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  Jeff Bailey   2/26/03,  10:29:46 PM
S&P futures (sp03h) settled Wednesday's trade at 827.80. Currently trading 825.80, so lower by 2-points here.

 
 
  Jeff Bailey   2/26/03,  6:22:38 PM
Prediction Friday's close on the SPX will be 822.80. OEX's close will be 416.60.

Will explain thoughts for these two predictions, but centers around the MONTHLY High, Low, Close values for the OEX, and its bearish vertical count of 390.

Here's the Updated Pivot Matrix for tomorrow's trade. Will discuss in tonight's Index Trader Wrap. I've highlighted various levels of correlative support and resistance. We see quite a few levels showing up among the DAILY, WEEKLY and MONTHLY levels. Most are at support levels. Link

Friday's is the last day of February's trading month. The reason for my "prediction" is that if I were to use the current MONTHLY high and low for the OEX, and "predict" the MONTHLY close of 416.60 for the OEX, the MONTHLY S2 support becomes 390.64. That's pretty close to the 390 bearish vertical count of 390 from the OEX point and figure chart.

Am I "betting the farm" on a Friday OEX close of 416.60, or a March low of 390 and another bottom at that level? No. But I've now got some interesting levels that may "jive" with the bearish vertical count of 390 in the OEX.

Note: If I were to "plug in" OEX 413.0, which is a level of correlative support for tomorrow at MONTHLY S1 of 413 and DAILY S2 of 413.30, I'd get a March MONTHLY S2 of 389.54.

 
 
  Jeff Bailey   2/26/03,  5:56:38 PM
QQQ $24.20 .... after-hours session low has been $24.16. This is WEEKLY S2 of pivot matrix.

 
 
  Jeff Bailey   2/26/03,  5:08:58 PM
American Electric Power (AEP) $20.33 -4.37% Link ... announces it plans to issue 50 million new shares of stock under previous shelf registration statement. Offering will bring total shares outstanding to approximately 389 million. As a result of dilutive effect, company is lowering earnings guidance for 2003 to $2.20-$2.40 per share (previous guidance was $2.50-$2.70). See story Link

This may be "good news" for bears that have been playing AEP short/put from previous bearish profiles near $25.00 on thoughts of potential dividend cut. Current quarterly dividend of $0.60 per share needs $2.40 in earnings per year to just pay the dividend. J.P. Morgan and Salomon Smith Barney are underwriters for the secondary offering.

Traders that have been with us awhile and perhaps following "secondary offerings", utilities dividends at risk, potential cash crunches, may remember a similar deal in fellow utility stock Duke Energy (DUK) $13.61 (unch), when it priced a 52 million share secondary offering near $18. Took awhile, but when it eventually discounted (broke below the secondary offering price) stock has been under pressure. Link

I also find another AEP news item after today's close in which AEP pulled down a credit facility to improve near-term cash needs. Here's that story. Link

 
 
  Linda Piazza   2/26/03,  4:03:28 PM
One last look at the five-minute chart on the OEX: The OEX did rise to test that broken bear-flag pattern, but was turned back near the 21-pma. The OEX ended the day sitting right on that midline support from the yesterday's candle, marked by a teal-colored line on the linked chart. Link

 
 
  Linda Piazza   2/26/03,  3:54:57 PM
At 282.95 as I type, the SOX hovers just above important support. A move below 282 and particularly below 280 would break the SOX out of the recent trading range, and perhaps send it to next support near 272. The hourly chart shows 5(3)3 stochastics trying to round up from oversold levels while the 21(3)3 still point down, but from a level that's deeply oversold. If the SOX does not break down beneath that near support before the stochastics cycle back up, that may predict another test of recent resistance. Again, I don't expect the SOX to break through that resistance unless chart signals change in the interim. Daily oscillators still look bearish.

 
 
  Jeff Bailey   2/26/03,  3:53:51 PM
The 3:15 PM Intraday Update has been posted. Link

 
 
  Linda Piazza   2/26/03,  3:39:55 PM
It's the time of day to scan out from the OEX five-minute charts to the daily charts. If the OEX closes at or below current levels, the body of today's red candle engulfs the real body of yesterday's candle, although it does not engulf the shadows. RSI turns down, MACD appears to flatten underneath zero, and the 5(3)3 stochastics speed quickly toward oversold levels. The longer-term 21(3)3 stochastics flatten in mid-rise. However, I'd feel more comfortable in my overall bearish outlook if the OEX closed below 418. Without a close below that level, a bounce and renewed attempt at next resistance seems possible, although at this time, I wouldn't expect that attempt to be successful. Next support lies at yesterday's low at 413.69, but that's light support. Next support below that is 407-407.50, another area I've had marked on my chart for months and also the February low.

 
 
  Jonathan Levinson   2/26/03,  3:33:47 PM
I agree, Linda. Well, that, and the Plunge Protection Team and Etch-a-Sketch(tm) artists in the trading pits.

 
 
  Linda Piazza   2/26/03,  3:32:20 PM
Several writers commented yesterday that they couldn't believe the markets didn't react more strongly to the Consumer Confidence level yesterday. I'm currently reading Reminiscences of a Stock Operator, a book I've meant to read for a long time. Here's a quote from the fictionalized Larry Livingstone, a supposed pseudonym for Jesse Livermore. He comments on the reaction of the markets to the news of the great San Francisco earthquake in the early 1900's, noting first that the markets had a bullish tenor when the news first hit and then saying, The Street paid no attention to the earthquake the first day or two. They'll tell you that it was because the first dispatches were not so alarming, but I think it was because it took so long to change the point of view of the public toward the securities market. Even the professional traders for the most part were slow and shortsighted. Ever since yesterday, I've been wondering if it might be taking some time to absorb the concerns about the Consumer Confidence level. I'm not equating the implications of that Consumer Confidence number to the bearish implications of the San Francisco earthquake, of course.

 
 
  Jonathan Levinson   2/26/03,  3:15:44 PM
I bought some puts on the QQQ yesterday when it the market went up. It took all day today for me to get out of them. I bought them at 75c and just sold them for 90c. I bought 11 contracts so I could buy all or none. 10 contracts with my broker it has to be over ten. The reason is that they are trading so slow. That I tried 10 a few days ago and 4 went then and hour later the other 6 went. Commissions were the same as long as they sell the same day. So for all that with commissions I made $85. But the QQQ is not giving up big gains lately. Is their a reason?

Yes. Jeff had an excellent 1st hand account of his experience trading QQQ contracts in the newsletter last night- Jeff and I have both experienced this with puts recently. The low QQV is the culprit- we had readings at 44+ during weeks past, now it's at 39.65- very little premium in our contracts. This is caused/exacerbated by volume option sellers such as Jeff reported from yesterday.

 
 
  Linda Piazza   2/26/03,  3:12:45 PM
The OEX reached a low of 418.14 before rebounding slightly, nearly achieving the 418 target predicted by the confirmation of the double-top pattern on the five-minute chart. As I type, the OEX trades at 418.75, the midline support of that five-minute candle from the five-minute chart I posted earlier today. Now we're looking at another pattern confirmation--the confirmation of the bear-flag pattern. I always watch out for a retest of a broken trendline or a broken pattern, and such a retest would occur on an OEX move back toward the bottom of the bear-flag channel at 420-421, depending on when it might be tested. The five-minute 21-pma is near that level at 420.73. I'm not predicting that the OEX will retest that level, but only mentioning the possibility.

 
 
  Jonathan Levinson   2/26/03,  3:10:28 PM
We have uncovered a link that fed governor Ben Bernanke might find useful: Link

 
 
  Jonathan Levinson   2/26/03,  3:01:18 PM
The COMPX is back to the break zone of yesterday's range, with a low of the day at 1305. A break below will target 1297 support.

 
 
  Linda Piazza   2/26/03,  2:57:33 PM
Here's an update on the VIX chart that many of us have been watching, with the red line showing the descending trendline that has been capping the VIX's upward movements. Because that line is descending, it now crosses below 40, at about 38.98. However, I agree with Steve's comment last night that it would be safest to wait until the VIX is above 40 to draw too many conclusions. What conclusions could be drawn from a close above 40? Such behavior could be signaling another broad market decline, but again, it's wisest to use these indicators as warnings to prepare for certain actions while using price action itself to guide buy and sell decisions. Link

 
 
  Jonathan Levinson   2/26/03,  2:52:34 PM
Congress passes the SEC emergency powers bill: Link

 
 
  Jeff Bailey   2/26/03,  2:52:02 PM
10-year YIELD ($TNX.X) 3.774% ... broke to a session low. Was trying to work up a 5-minute interval chart discussed in my QQQ comments. Move looks defensive here. Here's the chart, with some time delay as I was putting it together. Link

 
 
  Linda Piazza   2/26/03,  2:49:35 PM
The OEX is also at a day's low. Watch how the OEX behaves near 418-418.75, as these are areas of potential support.

 
 
  Jonathan Levinson   2/26/03,  2:47:59 PM
Lows of the day for GE, MSFT, INTC and QQQ as the COMPX breaks below 1311, TRINQ 3.11, FVX -2.5 bps.

 
 
  Linda Piazza   2/26/03,  2:44:13 PM
Update on the OEX five-minute chart: After breaking beneath the 421.75 confirmation level of the double-top formation, the OEX began to trade in an upward-slanting regression channel, rising up to test resistance and then falling toward the bottom of the channel, as it is currently doing. Due to my prior experiences (wrongly believing that higher highs and higher lows always was a bullish development) and to the definition of a bear flag pattern, I tend to view these types of patterns developing after a decline as potential bear flag patterns until proven otherwise. Confirmation of a bear-flag pattern would come on a move and five-minute close under 420.80, while an upside breakout would come on a close over 422.50. As I type, the OEX has moved to test the bottom of that channel, but there has not yet been a five-minute close beneath it. Link

 
 
  Jeff Bailey   2/26/03,  2:40:53 PM
American Electric Power (AEP) $20.50 -3.57% ... getting downside alert below yesterday's low here and stock defensive. Set an alert here as stock looked to consolidate after recent upgrade by UBS from a couple of sessions ago.

Disclosure: I currently hold bearish position in AEP in Aug. $20 puts.

 
 
  Jeff Bailey   2/26/03,  2:30:18 PM
"Turkey basted" ... not to make fun of a losing trade, but just drives home the point of what kind of market we're in and very "news driven." Link

I'm not sure if my 10:42:46 post made it in time for some traders to pull their bids in previously BULLISH profile of the QQQ for entry at $24.83. I had already placed an order with my broker and got filled on the move lower, then protective stop got hit 25-minutes later below $24.60.

Q's have been "range-bound" ever since, but so has 10-year YIELD. I've also placed a DAILY pivot analysis retracement on the 10-year YIELD for intra-day trading the QQQ and you'd think you were looking at the Q's. May take a 10-year YIELD above 3.8% to see Q's above DAILY pivot of $24.60, or at least the bond market's close. Q's have held up rather well, as have major indexes after hitting their lows of the session. Might see one of those "last hour" bids come into stocks on bond market close.

 
 
  Linda Piazza   2/26/03,  2:30:09 PM
Currently at 2050.81, but with a high five-minute high this period of 1051.97, the Dow Jones Transportation Index now tests yesterday's high of 2052.09.

 
 
  Jonathan Levinson   2/26/03,  2:15:51 PM
The CRB is now up to 249.45, led by natural gas (+11%) and oil. HUI and XAU are doing well too, +2.25 and 1.09 respectively. Mexico has agreed to support a second UN resolution.

 
 
  Linda Piazza   2/26/03,  2:08:54 PM
At 13.70 as I type, CSCO has now dropped below its exponential 200-dma and its simple 50 and 21-dma's. Its simple 200-dma lies just beneath at 13.51. For several months, CSCO has been trading in a range from about 12.75 to 15.40, but February's peak reached only 14.78 before CSCO turned down. If CSCO touches the lower end of its range before trading the higher end, this will be a lower intermediate high for CSCO, casting more doubt on its ability to complete that potential reverse H&S pattern.

 
 
  Jonathan Levinson   2/26/03,  2:05:02 PM
It's amazing what 10 QQQ pennies can do- the market doesn't feel light anymore as the TRINQ climbs to 2.34, QQV +1.86 and the TICK.NQ tumbles to -238. The FVX is back to -.8 bps, barely twitching, and the COMPX is back to 1313. This is nerve jangling rangebound trading within a very narrow range.

 
 
  Jeff Bailey   2/26/03,  2:04:15 PM
The 1:00 PM Intraday Update has been posted. Link

 
 
  Linda Piazza   2/26/03,  1:56:48 PM
After my post about the costs of stabilizing Iraq, a reader wrote reminding me that Iraqi oil would help pay those costs, although the reader commented that this view was politically difficult to espouse and, for that reason, rarely voiced. The Senate Energy Chairman was just on CNBC, commenting that Iraqi oil belonged to Iraq, and should be used to pay the costs of stabilizing the country, echoing that reader's comments. Thanks, D.S., for the reminder.

 
 
  Linda Piazza   2/26/03,  1:43:35 PM
Looking for signs of strength or weakness in the market, I've been scanning several charts and noticed that today, Merrill (MER) trades just below its Sept 01 intraday low of 33.50, but above the 32.01 low posted earlier this month, which would be next support if MER continues to drop today. MER currently trades at 33.47. If MER should instead move up, it will face next resistance at its 21-dma at 34.20. Weekly 5(3)3 stochastics try to cycle back up from above oversold levels, but daily 5(3)3 are rolling back down from below overbought levels. Daily RSI shows a pattern of lower highs and lower lows beginning last November.

 
 
  Jonathan Levinson   2/26/03,  1:37:52 PM
GE has just printed a low of the day, but the COMPX is starting to feel "light" as QQQ drifts higher, now 24.56. FVX -.5 bps, TRINQ 1.92, TICK.NQ -35.

 
 
  Kent Barton   2/26/03,  1:35:01 PM
IBM ($77.95 -1.12): Those weak revenue numbers from HPQ aren't helping Big Blue. Shares are trading lower by 1.4%, underperforming both the Dow and NASDAQ. On Friday we added IBM to our Play List on Premier Investor, but thus far it hasn't cleared our entry trigger at $80.06. The stock is currently trading an Inside Day and gravitating towards the converging 21-day and 100-day moving averages.

 
 
  Linda Piazza   2/26/03,  1:31:56 PM
What's happening on the OEX? On the five-minute chart, at least, the OEX has been rising to test the 421.75 level that marked the confirming level of the double-top formation. This level was the low of the trough between the two peaks. The OEX has been bouncing between support near 420 and this new resistance, currently testing it for the second time since falling through 421.75 a couple of hours ago.

 
 
  John Seckinger   2/26/03,  1:23:16 PM
Looking at the Pivot Analysis Trading System (grin), it is interesting how the Dow appears to be coming back to test the daily pivot of 7850. Stops should be found just above. Speaking of levels, a level to watch in the QQQ's definitely comes in on the QQQ's at 24.80, and should be watched carefully if the market does in fact bid higher.

 
 
  Linda Piazza   2/26/03,  1:21:55 PM
Current adv/dec ratios are .63 for the NYSE and .58 for the Nasdaq. Down volume is 1.8 times up volume on the NYSE and almost 4 times up volume on the Nasdaq. New highs vs. new lows don't seem quite as unbalanced today as they did earlier this week, with the ratios at 26:73 for the NYSE and 39:59 for the Nasdaq. Total volume is 718 million shares on the NYSE and 662 million on the Nasdaq.

 
 
  Jonathan Levinson   2/26/03,  1:16:06 PM
A quick burst of buying a few minutes ago caused a brief bump in the ADVDECV.NQ line, but the trend remains steadily lower as the day progresses. This steadiness is reflected in that persistent TRINQ at 1.99 now. The TICK.NQ is nearly flat at -39, but volatility is rising, with QQV +1.59 now at 39.55. This pause in the decline is nothing new, and the only question will be which way it breaks out. Bears who are tired of getting mauled on those quick ramp jobs we've come to know well over the past weeks should consider putting on a tight stop here. The high QQV didn't occur yesterday, but other than that, it feels like we've been here before.

 
 
  John Seckinger   2/26/03,  1:09:57 PM
Mortgage Bankers Association of America (MBA) announced today that their refinancing index rose 10.1 percent to 5,989.6 in the week ended February 21st. This is a high not seen since November 15th. Note: Refinancings accounted for 75.3 percent of the February 21 week's loan applications, and rates fell to 5.65 percent, a record low since the index was started in 1990. Interesting, the trade group's measure of demand for loans to purchase a home (purchase index) fell 7.5 percent to 309.0 last week, its lowest level since the week ending February 15, 2002.

 
 
  Linda Piazza   2/26/03,  1:06:56 PM
Some of you might remember that I've been posting OEX graphs that show some similarities between this period and the May-July slide. The similarities I noted rested in the configuration of certain oscillators in relationship to each other. Reader T.G. sent the following graph, posing the possibility of similarities, too, but looking at different factors. Here's his graph: Link I note, however, that neither this reader nor I can promise that these patterns will continue to repeat. Recognizing patterns is an important tool for traders, however. Last week, I noted that recognizing repeating patterns in the May-July slide and the current period kept me from making a too-bullish interpretation of the action.

 
 
  Jonathan Levinson   2/26/03,  12:56:49 PM
An excellent article by Leigh. Thanks Leigh and Linda for highlighting it.

 
 
  Linda Piazza   2/26/03,  12:53:36 PM
Concerning John's post about the White House estimates of the cost of an Iraq war, the international community thinks the U.S. vastly underestimates the costs since an effort to oust Hussein means staying in the region and stabilizing it. This isn't a dismissal of John's post, of course, but of the White House estimates.

 
 
  Mark Phillips   2/26/03,  12:51:43 PM
UTX $58.09 (-1.46) trading new lows in the past few minutes, new OI Put play has broken below its recent lows and is getting close to a break below the $58 level. That trade at $58 will solidify the break below the PnF bullish support line as well as generate a new PnF Sell signal. The current vertical count is 451, and with price breaking down and On Balance Volume breaking to its lowest level since mid-October, it certainly appears the stock is out of favor with the bulls.

 
 
  Jonathan Levinson   2/26/03,  12:48:49 PM
The US Dollar Index has bounced off its lows at 99.50 to the current 99.55, as spot gold continues to hold above 354.25.

 
 
  John Seckinger   2/26/03,  12:46:58 PM
Few side notes: The White House estimates war with Iraq will cost $95 billion. There is a bidding deadline in the two-year notes which ends in 15 minutes, and FNMA is actually lauching three-year notes today to be priced. Talk is that these notes will be about 25 bp higher than Treasuries.

 
 
  Linda Piazza   2/26/03,  12:46:20 PM
Reader T.G. mentions that Martin Pring will be on CNBC Friday. Frequent readers will remember that I sometimes quote from one of his books on technical analysis and last night, Leigh mentioned him, too. By the way, if you haven't yet read Leigh's article on trading systems, it's an eye-opener. Here's the link: Link

 
 
  Jonathan Levinson   2/26/03,  12:46:06 PM
News that the total number of US reservists on duty has increased by 16,735 to 168,083.

 
 
  John Seckinger   2/26/03,  12:44:07 PM
The latest bounce took the Dow to 7845, and the daily pivot is at 7850. Coincidence?

 
 
  Jonathan Levinson   2/26/03,  12:37:49 PM
The 4 point bounce off the day low on the COMPX 5 minute candles looks like a bear flag to me, but it feels reminiscent of the action that occurred 15 points lower yesterday, as the TRINQ stays high at 2.23. However, the FVX is holding its losses, -1.2 bps, and QQV is staying positive at +.91, which wasn't the case yesterday. A print above 1320 could change this, but for the moment, the COMPX still looks like there are further losses ahead.

 
 
  Linda Piazza   2/26/03,  12:28:37 PM
As you're reading my posts or those of other writers on the Monitor, consider the time frames we're mentioning and how that might relate to your preferred trading method. I tend to stay in trades a couple of weeks, so when I'm looking at daily and weekly charts, I'm looking for an overall trend rather than what might happen in the next day's trading. When I mention that I see potential chinks in the SOX's armor, for example, as I did in a previous post, my outlook wouldn't necessarily change if the SOX spent the next day or two consolidating at current levels or even moving up a bit and retesting the top of that descending channel I mentioned. If you tend to stay in trades only a day or two and tend to choose your option strike and expiration month accordingly, such a move might blow through your stop or violate the plan you devised when you entered a trade.

I often look at intraday charts, too, even one-minute and five-minute charts. Just as Jeff and John look at daily, weekly, and month pivots, supports, and resistances and try to find correlative prices between the three, I sometimes am watching for intraday moves near an area I've pinpointed as important on my daily charts. For example, I've mentioned in past weeks that I've had the OEX 418 level marked on my charts for several months now, and today's five-minute double top formation predicted a target near 418, so that I'll certainly want to watch to see what happens near that level, if the OEX does try to fulfill that target. I also watch intraday charts to determine the best entry or exit, and to give me clues as to current market psychology.

 
 
  Mark Phillips   2/26/03,  12:20:50 PM
CB $46.32 (-0.93) The downward trend continues in shares of CB, as the stock once again rolled over at a lower high this morning and plunged to a new low of $46.22. While slightly off its worst levels of the session, today's continued slide just confirms the bears are still very much in charge. Traders already in the play should think about ratcheting their stop down to $48.50, just above Monday's failed rally, and the 10-dma ($48.20), which continues to provide resistance to any upside lift.

 
 
  Jonathan Levinson   2/26/03,  12:20:47 PM
I would characterize the Shiokawa comment as "short term", given the regularity with which the BoJ makes statements about what it plans to do with its currency on a regular basis.

 
 
  John Seckinger   2/26/03,  12:17:59 PM
There was a Q&A concerning FDIC, and Greenspan said that the drop in consumer confidence is not a surprise given oil prices and geopolitical concerns. The dollar continues to fall lower, while FX traders are talking about pretty light volume today. There has been talk of Japanese intervention this morning, and this is comical considering that Shiokawa came out yesterday and said that "the market will decide exchange rates."

 
 
  Linda Piazza   2/26/03,  12:10:50 PM
I perhaps see some chinks in the SOX's armor. As I mentioned in the Market Monitor late yesterday afternoon, the SOX has been trading in a descending regression channel on the daily chart, and prices appear to be rounding over again as they again approach the top of that regression channel. 5(3)3 stochastics are already turning down out of overbought territory, and 21(3)3's have made a bearish kiss. MACD appears to be turning down again, and RSI has turned down, indicating possible bearish divergence if prices also turn down from this level. I use the word "appear" when describing price action because the SOX's behavior has lately defied explanation.

 
 
  Mark Phillips   2/26/03,  12:05:50 PM
DGX $54.51 (+1.06) New OI Call play DGX is definitely bucking the broad market trend this morning, currently up more than 2%. Continuing yesterday's rally, the stock rallied through the $54 level, generating a PnF Buy signal and a bullish price target of $63, as noted in last night's writeup. The next couple obstacles are the $55 historical resistance, followed by the 50-dma at $55.59. Traders looking for new entries will now be eyeing a possible pullback to the $53.00-53.50 area or else a breakout over the 50-dma.

 
 
  Jonathan Levinson   2/26/03,  12:05:28 PM
Bloomberg radio has just mentioned that Ted Turner has recently accelerated selling in his substantial AOL holdings- up from his previous $5M worth of stock per month.

Spot gold has reversed, currently +2.90, and has pulled up the miners with it, with HUI +2.15 to 133.16 and XAU +1.03 to 71.52. The CRB is doing well too, back above 248 as commodities find a bid, with all of its components up except for coffee and live cattle contracts.

The COMPX found support just above 1310 on its way back down to the top of yesterday's range. The TRINQ remains above neutral at 1.92, TICK.NQ flat at -33, FVX confirming -1.6 bps on the day. QQV is +1.55, showing significantly more volatility increasing than we had yesterday even during the post-con-con data selloff.

 
 
  Linda Piazza   2/26/03,  11:54:17 AM
The OEX did confirm the double-top formation seen on the one-minute and five-minute intraday charts. That forecasts a target of 418, although predictions forecast from a five-minute chart are not always reliable. A fall might also be arrested by S/R in the 418.75-420 band, too, with some historical support just above 420 and with midline five-minute candlestick support at 418.75. If the OEX plummets below 418, there's slight historical support near 416.75 and again near 414.50, but yesterday's lows would be the next logical target.

 
 
  John Seckinger   2/26/03,  11:50:58 AM
The Dow fell underneath its bullish regression trend line, as well as its daily pivot at 7849. The Dow is currently testing the halfway point of the first period's range of YESTERDAY's first five-minutes (7817). This was a solid level yesterday, and should hit stops underneath. Bonds continue to bid higher via prices, with the 30-year now up '11 ticks at 114'12. As long as above the 114 level, equity bears should be content.

 
 
  Jonathan Levinson   2/26/03,  11:42:43 AM
Downside break of the COMPX range with TRINQ up to 1.80. COMPX currently trading 1315, targetting yesterday's s/r zone of 1298-1305 on further weakness.

 
 
  Jonathan Levinson   2/26/03,  11:41:51 AM
Ominous words in a join release from the thrift and federal bank regulatory authorities regarding mortgage banking activities: Link

 
 
  Linda Piazza   2/26/03,  11:41:27 AM
This morning, I put up a chart showing midline candlestick support on a five-minute OEX chart. On previous days, I've posted 60-minute charts showing midline S/R provided by the larger-than-normal 60-minute white candles on February 13 and 18th. Here's an update of that chart, showing how the OEX has behaved near the teal-colored lines that represent the midlines of those candles. While the move above the highest midline support seemed to argue against its importance, some consolidation did occur near that level and this morning's action has brought the OEX up to test that resistance. Link

 
 
  Jeff Bailey   2/26/03,  11:40:39 AM
The 11:00 AM Intraday Update has been posted. Link

 
 
  Jim Brown   2/26/03,  11:40:08 AM
Our Internet connection is sporadic this morning while they work on the outside access issue. If there are long periods between post it may not be intentional. Please bear with us.

 
 
  Linda Piazza   2/26/03,  11:16:10 AM
GE trades at 23.65 as of this writing, below 24-24.25 resistance provided by historical support/resistance and the simple 50-dma at 24.24. The daily 5(3)3 stochastics have begun to cycle down from overbought levels, and the 21(3)3 stochastics have made a bearish kiss in overbought territory. RSI appears to be rolling, and if that roll continues and prices continue to move down, RSI will be showing bearish divergence from GE's price action (higher high on RSI with lower high on GE). Just below current prices, however, at 23.01 is the simple 21-dma, so next support should be at that level if GE should continue to fall. Also, the July intraday low was 23.02, a low that GE has already exceeded this month. On February 13, GE traded an intraday low of 21.30, slightly exceeding its October 10 intraday low of 21.40.

 
 
  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.

 
 

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