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  Jeff Bailey   3/11/03,  6:10:52 PM
Pivot Matrix for tomorrow. Link

Several correlative levels of resistance in the matrix, especially in the SPX, OEX and BIX.

In Friday evening's market monitor, many of the levels that show up as resistance for tomorrow in the SPX and OEX and even the BIX.X were "support" levels on Friday. If its true that support broken becomes resistance, then these levels may be important in tomorrow's trade. Here is what the pivot matrix looked like Friday evening. Link . While the WEEKLY and MONTHLY levels have not changed, many of the indexes in the pivot analysis all closed below these correlative levels of "support" from Friday's update.

 
 
  Jeff Bailey   3/11/03,  3:59:11 PM
Correction to 03:15 Update in chart of SPX I typed... "SPX breaks into lower zone of support..... as break below 809 has SPX vulnerable to 790.

I meant to type 801 to depict the 80.9% retracement from MONTHLY retracement.

SPX 800.73 here.

 
 
  Linda Piazza   3/11/03,  3:53:22 PM
At 38.23 currently, the VIX looks to close near the day's high and springing up toward the descending trendline. Tomorrow should prove quite interesting.

 
 
  Linda Piazza   3/11/03,  3:49:54 PM
Volume patterns now turn negative across the board, but we haven't seen the strong selling seen yesterday. Adv/dec ratios are .78 on the NYSE and .82 on the Nasdaq. Instead of down volume measuring 17.5 times up volume on the NYSE, as happened yesterday, down volume currently is 1.7 times up volume on the NYSE and 1.3 times up volume on the Nasdaq. Total volume is 1.2 billion shares traded on the NYSE and 1.1 billion on the Nasdaq.

 
 
  Steven Price   3/11/03,  3:47:58 PM
Swing Trade Signals
With the move below the July low in the Dow, things are looking awfully ugly and aggressive traders can think about adding to shorts entered above or possibly starting with a 1/4 to 1/2 position short. However, with Dow 7500 and SPX 800 sitting just below, I am going to sit on my hands (which keep reaching for the short button) until I see a test of that support.

 
 
  Jeff Bailey   3/11/03,  3:45:40 PM
The 3:15 PM Intraday Update has been posted. Link

 
 
  Jonathan Levinson   3/11/03,  3:43:01 PM
For the record, I see nothing to lead me to believe that the COMPX is at a bottom today. I could well be wrong, but that's what I see. We have JPM, C, IBM and QQQ at lows of the day, TRINQ at a mere 1.83.

 
 
  Linda Piazza   3/11/03,  3:34:06 PM
Some readers have been mentioning seeing H&S patterns on the five-minute charts of several of the indices. Patterns formed on the five-minute charts are not particularly reliable and the OEX version's neckline slants quite strongly, rendering it even less reliable, but it nevertheless appears that the neckline has been broken. Kudos to those readers who are always watchful for patterns and their implications.

 
 
  Steven Price   3/11/03,  3:33:26 PM
Swing Trade Signals
Sorry for the long absence. I've been involved in an extended session pick meeting and I must say it is hard to find anything I really like as a long. What does that tell me about the broader markets? It tells me everything still looks terrible, but I'm waiting for a test of that 7500 level, given all of the support I've highlighted today. While I still like current shorts, I'm just not going to enter in that direction here just above support.

 
 
  Linda Piazza   3/11/03,  3:29:28 PM
It's difficult to pinpoint the one VIX level that will indicate that the markets are preparing for another down leg. A move over the descending trendline would be the first step. That would occur definitively with a move over Mark's more conservative trendline at 39.09. This would coincide, too, with a new "buy" signal on the P&F chart, Mark mentioned yesterday. The round 40 is psychologically important, but the February 13 high was 40.68, so it might be important to see a 41 print, at which time yet another P&F buy signal would also be issued.

 
 
  Linda Piazza   3/11/03,  3:18:57 PM
We just saw a big OEX spike up through the five-minute 21-pma and overhead resistance and then a quick plunge back to afternoon support at 409, which appears to be failing now. The VIX is moving back up again, currently at 37.98. This appears bearish, but nothing's settled yet until today's low is exceeded.

 
 
  Linda Piazza   3/11/03,  3:06:14 PM
At 1949.96, the Dow Jones Transports are now less than ten points above the September 2001 low of 1942.40. This is an important level to monitor for a possible bounce, as forward-thinking reader S.T. reminded me.

 
 
  Jeff Bailey   3/11/03,  3:05:02 PM
Forest Labs (FRX) $47.81 -5.9% ... here's the unconventional $0.50-box chart of FRX we've discussed in recent sessions and thoughts/scenario as it relates to Kent Barton's fact finding work today. Link

 
 
  Linda Piazza   3/11/03,  2:56:15 PM
The VIX has turned positive again, although barely so, at 37.87 and oh-so-close but oh-so-far from that descending trendline.

 
 
  Linda Piazza   3/11/03,  2:54:15 PM
I keep looking at that OEX five-minute chart and seeing what looks like a very unstable trading pattern, with that expanding bullhorn shape Jonathan mentioned earlier in relationship to the COMPX, and then with candles issuing from the middle of the bullhorn and kind of drifting down. Patterns keep setting up and then falling apart.

 
 
  Jonathan Levinson   3/11/03,  2:51:46 PM
The put to call ratio at .69 is awfully low for bulls' comfort, but the FVX is now up 2.8 bps, too high for bears' comfort. I'll continue to follow the price of the COMPX and QQQ and watch the s/r levels.

 
 
  Linda Piazza   3/11/03,  2:48:43 PM
The daily chart of the SOX shows that the SOX still appears to be rounding over from its test of a down-sloping regression channel, but the 21(3)3 stochastics slope down in an as-yet-unconvincing manner, while MACD has flattened. That flattening occurs, however, in accordance with a series of lower highs the daily MACD has been making, and the daily RSI and OBV have also been showing similar patterns. Currently at 280.01 as I type, the SOX trades below its 21-dma at 283.29, having closed beneath that moving average yesterday for the first time since crossing above it on February 18. The weight of the evidence appears bearish, but the expected fall hasn't come.

 
 
  Jonathan Levinson   3/11/03,  2:46:46 PM
Did you just hear the CNBC comments? Said if we get about 6 days close together like yesterday - 90% down vol, then that has historically predicted the bottom. Said we had one back in Jan or Feb. Do you know anything about this? or are they still just climbing a slope of hope? Said yesterday's vol was very unusual. Suzanne O

Yes, I've heard it. 6 days like yesterday in a row would certainly be one heck of a show, and I'd be expecting a bounce after that. Of course, it would be from a much lower level, and thinks would look very different after that. On a technical basis, this is a reasonable assessment. However, the systemic and fundamental excesses that underlie this bear market will take longer than a week to cure, but just like the long term charts show and as we've seen with the Nikkei over the past decade, bear markets are punctuated by violent rallies. We could get one of those after a week of 90% down days. I wouldn't trade on these simple rules, but add them together and it makes a more useful checklist to reference.

CNBC would love to reduce the markets to bits and bytes small enough for their anchors to understand and explain, but alas, complex feedback systems like markets defy simplification. It's useful to know what other investors and traders are thinking, but beyond that, I believe there's a lot of art to it as well.

 
 
  Jeff Bailey   3/11/03,  2:42:07 PM
EMC Corp. (EMC) $6.79 -2.4% ... Jeff: From a technical level, where do you see support for EMC? Thanks.

Near-term, I'd be cautiou on EMC and look for pullback to $5.86. P/F chart is showing some signs of life, and my 5.86 level comes from retracement taken from the July highs of $9.41 to the lows of 3.67, which has 50% at $6.54 and $8.86 at 38.2%. I "like" the $5.86 level of support as it would tie in better with support in the p/f chart at $6.00, which was the pullback level in early December (red C). Link

While EMC is not a NASDAQ-100 component, this would be the major index that I would compare this "technology-like" stock too. Here's a look at EMC's relative strength chart vs. the NDX. Link

 
 
  Jonathan Levinson   3/11/03,  2:36:49 PM
C(iticorpse) seems to be getting JaPalMed today, with JPM taking out the Feb lows and C close behind.

 
 
  Linda Piazza   3/11/03,  2:35:52 PM
Declining issues outnumber advancing issues in both the NYSE and Nasdaq, but not by overwhelming amounts. Adv/dec ratios are .94 for the NYSE and .95 for the Nasdaq. These are fairly neutral numbers. Down volume is 1.25 times up volume on the NYSE, but up volume is 1.34 times down volume on the Nasdaq. New lows outnumber new highs by about 4 1/2 times on the NYSE and 3 1/2 times on the Nasdaq. Total volume is 930 million shares traded on the NYSE and 873 million on the Nasdaq.

 
 
  Kent Barton   3/11/03,  2:31:33 PM
No shortage of bearish charts in the S&P 500: AGN, AIG, BAC, BDK, DLX, FDC, IR, LLY, MWD, GM, SWK

 
 
  Linda Piazza   3/11/03,  2:29:14 PM
As the OEX again tests the 409.50 area, reader P.G. also mentions that 409.23 is the 78.6% retracement of the August-to-December rally. Those retracement levels from that particular rally keep coming back to haunt OEX traders.

 
 
  Jonathan Levinson   3/11/03,  2:14:19 PM
To me, the inability to hold any kind of bounce after yesterday's shellacking looks bearish. Then again, the inability of bears to push it lower looks bullish. Indicators are mostly unchanged, though the FVX is creeping higher, now +2 bps. Bonds selling could be a precursor to another equities bounce.

 
 
  Jeff Bailey   3/11/03,  2:04:38 PM
The 1:00 PM Intraday Update has been posted. Link

 
 
  Linda Piazza   3/11/03,  2:02:46 PM
As soon as I typed the previous entry, the OEX moved above that 411.40 top of the consolidation. It has since moved back down and is in the process of retesting that consolidation from the top.

 
 
  Linda Piazza   3/11/03,  1:50:20 PM
On a day like today, there's nothing much to do except analyze every movement in great absorption, which can be a dangerous undertaking. Read further with some healthy skepticism, then. On the OEX five-minute chart, I note that since midday the OEX has been trading in a tight horizontal range with a base near 409.50 and with slightly lower highs beginning about 411.40 and sloping down to the last (very) short-term high at 410.97. A break below 409 would appear to be key, then, but isn't that what I said this morning, too? On the hourly chart, I note that during today's consolidation, the 5(3)3 stochastics have been cycling up out of oversold territory up toward overbought territory, although they haven't reached those levels yet. This also appears somewhat bearish on the surface, because what happens when they reach overbought levels and turn down again? The longer-term and more reliable 21(3)3's have barely moved out of oversold territory, however. Current levels are dangerous for bears and dangerous for bulls. Bulls risk a fall through these levels, through 407, and down to current H&S and (traditional) P&F targets of 390 or so. Bears risk a double-bottom formation with the OEX now currently sitting near February 13 lows. On the daily charts, I continue to see a distribution pattern--a fall and then consolidation, with a fall through current levels nearly destined to retest October lows. However, the OEX doesn't care what I see. In any case, a bounce all the way up to OEX 427 would still maintain that distribution pattern, but be extremely painful to bears in March positions.

 
 
  Kent Barton   3/11/03,  1:43:22 PM
Speaking of FRX, our Premier Investor long play remains untriggered. The stock was looking strong last week but wasn't able to move above the relative high of $51.12 on Monday.

I did some digging to find out what might be pressuring FRX today (you'd expect shares to trade higher on that positive study news), and turned up a news story on H. Lundbeck, a Danish drug company. Lundbeck markets Forest Labs' popular anti-depressant drugs Celexa and Lexapro under different names in Europe. This morning they reported strong earnings results that included a 29% increase in full-year operating profit. Strong sales of both drugs helped to drive the earnings growth. As bullish as that sounds, the company also guided slightly lower for 2003. Lundbeck anticipates profit growth of roughly 12% and sale growth of 10% for the full year. Previous guidance was for profit growth of 12%-15% and sales growth of 10%-12%.

While that's not a huge reduction in expectations, FRX investors may have been spooked by additional comments that Lundbeck expects competition from generic drugs in Europe to eat away at sales of Celexa. This would offset sales growth in Lexapro, a more effective (and more expensive) version of Celexa; ultimately impacting Forest Labs' bottom line in a negative way.

 
 
  Jonathan Levinson   3/11/03,  1:42:54 PM
With the Fed meeting on the 18th and the futures giving close to a 100% chance of a rate cut, plus money flowing towards bonds for safety. The administration has made it known that it's going to flood the market with money to lower the dollars value, to reduce imports and boost exports and stimulate our economy. So, rates will not go up but rather down, making equities less attractive. Even, Warren Buffet recently said stocks are not a buy currently, instead he's buying corporate bonds. I'm attaching a chart on the $TNX let me know what you think.

Yes, Tab, we agree. Al Green lowering rates again would be an admission of the fed's ineffectiveness. Note that he told the market "this is it" after cutting The Big One of 50 bps last time around. I believe it would be bearish for equities, but moreover, very bullish for commodities, gold and silver included. That said, I was stunned when the Bank of Canuckistan raised rates most recently by 25 bps, given that the US is its largest trading partner and the economy in Canada isn't exactly "overheating", with unemployment over 7% and many of the same credit bubble constraints as in the US. Central bankers are very tough to predict, and even more difficult to understand. I sometimes wonder if Al Green's secret intention isn't to trash fiat currencies worldwide and underline the need to return to a gold standard. But, I digress, and it's a pretty crazy thought.

 
 
  Linda Piazza   3/11/03,  1:31:15 PM
European markets ended with the FTSE 100 up 16.70 points or .49% to 3452.70, the CAC 40 down 20.19 points or .80% to 2493.42, and the DAX down 48.68 points or 2.09% to a startling 2280.36.

 
 
  Jeff Bailey   3/11/03,  1:19:52 PM
Forest Labs (FRX) 48.86 -3.87% ... Stock defensive today. I didn't see this news yesterday (08:41 AM on Briefing.com), but company announced the results of a new study which showed there were no pharmacokinetic interactions between memantine, an investigational drug for its Alzheimer's disease drug, and donepezil, which is an approved drug for the treatment of mild-to-moderate Alzheimer's disease. Data from the study, which was designed to assess for possible drug interactions between memantine and the most commonly prescribed Alzheimer's therapy donepezil, were presented last week at the American Medical Director Association.

 
 
  Linda Piazza   3/11/03,  1:08:11 PM
Here's an update of the OEX five-minute chart I posted early this morning, showing that the 50% retracement from today's highs to today's lows appears to be playing a part in current OEX action. That retracement lies along the thin red horizontal line seen on the chart. So far, the OEX has not been able to sustain a move over that 50% retracement level, although it has had brief moves above that level. This action appears bearish, but I continue to believe that almost anything can happen today. I've also included the regression channel I was watching earlier. Link

 
 
  Jeff Bailey   3/11/03,  1:05:53 PM
Flour Corp. (FLR) $29.23 -0.23% ... per "oil well fire" article Link there may be some signs of bullishness or at least a bottom forming in FLR's p/f chart Link with a "low pole warning" (full retracement of long column of O's). See how FLR has come back to the apex of the "bearish triangle" at $30? Also interesting is that FLR's bearish vertical count was $27 and was exceeded to the downside (bottom found?) and from Professor Davis' study, the bearish triangle formation portended a 33.3% decline in 2.5 months. FLR triggered the "bearish triangle" at $27. A 33.3% decline would have been to $18.00. In two months, FLR fell to $21, but hasn't yet achieved this $18.00 bearish objective. A trade at $31 would negate the bearish triangle probability at this point.

If SPECULATING on oil well fires in Iraq, then this may be an option play with OUT the MONEY July $35 calls (FLRGG) $0.70/$0.90. Thinking here as it relates to WELL is that a SPECULATIVE play in FLR is perhaps more fundamentally sound as it relates to current information we have.

 
 
  Linda Piazza   3/11/03,  12:59:18 PM
Good point, Jonathan! The markets don't know yet what they're going to do. One point in case: the OEX did break out of that potential bear-flag pattern to the downside, and instead of falling as would be a normal expectation, the OEX just trades sideways, now coiling into a tight wedge. The downside break turned into a sideways break, and we can't consider the formation a bear-flag formation any longer. Now it's been rendered just an interesting regression channel to give us something to discuss for part of the day while we wait for something real to happen.

 
 
  Jonathan Levinson   3/11/03,  12:53:01 PM
The COMPX, INDU, SPX, RUT, QQQ and NDX are virtually unchanged today, but everyone's on edge. FVX is now +1.5 bps, showing increasing selling in the five year note, but everything is very choppy. Ellioticians, cycle timers- everyone is completely confused. With QQV now -.05 on the day, the TRINQ in neutral bull territory at .66, the TICK.NQ -267, and the stochastics all over the map, it's easy to see why. I continue to watch 1260 support, 1277 low, 1288, 1292, 1302, 1309, 1312 and 1318 as key levels on the COMPX. The market will tell us where it wants to go- right now, it's not sure.

 
 
  Jeff Bailey   3/11/03,  12:51:46 PM
Boots & Coots (WEL) $0.55 -17.9% ... Good coverage in my opinion by CNBC reporter. This one smells a bit like a rat, only because this Checkpoint Partners, which notified WEL that it was in default of a $1 million loan, is a group in Panama and if they were to be able to force WEL into bankruptcy, then shareholders would lose control, perhaps just ahead of a very important and potentially profitable time.

CNBC reported that WEL may be the head contractor should Iraq set fire to oil wells there.

Troubling to me, is that WEL's President was rather "closed mouth" about Checkpoint and said he would have Checkpoint call CNBC to comment on what it felt was going on.

It would seem to me, that if WEL really wanted to save shareholders from company's potential bankruptcy, it should be able to find some investment banking house to offer a secondary offering or SOMETHING, to raise $1 million dollars to get rid of Checkpoint. That is.... if WEL's executives really wanted to serve its shareholders.

This may be in the works, but hopefully updates WEL traders why I rate this stock as HIGHLY SPECULATIVE.

 
 
  Linda Piazza   3/11/03,  12:51:20 PM
Speaking of H&S objectives, as Steven has just done, there's a complementary (to that in the equities) H&S on the TNX, as reader T.G. reminds me. Jonathan and Jeff have both mentioned the lows reached by the TNX today, and reader T.G. mentions a potential target of 32 for the TNX confirmed H&S.

 
 
  Steven Price   3/11/03,  12:50:07 PM
The last link did not work. Try this one Link

 
 
  Steven Price   3/11/03,  12:46:16 PM
Swing Trade Signals
The other factor that has me concerned on shorts from this level is the head and shoulders objective in the Dow. While this may be only a minimum, we have come awfully close to achieving the objective and the last time we did so, in October, we got a big rally. This trend has been more consistent, which is good news for bears, but throws up a red flag. I'll also mention that different analysts draw the neckline slightly differently, but the method I use is causing me some concern on short entries. Here is a link to the chart as I have it drawn Link

 
 
  Jeff Bailey   3/11/03,  12:39:48 PM
Boots&Coots (WEL) $0.59 -11.9% ... intra-day high has been $0.63. In yesterday's after-hour's session, there were seller in WEL. I went looking for any news. This is all I found Link and it may be that the exclusion of Boots&Coots (WEL) in this article is suspect and somewhat "negative".

CNBC reporting on WEL right now.

 
 
  Linda Piazza   3/11/03,  12:31:52 PM
The OEX had a single five-minute close beneath that potential bear-flag pattern, but then promptly moved back up strongly, bringing the candles back into the channel. While OEX bears can be encouraged that the 411.80 level appears to be containing prices except for that one spike up this morning, any possibility is still feasible in today's trading--rally, chop, or drop.

 
 
  Steven Price   3/11/03,  12:25:21 PM
Swing Trade Signals
That bounce off the Dow weekly S1 only highlights the importance of the current support levels and the risks for bears at these levels. The failure at 7600 on the bounce looks bearish, but the downside is still fighting a battle to get through those levels (daily and weekly support). I still think shorts are in charge, but until those levels are broken, I an going to measure the risk/reward in relation to those numbers.

 
 
  Jeff Bailey   3/11/03,  12:10:25 PM
McKesson (MCK) $24.41 -1.57% ... stock off its lows of $24.10 and just saw a rather large "volume spike" of 351,000 shares in last 5-minutes. May be worth monitoring for short-term traders.

 
 
  Linda Piazza   3/11/03,  11:59:17 AM
Would you look at that? The next-to-last five-minute OEX candle reached a high of 410.83 before pulling back just a bit. That was just after my 11:41 post when I conjectured that if the current OEX pattern was a bear-flag pattern, it needed to break down at or near 410.80. However, although the OEX did pull back a few cents on that candle, right on target, it moved up on the next candle. A further examination of the charts also shows a bigger downward-sloping regression channel with a top band near 411.20, so I'd still give that potential bear-flag pattern some wiggle room, as it looks as if the OEX just came up to test that channel, too. If the OEX continues to push up, it's going to negate the possibility that it's a bear-flag pattern we're watching, but so far, the OEX is moving back down inside the potential bear-flag pattern.

 
 
  Jeff Bailey   3/11/03,  11:58:08 AM
The 11:00 AM Intraday Update has been posted. Link

 
 
  Mark Phillips   3/11/03,  11:49:16 AM
MHK $44.81 (-0.04) Speaking of stops, I noticed an error on the playlist this morning. I hit the wrong key when putting in the updated stops for the website last night and inadvertently set the stop on our MHK play at $47.90. My intention had been to lower it to $46.90, just above Friday's intraday high. Please factor that into your trading plans if currently in this play. We'll get that change made on the site tonight.

Keep in mind, we've been talking about harvesting gains on this play in the $44-45 area, and given the lack of downside this morning, I think this level would make a great opportunity to harvest those gains, before the next bounce.

 
 
  Linda Piazza   3/11/03,  11:45:09 AM
I note that the 60-minute 21-pma now lies at 410.22, lending even more importance to the OEX's behavior near yesterday's lows, current weekly and monthly S1 levels, and the needed breakdown point to confirm a bear-flag pattern. All these levels lie between 409.50-410.80.

 
 
  Jonathan Levinson   3/11/03,  11:44:27 AM
Good eye, Linda. It looks like a bear flag on the COMPX just below bounce reistance.

 
 
  Mark Phillips   3/11/03,  11:43:04 AM
UTX $54.87 (-1.10)

Once again it looks like patience has been rewarded this time on UTX. Are we still looking to bail at 51?

Well, would you look at that! UTX has certainly been a good performer for us over the past couple weeks, hasn't it? It is definitely leading to the downside again today, off more than 2%, while the broad market hovers around the unchanged level. I like the breakdown under $55 this morning, which represents a new post-October low. Not only is the price action bearish, but it is coming on strong volume (already more than half the ADV). The methodical way in which UTX is moving lower still has me leaning towards lower levels ahead. But with less than $4 of potential reward to our $51 target, it is time to get a bit more aggressive on our stop, keeping the risk/reward ratio in a favorable balance. If holding open positions, stops should now be lowered to $57.25, just above the recent intraday highs.

 
 
  Linda Piazza   3/11/03,  11:41:33 AM
A potential bear-flag pattern may be forming on the OEX, with a countermove off the day's lows in a tight pattern of higher highs and higher lows. If it's a bear flag pattern, it should break down at or before 410.80, a 50% retracement of the move from the day's highs down to the day's lows. If it doesn't break down before or near that level, rally potential must be reassessed and given more credence.

 
 
  Jonathan Levinson   3/11/03,  11:28:03 AM
This failure at 1st bounce resistance on the COMPX should have us targeting the lows of the day from here.

 
 
  Jeff Bailey   3/11/03,  11:20:12 AM
Dow Industrials (INDU) 7,569 (unch) ... session low has been 7,540.73, which is WEEKLY S1, so its held a fairly IMPORTANT level of support so far. BEARS looking to apply pressure can use the WEEKLY pivot analysis retracement from WEEKLY with stop above its 61.8% retracement of 7,662, say 7,675 to give some room, but Dow lacks some of the regional bank exposure that seems to have SPX/OEX weighing lower.

 
 
  Jonathan Levinson   3/11/03,  11:19:00 AM
The COMPX continues to beat around in what could be an expanding range or "bullhorn" formation on the five minute candles. FVX is up off its lows, now flat, and the put to call ratio has come in at .66 for this past half hour. The TRINQ is at .57, TICK.NQ -249. Directional traders like me are just watching the price and indicators, wondering how this will be resolved. Gold and HUI/XAU are off their lows, and the weakness of QQQ below 24 is looking good at the moment for bearish positions.

 
 
  Linda Piazza   3/11/03,  11:12:21 AM
Down volume is now ahead of up volume on the NYSE, although up volume still leads on the Nasdaq. Advancers still lead on the NYSE, although not by as high a percentage, while advancers and decliners are now neck-and-neck on the Nasdaq. These volume patterns have changed from the earlier, more-positive patterns.

 
 
  Mark Phillips   3/11/03,  11:10:45 AM
your 10:50 rant helped my perspective. rant on! Debby

Thanks Jonathan and Debby! Glad to hear I'm not the only one!

 
 
  Linda Piazza   3/11/03,  11:08:28 AM
For information's sake, the February 13 OEX low was 407.79. This is a key level I've had marked on my charts for months.

 
 
  Steven Price   3/11/03,  11:07:19 AM
Swing Trade Signals
As we roll below yesterday's lows, I'm wondering if we'll get the entry back up in the 7750 range I was hoping for. It certainly doesn't look like it and those who entered at the multiple failure level of 7640 or 7625 look to be sitting pretty here. Possible stop loss levels depending on risk levels for shorts: 7665/7760/7815

 
 
  Linda Piazza   3/11/03,  11:06:20 AM
The CNBC World commentator was talking about a bottom of the type seen in July and October and not "the" bottom, Mark, but your comment is still well taken. He wasn't advising buying stocks when that level was seen, but was instead advising that markets still have further to go down in the intermediate term. Your comments are important, though, because our more sanguine version of CNBC continues to feature commentators of the buy-and-hold ilk. I remember a few weeks ago when an advisor was featured early one morning on our version, pointing out how quickly markets rallied from bottoms and how we should be buying stocks ahead of the bottom, because markets would rally so quickly. I've thought of her advice off and on throughout the last six or seven weeks as markets continue to "unrally."

 
 
  Jeff Bailey   3/11/03,  11:03:48 AM
10-year YIELD ($TNX.X) 3.551% ... new multi-decade lows in YIELD here. Looks further defensive, especially with softening in the BIX.X yesterday and today.

 
 
  Jonathan Levinson   3/11/03,  10:56:42 AM
The FVX has gone negative by .5 bps, TRINQ still way too low at .54, showing strong net buying pressure, TICK.NQ -572 telling us that the buying is very focused. QQQ is back at 24 after a weak bounce past 24.12 resistance. We're still in the range discussed earlier, and bulls and bears alike are getting whipped around.

 
 
  Jonathan Levinson   3/11/03,  10:51:31 AM
Put 'er there, Mark!

 
 
  Jeff Bailey   3/11/03,  10:50:56 AM
S&P 500 Index (SPX.X) 807.01 -0.07% ... inching red here, and looks to be following the BIX.X

 
 
  Mark Phillips   3/11/03,  10:50:32 AM
What I find interesting about the media commentary on the VIX is that they still don't really get it. They're talking about "Major" bottoms in the market, and to my knowledge they're referencing the TRADING bottoms seen in July and October of last year, and September of 2001. None of those points could as yet be considered Major Bottoms. I may be overly sensitive on the issue, but the comments from CNBC World that Linda referenced sounds like another way of saying we're close to a bear market bottom. You and I know that isn't likely to be the case, but it continues to concern me because of the investors that will hear that comment, take it at face value and buy stocks at the next VIX reading over 45...only to suffer the fate of long-term Buy-and-Hold investors that have tried that on each extreme reading of the past 18 months.

Don't get me wrong. Extreme VIX readings in the 45-55 area are good opportunities for position trades that can last for several weeks. But under no circumstances, should we be talking about a major market bottom just because the VIX pokes over 45 again.

Linda, I might have misinterpreted your post (I don't get CNBC World), but if not, this is exactly the kind of media irresponsibility that helped keep investors in the market and hoping over the past 3 years. And for that, I can't sit idly by. Sorry for the rant -- I'm better now.

 
 
  Jeff Bailey   3/11/03,  10:48:56 AM
Unumprovident (UNM) $6.51 -18% ... this reinsurer getting crushed again today. Yesterday's comments from Warrn Buffett very NEGATIVE on reinsurers. I looked at UNM's p/f chart and it had bearish vertical count of -$4. Link

 
 
  Linda Piazza   3/11/03,  10:48:55 AM
A glance at volume patterns shows more advancing issues than declining issues, with an adv/dec ratio of 1.66 on the NYSE-traded issues and a 1.22 ratio on the Nasdaq-traded issues. Up volume is just over twice down volume on the NYSE and about 2.5 times down volume on the Nasdaq. New lows continue to vastly outnumber new highs on the NYSE, and are almost three times new highs on the Nasdaq. Volume is 278 million shares traded on the NYSE and 298 million on the Nasdaq. This total volume doesn't speak of relief after a major bottom and happy investors flocking into the markets, but the positive adv/dec and up/down ratios do perhaps make bearish trades riskier.

 
 
  Steven Price   3/11/03,  10:48:49 AM
Swing Trade Signals
So far it is looking like the last rally top just below Dow 7650 was the best entry point for shorts. Not only did we get a drop back below 7600, but it looks like a failed rally there, as well. I still think this entry level is not the best risk/reward ratio, but with the SPX turning red and the Dow and OEX showing only marginal gains, the momentum seems to still be with the bears. Keep an eye on the daily/weekly S1s now that we are rolling.

Current levels: Dow 7578/OEX 410.09/SPX 807.38/COMP 1281

 
 
  Jeff Bailey   3/11/03,  10:45:37 AM
NYSE Composite (NYA.X) 4,528 (unch) ... first major index to really get back to unchanged to fractionally lower in last 5-minutes. Most likely the BIX.X something to do with it as many banks listed on NYSE.

 
 
  Jeff Bailey   3/11/03,  10:43:18 AM
S&P Banks Index (BIX.X) 261.57 -0.27% ... quick move lower from 10:27:21 post and session lows. Looks lower to correlative support of 259 from DAILY S1 and WEEKLY S2 from pivot matrix. If so, may have major indexes back near unchanged.

 
 
  Linda Piazza   3/11/03,  10:42:59 AM
The OEX is again slowing its descent near Friday's and yesterday's lows and near weekly and monthly support levels. A break below 409.50, and particularly below 409, would be significant, because the 409.50-410.50 area is one being watched by pivot enthusiasts and more traditional chartists, too. That break may be difficult to achieve, and will soon face the 407-408 historical support. Still, I don't see a lot of strength in the market, either, particularly with the $TRAN now trading near 1965.

 
 
  Jonathan Levinson   3/11/03,  10:36:33 AM
The COMPX failed on that surge at 1288, which is the lower end of a descending range on the 30 minute chart. It's not bullish, but we need to see if the bears can put anything together here. A short below 1277 would be the prudent way to enter if looking to do so. Shorting in the current range will get a better entry IF the lows get taken out - but another push higher could break the COMPX through upside resistance.

 
 
  Jeff Bailey   3/11/03,  10:35:47 AM
Ford Motor (F) $6.88 -1.57% ... notable new 52-week low here. Stock looks vulnerable to its bearish vertical count of $6.50, which was established in July of 2002 (column of O from $17.50-$12.50). Link

I currently own 1 Jan. 05 $7.50 call and now begin to "hope" (not a good thing, but minimum capital at this point) that stock finds a bottom near $6.50.

 
 
  Jeff Bailey   3/11/03,  10:30:01 AM
Airline Index (XAL.X) 27.32 -5.3% ... this "economically sensitive" sector taking out February lows and getting pounded back to lower Bollinger band this morning.

 
 
  Jeff Bailey   3/11/03,  10:27:21 AM
S&P Banks (BIX.X) 263.17 +0.33% ... with the major indexes finding a slight bid after January wholesale inventories, equity index traders in SPX and OEX monitoring BIX.X here. Will note that BIX.X session high has been 264.03, and was NOT able to reclaim its WEEKLY S1 of 265.23 at this point. May have the SPX and OEX somewhat "neutral" in morning trade and tough to have any type of BULLISH sense of direction at this time, and still lean a bit BEARISH with BIX.X lagging a bit here.

I don't think I made notes on BIX.X correlative resistance from DAILY pivot of 265.10 and WEEKLY S1 of 265.23, but looks to be holding resistance in early part of this morning's trade.

 
 
  Linda Piazza   3/11/03,  10:26:44 AM
I found it interesting to watch CNBC World this morning and listen to a discussion of the VIX. The conclusion there was that major bottoms in the U.S. markets were attended by VIX levels near 45, and that hasn't yet occurred in the latest decline. This echoes some of Mark Phillips' commentary of late. As an aside, at 37.07, the VIX is currently pulling back and is near day's lows.

 
 
  Linda Piazza   3/11/03,  10:21:37 AM
Just as the DJI hesitates near key resistance, as Steve mentioned, the OEX hesitates near the March 5 low of 413.98 and yesterday's S1 level. If the OEX broke above this level, it would probably next test the bottom of the 415-420 trading range from last week, but, so far, that level seems to be holding any OEX advances.

 
 
  Jeff Bailey   3/11/03,  10:13:43 AM
Wholesale Inventory follow up MARKETS seem to be able to read the data from the report Link much faster than I, but Durable Goods data showed gains for most part when comparing Jan. 2003 to Dec. 2002 and even Jan. 2002.

Dow Indu +65 points, SPX +5.8, OEX +3.5, NDX 6.2.

Treasuries have reversed from selling to modest buying, with 10-year YIELD rising now to 3.583%. March 10-year futures contract (ty03h) $117'220 -0.19% (10-minute delay)

 
 
  Steven Price   3/11/03,  10:13:30 AM
Swing Trade Signals
As I sent my last entry, we got a rally in equities to new highs and we are testing the 7650 level I highlighted earlier, with an intraday high of 7642. We saw several failed rallies on Monday afternoon at 7640 and so far we are right up against that resistance. Next up is 7660, but 7640 saw at least 3 failed rallies and should be a tough level for bulls. On a break above 7660, the next intraday level should be 7700.

 
 
  Mark Phillips   3/11/03,  10:09:53 AM
EXPE $34.00 (-0.33) Don't let the price fool you...remember, EXPE completed its split this morning, so price has been cut in half. Interesting to note that the stock dipped to just below our stop ($33.75) at the open, but is now fractionally back above that level. We deliberately avoided entering the play ahead of the split due to the unknown reaction after the split. Given the fact that EXPE seems to want to hold above our stop, this could make for a solid entry. More cautious traders will want to wait for a push through $34.55 (entering yesterday's gap) before playing.

 
 
  Steven Price   3/11/03,  10:09:21 AM
Swing Trade Signals
So far failing once again at the morning high, which coincides with yesterday afternoon's last gasp. 10-year and 5-year yields both in green, although 10-yr close to unchanged. This is a departure from earlier activity in the 10-yr and less bearish for stocks

Current levels: Dow 7615/SPX 811.69/OEX 412.30/COMP 1286

 
 
  Jonathan Levinson   3/11/03,  10:09:02 AM
Well, bad news, good news, either way the COMPX has escaped 1280 on its way to 1292 resistance.

 
 
  Jonathan Levinson   3/11/03,  10:04:53 AM
Al Green has just re-established the expiring overnight repo with a fresh repo of 4.251B. I guess the .001B is just for good luck.

 
 
  Jeff Bailey   3/11/03,  10:02:42 AM
January Wholesale Inventories fell 0.2%, which was below economists forecast for a gain of 0.2%. Will have to read further into the report and see if decline was from demand pull, or lack of production. Link

Dow Indu +32 points, S&P 500 +2.8, NDX +2.82

 
 
  Jonathan Levinson   3/11/03,  10:01:36 AM
Wholesale inventories down .2% in January.

 
 
  Jonathan Levinson   3/11/03,  9:59:40 AM
The 10am report is due in two minutes. This feels like emotional rangebound trading. The inability to put together a rally through resistance at the open looks very weak to me, but that huge TRIN reading yesterday was a little frightening. The 10am report will likely get things moving.

 
 
  Linda Piazza   3/11/03,  9:57:41 AM
The OEX failure this morning occurred right at a midline candlestick level I had marked on one of my charts yesterday, near 411.80. Today, that candle doesn't look particularly impressive but when it first formed, it was larger than the candles that had preceded it and I had marked that midline level when it first formed. It's interesting that the OEX switched directions there. More significant midline candlestick resistance should come a bit higher, at the 50% retracement of Friday's big first five-minute candle. That level is 412.66. Link

 
 
  Jeff Bailey   3/11/03,  9:57:31 AM
Wells Fargo (WFC) $44.30 +0.06% ... component of S&P Banks Index (BIX.X) 262.39 +0.03% ... company announced this morning that a federal court agreed with WFC late yesterday and issued a preliminary injuction against the Commissioner of CA Dept. of Corporations, blocking the state from interfering with WFC's Home Mortgage business. The federal court issued a preliminary injunction in the case, finding that Wells Fargo is likely to prevail on it belief that subsidiaries of national banks are subject to exclusive regulatory jurisdiction by the Office of the Comptroller of the Currency. Story Link

 
 
  Linda Piazza   3/11/03,  9:49:56 AM
At 37.58, the VIX is down .27 today, but still within striking distance of the overhead descending trendline.

 
 
  Steven Price   3/11/03,  9:47:31 AM
Swing Trade Signals
So far we are running out of steam just below Monday afternoon's failed rally at Dow 7626/SPX 813. With the bounce above the daily and monthly S1 (7505/7541), I'd prefer to enter higher for a better risk/reward ratio, but the most aggressive traders can think about a short 1/4 position here. I haven't seen weakness in equities, but the ten-year yield is in the red, which is bearish for stocks.

Current levels: Dow 7611/COMP 1282/OEX 411.84/SPX 811.33

 
 
  Jeff Bailey   3/11/03,  9:43:54 AM
Boots & Coots (WEL) $0.62 ... I placed WEL into a DAILY/WEEKLY/MONTHLY pivot analysis matrix. From WEEKLY R1 of $0.61 and DAILY Pivot of $0.61, might expect some resistance here.

 
 
  Linda Piazza   3/11/03,  9:42:36 AM
A hearty welcome back, Steve!

Currently at 1978.27, the Dow Jones Transportation Index dipped below the former February low of 1973.63 and October closing low. This remains important to watch.

 
 
  Jonathan Levinson   3/11/03,  9:41:01 AM
Gold is getting sold this morning, with spot prices down 3.20, HUI -1.93 to 117.60, XAU -.83 at 64.11. This is a warning of potential plunge protection team activity. QQQ has just crossed above 24, headed for 24.13 resistance.

 
 
  Jonathan Levinson   3/11/03,  9:33:34 AM
Flat open on the COMPX, TRINQ .53, TICK.NQ -219.

 
 
  Jeff Bailey   3/11/03,  9:25:44 AM
10-year YIELD ($TNX.X) 3.566% ... has traded a low YIELD of 3.561% this morning, which was very close to the 3.599% YIELD traded intra-day on October 10th. Yesterday's closing YIELD of 3.574% was the lowest YIELD close in half a decade.Link

Pivot matrix note: This morning's low YIELD trade of 3.561% comes right at this WEEK's S1. My thoughts are that equity BEARS would like to see this WEEKLY S1 level taken out to the downside for further equity index weakness and levels discussed in last night's Index Trader Wrap.

 
 
  Jeff Bailey   3/11/03,  9:22:47 AM
The 9:00 AM Intraday Update has been posted. Link

 
 
  Jonathan Levinson   3/11/03,  9:20:49 AM
Here's an excellent background article on the plunge protection team from the Washington Post, published in 1997. Link

 
 
  Steven Price   3/11/03,  9:20:47 AM
Swing Trade Signals
Oh sure, I leave for a few days to do some downhill skiing and the market beats me down the hill. Kudos to Linda on picking an efficient entry and exit on Monday. We have come awfully close to the July low of 7532 and at the same time we are up against a descending trendline in the VIX, connecting the highs of July 23, October 10, Feb 10 & 13 and now March 10.

The last two drops over the past week have been followed in the Dow by bounces to about the midpoint of the previous day's candle. A bounce from the current level would seem to be the most prudent entry point from the short side, but as Linda pointed out, the oversold bullish percents and approach to support levels have increased the risk for shorts. I think a move below Dow 7500 would look bearish for aggressive momentum traders. I would prefer to enter on a bounce and will look for a failed rally below recent intraday resistance at Dow 7650 or preferably 7750 for a possible short entry. Notice today's R2 sits at 7802, just above the resistance point from last week and that level may provide an even lower risk entry with a tight stop on a failed rally at 7800. If we approach any of these possible entries I will take the bond market into consideration, as well. With the current geo-political situation, I will decide at that time whether to enter officially, or just give a recommendation depending on a trader's risk profile.

 
 
  Jonathan Levinson   3/11/03,  9:19:35 AM
The fed is owed 4.25B in expiring overnight repos. We await the 10AM announcement, which, I believe, should also be the time of the wholesale inventories data.

 
 
  Linda Piazza   3/11/03,  9:04:41 AM
European markets have inched up a bit more since my earlier report, with the FTSE 100 now in the green by 6.60 points or .19%, and the CAC 40 now down only 4.89 points or .19%. The DAX hasn't managed much of a climb, however, still hovering near the 2300 level at 2319.63, down 9.41 points or .40%.

 
 
  Jonathan Levinson   3/11/03,  8:39:32 AM
The US Dollar Index is hitting new multiyear lows below 97.60. Bonds have opened down, with yields up, FVX +1.8 bps, TNX +.3 and TYX -.3 bps. I made the mistake of glancing at the screen around 3:30AM and was treated to the sight of a Corynthian Geyser in the futures, but they never took out resistance and settled back down. QQQ is trading flat from its close yesterday, currently 24.013 on Island ECN.

 
 
  Linda Piazza   3/11/03,  7:35:54 AM
Good morning. As I begin research each night in preparation for this discussion on the Asian and European markets, I sometimes have to check to see if I'm reading old articles or new research. Lately, every article I find is titled with a variation on "Nikkei Falls, Led by Exporters" or "Financial Stocks Drive Japanese Markets to New Lows." Today, both exporters and financial stocks participated in the losses as the Nikkei once again plunged, dipping below 8000 by midday and closing beneath 7900, at 7862.43. This represents a fall of 2.2%, and is a new 20-year low. Hoping to avert instability in the financial markets, the Bank of Japan injected 1 trillion yen ($8.5 billion) into the short-term money market, according to a report on Marketwatch.com. One bright spot could be found in the retailers, a group that rose after Seven-Eleven Japan announced after yesterday's close that it would increase its dividend. Seven-Eleven rose 3.8%.

In Hong Kong, Hutchison Whampoa declined for a second day after announcing its intention to infuse its U.K. 3G mobile communications unit with $1 billion. Trouble with mobile communications companies spilled over into European trading, with Nokia dropping 4.3% after the company lowered the higher end of per/share forecasts and sales forecasts. Ericsson and Alcatel plummeted. Volkswagen and publisher Wolters Kluwer also offered warnings and added to European declines. Currently, the FTSE 100 trades down 8.30 points or .24%, to 3427.70. The CAC 40 trades down 23.70 points or .94%, to 2489.90. The DAX trades down 17.50 points or .75%, to 2311.54. All these markets are off their lows of the day, with the DAX having dipped below 2300 to 2287.16 at one point, but all trade now at multi-year lows. After a disastrous 2002 in which the DAX dropped 40%, it has dropped a further 23% since beginning the year at 3000. The DAX falls although January German production numbers, released today, increased 1.6%. With economists watching for signs of a contraction in Germany's economy, that production increase eased fears somewhat, but the increase comes on a comparison to a three-year production low in December. Some economists prefer a two-month comparison. On this basis, the December/January period fell 1.5% from the October/November period. The U.K. also released production numbers today, with January manufacturing production growing 0.3%, an upside surprise.

Geopolitical news that might affect the markets today include Pakistan's announcement last night that it would abstain from a vote on a resolution to disarm Iraq by force. With Pakistan abstaining and opposition by other countries hardening, the U.S. and U.K. backed off an attempt to push through a vote today, agreeing instead to meetings today and tomorrow on the Iraq issue. The U.S. and U.K. signaled a willingness to negotiate changes in the resolution, including the deadline.

 
 
  Jeff Bailey   3/10/03,  11:48:21 PM
The Index Trader Wrap has been posted: Link

 
 
  Jonathan Levinson   3/10/03,  11:48:14 PM
The Futures Trader Wrap has been posted: Link

 
 
  Linda Piazza   3/10/03,  11:48:04 PM
The Swing Trade Game Plan has been posted: Link

 
 
  Steven Price   3/10/03,  11:47:13 PM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

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

 
 

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