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  Jeff Bailey   3/1/03,  1:11:35 PM
Gaming Sector ... According to Dorsey/Wright and Associates, the gaming sector bullish % (BPGAME) reversed up into "bull alert" status on Friday, which is a reversal from 30% bullish to 40% bullish. December high bullish % was 56%.

Leader looks to be Intl. Game Tech (IGT) $78.58 +1.2%Link , gave double top buy signal at $79, bullish vertical count is $95, first sign of weakness would be $73. Partial positions here, then look for spread-triple-top at $81 for further bullishness. Should S&P 500 Bullish % ($BPSPX) Link reverse back up into "bull confirmed" at 40%, IGT bull could hit the "jackpot" if MARKETS and SECTOR both become bullish phase.

Other notables ... Acres Gaming (AGAM) $6.52 -3.4% Link , Gtech Holdings (GTK) $29.10 +1.2% Link

Mutlimedia Games (MGAM) $18.29 +5.11% Link had a strong day on Friday. Looks to be at "historical" bottom level. Since bearish count is currently $7.00, look for negating "buy signal" at $19.00.

Penn National Gaming (PENN) $17.04 -0.75%, here's a compelling one and one to watch for volume break above 200-day SMA, which was tested on Friday Link (nice double bottom at $15, 21-day & 50-day curling up for support at $16.25). P/F chart traded a triple-top buy signal at $17, so shorts should be looking to cover with sector now "bull alert." Link

  Jeff Bailey   2/28/03,  6:41:25 PM
Updated Monthly/Weekly/Daily Pivot Matrix for next week. Link

  Steven Price   2/28/03,  3:57:36 PM
Radar Plays: These did not make the final cut, but traders can keep an eye on the possibilities.



  John Seckinger   2/28/03,  3:54:45 PM
Looking ahead, there is the ISM report on Monday and the February non-farm report on Friday. Monday is also a new moon (grin). It is nice to see a solid week of economic reports, since it should really force bond traders' hands and let us get a good fell for the ten-year yield. Is this move a trap? Will we see another wave lower in yields? Is this a "I don't want to be short heading into war" bond trade?

  Steven Price   2/28/03,  3:52:57 PM
Swing Trade Signals
I'm heading into the weekend with a 1/2 short position, with the stop still set at Dow 8170. I would suggest alternate stops for conservative traders of 8060-8065, or just above 8000.

  Jeff Bailey   2/28/03,  3:51:32 PM
The 3:15 PM Intraday Update has been posted. Link

  Linda Piazza   2/28/03,  3:45:08 PM
I’ve talked about the OEX and how it’s been trading today in relationship to its 21-pma on the 60-minute chart, at 423.50. The OEX is now dipping just below that average as it prints 423.28 as of this writing. Also important is that, if the OEX stays at or below current levels for the rest of the trading day, today’s action adds yet another day that the OEX has tested and then failed from its simple 21-dma on the daily chart, currently at 424.26.

  John Seckinger   2/28/03,  3:42:12 PM
I received a few emails wondering about the month-end extension buying in bonds. Looking at the ten-year yield, I will be putting an alert at the 3.759% level and, if yields do rise above this area, then I will look for a nice bull trap in bonds. A bull trap in bonds (speaking in terms of price) should be bullish for stocks. Speaking of stocks, I am a little surprised it took this long for stocks to move after the bond market closed.

  Jonathan Levinson   2/28/03,  3:40:28 PM
QQQ has broken below 25, currently 24.97. TRINQ .53, TICK.NQ -286. This is the biggest move I've seen in the past 40 minutes.

  Mark Phillips   2/28/03,  3:40:04 PM
Great observations on the VIX, Linda! You're slowly winning me over to your way of thinking and the inflection points you mentioned in your 3:29 post are indeed hard to explain in any manner other than the importance of those moving averages, even on the VIX.

  Jonathan Levinson   2/28/03,  3:32:13 PM
I can report that the indicators have not budged in the past half hour, with QQQ at 25.04, TRINQ .43, QQV -.57, TICK.NQ +82... the NDX has achieved equilibrium.

  Linda Piazza   2/28/03,  3:29:26 PM
Mark and I are soon going to have another opportunity to study whether the VIX really does behave as a stock or index might around a moving average. It’s been my contention that it does, and today’s “bounce” from its 33.39 low at the confluence of the simple 50-dma (33.10) and exponential 200-dma (tellingly, at 33.37) offers one more bit of evidence to confirm that belief. That doesn’t mean that the VIX will stay above that 200-ema by the end of the day, as stocks and indices fall beneath important MA's, too, but only that it seems more than coincidental that the VIX hit that level and then moved up. It’s also perhaps more than coincidental that the simple 200-dma at 34.66 seemed to turn back the VIX this morning.

  Linda Piazza   2/28/03,  3:11:32 PM
The 60-minute 21-pma continues to support OEX prices this afternoon, with the OEX bouncing each time it approaches that MA. Here’s an update of the OEX chart 60-minute chart I showed earlier today, including the wedges shown on price, 21(3)3 stochastics, and 5(3)3 stochastics. This time, I’ve also included the RSI, showing that it, like the 21(3)3 stochastics, broke above the upper resistance line of its wedge yesterday, successfully retested the line and then moved up. Unlike the 21(3)3 stochastics, which have turned down to retest the wedge support, the RSI has flattened. If the OEX does not soon break below that 21-pma, I would instead expect another test of the trendline resistance on the price chart. Link

  Jeff Bailey   2/28/03,  3:06:03 PM
Bond Market's closed ... final 15-minutes of trade once again (like yesterday) saw strong buying, pegging 10-year YIELD ($TNX.X) 3.696% near its low of the session, which was 3.692%.

Dow=7,883, SPX=840, OEX=425, NDX=1008, QQQ=$25.08 HERE.

  John Seckinger   2/28/03,  3:04:33 PM
The bond market has closed. Note: Bonds did seem to keep stocks under pressure for most of the session, and now this asset allocation play is no longer a factor. This should explain the quick short-covering move in stocks.

  Steven Price   2/28/03,  2:59:47 PM
Swing Trade Signals
I was looking back over my previous short signal at Dow 7940 (10:24:38) from earlier this morning and realized that my indication to go short never hit the monitor ahead of time. I have no explanation for this, but since we bounced after the entry and spent some extended time above that level, I hope traders following the signal had plenty of time to enter. I apologize for the glitch. I have not received any complaints so far, so I hope everyone who wanted to get in had plenty of time.

  Jonathan Levinson   2/28/03,  2:58:09 PM
A slight ripple emanating from the St-Louis fed, which stands ready to intervene "really vigorously" in the event of a market shock: Link

  Jonathan Levinson   2/28/03,  2:54:39 PM
Yes, thanks Brian!

I was growing concerned by a show of strength in the FVX, but it was for naught, as FVX is back down to 2.688%, for a 4.5 bps dip on the day. TRINQ remains low, an astounding level of continual buying pressure this week with the exception of that one day during it which it printed above 4.0 for me. Not like the good ole days last spring when it was continuously above 3-4. HUI is +1.51 and XAU +1.73, in a rare show of relative strength from the XAU above HUI. CEF is at its HOD at 5.0. QQQ appears to have achieved the mystical "equilibrium" point, as price stayes pegged just above 25.02.

  Linda Piazza   2/28/03,  2:53:25 PM
For those of you who missed Martin Pring’s discussion on CNBC, as I somehow did, reader T.G. summarized Pring's interview with Ted David. Thanks, T.G. Here’s the summary:

Mr. Pring gave a brief explanation of the 6 stages in the Business Cycle, Recession Phase 1)bonds bottom out first as interest rates begin to fall, 2)stocks begin to rise as a recovery is anticipated, 3)commodities recovery takes place and prices bottom out. Recovery Phase- 4) Bonds peak, 5) stocks anticipate the next recession, 6)as economy weakens prices peak on commodities. Pring uses 10 indicators for each of the 6 models. Of course, as with every model, it's not without flaws. January 2001 Pring's stock barometer went to bullish as the monetary barometer went bullish. That same model went to bearish last month (barometer measures environment). So why did it fail back in 2001? The A/D was rising at that time, but the SPX declined because of over valuation at the top of the bull market.

So where do we stand now? Stage 1 model. Bullish for Bonds, Bearish for Stocks and Bearish for Commodities. What would make things change? Pring closely follows the Industrial Commodities price versus Stock prices with a smoothing momentum indicator. Back in '95 it gave a BUY signal and in '99 is gave a SELL and has not as of yet given a buy. What he watches for is the momentum , if it's rising that's bullish- falling is bearish. He would like to see falling commodity prices and a sustainable rally in the SPX. He tracks the monthly SPX with a 12 month moving average. So, he would go bullish if the SPX climbed over the 950 level. Looking back at past bear markets from '29 to '32 and '73 to '74 it never crossed over the moving average.

  Mark Phillips   2/28/03,  2:47:22 PM
Following up on my post earlier about gold (well, actually I just posted Buzz's note), I got an interesting reader email related to researching ETFs and the like.

Mark, Another good site for closed-end funds, exchange traded funds and convertibles is one run by Nuveen. The address is www.etfconnect.com (for exchange traded fund).

This site has data that shows graphically the historical differences between a fund's NAV and share price. Whether it traditionally trades at a discount or a premium and how that gap widens and narrows over time.

I'm just learning about this stuff myself. The idea is to buy when the share price is at the most favorable spot to the NAV: at the deepest discount or at least, the smallest premium.

Thanks Brian! Good info there!

  Jonathan Levinson   2/28/03,  2:43:30 PM
Heating oil and natural gas futures remain higher by better than 8% today, while crude is down by 1.34% to 36.70.

  Linda Piazza   2/28/03,  2:41:29 PM
One stock that has already tested its October lows is GE, currently trading at 24.08. GE trades above its rounding-up simple 21-dma, but in a theme that’s common this week, it’s been testing and falling back from another MA. In GE’s case, it’s the simple 50-dma just overhead at 24.16. Daily oscillators give mixed messages with GE. The 5(3)3 stochastics began to cycle down, but have flattened in a kind of squiggly line that’s too difficult for my 53-year-old eyes to interpret. When that happens, I decide the direction is inconclusive! MACD has been trying to round up over zero. RSI has been testing the 70 level and falling back from that level for several days. I have to rely on price action alone to judge what’s happening. I note that GE currently trades just above its July 24 opening price. July 24, as you may remember, GE opened at 24.19, fell to July lows, and then bounced strongly up from those levels. This level also marked the December low, so that GE is being pressured by former support that is now resistance. In addition, an intermediate-term descending trendline (August-present) crosses exactly at GE’s current level, adding its resistance to that of the 50-dma and the horizontal resistance. A longer-term and less-steep descending trendline crosses a little more than a point above current levels, also perhaps retarding GE’s upward movements.

I watch GE because it’s a conglomerate that’s been a bellwether stock. If GE is turned back from either of its descending trendlines, that might portend more weakness in the broader markets. If it manages to trade above those descending trendlines and then move above its January highs, bears might be alerted to more strength in the market. Daily OBV doesn’t yet promise much strength in GE, however.

  Kent Barton   2/28/03,  2:32:21 PM
Infosys (INFY) $61.77 +1.77 Last night we added INFY to our Premier Investor bearish play list. With shares gapping higher this morning, we haven't yet been triggered. While there isn't any apparent news to explain the upward gap, it's interesting to note that shares haven't been been able to move above the 200-dma. A rollover from that moving average would probably send INFY back to the $60.00 level.

  John Seckinger   2/28/03,  2:27:26 PM
It was the 'ol "dip under the pivot, trap some bears, and then bounce back towards 7900." In my opinion, not a good market to trade. 50% of today's range is 7912, so I could see the Dow go there. Note: We are currently in the range established during the first five-minutes.

  Jonathan Levinson   2/28/03,  2:07:41 PM
The ten year yield is at an important support level- a break below would imply a renewed flight to bonds, which certainly wouldn't help equities. Link

  Jeff Bailey   2/28/03,  2:06:24 PM
The 1:00 PM Intraday Update has been posted. Link

  Jonathan Levinson   2/28/03,  2:03:19 PM
The 30 and 60 min 10(5) stochastics are keeling over, yet it's tough to get too excited about a downside move. If the last two weeks is any indication, we'll just drift lower for an hour or two and then ramp back up to new highs in a 10 minute flagpole liftoff. But, the market hates predictable patterns, so we'll continue to watch. FVX is off its lows, currently -4.3 bps, the TRINQ is .48, TICK.NQ -47, QQV -.80. Bernanke and Al Green are probably sparking up the first of the afternoon's tuberos, selecting a musky port and perhaps some Bach sonatas... Glenn Gould, perhaps. The luxurious creak of well-aged leather as Al Green and the tenderfooted Bernanke ease into their wing-backed easy chairs as Al Green puts the ole dogs up on an imported hassock, the batphone and cropdusters forgotten for the moment. TGIF.


  Linda Piazza   2/28/03,  1:55:26 PM
On the 60-minute OEX chart, it’s possible to draw an ascending trendline along the lows from February 25 until today. This trendline is inside the wedge showed on earlier charts. A break of that trendline would come near the 21-pma on the hourly chart, currently at 423.45. If the OEX were to break below this trendline and the 21-pma, I would then expect a test of the 418-418.75 area. Just below that is the ascending trendline from the larger wedge, crossing now at 417. Hmm. If I’m remembering last night’s write-up correctly, isn’t that strangely close to Jeff’s prediction for the end-of-day value for the OEX?

  John Seckinger   2/28/03,  1:51:13 PM
The Dow continues to bounce off its daily pivot, but remain below the 7900 level during the first rebound. Bonds continue to outperform, and it is interesting that solid bids have entered the five-year sector. This is bearish for stocks, and might be a catalyst for a move down towards 7800. Pretty optimistic to think it will get there, and I am sure shorts will use the daily pivot at 7866 as just that, a pivotal level.

  Linda Piazza   2/28/03,  1:47:27 PM
Volume is now 771 million shares traded on the NYSE and 804 million on the Nasdaq. Advancers still lead, with a 1.44 adv/dec ratio on the NYSE and a 1.03 ratio on the Nasdaq. The Nasdaq ratio shows that decliners now pull almost even with advancers. However, up volume still comes in at 1.7 times down volume on the NYSE and 2.51 times down volume on the Nasdaq. All these values show some declines in bullishness, but new highs still lead new lows.

  Jeff Bailey   2/28/03,  1:22:26 PM
US and UK get Japan's backing ... news wires reporting that Japan, which is not a Security Council member will back the US/UK and Spanish resolution in the United Nations following Hans Blix's scheduled report on March 7th.

  Mark Phillips   2/28/03,  1:20:48 PM
MME $35.14 (+0.24) This OI Call play finally got triggered this morning when the stock pushed through our $35.25 trigger. That breakout could have been used for aggressive traders to enter the play, while those with a more conservative approach would have wanted to wait for a pullback to confirm that level as support. In the last hour, MME has pulled back and appears to be bouncing from above the $35 level, so it looks like all systems are "Go".I'll personally feel a lot better about the play if it can work back up towards the days high by the close though.

  Jonathan Levinson   2/28/03,  1:20:24 PM
A moment of silence for SYMC bulls today, watching the stock get smoked over 12% on over 7x the average daily volume.

  Jonathan Levinson   2/28/03,  1:14:58 PM
They're buying bonds, buying gold, silver, platinum, natural gas, heating oil and a bunch others... and QQQ, COMPX, SPX and INDU. Well, I'll follow the larger trend and wait for the gains to be reversed in equities, based on the reasoning that the larger money (treasuries) should outweigh the bullish action in equities. Meanwhile, though, it's still a buyer's market on the COMPX- TRINQ .39, QQV -1.03. The TICK.NQ is -60. My guess is that it's end of month tape painting- time will tell.

  Jeff Bailey   2/28/03,  1:11:14 PM
GSTI Software Index (GSO.X) 102.34 -0.44% ... slight laggard sector in technology, with Symantec (SYMC) (see 12:57:06) impacting group. 102 level has been 2-day support after brief dip below 102 on Tuesday.

  Linda Piazza   2/28/03,  1:06:03 PM
European markets moved up quite strongly after U.S. markets opened, with the FTSE 100 trading in the green by 85.70 points and the CAC 40 up 38.27 points on the day. The DAX, which stays open longer than the other two, had time to react to the recent move down in the U.S. markets, and had fallen about 17 points in the last twenty minutes, from being up 48.27 points to being up 31.48 points.

  Mark Phillips   2/28/03,  12:59:31 PM
ATK $47.74 (-1.42) Finally!! ATK has been incredibly stubborn about moving south with the rest of the Defense sector, and yesterday's intraday move over $50 didn't look good at all. But the stock faded into the close and with the DFI index getting hammered to new lows again today, ATK is retracing its recent bounce and is once again approaching that $47.50 support level. Aggressive traders that faded that most recent rally attempt are looking good today, but will want to carefully monitor the stock as it nears support. A breakdown below that level can be used for new entries into the play as it ought to continue down towards the $40 PnF bearish price target, although there is likely to be more mild support in the $43-45 area.

  Jeff Bailey   2/28/03,  12:57:06 PM
Symantec (SYMC) $40.30 -14.9% ... stock hit hard today after analyst meeting. During meeting, company showed 2004 pro forma EPS of $1.88 and this was below First Call of $1.92. However, I'll make note that January 15th guidance from the company was for $1.88. Link

Seems a bit "overdone" to the downside, and aggressive bull might take a look at the $40 calls and bounce back to $45 in coming weeks.

  Steven Price   2/28/03,  12:48:30 PM
Swing Trade Signals
With the fade back below 7900, I'd love to see some resistance there, as well. Also, if the SPX can get back below 840 on a 5 min closing basis, I think we'd have the start of a successful short position. So far, the ticks into the red were short lived and the bulls appear to be drawing a line in the sand at the even mark. Yields finally bounced, but the bounce is beginning to fade.

  Linda Piazza   2/28/03,  12:46:37 PM
Here’s an update of an OEX chart I put up earlier in response to a reader’s question about the wedges forming on the stochastics. This updated version shows that prices were turned back at the descending trendline from late January, while the 5(3)3 stochastics were turned back from their own descending trendline. The 21(3)3 stochastics had previously broken out of their own wedge and had successfully retested the wedge, but now turn back down, too. Link Until prices break conclusively out of this wedge, I still consider the OEX as consolidating. However, my expectation is that the OEX will break to the downside, as my overall bias is down and as this formation occurred after a steep decline. I therefore consider this consolidating pattern most likely to be a continuation pattern. Still, I’m not so wedded to this opinion that I'm betting my family savings on that ultimate direction, and perhaps you shouldn’t either.

  Mark Phillips   2/28/03,  12:46:01 PM
Thanks Jonathan! Appreciate the feedback!

  Jeff Bailey   2/28/03,  12:40:51 PM
10-year YIELD ($TNX.X) 3.692% ... clears the 3.7% level. "Circle gets the square" at 3.7% and helps negate the potential for "bull trap" in Treasuries. Link

  Jonathan Levinson   2/28/03,  12:39:42 PM
Yes, Mark. The CEF premium has been pretty steady and I expect it to stay that way until gold becomes a sell, as it one day will. Because CEF is the best, and possibly only way to own gold and silver in a retirement account, it will continue to find bids, particularly so if the 401K crowd ever begins to actually worry about equities not "coming back." I continue to hold my own CEF shares, although the first time I saw that premium, about 1 month ago, it scared me too. So far, the premium has been quite consistent.

Bottom line remains that your investment goal and timeframe will dictate what you buy. I would use CEF to "game the tape". Futures, XAU options, or miners are the way to go there. For long term "ark building", I'll continue to pay the premium for coins and CEF.A shares. Just my humble opinion.

  Jeff Bailey   2/28/03,  12:37:44 PM
Dow Industrials (INDU) 7,881 ... -6 points here.

From 11:00 intra-day update. Breadth weakening with 16 up, 14 down.

  John Seckinger   2/28/03,  12:37:40 PM
From the 7826 low to the high this morning of 7965, 50% of this move is 7906. With this level now failing, bulls might just head to the sidelines. 7925 failed to hold, 7900 failed, and now traders will see if the daily pivot of 7866 can hold ths recent selling pressure. We are definitely seeing more buying in Treasuries, and this should add to the descent.

  Mark Phillips   2/28/03,  12:32:33 PM
For those of you that have been following Buzz Lynn's series on Gold, the following note may be of interest. I was talking with him on the phone this morning on the subject of gold and more specifically The Central Fund of Candad (CEF).

Remember that thing about "guru" I talked about in my article last night? Link. Well, I was wrong again, which should prove beyond a shadow of a doubt that I am not, never have been, and will shun any attempt to call me a guru - kiss of death! Proof? My decision to buy more shares of CEF yesterday. I should have checked the net asset value (NAV). By paying $4.95 per share, I was paying for slightly less than $4.00 worth of gold and silver in storage - roughly a 20+% premium. By that math, I should be willing to pay $425 for a Krugerrand!

Long story short, I sold CEF back for $4.97 this morning, a slight profit, but a net loss of $50 after commission. Better to break even now, wait for the premium of NAV to shrink, then buy it again when/if the the premium evaporates, which could be triggered by the first media-covered strikes in Iraq. . .you know, buy the rumor, sell the news. Here's the link to the information I found last night. Link

Maybe taking physical delivery of a futures contract isn't such a bad idea!

Hey Jonathan, any thoughts on this?

  Linda Piazza   2/28/03,  12:29:18 PM
At 13.96 as I type, CSCO has so far been unsuccessful in its test of its exponential 200-dma at 14.11, just two cents above CSCO’s high of the day. CSCO now trades near the high of yesterday’s inside day, 13.97. A move below 13.88 will bring CSCO back below its simple 50-dma. Below that lies its simple 200-dma at 13.48.

  Linda Piazza   2/28/03,  12:24:16 PM
CNBC World’s Emma comments that OPEC has admitted that it’s lost control of oil prices, and that it will put together an emergency committee in the case of a war with Iraq. Most analysts agree that OPEC cannot ratchet up production too much above current levels, however.

  Jeff Bailey   2/28/03,  12:20:36 PM
NASDAQ-100 Index (NDX.X) 1008.45 +1.37% ... current resistance technicals in play have conventional 38.2% retracement at 1,018, long-term downward trend from March 11, 2002 relative high extending lower at 1,018 and 200-day SMA at 1,010 along with 50-day SMA of 1,011. Support in play from conventional retracement is 975. Tough to anticipate a bullish break above 1,018 at this point, especially with buying in bonds.

Either short-covering taking place on break above 3-day resistance, or new money that's just been sitting in cash coming in.

  Steven Price   2/28/03,  12:20:25 PM
Swing Trade Signals
Stocks are finally starting to catch up to yields, which are extending their losses. The Dow is still above 7900, and the SPX hoding over 840.

  Linda Piazza   2/28/03,  12:11:21 PM
As the Dow Jones Industrials draw back slightly from a test of the simple 21-dma at 7944.50, the Dow Jones Transportation Index also pulls back slightly, too, now trading almost 60 points below its 21-dma at 2115.53 and never having approached that MA. Another divergence lies in the fact that the transportation index is below July’s 2090.32 low and is currently just below the February 13 low of 2054.59. By all these performance measures, these two indices are not trading in tandem and are, in fact, diverging.

  Jonathan Levinson   2/28/03,  12:06:12 PM
The most recent put to call ratio has just printed .53, showing great optimism reflected in excessive call option volume.

  Jonathan Levinson   2/28/03,  12:03:21 PM
Spot gold has hit 350/oz now, HUI +1.14, XAU +1.12. FVX is down 1.5 bps, off its lows, as QQQ holds 25.16 and COMPX 1340. Just another flagpole rally here on the last trading day of the month.

  John Seckinger   2/28/03,  12:03:21 PM
There is definitely talk of month-end index extension buying in bonds, with traders I talk to anticipating roughly a billion dollars worth. This seems to be the "bubble in bond prices"; however, there could definitely be another wave higher (read: lower yields). If long bonds, it definitely makes sense to just keep a tight watch on any sign of weakness. The 30-year is at 115'05, and well above the first sign of trouble (114).

  Linda Piazza   2/28/03,  12:00:42 PM
The OEX 60-minute chart continues to show a series of hourly candle shadows spiking up above the descending trendline, with the real bodies of those candles hanging below the line. The trendline continues to provide resistance so far. A glance at a five-minute chart, however, shows this morning’s swift run-up to the trendline, and then range-bound trading in a tight pattern above and below the trendline, perhaps hinting at some controlled accumulation. If so, it’s far from certain as yet whether those accumulating bulls or the selling bears will win out. In my opinion, this afternoon’s outcome may not be determinable by technical analysis or a study of fundamentals, but in rumors and hints and fears concerning the Iraqi situation as market participants take or close out positions ahead of the weekend.

  Jeff Bailey   2/28/03,  11:58:28 AM
10-year YIELD ($TNX.X) ... 3.735% darting lower still. Can't figure out how stocks hold a bid. Dow up 45 here, SPX up 7, OEX up 3.8, NDX +15 and QQQ +$0.35 at $25.14.

First sign of any weakness in the QQQ would be a dip below a daily zone of support from $25.05-$25.02, with a zone of support at $24.00-$24.01 and formidable support.

  Jeff Bailey   2/28/03,  11:57:35 AM
The 11:00 AM Intraday Update has been posted. Link

  Mark Phillips   2/28/03,  11:56:26 AM
SYMC $44.97 (-2.39) stock getting killed in the last 30 minutes. The company has an ongoing analyst meeting that began at 11am ET, and whatever is being said is not giving the bulls a warm fuzzy feeling! The past few days the stock has been flirting with a breakout over the $48 level and it appears that isn't going to happen any time soon!

  Jonathan Levinson   2/28/03,  11:47:24 AM
The fvx just got dumped, now down 2.5 bps on a sudden rush of buying in treasuries.

  Steven Price   2/28/03,  11:42:16 AM
Swing Trade Signals
We continue to hover around 7950, with a slightly declining series of lower highs, however nothing decisive. A move back over 7965 could quickly lead to 8000. A move back below 7920 could be the first domino back toward yesterday's lows. Rigth now we are treading water, but have managed to hold onto most of today's gains. The good news for bears is that yields have ticked into the red.

  Jonathan Levinson   2/28/03,  11:39:19 AM
Well put, Mark. The five year yield has now gone negative, and the QQV has gained a bit, now down .84 on the day to 38.45. HUI and XAU and spot gold are all positive, as the COMPX continues to attempt to break away from 1340. Many have been hearing of the new moon this weekend, which will cast total darkness over the desert. I believe what we are seeing in this James Cramer "Go short last night" Rally is a frontrunning of the expected war rally.

  John Seckinger   2/28/03,  11:36:34 AM
The Dow appears to be stuck between the 7925 and 7950 area. Bonds are also in a tight range, and the 30-year is lower fractionally ('04 ticks) to 114'28. Resistance at 115 and support at 114'16. Only a move under 114 will have me thinking about a solid bull trap in bonds and flight of capital into the stock market.

  Mark Phillips   2/28/03,  11:32:04 AM
VIX 33.62 (-1.56) And the divergence continues. Pretty big drop in the VIX today for the OEX only being up less than 4 points and still below the 430 level. In line with Wednesday's Options 101 article, let's look at the last time the VIX was this low was on January 24. On that day, the VIX soared from 31 to 37 as the OEX plunged from 450 to 436. But even at the end of that day, the OEX was still well above the critical 430 level. I am more and more convinced that there is a lot of complacency in this market, based on the expectation that the war (when it starts) will go smoothly and be over quickly. I hope they're right, but the current lack of fear (in relative terms) certainly makes me nervous. That's certainly a big reason to keep positions small until we see more certainty in this market.

  Linda Piazza   2/28/03,  11:31:10 AM
Reader Comment: Regarding 60min chart on OEX, I see there is a wedge formation in the 533 stoch against the price pattern trending upward, then the 2133 stoch is trending up along with the price movement here. What is your opinion here?

Response: Great observation! Actually, I see the price as forming a wedge, too, with the OEX currently testing the top of the wedge, so that I see the 5(3)3 as echoing the price behavior. I'm watching for a break in the formation of the 5(3)3 as well as in the formation on the OEX, to confirm or help predict the eventual behavior of the OEX. Link

It's possible that the 21(3)3 has already done that, however. If you begin back at February 18, you can draw a wedge with these stochastics, too, with the 21(3)3 breaking through the top of the wedge yesterday, then coming back to retest the line, then moving up again. That pattern may have been predicting today's upward movement. These 21(3)3 stochastics are more reliable than the 5(3)3's, but still, the 5(3)3's don't seem to have confirmed that breakout yet, and prices don't seem to have done so in a convincing manner, either, so I'm still watching. It may have been that the 21(3)3's were predicting an upside test of the wedge only.

Even if there is a convincing breakout, I'm unlikely to enter on the long side because I don't tend to trade against trend, and my belief so far is that we're still in an intermediate- and long-term downtrend. I'm willing to change that view if evidence presents itself, but won't enter on the long side on moves expected to be short-term.

  Jeff Bailey   2/28/03,  11:16:41 AM
Semiconductor Index (SOX.X) 296.50 +2.4% ... now challenging 50-day SMA and downward trend from December high. Look for move above 300 to provide further psychological lift for technology, while monitoring potential resistance above 300 at 305, which would be extension of ascending neckline trend from head/shoulder top. This trend, along with 50-day had served resistance on recent SOX rebound from 261-297.

  John Seckinger   2/28/03,  11:10:20 AM
Taking a look at the Chicago PMI report, and how it might affect Monday's ISM, new orders did remain strong at 59; possibly portending a continual increase in the production component (which has been above 62 for two months). Prices paid came in at 54.9 due to higher energy costs, and was slighly higher than expectations. Will this raise estimates for ISM, currently at 52? Probably will.

  Jonathan Levinson   2/28/03,  11:06:36 AM
A new HOD for the COMPX at 1342.49, although bonds continue to fail to confirm this move in equities. FVX is up .4 bps on the day, but QQV has collapsed, down 1.46 to 37.86, TICK.NQ +51, TRINQ .38.

  Linda Piazza   2/28/03,  11:06:20 AM
While the Dow Jones Industrials at 7948.50 currently trades just above the simple 21-dma at 7945.58, the Dow Jones Transportation Index does not yet confirm this sign of strength in its sister index. At 2067.21, the Dow Jones Transportation Index trades almost 50 points below its simple 21-dma at 2115.97. To those who subscribe to Dow Theory, this makes the rally somewhat suspect.

  Jeff Bailey   2/28/03,  10:57:38 AM
Yahoo! Inc. (YHOO) $20.80 +3.63% ... notable 52-week high today. Link

  Steven Price   2/28/03,  10:56:40 AM
Swing Trade Signals
I agree with John that the bounce off previous resistance at 7925 looks bullish right now. Did I jump the gun? My guess is that we will find out when Bush concludes his speech, but on Friday afternoon, we could also see a lack of interest as traders head home early. Another bullish sign is the VIX now below 34%, after finding support at 35% all day Thursday. This could be partially due to the weekend and traders not wanting to get long premium and absorb time decay, as well. However, we did move below a significant level.

  Linda Piazza   2/28/03,  10:56:04 AM
Here’s what’s happening so far with the OEX on the 60-minute chart, with respect to that descending trendline from late January. Link

  Linda Piazza   2/28/03,  10:50:52 AM
Volume appears light, with only 263 million shares traded on the NYSE and 315 million on the Nasdaq. Other volume patterns support the bullishness, however, with adv/dec ratios at 2.68 for the NYSE and 1.58 for the Nasdaq. Up volume is 4.6 times down volume on the NYSE and 3.5 times down volume on the Nasdaq. A change can be seen in the news highs/new lows figures, with new highs outranking new lows on both the NYSE and Nasdaq. Since January, these new highs/new lows figures have given traders an early warning of a change in the short-term trend, as they did last week when the ratio reached levels that signaled oversold conditions and then began reversing.

  John Seckinger   2/28/03,  10:40:13 AM
On the phone with Bailey, and it really is hard to decipher direction right now. Lack of follow-through is concerning, but I was impressed the Dow didn't come back and test the 7925 area (bullish, in my opinion). Optimistically, I would like to see a test of 8000; however, what will be the catalyst to get this market going? I don't think Treasuries, since that captial market appears to be asleep today.

  Jonathan Levinson   2/28/03,  10:38:11 AM
The five year yield is now +.2 bps... we'll call it flat. Spot gold is up 3.10 to 348.60. The James Cramer Rally might be growing a little long in the tooth, as COMPX 1340 begins to assert some gravitational pull on the price advance. TRINQ still .41, QQV down .48 on the day, TICK.NQ +15.

  Jonathan Levinson   2/28/03,  10:33:16 AM
The put to call ratio has risen to .61, still quite low, while the FVX is down to a gain of .6 bps on the day.

  Mark Phillips   2/28/03,  10:26:31 AM
CB $48.25 (+0.78) Turn out the lights, the party's over! CB has been a pretty consistent performer for us of late, but that pattern of lower highs and lower lows has been broken this morning with the broad market strongly in positive territory. Not only did CB push through the 10-dma, but it also sliced through our stop at $48.10. A rollover here would make for an aggressive entry into the play, but keep in mind that a close over $48.10 will have us dropping the play tonight.

  Jonathan Levinson   2/28/03,  10:25:53 AM
FVX continues to drop, now up 1.1 bps on the day as selling in five year treasuries slows.

  Steven Price   2/28/03,  10:24:38 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the 1/2 short entry when the Dow traded 7940 at 10:29:50. We got a slight bounce and I'll look to add if we approach 8000-8050. Stops are set at 8170. Conservative traders can set stops at 8060.

  Linda Piazza   2/28/03,  10:23:49 AM
CSCO: 14.06, +0.31. Those who trade inside days or harami’s (buying if the price exceeds the high of the inside day, selling if the price drops below the low of the inside day) might have noted that CSCO today has traded above the highs of yesterday’s inside day. Although I haven’t been watching how CSCO trades with respect to inside days, I have noted a tendency on the indices lately for prices to pop above inside-day highs or inside-day lows, and then to reverse course, trapping buyers or sellers. I mention this information since I know some of you trade based on inside days, and I don't know that I'd suggest considering buying CSCO based on this move above the inside-day high. I urge special caution with those considering a long play on CSCO based on the inside day, as the exponential 200-dma lies just ahead at 14.11.

  Jonathan Levinson   2/28/03,  10:21:15 AM
We'll call this the "James Cramer Rally."

  Jonathan Levinson   2/28/03,  10:18:37 AM
1340 COMPX has been busted, now targeting resistance at 1350. Note that FVX is not confirming this strength, with the five year yield up a mere 2 basis points. That could change, but with this little selling in the bond market, this move as a true breakout is still suspect.

  Jeff Bailey   2/28/03,  10:13:12 AM
WEEKLY Pivots tested here in SPX, OEX, NDX, QQQ. Dow lagging a bit, but looks to catch up.

  Jonathan Levinson   2/28/03,  10:08:19 AM
The opening put to call ratio has come in at .56. The fed has just announced a weekend repo of 5.4B, which is a drain of 2.1B from the 7.5B overnight repo expiring today.

  John Seckinger   2/28/03,  10:03:52 AM
So far, so good for bulls. Tuesday's pivot of 7909 was cleared, then 7925 tested. And now the low after clearing 7909 has been 7911 and we are back above 7925. In my futures wrap, I did expect a directional move from open to close; however, I definitely expected a more explosive move. If we stay above 7925, things might just work out.

  Jonathan Levinson   2/28/03,  10:02:17 AM
We have a breakout of yesterday's range, with the COMPX currently printing 1334, QQQ 25.00. The TRINQ is down to .46, TICK.NQ quite high at 651, FVX +3.6 bps. Next resistance is 1340, followed by 1350.

  Jeff Bailey   2/28/03,  10:01:25 AM
Chicago PMI 54.9% vs. 52.5%, so upside number here.

  Linda Piazza   2/28/03,  9:59:55 AM
European markets hold onto their gains, with the FTSE 100 up 50.30 points, the CAC 40 up 21.38 points, and the DAX up 48.20 points.

  John Seckinger   2/28/03,  9:54:24 AM
Michigan Consumer Sentiment index fell to 79.9 in Feb from 82.4 in January, but today's revision did add to the initial 79.2 reading. The other reported sentiment indicator, Conference Board, fell to 64.0 from 78.8.

  Linda Piazza   2/28/03,  9:54:18 AM
OEX 427 appears to be an important level for several reasons: depending on how you draw the line and which shadows you include or don’t include, it’s the current location of the descending trendline that’s been capping prices since late January; it’s the location of midline candlestick support from a larger-than-normal hourly candle from February 18; and it's the site of historical support, having been the level of previous closes or intraday lows or highs since last July. On February 21, there was an hourly close above that descending trendline, but then the prices moved back below it, so don’t jump to too many bullish conclusions with a brief move over that level. As Steve mentioned earlier, I wouldn’t be tempted to enter long plays now anyway. As I said yesterday, I mention these possibilities as warnings to those of you in bearish plays and making decisions about stops.

  Jeff Bailey   2/28/03,  9:52:42 AM
Michigan Sentiment 79.9 vs. 79.2 and "surprisingly strong" considering the Conference Board's decline.

  Jeff Bailey   2/28/03,  9:46:48 AM
Flat opening minutes Rather flat opening for stocks in opening minutes of trade. Same for Treasuries. Networking Index (NWX.X) 144.26 +1.13% Link is only sector posting 1% gain, while the Dow Jones Home Construction Index (DJUSHB) 316.71 -0.96% Link is weakest sector in first 15-minutes of trade.

Both have their longer-term 200-day SMA's in play. NWX.X finds support from trending lower 200-day, while DJUSHB finds resistance.

  Linda Piazza   2/28/03,  9:46:30 AM
At 425.76, the OEX currently approaches within a point of yesterday’s high of 426.46.

  John Seckinger   2/28/03,  9:40:49 AM
Note: Michigan Sentiment at 9:45 a.m. This is a revised report. Estimates are for the figure to remain unchanged at 79.2. At 10:00 a.m., Chicago PMI for February is expected to show fall from 56 in January to 52.5.

  Jeff Bailey   2/28/03,  9:40:45 AM
Forest Labs (FRX) $49.64 +1.09% ... little "gap" above its short-term 21-day SMA this morning. Link

John Seckinger like to point out "apexes" in charts. See the little apex at the $50 level from Feb. consolidation? Then another apex at $48 from a little triangle on the bar chart that FRX has moved out of. Current range looks to be $48-$50. Being a bull in FRX, I'm looking for upside resolution.

Company will be presenting at Lehman Borther Healthcare Conference on Monday, March 3rd at 05:10 PM EST.

  Steven Price   2/28/03,  9:40:14 AM
Swing Trade Signals
We once again appear to be running out of steam below 7925. I have an itchy trigger finger as far as wanting to go short. However, with economic data due out in the next 1/2 hour (Consumer Sentiment and Chicago PMI) I will most likely wait those out before entering a position. If the rally can make it past 7930, I may get my entry point closer to 8000. Right now it isn't happening and we are stalling below 7925.

  John Seckinger   2/28/03,  9:38:12 AM
After the first five-minutes of trading, the Dow has been in a tight range from 7886 to 7913, but more importantly did try to break above Tuesday's pivot of 7909 and temporarily failed. The daily pivot is below at 7866. Traders can use 7925 as confirmation that prices are solidly above this pivot and will most likely portend an extended move higher.

  Linda Piazza   2/28/03,  9:37:23 AM
If you haven’t yet read Jeff’s Intraday Update, you might do so, as he offers an interesting summation of the GDP revision and the factors behind that revision.

  Linda Piazza   2/28/03,  9:34:28 AM
At 424.74 as I type, the OEX again challenges its simple 21-dma at 424.32. Even though the OEX is currently above that average, I say “challenges” rather than "exceeds" because of the pattern of the previous three days. On those days, the OEX has punched above this MA each day, only to fall back as the day progresses. If you’re in bearish plays, watch for a divergence from this pattern.

  Jeff Bailey   2/28/03,  9:32:17 AM
The 9:00 AM Intraday Update has been posted. Link

  Jonathan Levinson   2/28/03,  9:31:10 AM
4 point gap up open to 1327 COMPX, TRINQ .77, QQV +.2 to 39.49, FVX +1.9 bps.

  John Seckinger   2/28/03,  9:28:56 AM
Intra-day Pivot/Levels for Friday (02/28/03)...

INDU : S2= 7732, S1= 7808, P= 7866 , R1= 7943 , R2= 8001

SPX : S2= 821, S1= 829, P= 836, R1= 844, R2= 850

OEX : S2= 415, S1= 419, P= 423 , R1= 427, R2=431

NDX : S2= 966, S1=981, P= 991, R1=1005, R2=1015

QQQ : S2= 24.00, S1= 24.39, P= 24.65 , R1= 25.04, R2= 25.30

  Jonathan Levinson   2/28/03,  9:25:18 AM
Truthfully, even though I have minimal positions, all this whipsawing makes me uncomfortable, and during the trading day, sometimes even doubtful of my overall scenario for the markets. When I step away, however, and examine what I see happening in Japan and Germany, what's happening with our debt, and other factors, I still don't see the beginning of a bull market just yet. When I look at those weekly charts, I still see what looks most to me like a distribution pattern since July, although I grant that it could instead be a reversal pattern. As I try to uncover reasons behind the recent market activity, my most logical conclusion is that market participants are trying to front-run an expected "when the shooting begins" rally, with the same likely results as happened when market participants tried to front run the Santa Claus rally. Have you altered your overall outlook?

Beautiful analysis. No, I most certainly haven't. My own outlook, which is for lower lows on an unfolding of the Kondratieff Winter, seems to be confirmed with each passing day. My article on the PPI/CPI story last week was one example- I see nothing for US companies to celebrate currently. My cautious comments are for bearish option traders. What to most bears is merely trading "noise" is boom or bust to option traders. While the indices have remained mid-term flat from last month, that's one month of premium gone by, with some substantial swings in between. Short and hold is a very dangerous strategy in this this environment unless you can pick the exact tops and bottoms, and even then, time is against us. For this reason, short timeframes and quicker trades, even scalps, have merit in the current environment. As well, it's at times like these that Mike Parnos' approach is particularly apt. We are here to make money, and while the mid to long-term trend is clear to me, a quick glance at Japan's monthly chart shows why we have to stay nimble. Bear market rallies are devastating for bears and bulls alike.

  Linda Piazza   2/28/03,  9:25:07 AM
A reminder to readers: Still due out today are Michigan Sentiment (9:45 ET) and Chicago PMI (10:00 ET).

  Linda Piazza   2/28/03,  9:21:54 AM
Cheered or perhaps just relieved by the revision of the U.S. GDP number and Iraq’s claims that the country will destroy their Al Samoud-2 missiles, European markets have climbed since my last post. The FTSE 100 currently trades up 41.30, having moved just over the key 3600 level to 3611.20. After falling briefly below 2700, the CAC 40 trades up 27.79 points or 1.02%. The DAX has climbed back above 2500, up 47.68 points or 1.90%, to 2560.90.

  Steven Price   2/28/03,  9:19:02 AM
Swing Trade Signals
We are currently flat. I would prefer to enter short on a rally to the 8050 or 8150 range in the Dow. Alternative entry on a failure at 7925, where we have found resistance for the last couple of days, would be a secondary entry point, as well. I expect a bounce around Dow 7800, as that level has provided support on numerous occasions in the recent past. My target on a short would a lower low, beneath the 7628 support level from Feb 13, but I would expect additional support just above 7700, as well. If we do fail again at 7925, then that would also constitute a lower high, as the past couple of rallies have taken us over 8000. As I highlighted in last night's wrap, a move above 7950, but below 8000 would complete the next leg of the current triangle pattern on the PnF chart. I don't want to jump in too early and I am going to try and be patient and let any rally run its course. It appears we will start the morning with a slight rally and I'll be looking for signs of a roll over before entering any positions. Why am I not looking at the long side? I would like to be open to anything, but with heavy overhead resistance described above, I don't see myself going long long anywhere below Dow 8200.

  Jonathan Levinson   2/28/03,  9:08:30 AM
The GDP came in at 1.4%, beating the 1.0% expected. Link

  Jonathan Levinson   2/28/03,  9:02:00 AM
On the bright side for bears, Lehman Brothers' Dan Niles has just raised Q1 estimates for INTC.

  Jonathan Levinson   2/28/03,  8:23:12 AM
Once again, the US Dollar failed at 100.00 resistance and is now trading 99.75, while gold failed above 348 and is now trading 346/oz. Futures are lightly positive with QQQ trading up 11 cents from yesterday's close, currently 24.88.

Much ado of the fact that James Cramer, my favorite contrarian indicator who proclaimed the new bull market in January 2001 and told everyone to buy gold a few weeks ago when it was trading 380/oz, has most recently advised selling equities. All I can say is that bears should keep their stops on tight, as bearishness from pundits such as Cramer is one of my own list of indicia of the bear market bottom. I believe that equities remain overpriced and the economy looks very weak. My only concerns for short positions is that Cramer is making bearish sounds, and short interest on the QQQ is reputed to be at multimonth highs. On the other hand, the put to call ratio spend most of yesterday below .60 and closed at .55, which is a multimonth low.

The degree of stress and anxiety on the part of bears has continued to climb since the weekend, and little wonder. Whether that is a bullish or bearish signal is anyone's guess. My only suggestion is that caution is the cure. Underleverage, keep your stops tight, and preserve your capital. That's what the smart money is doing.

  Linda Piazza   2/28/03,  7:03:45 AM
Good morning. Economists released several numbers in Japan Friday: January’s unemployment number showing a 5.5% unemployment rate; the January industrial production number showing a 1.5% increase; the Tokyo February core consumer prices number, which fell 0.1%; and the national core consumer price index, which dropped 0.8% from a year ago. Core consumer prices have not risen since 1998, a Bloomberg report comments. In addition, January inventories rose 0.8%. Manufacturers benefited from the industrial production number and some exporters benefited from the Nasdaq’s Thursday performance. Exporters might also have benefited from Japan’s attempt to lower its currency against the dollar, with Japan saying that it sold the currency again this month. Still, impacted by the unemployment numbers and other factors, the Nikkei fell through midday trading, but managed another flat close, closing up 3.66 points or 0.04%.

Economic numbers released in Europe today include a blended February index of consumer prices that showed a provisional 2.3% year-over-year rise and a Eurozone February consumer confidence number that showed a drop to -19. Both these numbers were worse than anticipated. In addition, an Italian number showed that Italy’s 2002 economy grew at the slowest pace in almost ten years. Most European markets dropped, with Bayer, Cap Gemini, water company Suez, and insurer Axa contributing to the declines. As of this writing, the FTSE had managed a 2.60 point increase, up 0.07%, while the CAC 40 had fallen 7.24 points or .27% and the DAX had fallen 3.53 points or 0.14%.

Geo-political developments of note include a statement attributed to Russian Foreign Minister Igor Ivanov by a French news source, saying that Russia would use its veto power in the U.N. Security Council to maintain peace. U.K. Prime Minister Blair, echoing Bush’s statement yesterday, dismissed Iraq’s offer to destroy its missiles. Having predicted earlier in the week that Hussein would time his acquiescence to the U.N. demand to destroy the Al Samoud-2 missiles to coincide with the U.N. weapons report, Blair expressed confidence that the U.N. Security Council would approve a resolution that could lead to Iraq’s disarmament by force.

  Jeff Bailey   2/27/03,  12:29:44 AM
The Index Trader Wrap has been posted: Link

  John Seckinger   2/27/03,  12:29:38 AM
The Futures Trader Wrap has been posted: Link

  Steven Price   2/27/03,  12:29:30 AM
The Swing Trade Game Plan has been posted: Link

  Steven Price   2/27/03,  12:28:43 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

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


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