session.

  Jonathan Levinson   2/25/03,  12:09:25 PM
FVX has tumbled a bit here, now -7.9 bps. COMPX dropped only 1 point on the move, TRINQ up to 3.60, TICK.NQ -66. QQV has risen a touch- the market feels nervous here, but undecided.

  Jeff Bailey   2/25/03,  12:03:31 PM
Sell Program Premium Alert ... Same levels here as the first sell program alert from 10:46 AM ESt. That sell program was obsorbed and both come very near the WEEKLY S2 of 822.80. If SPX breaks session low, then look for next support of 804.

  Mark Phillips   2/25/03,  11:58:34 AM
LEAPS Update With the markets getting pummelled again today on the abysmal Consumer Confidence numbers, several of the Watch List plays we're currently listed in the LEAPS column are at or near the recommended action points.

DJX - Currently trading $77.63 (low of $77.20) and entry target of $77.50.

MSFT - Currently trading $23.54 (low of $23.40) and entry target of $23.00-23.50.

AA - Currently trading $20.00 (low of $19.60) and entry target of $19-20.

BEAS - Currently trading $9.44 (low of $9.24) and entry target of $8.50-9.00.

We set each of these targets based on the expectation that there would be another leg down in this market before a sustained rally could be mounted, and it looks like that expecation is being fulfilled today. The underlying question is whether this is the day to enter some of these plays or should we wait for lower levels? Decisions, decisions...

My expectation is that we will likely see more weakness as the week drags on, primarily due to the fact that the daily Stochastics on each of these stocks is still in its bearish descent. I sincerely doubt that I'll log entries in any of these plays today (since I wait to see where they close before making a decision), as there is really not much strength to be seen. My preference in the current market environment will be to wait for a test of the lower edge of the entry zones before taking a position. For MSFT, that means I want to see what happens on a test of $23, for BEAS it is the $8.50 level and for AA it is the $19 level. The DJX play is a bit different, as its target is just $77.50 and that has been met. So for the DJX play, despite my doubts, we will log an entry if it closes above $78.00 (requiring a decent bounce that holds) this afternoon. All of the others will likely wait for another day of market action.

For traders worried about missing the boat, I think a strategy of partial positions makes sense here. Enter 1/2 positions on today's weakness and look to round out to a full position if the lower end of those entry zones are reached later this week. Of course the more conservative approach would be to simply wait for the daily Stochastics to bottom in oversold and see if price action is still holding above those entry targets we have specified. If so, then it would in my opinion be a stronger entry point.

  Jonathan Levinson   2/25/03,  11:53:50 AM
The TRINQ continues to blow off steam as the COMPX and QQQ chop along the 1300/24.24 line. The COMPX is beginning to show what is either a bear flag, a bearish rising wedge, or a flat wedge/ pennant. The latter is a continuation pattern within the next longer trend (ie, price should resolve downward), while the other two are bearish patterns (ie, price should resolve downward). We'd therefore call it a "technical" bounce while the oscillators relieve their oversold extreme conditions. QQV is negative and never got to even a 1 point gain on the decline, while the VXN is up 1 point. My guess would be yet more support coming from the SOX. FVX is down 6.6 bps, off its lows but still showing good strength in treasuries.

  Steven Price   2/25/03,  11:53:35 AM
Swing Trade Signals
Sort of treading water at this point, but the last failure to hold a 5 min close over 7778 also equates to a failure at the bottom of the opening range on that 5 min chart. While we did take out 7750, and the COMP remains just above 1300, I think a close below 7778 and a close beneath 1300 would both signal further weakness ahead. Of course, we are sitting above that recent closing low of 7749 and that level would be more decisive on a closing basis.

  Jeff Bailey   2/25/03,  11:50:38 AM
The 11:00 AM Intraday Update has been posted. Link

  John Seckinger   2/25/03,  11:48:42 AM
Are we seeing another wedge in the Dow? Lower highs and higher lows on a five-minute chart over the last hour or so; therefore, look for more weakness under 7747 and likely shorts covering once above 7801. I then look at the pivot matrix, and it is interesting that 7747 and 7801 is basically S2 and S1. No coincidence (grin).

  John Seckinger   2/25/03,  11:44:36 AM
El Paso Corp. (EP) stated on Tuesday that they have completed a $1 billion dollar financing deal that should help the deteriorating consumer confidence. Yesterday, Chesapeake Energy Corp. (CHK) said it would pay $500 million for El Paso's mid-continent natural gas reserves. It was only a few weeks ago when the company cut its dividend by 82 percent and began planning to sell billions of dollars of non-core assets this year. Shares are currently 0.42 cents higher at 4.97.

  Jonathan Levinson   2/25/03,  11:33:32 AM
The US Dollar chart has gone ...well, very volatile (I was going to say berzerk), but the latest surge appears to have failed at 100.00. The COMPX and QQQ are in their narrow range, while oil and natural gas have turned negative, dragging down the CRB which is currently off by .82% to 249.14. Link to the US Dollar chart: Link

  John Seckinger   2/25/03,  11:24:29 AM
The 30-year is back to the 114 level and making it clear that bond traders are a little nervous about this recent move higher. However, there are better bids in the five-year note than the 10-year note - which is a little bearish for stocks. With that said, I will give bears the slight edge. Looking elsewhere, the Utility Index is down 1.42-points and under a pretty critical level of 239.75. Support is not seen until 231. This should further keep a lid on stocks.

  Steven Price   2/25/03,  11:19:19 AM
How did you pick 7735? Looks like good call and I did not sell. It is hard to sell when everything I seen said down. Your experience must be the difference.

It was really the break below 7725. In the recent past the 25 level has come into play on several moves in both directions and I just wanted to give it 10 points leeway. When it continued to fail under that level, I left it and figured any move back above might have some legs.

Swing Trade Signals
I think the move back to 7801 and then the failure tells us that we have ratcheted down yet another level. Remember that before our big rally last week, 7800 had been a temporary bottom and may now act as resistance. Those traders who left stops at 7811 were rewarded with what appears to be a lower ceiling. The COMP is also back below 1300, but just barely.

Current levels: Dow 7764/COMP 1299/SPX 822.60/OEX 416.23

  Mark Phillips   2/25/03,  11:14:37 AM
Transports Hit New Low Those that follow Dow Theory are taking note this morning of the Dow Transports plunging to new lows this morning. We need to see where they close today, but right now, the TRAN (currently $1990) has solidly taken out its October low and as long as it closes below 2013, we'll have a new bear market low. I covered this topic in some detail in last night's Trader's Corner article, which can be accessed here. Link The first domino has fallen and now we look for confirmation or non-confirmation from the Dow Industrials.

  Jonathan Levinson   2/25/03,  11:12:22 AM
The COMPX is hugging the 1300 line just below the 1305 s/r zone. The TRINQ has blown off some steam to 3.59 as price climbs in what might be a bear flag, but you really have to squint at the 5 minute candle chart. Gold continues to sell off, trading just above 351/oz now, HUI -1.06 at 132.91 and XAU -.22 at 71.70. FVX is higher, -6.4 bps on the day. QQQ 24.34 remains resistance on this move.

  John Seckinger   2/25/03,  11:01:21 AM
That recent spike higher did see some solid volume come into the market as the low during the first five-minutes was cleared (7778). If the Dow can get above the aforementioned 7817 level, bulls might be looking to buy on dips. Note: 50% of today's range comes in at 7788, and the Dow has now fallen back below this area.

  Jeff Bailey   2/25/03,  10:52:25 AM
Buy Program Premium Alert Dow = 7,796, SPX= 826, OEX= 418, NDX = 978, QQQ = $24.32

  John Seckinger   2/25/03,  10:49:08 AM
Interesting developments in the Dow. Above S2 at 7743 and has now used that level as support during the last 10-minutes. Steve, very nice exit (grin). I do expect resistance above at 7778, while a roll lower back under today's S2 could have bulls taking to the sidelines once more. Right now is the 'wait and see' part of the session.

  Jonathan Levinson   2/25/03,  10:46:53 AM
The US Dollar Index has been sold to 99.45, but gold has gone negative, with HUI -.19 to 133.73, XAU +.16. Yields have stabilized for the moment with FVX -7.5 bps. The high TRINQ, 4.28, is worrisome, but I note that it has stayed below .30 for days on end. The TRINQ is telling us that a bounce could come, but we do not know when or how much loft it might have.

  Jeff Bailey   2/25/03,  10:46:36 AM
Sell Program Premium Alert Dow=7,750 , SPX = 822, OEX= 416, NDX = 973, QQQ = $24.18.

  John Seckinger   2/25/03,  10:41:41 AM
Now let us break apart the Consumer Confidence number. It fell 18.8% to 64, and was partially suggested by the preliminary University of Michigan Sentiment Index. This was the third consecutive decline. I belive this report is at its lowest level in nine years, and note that this index is more business weighted. Since 1990, it appears that a 95 reading is the mean for this index.

  Mark Phillips   2/25/03,  10:35:45 AM
TRMS $41.94 (-1.31) Delayed reaction? Shares of VXGN got hammered due to poor results from trials of its AIDS drug yesterday, but TRMS actually held up well throughout the day. That relative strength has apparently vaporized this morning, with the stock falling as low as $41.76 in sympathy with the rest of the broad market. Should the market rebound later today, this could make for a solid entry into the TRMS play. More cautious traders may want to wait for a push back through the 10-dma ($42.11). Remember, our stop is set at $41.50, so a breakdown under that level will have TRMS exiting the call list tonight.

  John Seckinger   2/25/03,  10:32:55 AM
Breaking apart the home sales report, the January 6.09 mln pace is above the 6.05 mln figure seen a year ago. Only the Midwest showed a decline in January. The South (which is 40% of sales) rose by 7 percent. December sales were revised higher to 5.91 mln. There are definitely consumers out there that find buying houses is a better investment than owning stocks, but I have a feeling that mentality will change in the next few months. Note: Median prices are 6.7% higher than a year ago and average prices are 7.1% higher year-over-year.

  Steven Price   2/25/03,  10:32:23 AM
Swing Trade Signals
I think the fact that we are finding resistance at Dow 7750 is a good sign for bears and with the COMP nudging its way back over 1300, it will be interesting to see if it can hold up above that level. Remember that although we got an intraday low in the Dow down to 7628 on Feb 13, the recent closing low was 7749 and we should watch today's close around that level for signs of a bounce or further weakness.

Current levels: Dow 7753/SPX 822.00/OEX 415.71/COMP 1301

  Steven Price   2/25/03,  10:24:29 AM
Chubb (CB) $47.50 (-0.71) While this OI put play looks anything but bullish, it has held above support at $47.00 the last three days and I'd be looking for a breakdown below that level before entering new positions or adding to current ones.

  Steven Price   2/25/03,  10:21:52 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were stopped out on the 3/4 short position when the Dow traded 7735 at 10:19:44. Entries ont the play were 1/4 at 7994, 1/4 at 7989, 1/4 at 7884. While I am still leaning in favor of more downside to the market, I think the current evnvironment supports taking some profits ahead of time, rather than waiting too long. More aggressive traders still short may want to use a stop at 7811, which was my first stop this morning and sits above the daily S1 of 7800.

  Jonathan Levinson   2/25/03,  10:15:07 AM
Oil and natural gas futures continue to rally strongly today. The fed has announced no action today, so 2.75B in overnight repos will expire for a net drain in that amount. We have bonds rallying, oil and natural gas rallying, equities lower, consumer confidence lower, PPI higher and CPI flat. The fed must be taking notice, if even I am thinking... stagflation?

  John Seckinger   2/25/03,  10:10:25 AM
This certainly looks like an "open drive" session lower; therefore, we could easily end up on or near the lows of the session. So far, it is going according to textbook. Failure on initial bounce; once below the low during the first five-minutes (7778), the Dow remained under pressure; moreover, we are now under the last real calculated level of support (daily S2).

  Steven Price   2/25/03,  10:08:48 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Lower stops to Dow 7735

  Jonathan Levinson   2/25/03,  10:06:06 AM
Existing home sales up to 6.09mm in Jan - higher than expected with Dec revised up to 5.91mm.

  John Seckinger   2/25/03,  10:05:09 AM
Right down to the daily S2 level of 7743. If this level does fail to hold the selling pressure, we will have to use a "fitted retracement" method based off the opening range. Doing that now, I find support below at 7700.

  Steven Price   2/25/03,  10:02:06 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
I am going to chase this drop an lock up a gain. Set stops at 7761.

  Jonathan Levinson   2/25/03,  10:00:48 AM
Consumer confidence # was 64, way below expectations of 77.

  Jonathan Levinson   2/25/03,  9:58:49 AM
An explosion has occurred at an Iraqi oilfield: Link

  John Seckinger   2/25/03,  9:58:49 AM
The slight rebound in the Dow only took the blue-chips back to the 7800 level, not close to the 7817 level and 50% of the range of the first-five minutes. Aggressive bears will try to keep the Dow below the low of this range, seen at 7778. This is just below yesterday's S2.

  Steven Price   2/25/03,  9:58:06 AM
Swing Trade Signals
The COMP is holding right around 1300 so far and conservative traders can think about taking some profits on the short position. A breakdown below 1300 could signal another leg down, but I can see us hovering here, as well.

Current levels: Dow 7771/SPX 823.67/OEX 416.59/COMP 1300.56

  Jonathan Levinson   2/25/03,  9:52:11 AM
February Consumer Confidence and January Existing Home Sales will be released at 10:00 EST, and the market currently expects Consumer Confidence to drop to 77.0 from 79.0 in January, and Existing Home Sales to slip to 5.80M from 5.86M in December.

  Jonathan Levinson   2/25/03,  9:48:43 AM
The COMPX is showing no loft on this bounce attempted from the lows, and the TRINQ is growing extreme at 4.3, TICK.NQ -304. The QQV is actually negative, down .11 to 39.55, displaying a near certainty in a rally off the lows on the part of the QQQ options market. Yields remain weak, -7.5 bps, and so there appears to be a serious difference of opinion amongst the "smart" money.

  John Seckinger   2/25/03,  9:47:42 AM
The 30-year bond set a new contract high (114'17), and is currently up '23 ticks to 114'10. As long as the 30-year stays above 114, we should still see some good selling in equities.

  Jeff Bailey   2/25/03,  9:43:31 AM
Thee 9:00 AM Intraday Update has been posted. Link

  Steven Price   2/25/03,  9:37:56 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Let's try to lock in some gains here. Lower stops to 7811, just above the daily S1

  John Seckinger   2/25/03,  9:37:52 AM
After the first five-minutes of trading, the Dow is under yesterday's S2 of 7785 while seeing a range from 7856 to 7778. To continue looking for an "open drive" session, bears should not let the Dow get above the 7817 level. Note: Today's S2 is seen at 7743.

  Jonathan Levinson   2/25/03,  9:36:23 AM
QQV and VXN are staying low despite the drop in the QQQ and COMPX.

  Jonathan Levinson   2/25/03,  9:31:51 AM
15 point gap down open on the COMPX to 1307, TRINQ 2.45, QQV +.32, TICK.NQ -321.

  Steven Price   2/25/03,  9:17:57 AM
Swing Trade Signals
We are currently short a 3/4 position in the broader markets, entered in 1/4 increments at Dow 7994, 7989 and 7884. The current stop is Dow 8170, although if we get a nice dip this morning, I may tighten things up. Alternate stops I listed last night for more conservative traders are:

1. Dow 7910, just above yesterday afternoon's failed rally at 7900;

2. Dow 8055-8060, just above what would be a point and figure reversal up into a column of "X" and also above the highs of the past few days;

3. Profit taking at any point, as we are in a see-saw market that has been subject to large day to day swings, but not necessarily predictable ones that follow a trend.

Once I see the opening range, I will likely lower the stop to lock in some profits, but I'd like to get a snap shot of the market before deciding where that stop will be placed.

  Jonathan Levinson   2/25/03,  9:14:41 AM
Treasuries continue to rally, with FVX now -7.3 bps. Al Green has 2.75B in overnight repos expiring today.

  Jonathan Levinson   2/25/03,  8:42:54 AM
Bonds have opened strong, with FVX -5.1 bps, TNX -4.2 bps, and TYX -3.6 bps.

  Jonathan Levinson   2/25/03,  8:26:58 AM
I guess this morning's gap down... or at least, the one I think we'll get as of the time of this posting... will leave us with an island reversal on the COMPX- an unsupported island caused by a gap up, and then a gap down. QQQ is currently trading 24.49 on Island ECN, the US Dollar Index has just been ramped up to 99.80 and gold down to 357, with NDX futures under 990 and SPX futures under 830.

Attached is an image, a fantasy really, of bears throughout the market, uploaded for a laugh. It is not a projection, trading advice, or any other such thing. CNBC had nothing to do with it- just the creation of a very talented bear. Link

  Jonathan Levinson   2/24/03,  11:45:21 PM
The Index Trader Wrap has been posted: Link

  John Seckinger   2/24/03,  11:45:15 PM
The Futures Trader Wrap has been posted: Link

  Steven Price   2/24/03,  11:45:07 PM
The Swing Trade Game Plan has been posted: Link

  Steven Price   2/24/03,  11:45:01 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.

  John Seckinger   2/24/03,  1:15:52 AM
Intra-day Pivot/Levels for Tuesday (02/25/03)...

INDU : S2= 7743, S1= 7800, P= 7909 , R1= 7967 , R2= 8075

SPX : S2= 822, S1= 827, P= 838, R1= 843, R2= 854

OEX : S2= 415, S1= 418, P= 424 , R1= 427, R2=433

NDX : S2= 982, S1=988, P= 1001, R1=1007, R2=1020

QQQ : S2= 24.39, S1= 24.57, P= 24.89 , R1= 25.07, R2= 25.39


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