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  Jeff Bailey   3/6/03,  6:31:29 PM
Pivot Matrix for tomorrow. Link

For the second consecutive session, the S&P Banks Index (BIX.X) holds WEEKLY S1 of 268.34, though it was traded to the decimal today. Will set an alert there to alert to weakness, which may spill over toward the major indexes in tomorrow's session.

If BIX.X make a move below that level, good correlative support between Dow's DAILY S1 and MONTHLY S1 of 7,692. While March is still young, MONTHLY S1 levels have not been tested at this point. In past two sessions, Dow's been finding support at 7,665 level, which has come from a retracement level from DAILY retracement. However, today's low session close has that DAILY retracement support lowered to 7,636 tomorrow and we now see a "zone of resistance" from DAILY and WEEKLY retracement at 7,686-7,963, and turns out that this was a "zone of resistance" all day today after the Dow reached a session low. From support at 7,629, could build a "zone of support" further down in Dow at DAILY S2-WEEKLY S2 of 7,578-7,585. This might be good MAX WEEKLY decline zone for an end of week target and good bearish cover zone.

Despite negative after-hours reaction to Intel's mid-quarter update, still marking correlative resistance for NDX at 997-999, which would be just below "psychological" 1,000 level.

Additional correlative resistance found in OEX at 423.

Late addition for correlative resistance (didn't see it until writing Index Trader Wrap) is SPX at DAILY Pivot 823.9 and WEEKLY S1 of 823.7.

  Jeff Bailey   3/6/03,  6:02:15 PM
Intel Conference Call ends.... stock at $15.98 in after-hours, which is just where it was when call began.

Nothing major revealed in the call, and Intel seemed to have little visibility to skew it from prior guidance. Flash memory softness was only negative discussed. Mr. Bryant said he hasn't seen anything since quarterly update to signal economic recovery.

It's my impression from after-hours trade that declines were mostly due to "lack of upside" than any type of "downside" surprise.

  Jeff Bailey   3/6/03,  5:30:41 PM
Intel (INTC) $16.68 ... fell to after-hours low of $15.85 and currently steady at $15.95 ahead of mid-quarter update, scheduled for 05:30 PM EST. Link to early press release for discussion on call. Link

  Jeff Bailey   3/6/03,  4:35:34 PM
QQQ $24.27 here and those perhaps holding over from earlier day trade short of 12:03:57 may look to lock in gains here. (not sure if traders were stopped out right at the $20.60 afternoon high as profiled), but target of $25.25 pretty close here.

  Kent Barton   3/6/03,  4:14:59 PM
Intel gives its Mid-Quarter update at 5:30 EST. You can listen to a live audio feed of the conference call here: Link

  Linda Piazza   3/6/03,  3:59:14 PM
Perfect. The OEX appears to be ending the day near 417, almost exactly in the middle of the range from the 418.75 resistance and the 415.80 support marked out early this morning. A perfect way to end a perfectly rangebound day. No decision either direction.

  Jeff Bailey   3/6/03,  3:54:16 PM
The 3:15 PM Intraday Update has been posted. Link

  Linda Piazza   3/6/03,  3:53:56 PM
As the markets head into the close, I note that NYSE volume reads at 1.2 billion and the Nasdaq volume reads at 1.1 billion. Decliners continued to lead throughout the day. Down volume continued to lead up volume throughout the day. New lows are more than twice new highs on both the NYSE and Nasdaq.

  Linda Piazza   3/6/03,  3:37:01 PM
Currently at 2015.81, the Dow Jones Transportation Index is only 8 points above its October low, and appears to be headed back toward its February 25 1973.63 low. Those anticipating reverse H&S formations on the indices should take warning from this index, which tried to form a right shoulder near 2100, but then fell through that shoulder formation. In January, this index was one of the first to test and then fall away from its exponential 200-dma, giving warning that the rally would not be sustained. It may once again be giving advance warning of more weakness. Link

  Jonathan Levinson   3/6/03,  3:32:36 PM
We now have the program robots reverting to their original bios configurations, which was for Pong units, the evidence for which is clearly seen on the 1 minute bars as they bounce money back and forth. I wonder if the "blip" "blop" sound can be heard in the trading pits. TRINQ 1.36, TICK.NQ -163. Still going nowhere within the range, but more violently so now.

  Linda Piazza   3/6/03,  3:22:34 PM
Swing Trade Signals
To those who heeded my warning this morning and did not enter the markets, congratulate yourselves on your decision. To those aggressive traders who planned to take the unofficial entry with risk capital only on a break below 415, congratulate yourselves on your patience. To those who have not yet exited Steve’s trade, the trade still performs well on a technical basis, but it’s the time of day to evaluate risks to holding the position overnight and decide whether those risks fit your trading parameters. As I mentioned earlier, I would not suggest entering new positions this time of day, even on a break of 415.

  Linda Piazza   3/6/03,  3:13:25 PM
Currently at 7801.30, the Wilshire 5000 (TMW on Q-charts, $WLSH on stockcharts.com) threatens to drop below 7800, but this round-number level is one of psychological support only. Actual support lies a little beneath that, between 7760-7780. On the daily charts, 21(3)3 stochastics cycle down, MACD flattens beneath zero, OBV slopes down, and RSI turns down. This hints at more weakness to come in the Wilshire, with a fall below February lows of 7658 perhaps sending the Wilshire back toward July lows of 7397. Since the Wilshire is the broadest of all markets, a continued fall in this markete does not bode well for the other markets.

  Linda Piazza   3/6/03,  3:00:37 PM
I continue to watch the Russell 2000, currently at 253.87, less than a point off the day’s low and below its October-to-present supporting trendline. Yesterday, the Russell managed a close right on that trendline after falling beneath it during the day. This is a key time for the Russell and perhaps for the broader markets, as it’s difficult to imagine that the markets can sustain any upward movement without the participation of the small caps, too.

  Jeff Bailey   3/6/03,  2:59:26 PM
KLA-Tencor (KLAC) $33.63 -1.32% ... per 02:57:26 post, have been setting some alerts just under this afternoon's lows. Getting one here from KLAC.

  Jeff Bailey   3/6/03,  2:57:26 PM
Bond Market Closes in 5 minute, and with the major indexes having traded range-bound since roughly 12:00 PM EST, might look for some type of directional action after bond market's close. Currently, Indexes are near their afternoon range highs and levels where we've seen intra-day resistance. 5-minute stochs are "oversold", but MACDs on this time frame continue to edge upward and are just under there zero levels. This gives me the impression we might get a move on the bond market's close. Day traders on the alert here.

  Jonathan Levinson   3/6/03,  2:49:21 PM
FVX is climbing, now +4.2 bps, and the put to call ratio is close to 1. There are too many bears in the options market and too many bulls selling the five year note for me to be comfortable here. TRINQ 1.3 is neutral, TICK.NQ +30, well off its lows, QQV +.70 reflecting that bearishness in the options market. COMPX at 1305 is challenging its descending trendline on the 5 minute chart. We continue to watch the range, 1298 to 1312 for signs of a breakout or breakdown.

  Linda Piazza   3/6/03,  2:40:16 PM
Swing Trade Signals
Candles on the 60-minute OEX chart are so small they’re difficult to see. Usually that predicts a bigger move to come. Which direction will that move be? Although oscillators aren’t the best predictors of market direction in this geo-political climate, the hourly stochastics predict that the movement will take the OEX up toward next resistance. I see today’s action as a smaller “b” distribution pattern within a much bigger “b” distribution pattern, but those aggressive traders who stayed in Steve’s trade must once again assess appropriate stops in case of a short-covering rally ahead of Bush’s speech tonight or after it, at tomorrow's open. Those waiting for an entry must assess the risks of entering ahead of a potential rally. If the OEX had broken through 415 at 10 this morning, after the release of the factory orders numbers and traders had gains to cushion against any rally, I might feel differently, but I would caution against any entry at this point in the day. While I can't imagine any reason for markets to rally past important resistance, markets don't consult me before moving.

  Mark Phillips   3/6/03,  2:40:10 PM
Excellent comment on the VIX, Linda. I really had to restrain myself to not talk about the VIX in last night's Options 101 article, as it is continuing in its pattern of divergence from the recent past. OEX is now well below the 420 level, yet VIX remains mired well below both the descending trendline and the critical 40 level. That just seems to reflect a preponderance of complacency in the market, despite the imminent war with Iraq. Something has got to give soon (at least in my opinion) and I expect it to be the market to the downside and the VIX to the upside. While it may be a powerful move, it could also be short-lived, in the final analysis equating to a bear trap. but as I'm fond of saying, time will tell. Reminds me of the old Heinz ketchup commercial...Anticipation...

  Linda Piazza   3/6/03,  2:25:36 PM
It’s time to show that daily VIX chart again, depicting the descending trendline. Currently at 36.60 and near the highs of the day, the VIX’s level is only 2 points below the descending trendline. Since the VIX sometimes tests the trendline with candle shadows above it but not with closes above it, it’s important to wait for a close above that trendline before drawing too many conclusions about market direction. As Steve and Mark have mentioned in the past, a close above 40 would be even more significant. I’m not so certain that the VIX could move up that fast today, but this is something to watch today and tomorrow. Link

  Jeff Bailey   3/6/03,  2:25:29 PM
Dow Industrials (INDU) 7,662 -1.45% .... edging to session low, just below DAILY retracement of 7,666.84. 5-minute chart shows Stoch's "oversold," but MACD on this timefram now begins to roll lower, just below zero. QQQ Bear wants a Dow tradet at 7,650 here to get his/her QQQ trade to the day's lows. QQQ $24.40 here.

  Jonathan Levinson   3/6/03,  2:18:20 PM
1299 LOD for the COMPX. FVX +1.5 bps, TRINQ 1.49.

  Linda Piazza   3/6/03,  2:17:58 PM
Swing Trade Signals
Since I suggested this morning that the most aggressive traders, who felt they must be in the market, could consider entering a bearish position on the OEX on a move and close below 415, several new risks have been added to the market. The first is Bush’s speech tonight. The second is the nearly oversold levels in the OEX hourly stochastics. The third is the time of day. As Jonathan often says, cash is a position and it may be the best one today. Those still in Steve's trade are still doing okay.

  Linda Piazza   3/6/03,  2:15:35 PM
Three levels of resistance now converge near OEX 418. The down-sloping hourly 21-pma now registers 418.17. I’ve been mentioning 418-418.75 historical support for a couple of weeks now. In addition, the broken support of this week’s bear-flag pattern now crosses about 418.60.

  Jonathan Levinson   3/6/03,  2:06:56 PM
While we're playing the pattern game, Matt points out a double top failure on the INDU, peak 7770, neck 7690, target 7610. Thanks, Matt.

  Linda Piazza   3/6/03,  2:02:01 PM
CNBC reminds us that tonight will be only the second time that Bush has addressed the nation from the East Room. The first time was after September 11.

  Jonathan Levinson   3/6/03,  2:01:57 PM
Violation of the SPX cup and handle formation. That's supposed to be a bullflag, not a bull hernia.

  Linda Piazza   3/6/03,  1:59:43 PM
European markets closed as follows: The FTSE 100 closed flat, down 8.10 points or .23% and unable to move back above the 3600 level. The CAC 40 traded down 20.54 points or 0.77%, to 2634.53. Its October low was 2612, only 22 points below the current level. The DAX traded down 47.85 points or 1.92%, to 2450.17. Its recent multi-year low was 2433.15, only 17 points below its current level.

  Jonathan Levinson   3/6/03,  1:53:59 PM
On the COMPX it looks like a bear flag, but on the 5 minute SPX it looks like a very nice cup and handle formation, which is bullish. It should print a small descending bull flag, which, on the break, should provide the liftoff to approx. 826. Just 3 points on the SPX, but I'm bored. We'll see if it plays out- that's just the chart pattern without regard for the oscillators and other s/r lines.

  Jeff Bailey   3/6/03,  1:53:29 PM
The 1:00 PM Intraday Update has been posted. Link

  Linda Piazza   3/6/03,  1:49:28 PM
The SOX bounced from just above its rounding-up 21-dma at 280.97 and is heading up toward the day’s highs, where the simple 50-dma at 293.58 and the 297 resistance from the descending trendline from early December await it.

  Kent Barton   3/6/03,  1:45:58 PM
Seeing some upward action in the SOX.X over the past hour. The catalyst for this intraday rally appears to be National Semiconductor's conference call. The company reported that it expects to see strong utilization rates for the next quarter. NSM also said that the PC market is looking good compared to the usual seasonal trend for the current quarter.

  Linda Piazza   3/6/03,  1:43:59 PM
Not being able to break through 415, the OEX heads back up to test the bottom of the bear-flag formation from the underside, with that resistance coinciding with historical resistance near 418. As Jonathan mentioned, this is rangebound trading. So far, the 415 trigger has kept us out of trouble on the OEX, not entering new trades, even unofficial ones.

  Linda Piazza   3/6/03,  1:40:22 PM
Jack Straw is still speaking and says that Blix’s unpublished report shows Hussein’s deceit, according to CNBC.

  Jonathan Levinson   3/6/03,  1:39:29 PM
As my eyelids grow heavy, I'm watching the 1 minute "quantum" subatomic COMPX chart for kicks. It's forming a "small kahuna" toppling single scoop cone formation, a wobbly bear flag formation. The longer intraday 10(5) stochastics are giving or heading for buy signals, while the shorter ones, such as the 5 and 1 minute candles, are topped out. The TRINQ and TICK.NQ are showing nothing different, neutral and negative, while the FVX is climbing back up, now at 2.584% for a gain of 2.1 bps. This continues to be rangebound trading, and it continues to be untradeable except for scalpers. Premium sellers must love the narrow, directionless range running the clock. A tip of the hat to you couch potato traders out there.

  Linda Piazza   3/6/03,  1:33:42 PM
Swing Trade Signals
Traders considering entering a bearish play on a break and five-minute close beneath OEX 415 should factor in an awareness that the hourly 5(3)3 and 21(3)3 stochastics have cycled back down to oversold levels as the OEX strives to hold above 415. This adds another level of risk to a possible play, as it's now possible to posit a case for another rally attempt. Again, only the most aggressive and experienced traders should be considering an index play just now, and should be devoting only risk capital to a possible play. In addition, I would watch for a confirming drop in the COMPX below 1300.

  Linda Piazza   3/6/03,  1:28:40 PM
Jack Straw, U.K. Foreign Minister, is speaking, calling for Iraq’s immediate compliance and naming some areas in which Iraq has fallen short of compliance.

  Kent Barton   3/6/03,  1:28:40 PM
Corning (GLW) $5.48 +0.11 Our PremierInvestor high-risk/reward play benefited greatly from Tuesday night's news that Corning had reiterated its earnings forecast for the current quarter. Yesterday the stock shrugged off directionless trading in the NASDAQ and powered ahead to a gain of nearly 7%. The positive momentum carried over into this morning's trading, which saw GLW climb to a relative high of $5.60 - slightly below the February high. Given the recent steep gains, some additional consolidation would not be unexcepcted. Short-term traders looking to harvest a gain of slightly more than 9% could consider taking profits at current levels. We're targeting an eventual move to our upside target at $5.99.

  Linda Piazza   3/6/03,  1:26:47 PM
Adv/dec figures show ratios of .50 on the NYSE and .53 on the Nasdaq. There are almost three times as many news lows as new highs on the NYSE, with more than twice as many on the Nasdaq. Down volume is 3 times up volume on the NYSE and 2.74 times up volume on the Nasdaq. Total volume is 707 million shares on the NYSE and 731 million on the Nasdaq.

  Linda Piazza   3/6/03,  1:22:48 PM
So far, those aggressive traders who elected to say in Steve’s short position are probably congratulating themselves. Those who elected to stay out of the market today are probably congratulating themselves, too, as they stay clear of the tense trading situation.

  Linda Piazza   3/6/03,  1:12:29 PM
Here’s an update of the OEX five-minute chart from earlier today. That 415.80-416 level is proving to be key, as the OEX oscillates around it. Link

  Jonathan Levinson   3/6/03,  1:04:01 PM
The FVX took us up, and maybe she'll take us down. Now up just 1.5 bps as money returns to the five year t-note. TRINQ 1.41, TICK.NQ -243. The NSM earnings report seems to have splashed some water on the flames. QQV is now up .59 at 38.95, and even the HUI and XAU are dusting off some of their losses.

  Linda Piazza   3/6/03,  12:54:29 PM
Yesterday, I mentioned that the Russell 2000 might be slipping beneath its ascending trendline from October lows through February lows. Today, it definitely trades below that trendline, currently measuring 353.55. Since the Russell is also below the 354.11 July lows, it has only the February 13 351.78 low beneath it before heading back to October lows. A move back to October lows will negate the possibility of a reverse H&S in the Russell, at least, and may portend the same thing happening in the other indices.

  Linda Piazza   3/6/03,  12:49:37 PM
The VIX is moving to new highs of the day and the week, currently measuring 36.73, up 2.50.

  Linda Piazza   3/6/03,  12:47:16 PM
One of the dominoes might be falling now. At 282.92 currently, the SOX has been testing the week's low, actually slipping a bit below the previous low and trading at 282.79 for a moment.

  Linda Piazza   3/6/03,  12:38:47 PM
Currently measuring 36.38, the VIX is near the day’s high.

  Jeff Bailey   3/6/03,  12:38:40 PM
Intra-day Dow Chart similar to one we looked at yesterday. QQQ bears needs to see Dow break yesterday's lows to reach QQQ BEAR's day-trade target to $24.25. Link

  Linda Piazza   3/6/03,  12:32:13 PM
So far, there’s been no move below 415 in the OEX and certainly no close below that level. On the hourly chart, the 21(3)3 stochastics have now rolled over, but from levels barely out of oversold territory. The 5(3)3’s cycle quickly down toward oversold levels again, offering warnings to bearish traders. So far, those of you holding bearish positions overnight are still doing okay.

  Jonathan Levinson   3/6/03,  12:28:05 PM
I've just found it. Here's the oilfield rumour in print: Link

  Jonathan Levinson   3/6/03,  12:26:33 PM
And while we're at it, there's been trader talk all day, but unconfirmed, that Iraq has been bombing oilfields today, but I haven't seen a spike in the price of crude contracts to confirm it. I believe that this one is just a rumor for that reason.

  Linda Piazza   3/6/03,  12:24:47 PM
To add to Jonathan’s post about UN personnel being asked to leave Iraq, I read last night that two Iraqi UN workers were asked to leave the US yesterday.

  Linda Piazza   3/6/03,  12:23:18 PM
At 415.97, the OEX sits just above lows from yesterday afternoon and this morning. A move and close below this 415.82 level would confirm a double-top formation on the five-minute charts, predicting a minimum target near 416. These targets predicted by five-minute charts are not reliable, however, but do give traders information on what might be most likely to happen next.

  Jonathan Levinson   3/6/03,  12:20:01 PM
Trader talk: Confirmed by a phone call by a trader to Salomon Smith Barney, UN personnel are being told to leave Iraq.

  Linda Piazza   3/6/03,  12:20:01 PM
On the 60-minute OEX chart, the 5(3)3 stochastics have rolled down while the 21(3)3’s have made a definite bearish kiss without yet rolling completely. Those 21(3)3’s did not reach overbought territory before making this bearish kiss, but the 5(3)3’s did.

  Jeff Bailey   3/6/03,  12:10:00 PM
Dow Industrials (INDU) 7,676 -1.26% ... getting downside alert here at 7,680. This was from yesterday's potential reverse head/shoulder on 5-minute chart, where the right shoulder never formed intra-day. Alert to weakness here though, if yesterday's lows of 7,661 voilated to the downside.

  Linda Piazza   3/6/03,  12:08:59 PM
Here’s an update of the OEX five-minute chart. This shows the OEX’s apparent failure from the bear-flag formation, and also shows the possible support soon to be offered earlier just below 416, near previous days’ lows. Link

  Linda Piazza   3/6/03,  12:06:05 PM
The Dow is testing new lows on the day. Currently at 7684, it dipped briefly to 7679.40. Yesterday’s low was 7661.30.

  Jeff Bailey   3/6/03,  12:03:57 PM
QQQ $24.46 -0.36% .... Look for QQQ to get "whacked" lower here. Day trader's short, stop $24.60, with quick downside target of $24.25.

  Jeff Bailey   3/6/03,  11:55:14 AM
The 11:00 AM Intraday Update has been posted. Link

  Linda Piazza   3/6/03,  11:50:20 AM
Swing Trade Signals
The 60-minute OEX chart shows a potential bear-flag pattern, with a break out of that pattern occurring on an OEX move below 417. Just below that level, however, is former support from yesterday afternoon’s and this morning’s lows at 415.82. Because yesterday morning’s lows are just below that, at 414.20, and there’s further support at 412 and then again at 407.63, bearish traders face multiple possible bounce points. Those who elected to stay in Steve’s trade and not take the exit offered yesterday are faring fine, and I believe the markets may be setting up for another leg lower, perhaps to 407 and perhaps lower. Because of the multiple support levels below and the geo-political situation, even aggressive traders with risk capital may be gambling more than trading, however. I am staying in my OEX bearish trade, but not adding to that position. Those of you who want new entries and understand that technical analysis cannot predict a short-covering rally in the event of reassuring geo-political developments could consider an entry on a failure and five-minute close beneath 415. I offer this guidance only for those who must enter the market, with the caveat that it may be best to stand aside and let possible gains pass you by, preserving capital for another day's trading.

  Jonathan Levinson   3/6/03,  11:49:06 AM
The Swiss National Bank has cut rates 50 bps. The swiss franc had been looking like the perfect refuge. Not so much now. Link

  Jonathan Levinson   3/6/03,  11:37:47 AM
The FVX is now up 3.2 bps, continuing to fall from its highs. A rush of selling there, the TRINQ up to 1.3, TICK.NQ -424. QQV is up .50 at 38.94. More rangebound trading. Because of the risk of a breakout, which will inevitably come, it becomes difficult to game the reversals, but that's been the only play lately. Short at resistance of either 1312, or 1318-20 yesterday with a stop either at the next resistance level or 1 or 2 points beyond the resistance level, long at support with the same stops. Because the range is relatively narrow, this allows for scalps at best, unless choosing those levels to enter position trades. It's tough to do while tearing one's hair out, which is what many have been busy doing.

  Linda Piazza   3/6/03,  11:33:49 AM
On the 60-minute chart, the move off yesterday’s lows certainly has the look of a bear-flag pattern, with higher lows and higher highs, moving up in a tight range, with that movement being counter to the former descent. This impression is confirmed by the inability of the OEX to break cleanly above that former supporting line from February 13. The inability of the OEX to stay above its hourly 21-pma, currently at 419.48 also looks suspicious. However, on a five-minute chart, the OEX appears supported by the 21-pma at 418.57 currently, the historical support in the 418-418.75 area, and the 50% retracement of today’s first five minutes, with that level also being near 418. The hourly chart is setting up just as I hoped it would, but I also see danger signs. So far, those of you who elected to stay in the trade are still doing fine. Note: the OEX is breaking below some of those levels as I type.

  Mark Phillips   3/6/03,  11:33:19 AM
MME $37.10 (+1.08) Whoa! Just noticed that MME really caught fire this morning, blasting through the $36 level and then really seeing an increase in buying volume to push through $37. In sharp contrast to the sedate trade earlier in the week, the stock has seen pretty strong buying over the past couple days. A bounce from $35 (now solid support) yesterday, with follow through this morning has the bulls clearly in control.

It is rather interesting to see the strength of this move, with the broad market still languishing in the red, and no news that I could find to explain the strength. If anyone has any ideas about the root cause of the strength, please send it along.

  Linda Piazza   3/6/03,  11:22:13 AM
Volume patterns still show more selling than buying, with adv/dec ratios at .52 on the NYSE and .58 on the Nasdaq. Down volume is 1.9 times up volume on the NYSE and 1.6 times up volume on the Nasdaq. Something has to give soon—either these volume patterns change and the indices continue to move up or the indices cave in under the weight of the selling, even if it is on light volume.

  Jeff Bailey   3/6/03,  11:13:04 AM
Dow Industrials (INDU) 7,737 -0.48% ... has been either side of WEEKLY S1 of 7,734 this morning. I do see little DAILY zones of resistance from 7764-7767, which comes from the DAILY retracement and MONTHLY retracement.

Dow looks like it wants to bid here, and if it can clear the high of 7,777.42, there's a nice zone of resistance up at 7,805-7,807.

  Jonathan Levinson   3/6/03,  11:09:17 AM
The ADVDECV line on livecharts is approaching its lows of the day. The TRINQ is at 1.11, neutral, TICK.NQ -199. FVX is up 4.5 bps now, coming off its highs, while COMPX chops along at 1309, pretty much in the middle of its range.

  Jeff Bailey   3/6/03,  11:08:13 AM
U.S. Dollar Index (dx00y) 98.44 +0.16% ... turns green after setting a 52-week low. For now, looks to be just some "short-covering" in the dollar perhaps, and I'm kind of thinking we may be seeing some "profit taking" in the 5 and 10-year Treasury too today, which may be being "parked" in the 13-week, which is very similar to money market type of bond. VERY safe as it is VERY short-term.

  Linda Piazza   3/6/03,  10:59:40 AM
Swing Trade Signals
So far, I’m still not seeing an ideal setup on the OEX. While the index does appear to be hugging that former supporting line as the stochastics cycle back up, as I’d hoped, and although volume patterns and a higher VIX do appear to suggest more bearishness to follow, the dollar is slightly up on the day and bonds are down, perhaps suggesting more strength or at least more chop. On the hourly OEX chart, the 5(3)3’s again make a bearish kiss in overbought territory, while the 21(3)3’s still cycle up for the time being. RSI has turned down again. On the geo-political scene, the concerns about what Bush might say about Iraq tonight must be weighed against the more positive news from North Korea. While I’m staying in my own already-entered bearish play and feel that today’s actions still confirm that as a sound choice, I am not personally adding to my position and so can not yet suggest new entries for readers, either.

  Jeff Bailey   3/6/03,  10:57:12 AM
Bond action Pretty good round of selling in the 5 and 10-year Treasury today. While I don't have a ticker symbol for q-charts for the 2-year, I do see money going into the 13-week YIELD ($IRX.X) 1.147%.

Despite some less-than-spectacular reads on February same-store sales, its the S&P Retail Index (RLX.X) 252.47 +1.02%, which is this morning's biggest sector winner.

  Linda Piazza   3/6/03,  10:50:15 AM
We’ve just seen a temporary failure at the DOW 7775 level, the second in the last two days. However, earlier, we saw a move up from the DOW 7686 area for the second time in two days. Double bottom or double top? Or just range-bound trading?

  Linda Piazza   3/6/03,  10:38:41 AM
Note that the VIX, currently at 35.40 and up 1.17, is not yet dropping significantly as the markets attempt a bounce from today’s lows.

  Jonathan Levinson   3/6/03,  10:36:32 AM
The put to call ratio is back down to .85, still high but not as scary as that 1.08 reading was. FVX is down 2 bps to +6.1 bps on the day- also a mild relief to bears.

  Linda Piazza   3/6/03,  10:36:17 AM
Early volume patterns do not support a strong rally, but that may change. Currently adv/dec ratios are .43 on the NYSE and .53 on the Nasdaq, showing more decliners. New lows vastly outnumber new highs on the NYSE, perhaps by so large a number that we should at least think of it as a possible contrarian indicator, with 106 new lows to 20 new highs. Down volume is 2.6 times up volume on the NYSE and 1.8 times up volume on the Nasdaq. Volume is light, at 200 million shares traded on the NYSE and 261 million on the Nasdaq.

  Jonathan Levinson   3/6/03,  10:27:33 AM
Recall that 1312 was the bottom of the range for the COMPX earlier this week. That will be the first hurdle to clear on its way higher. So far, this push higher does not feel like the flagpole rallies we've seen- one of those would have taken us to 1325 by now, leaving me shaking my head. This is more of an "organic" bounce. On that note, over 40% of NYSE trades were fired off by machines during past weeks. Perhaps the markets will begin simply gapping from fib cluster to fib cluster, the tape printing golden sequences and prime numbers up and down. As option traders, we'll be reduced to trading on whether the next retrace is 38.2%, 50% or 61.8%... just an amusing thought on the fly.

  Linda Piazza   3/6/03,  10:24:12 AM
Swing Trade Signals
On the 60-minute OEX chart, hourly stochastics—both 21(3)3 and 5(3)3—appear to be redrawing themselves, with both turning up again. The five-minute chart shows that the OEX did push above that 21-pma and the 50% retracement of the first five-minute candle. While I'm not alarmed at what's happening, those who elected not to take yesterday’s exit and stay in bearish trades should be thinking about possible stops for their plays, depending on risk tolerance. Those wishing to protect profits should watch how the OEX behaves around 420 and then again near 425-426, the location of the descending line that’s been capping the OEX’s upward movements since late January. The OEX faces multiple layers of resistance above those levels, too, including 430 and 432, so consider your own trading style when making these decisions.

  Linda Piazza   3/6/03,  10:15:59 AM
On the five-minute OEX chart, the OEX just attempted another push above the midline resistance from the first five-minute candle and the 21-pma, currently at 418.13, and appears to be failing from that attempt. Bears still doing okay, but those lower bond prices still need watching.

  Mark Phillips   3/6/03,  10:15:45 AM
MHK $46.10 (-0.57) Here's another OI Put play that is breaking to new lows this morning. As the Housing picture continues to deteriorate, MHK is feeling the pinch and the stock continues to drill lower, now getting close to the October lows in the vicinity of $44. Reaching that level will satisfy our initial target, while a more aggressive target will be a revisit of the July lows near $40. After the decline of the past week, and with daily Stochastics now reaching oversold, I think it makes sense to get a bit more aggressive with our stop. So our official stop is now ratcheted down to $48.60, just above the top of the gap left behind on Tuesday.

  Jonathan Levinson   3/6/03,  10:14:07 AM
FVX continues to climb, now +6.1 bps. The put to call ratio at was 1.08 for the opening half hour. Again, it's either portending a waterfall, or, more likely, another bounce. Above 1318-20, we could be looking at another flagpole rally.

  Linda Piazza   3/6/03,  10:12:31 AM
At 285.72, the SOX refuses to drop below the 283.10 level that has marked this week’s low.

  Mark Phillips   3/6/03,  10:07:48 AM
VZ $33.91 (-0.72) At long last, VZ appears to finally be breaking below that stubborn $34.25 support level. We got a hint of today's action yesterday morning with a brief dip under that level, but the bulls managed to drag the stock back above it by the close. But this morning's drop is looking like the real deal, and selling pressure seems to be intensifying.

Remember though, we don't want to get caught up in trying to chase the stock lower due to the very real possibility for a rebound from above the $33 level. Positions opened on the failed rallies of the past week or so should have stops trailed to minimize risk. The level for that stop depends on individual risk profiles though. With this morning's breakdown, I'm lowering our official stop to $35.80, just above the intraday highs of last week. There is a descending trendline that can be drawn from the 2/21 highs, and connecting the intraday highs os the past week. That trendline is just now dropping below $35, so those that want to get aggressive with their stops can lower them to $35. An alternate approach would be to look for a decline down to near the $33 level later today and simply harvest gains accrued up to that point.

  Linda Piazza   3/6/03,  10:07:11 AM
Here’s what I’m watching on the OEX five-minute chart. The bottom light teal line shows support from yesterday’s low. The middle light teal line shows midline candlestick resistance from today’s first five minutes of trading (50% level), and the blue line is the 21-pma. The ascending red line is the broken ascending trendline. I’d hoped to see the OEX hug that red line this morning while the 21(3)3 hourly stochastics climbed out of oversold territory and aligned themselves with the shorter-term 5(3)3’s, before both turned down again, but that didn’t happen. Link

  Jonathan Levinson   3/6/03,  10:01:34 AM
Factory shipments up 2.2%.

  Linda Piazza   3/6/03,  10:00:50 AM
Factory Orders up 2.1%, higher than the expected 1.8%.

  Jonathan Levinson   3/6/03,  10:00:27 AM
Factory orders up 2.1% surprise to the upside.

  Jeff Bailey   3/6/03,  10:00:24 AM
Dow Industrials (INDU) 7,688 -1.13% .... yesterday, we saw support come in at the session low near 7,666. I've placed a "new" DAILY retracement on our Dow chart, and once again, I see a retracement level from the DAILY at 7,666.84. A move much below that level on 5-minue bar chart close could be the catalyst for decline toward WEEKLY S2 target.

With Treasuries seeing fractional selling, would look to lock in bearish gains for those bears that may have been targeting the 7,578 area in the Dow this week.

  Linda Piazza   3/6/03,  10:00:20 AM
On the 60-minute OEX chart, 5(3)3 stochastics roll down from overbought levels, the RSI turns down from mid-rise, and 21(3)3 stochastics flatten just after clearing oversold levels. There’s no strength here yet. Those in bearish trades are still doing okay. There’s still no ideal new entry, however.

  Jonathan Levinson   3/6/03,  9:58:30 AM
The fed has just announced a 5.25B overnight repo, for a 1B drain, which gives us 2B net drained today. Factory orders coming up at 10AM in 2 minutes.

  Linda Piazza   3/6/03,  9:57:16 AM
Awaiting factory orders, due out in a few moments. Jeff’s intraday update reminds us that expectations are for a 1.8% gain.

  Mark Phillips   3/6/03,  9:57:06 AM
SYY $23.25 (-1.07) Never mind the volatile moves back and forth in the broad market, this OI Put play got moving in the right direction as soon as we began coverage, and it isn't wasting any time drilling down towards our eventual target. After rolling at the $27.50 level on Monday, SYY picked up steam to the downside yesterday after a JP Morgan downgrade. I thought that the $24 level might provide some temporary support, and the stock's mild rebound just above that level yesterday afternoon seemed to confirm that thinking. But the bears are back in town this morning, knocking the stock down for another 5% loss in the early going. My target for the play is the $22 level and if reached today, I think it would be prudent to harvest some gains.

While we lowered our official stop last night, based on the drop this morning, I would lower stops to no higher than $25.50. More conservative traders may even want to get aggressive with their stop here, lowering to $24.50, just above yesterday's closing high. To be entirely clear, the bulk of the anticipated drop in the stock has already occurred, and at this point it is all about managing the play. I would NOT advocate any new entries at this point in time. Our focus should now be on harvesting as much from the play as possible.

  Linda Piazza   3/6/03,  9:51:11 AM
Dialing down to a near-microscopic level, the OEX at 418.24 climbed above the midline of the first five-minute’s candle and up to the 21-pma at 418.237, then promptly fell back. This looks bearish on the surface, and again works against giving aggressive trades an ideal new entry. For those of you who did not elect to exit the Swing Trade yesterday and are still in bearish trades, all looks okay for the time being. Unfortunately, for those looking to enter on the bearish side, the ideal setup I'd outlined earlier this morning isn’t occurring. Yet.

  Jonathan Levinson   3/6/03,  9:50:01 AM
The FVX has moved higher, +4.5 bps. If Brad's "waterfall" doesn't occur shortly, we could see a quick move to yesterday's highs. TRINQ at 1.37 shows light net selling pressure, TICK.NQ -92 confirms, QQV +.48 ditto. The selling in bonds remains troublesome for bears.

  Linda Piazza   3/6/03,  9:44:22 AM
Concerning Jonathan’s post about Bush speaking tonight, there has been much speculation of the various methods that might be used to alert the world that war with Iraq was imminent. A 72-hour warning to Americans to leave certain countries was one possible method discussed. An address to the nation was another.

  Linda Piazza   3/6/03,  9:40:44 AM
To illustrate the geo-political risks to bearish plays, CBNC is announcing that North Korea may allow nuclear inspectors into the country.

  Jonathan Levinson   3/6/03,  9:40:33 AM
The White House has just announced that the President will hold a news conference at 8PM.

  Linda Piazza   3/6/03,  9:39:22 AM
Swing Trade Signals
As feared, we got that down opening. I don’t see a good risk/reward setup for entering here, just ahead of DOW 7700 and COMPX 1300 and yesterday’s OEX low. Let’s see what happens and perhaps wait for the factory orders numbers. Disclosure: I have a bearish OEX position, entered earlier with risk capital only. There may not be an ideal setup today.

  Jonathan Levinson   3/6/03,  9:36:23 AM
The COMPX is selling off at the open, a dip below 1300 just now, TRINQ 1.92. 1298 is first support 1290-2 next support.

  Jonathan Levinson   3/6/03,  9:30:58 AM
8 point gap down open to 1306 COMPX< QQV +.87 to 39.23, TRINQ 2.08.

  Jeff Bailey   3/6/03,  9:25:50 AM
The 9:00 AM Intraday Update has been posted. Link

  Linda Piazza   3/6/03,  9:25:39 AM
Swing Trade Signals
I apologize in advance for the length of this entry, but most of you are not used to following my cues for entries, so I want to explain my thinking clearly so you can make your own decisions. I mentioned earlier that while I would not be issuing an official Swing Trade entry, I would list possible entries for aggressive traders using risk capital only. The lower futures coupled with the higher bond prices Jonathan mentioned places even aggressive traders in a bit of a quandary this morning. The OEX has not yet fulfilled its 390 P&F and H&S targets, and it’s possible that the recent pattern has been a distribution pattern of a type that often occurs about midway through a move, which would also predict a target near 390. It’s been my thinking that this consolidation goes on while the bears believing in the 390 target battle the bulls who believe some markets are setting up for a reverse H&S pattern. We’re all awaiting the rally that will take the markets above descending trendlines and begin the next bull market, but it has not yet happened, so while I watch for a potential reverse H&S formation to be set up in some markets, I’m acting on the already confirmed and tested H&S formations. Although it’s possible that longs could profit wildly on a short-covering rally, trading against the overall trend in this treacherous environment just stacks one more barrier in our way.

Since aggressive traders might be looking for a short/put trade, other elements we’ll want to see will be negative volume patterns, higher bond prices, lower dollar, and higher VIX and gold. That’s why those lower bond prices worry me this morning. We may not get all those elements working in our favor, but ideally we’ll look for as much confirmation as possible before entering a short/put play, especially as we must also factor in the low bullish percent numbers and the geo-political risks.

A lower open might work against an ideal risk/reward parameter, too. Here’s what I’m watching on a 60-minute OEX chart: Link Yesterday’s action snugged the OEX back under the former ascending support and the 21-pma at 420.20, just cents above the OEX close. The 5(3)3 stochastics cycled all the way back up to overbought territory on the move, but the 21(3)3 stochastics barely moved out of oversold territory. RSI cycled up, but is not yet signaling overbought conditions.

A failure at this level should send the OEX back down to test yesterday’s lows and perhaps back down to the February 13 low just above the key 407 level, but with stochastic and RSI evidence mixed, I’m not sure that the OEX would plunge straight to that potential 390 target without first bouncing at one of these levels. The most logical stop loss for an entry near 420 would be 426, the location of the descending trendline from late January, and light historical resistance. That’s a six-point risk for a potential short-term gain of 13 points. I had hoped to see the OEX move up toward 426 and fail there or else climb up the underside of that former supporting line while the stochastics and RSI align themselves for another turn down. An open below yesterday’s close complicates matters somewhat. Let’s see how the markets open and how those bonds behave. We may need to wait until factory orders are released at 10:00 ET to see how markets react. There may not be an ideal entry, and the markets may go on to plunge twenty points, but there will always be another trade.

  Jonathan Levinson   3/6/03,  9:21:34 AM
cmon say it...in your best "waterboy" voice YOU CAN DO IT $ down+equities down + yields up= waterfall

Short & pithy, but I take your point. The combination we're seeing could be pointing to a "waterfall" decline in the indices- it could mean an exodus from US assets this morning. Then again, it could also mean a buildup of liquidity that could find its way in to jam equities higher. Nothing would surprise me after the past month. Until 1298, then 1290 COMPX get taken out, I continue to see rangebound trading. Below that, yes, we could be looking at a waterfall. Above, however, could be a flagpole rally. Best to listen to the market here and watch our levels.

  Jonathan Levinson   3/6/03,  9:10:31 AM
The US Dollar Index is seeing heavy selling. Bonds are being sold, and equity futures are down but stable. The selling in bonds would tell me to expect a pop in equities, but perhaps it's foreign money leaving US assets for other currencies, selling bonds and equities to liquidate. We'll have to watch the open.

  Jonathan Levinson   3/6/03,  9:02:49 AM
The fed has just announced a 4B 28-day repo, which is actually a 1B drain against the 28 day repo expiring today. We await further announcements for the 6.25B in expiring 13 day and overnight repos.

  Jonathan Levinson   3/6/03,  8:55:20 AM
The Labor Department said initial jobless claims rose by 12,000 to a seasonally adjusted 430,000 for the week ended March 1, the highest level since last December.


  Jonathan Levinson   3/6/03,  8:49:41 AM
Troops 'told of March 17 invasion'

BRITISH troops had been told an invasion of Iraq would begin on March 17, with a huge bombing campaign being launched four days earlier, the Daily Express in London has reported.


  Jonathan Levinson   3/6/03,  8:45:26 AM
The US Dollar ramped up to 98.6 but has just fallen, with a spike down to the 98.3 level, while gold has spiked up above 354. Equity futures are lower, with QQQ trading 24.45, but to complicate matters, bond yields are higher, with FVX +1.7 bps, TNX +2.1 and TYX +1.8 bps. For those who have been asking, the yields I quote are the yields on the five-, ten- and thirty-year US treasury bonds. When bonds are being bought, the yields fall, while when bonds are being sold, yields rise. For the past few years, yields have moved in step with equities, as traders have tended to buy treasury notes in a "flight to quality", which, not coincidentally, also sees traders selling US equities. When they're running out of the COMPX, we usually see buying in treasuries. Because the "smarter", or at least larger money is in the bond markets, bond yields will tend to give solid direction on what we can expect to see equities doing if they're lagging the move. Here, the strength in yields contradicts the weakness in equity futures, such as the QQQ being lower, and so I'd expect to see QQQ perk up to follow the yield.

  Linda Piazza   3/6/03,  8:33:45 AM
Swing Trade Signals
The Swing Trade Model is flat, with all but aggressive participants stopping out yesterday for a 200-point gain on the bearish position on the Dow. After much deliberation, I’ve concluded that it’s exactly right that only aggressive and less risk-averse traders should be participating in index trades at the end of this week. Papers discovered on the captured Khalid Shaikh Mohammed suggest that bin Laden currently hides in the Baluchistan province of Pakistan. His discovery and any number of developments associated with the Iraq and North Korean situations render technical analysis less useful tools than normal. Anyone deciding to enter index trades under these conditions should do so with full knowledge of the risks faced and should do so with risk capital only. If Russia were to announce today that it would back a U.S. invasion of Iraq—unlikely, I know—markets might zoom. If North Korea’s scheduled test of a mid-range missile escalates the tension in that region, markets might plunge. For that reason, I’ve decided against entering an official Swing Trade signal today.

With that said, my technical analysis leads me to conclude that the markets may be setting up for another leg down. If I see that happening, I will be issuing unofficial signals for aggressive traders only. I’m an OEX trader, so my cues will come from the OEX with confirmation from the DOW and COMPX. After I watch futures a little longer this morning, I’ll post more about a possible setup. Disclosure: I currently have a bearish position in the OEX, entered with risk capital only.

  Linda Piazza   3/6/03,  8:10:40 AM
European markets have slipped after the ECB decision, with the FTSE 100 currently trading at 3571.90, the CAC 40 currently trading at 2648.90, and the DAX again slipping beneath 2500 and trading at 2482.

  Jonathan Levinson   3/6/03,  7:58:46 AM
The ECB has just announced that it is lowering rates by 25 bps to 2.5%. The BoE left rates steady, as Linda mentioned, and this week the Bank of Canada raised by 25 bps.

  Linda Piazza   3/6/03,  7:02:32 AM
As expected, the Bank of England leaves rates steady. The ECB decision will not come until later this morning.

  Linda Piazza   3/6/03,  6:46:33 AM
Good morning. While we don’t often talk about China’s economy in these morning updates, China today announced that its budget deficit may grow to $39 billion (in dollars) this year, a 3% expansion. In an effort to stem growing unemployment, China has undertaken public works projects such as building dams, bridges, or roads, with these projects driving up government spending. More concerning to many in Asia was the news that North Korea plans to test fire a mid-range missile. Both Japan and South Korea would be within the missile’s range. Asian markets tumbled, with the Nikkei falling 103.47 points or 1.2%. At 8369.15, the Nikkei now trades only 66 points above a recent 20-year closing low.

Ahead of the ECB and Bank of England decisions due today, European markets trade mostly flat. The Bank of England is not expected to lower rates, while most expect the ECB to lower by at least a quarter percentage point. Hopes have built that the bank might even announce a half-point cut. This morning, the Eurozone Q4 2002 final GDP estimate was released, showing growth a 0.2%, the top end of the forecasted range. Forecasts for future growth were for -0.1% to +0.3%, with the wide range being blamed on uncertain conditions due to geo-political concerns. In addition to these economic numbers, Germany announced an unemployment rate of 10.5%, up from the previous month’s 10.3%. Adjusted to meet Eurozone standards, those numbers would be a jobless rate of 8.7%, up from last month’s 8.6%.

Two more European insurers announced plans to cut dividends after suffering losses due to declining stock markets. Aegon NV, a Dutch insurer, cut its dividends 11% and announced that it would cut further in 2003. Ageon held 5% of Ahold, a company that last week announced that it had overstated profits, particularly in U.S. divisions such as the U.S. Stop & Shop supermarkets. Royal & Sun, a British insurer, also reduced its dividend.

After recently declining beneath support levels, European markets struggle to hold steady this morning. The FTSE 100 trades up 22.90 points, or 0.64%, but at 3586.40 remains below the key 3600 level. The CAC 40 trades up 4.77 points or 0.18%, at 2659.84. The DAX trades up 8.33 points or 0.33%, at 2506.35, after having slipped beneath the key 2500 level again at yesterday’s close. In January, I was writing about the CAC and the DAX struggling to maintain the key 3000 levels.

  Jeff Bailey   3/6/03,  2:21:15 AM
The Index Trader Wrap has been posted: Link

  Larry Wales   3/6/03,  2:21:07 AM
The Futures Trader Wrap has been posted: Link

  Steven Price   3/6/03,  2:20:53 AM
The Swing Trade Game Plan has been posted: Link

  Steven Price   3/6/03,  2:20:12 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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