Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
  Jonathan Levinson   3/18/03,  10:05:51 AM
The 1380 COMPX level continues to exert its hold on the price, coinciding with the descending trendline on the daily candles from the Dec high. The TRINQ at 1.51 and TICK.NQ -244 show net selling pressure, but it's moderate. FVX down .3 bps tells us the same thing. We have no announcement from the fed yet, but it's due shortly. The opening put to call ratio at .56 portends further weakness, but this is clearly a critical point- its resolution will help us determine where the market wants to go today.

 
 
  Jeff Bailey   3/18/03,  10:04:04 AM
Central European Distribution (CEDC) $27.92 +7.01% ... getting upside alert here on this "interesting name." Made note the Brean Murray believed that the reduction in Poland's excise tax might have the desirable effect of returning black market liquour sales to the legal channel, and that CEDC could be major beneficiary of this type of shift. The firm went on to say that it estimates that CEDC's volume is trending roughly 20% ahead of expectations. Link

Look for the trade at $23, to be a "shake out" and move at $28.00 to be bullish. Similar perhaps to that found in December on dip at $15.00 before stock reversed strong to the upside.

Note... stock does NOT currently trade options.

 
 
  Steven Price   3/18/03,  10:00:49 AM
Swing Trade Signals
Looks like my stop was about 5 points too tight. The Dow break back under 8100 looks bearish and aggressive bears are looking good here.

 
 
  Linda Piazza   3/18/03,  10:00:46 AM
The Dow Jones Transportation Index trades at 2089.46 as I type, just below its July 2090.39 intraday low.

 
 
  Linda Piazza   3/18/03,  9:57:11 AM
Currently at 317.79, the SOX trades a little more than a point above its 316.15 simple 200-dma. We may be seeing our first important test this morning.

 
 
  Steven Price   3/18/03,  9:54:17 AM
With the fade off the morning highs, I am thinking we may have seen some exhaustion and could be in a holding pattern ahead of the Fed meeting and the Saddam deadline. While common sense tells me it would be time to retrace some recent gains, the upturn in bullish percents has me wondering if we should be looking to buy a pullback. I have a hard time seeing an entry right here, but I'm less convinced about going long after what looks like at least a short term reversal top. Yields are dropping and the SPX has fallen back below 860.

 
 
  Jeff Bailey   3/18/03,  9:52:46 AM
Boots&Coots (WEL) $1.99 +65% ... stock has broken above both MONTHLY and WEEKLY R2s. Today's DAILY R1 $1.86 and R2 $2.52. I've had to roll up retracement from $3.50 to $0.06. This gives us 50% at $1.78, 61.8% at $2.18, 80.9% at $2.84. Those that took partial profits off table yesterday can either "let it ride" or snug a stop up under 38.2% retracement of $1.37.

 
 
  Linda Piazza   3/18/03,  9:49:27 AM
This morning, the SOX trades between its simple 200-dma at 316.17 and its exponential 200-dma at 337.98. Yesterday, the SOX closed over its simple 200-dma for the first time since May of last year. In May, however, the SOX had several closes over that simple 200-dma before testing and failing to move over the exponential 200-dma, and then falling back below the simple 200-dma, too. In December of last year, the SOX tested and failed to close over the exponential 200-dma. It might be key to watch how the SOX behaves near that exponential 200-dma if the SOX should continue to rise today. If it continues to fall, as it is doing now, watch the simple 200-dma for clues.

 
 
  Steven Price   3/18/03,  9:43:10 AM
Swing Trade Signals
Looks like I picked the top with my 8180 stop - high on the day is Dow 8184.

 
 
  Jeff Bailey   3/18/03,  9:41:20 AM
Treasuries mixed mixed in early going with selling in the shorter-dated 5-year, fractional selling in 10-year and buying in 30-year. This will have the YIELD curve flattening a bit, and should keep a bid under stocks as long as it continues.

5-year YIELD ($FVX.X) 2.8% here and trying to get back above its upward trend from the October lows, but should it fade toward buying and YIELD slip back under 2.786%, which was morning low, then equities could undercome some profit taking.

 
 
  Steven Price   3/18/03,  9:39:29 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were stopped out on the 1/4 short position when the Dow traded 8180 at 9:35:26.

We are pulling back slightly from that level and those traders using the more agggressive stop over 8200 may still havea chance for success. However, 8160 was a significant level and with an upturn in bullish percents in the Dow and NDX, I'd be leaning long if the SPX can get back over 870.

 
 
  Jeff Bailey   3/18/03,  9:36:17 AM
09:00 Update posted at this Link

 
 
  Steven Price   3/18/03,  9:36:09 AM
ZMH $49.40 (+0.43) We closed this OI call play last night to harvest some gains. However, with $49 out of the way those traders raising stops and hanging on should watch the action as we approach $50 and possibly tighten further if we stall at that level. We recommended a stop of $47.60 in last night's newsletter for those still holding.

 
 
  Linda Piazza   3/18/03,  9:32:50 AM
Handily enough, the OEX exponential 100-dma is located at 440.90, in the area of strong 440-442 resistance. For those of you who prefer numbers based on pivot analysis, the only correspondence I see near that number is the monthly R1 at 439.60. Those three factors--important MA, historical resistance, and resistance determined though pivot analysis converge in that area.

 
 
  Jonathan Levinson   3/18/03,  9:32:10 AM
Flat open on the COMPX at 1392, TRINQ .58, QQV +1.07 to 42.75, TICK.NQ -141.

 
 
  Steven Price   3/18/03,  9:29:36 AM
Swing Trade Signals
After the pullback in futures it looks close as to whether we will be stopped out on the open. As I have said, traders with more aggressive risk profiles may want to raise the stop above Dow 8200 to give the SPX just a little more room.

 
 
  Linda Piazza   3/18/03,  9:12:39 AM
European markets now trade well off their morning highs, with the CAC 40 now in the red. Currently, the FTSE 100 is up 22.60 points, the CAC is down 14.33 points, and the DAX is up 68.13 points.

 
 
  Jonathan Levinson   3/18/03,  9:09:00 AM
While QQQ is now down 25 cents off its morning highs, it remains above yesterday's close by 15 cents, still signalling a strong open. Yields have fallen lower, with TNX now in the red and FVX +.2 bps.

 
 
  Jonathan Levinson   3/18/03,  8:55:54 AM
The housing starts data was the worst one month drop in 9 years. Here are the details: Link

 
 
  Jonathan Levinson   3/18/03,  8:50:00 AM
Gold is up to 337 now, and while there is selling in bonds as expected, it's considerably lighter than I would have guessed before 8AM, with FVX +1.7 bps, TNX +.7 bps and TYX -1.2 bps.

 
 
  Jonathan Levinson   3/18/03,  8:44:10 AM
It appears that the housing starts data at 8:30 took some of the wind out of the markets' sails, with QQQ trading down 20 cents to 26.81. Housing starts fell 11% in Feb to an annual rate of 1.62 million.

 
 
  Steven Price   3/18/03,  8:36:41 AM
Swing Trade Signals
We are currently short a 1/4 position with a stop at Dow 8180. If we are stopped out and the SPX crosses 875, I would be leaning long at that time. I expect to be stopped out now on the open and I am glad I initiated only a 1/4 position. There is bearish resistance in the SPX at 870 (although that appears in danger at this time) and the Dow at 8300 and the OEX at 442.50 on the PnF charts and those levels could be a challenge. A trade to SPX 875 would be a full breakthrough of bearish resistance. Because the Dow reached 8150 before the SPX reached 868, aggresive tradres can try a more lenient stop, around 8230, to allow for the SPX to fail at the January bounce ceiling (868), which at the time correlated to Dow 8150-8160. I am hesitant to go long less than 48 hours before the start of war, knowing that any terrorist retaliation could send the markets tumbling. I would recommend long positions for aggressive traders only and for the moment I will leave this as a suggestion rather than a signal. Trading with a 2-3 day window when we are about to invade another country is the highest risk proposition I can imagine, knowing ahead of time that it is likely to happen. If Saddam were to flee, then we could see a tremendous rally. Basically, this is an extremely difficult market and I'd prefer to enter near strong resistance or support, as I did yesterday just below Dow 8150. That 8300 level where we find bearish resistance in the Dow is also a level of formerly strong support, so it should be pivotal if reached.

Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Set stops at Dow 8180.

 
 
  Jonathan Levinson   3/18/03,  7:58:00 AM
The US Dollar Index peaked on a spike above 101.40 and is now trading just below that level. Spot gold is trading down 1.50 to 335.00, and futures are sharply higher with SPX trading 872.10 and NDX 1089. QQQ is trading 26.99. I expect to see renewed selling in bonds when they open at 8:30 EST.

The bullish percent indices, BPCOMPQ and BPNDX, have both given buy signals, not at all surprisingly given the strength the rallies we've seen over the past week. In keeping with Jeff's football analogy from about a year ago or so, the bulls now have the ball. That said, the 200 day EMA will be a formidable resistance to clear, this is a dangerous environment in which to be staking out fresh positions. As the TRINQ has been telling us for a week, there is a very strong, continuous imbalance in market breadth to the buy side. This makes the market unacceptably dangerous for bears, and risky for bulls hoping for continued upside, as the imbalance could correct itself at any time. Bulls and bears alike expect a pullback, or at least a shallow basing period such as we saw yesterday. As long as the BPNDX and BPCOMPX are moving up, these dips should be bought to the long side.

This is what the charts say. Geopolitical and economic risks are another story entirely, but to repeat, price is the final arbiter.

 
 
  Linda Piazza   3/18/03,  7:46:05 AM
Blair currently addresses the British Parliament, meeting to vote on whether to back the U.S. move against Iraq. He details Iraq's previous decade of omissions in its "full and final" weapons reports. Today, Turkey's cabinet is to discuss allowing U.S. troops to use their bases.

 
 
  Linda Piazza   3/18/03,  7:16:43 AM
Good morning. By now, we all know Bush's 48-hour ultimatum to Saddam Hussein and his sons, so let's turn our attention to the markets' reaction. The first markets to react were the Asian markets, of course, and those markets rallied. Hopes of a quick resolution to the war drove crude oil prices lower and powered equities higher. Exporters, airlines, and telecoms, some of Monday's biggest losers, were Tuesday's biggest gainers. The Nikkei closed up 82 points or 1%, at 7954.46. Earlier in the day, however, the Nikkei had traded as high as 8081.17 before falling to its lowest level at the close.

European markets surged, helped by the release of a January Eurozone economic number that showed that industrial production increased 1.1% from December's number. February's Eurozone annualized inflation rose to 2.4% from January's 2.2%, however. Of more help than the Eurozone industrial production number was the slump in crude oil prices and the attendant hope that the engagement with Iraq will be brief. The ongoing rallies are broad based, but chemical-maker BASF also benefits from an earnings report that showed it returning to profit and Germany's Wella gains from the news that Procter and Gamble will buy the company. As of this writing, the FTSE 100 had climbed 44 points or 1.18%, the CAC 40 was up 49.39 points or 1.74%, and the DAX had climbed 113.99 points or 4.58%. The DAX has just managed to spike over 2600 for the second time in today's trading, and currently trades at 2601.11.

Articles discussing today's gains in the European markets spoke of a buying panic after recent sharp gains. EU representatives were meeting today to discuss humanitarian assistance to Iraq, but discussions did not extend to monetary help to rebuild Iraq. The sentiment was "you broke it; you fix it," according to one commentator.

 
 
  Mark Phillips   3/18/03,  3:47:12 AM
Finally, the wind is gone, and my connectivity is back to what it should be! Ah, what a relief. After getting everything back up tonight, the email came streaming in as the server caught me up with all that I missed during the day. After going through the bulk of that email, I came across one that really troubled me. I want to share an excerpt with all of you in hopes you can tell me if my perceptions are wrong.

You people have responsibility to your readers to tell them the truth. Did they have a two million person conference call to take the market up. Call everybody you know and ask them if they would have bought calls at 8:00am est this morning. Not one of you was commited to the upside. And the market went up 250 points.

First off, I think every contributor in this forum takes their responsibility to honestly share our views about what we see in the market. It would be self-defeating to do otherwise, as we soon wouldn't have the luxury of subscribers tuning in to share our thoughts.

While I think it is a safe bet that none of us saw Monday's 300+ point ramp coming until it was pretty much over, there are (at least in my mind) a lot of things that have happened in the past couple weeks that certainly painted the picture that a big bullish reversal could be lurking just around the corner. First and foremost was the achievement of the bearish price targets forecasted by the Head & Shoulders patterns that Steve has been talking about for months now. He pointed out last week that with the achievement of those targets could very well shift the action to the upside.

Jeff Bailey has been talking about the increasing level of risk that bears have been assuming in the market due to the depressed levels of bullish percent. On March 5th, he recommended a 1/4 bullish position in the DOW and upped that to a 1/2 position in the Monitor on Monday.

While I can't say that I've been all-fired bullish until the past couple days, I think the LEAPs column speaks for itself. There are currently 10 plays listed there, 7 in the Portfolio and 3 on the Watch List and ALL of them are bullish. As a matter of fact, those Portfolio plays are now performing quite nicely, don't you think?

I think most of us have gone overboard in the past couple weeks pointing out the elevated levels of risk associated with the uncertainties surrounding the Iraq situation. I know Steve, Jeff and Jonathan have pointed it out, and I've been doing the same thing for the past 3 weeks at the end of my LEAPS commentary.

I know this is only one email, and it may not be typical of the majority of the readers. But it raises the concern for me that perhaps I'm not being clear in describing my thoughts on the market. If that's the case, then clearly a course correction is in order. So I'd like to open this up for comments from all of you. If you have any thoughts on the topic, I'd certainly like to hear from you. Send me an email with "Clarity" in the subject line. I may post some of the responses later today, or just compile a summary. The end result I'm going for, is to provide the best information I am able. Thanks for your help!

 
 
  Jim Brown   3/17/03,  6:44:49 PM
Terrorist Alert Status going to Orange again tonight after the President's speech. Increased chance of attack is said to be imminent once war begins. Saddam has threatened to attack us on US soil if we attack him.

 
 
  Jim Brown   3/17/03,  4:49:38 PM
GTW is halted news pending and the news is massive layoffs and an $80 million restructuring charge. Then company said it would be closing many of its PC stores due to lack of demand.

AMAT said they were not seeing any rebound in the IT sector and this continued to be the worst-ever slump in the chip sector.

 
 
  Steven Price   3/17/03,  4:00:45 PM
Hi steve, I noticed the same thing in the VIX. It went up to the downward trendline where it found resistance. Can you please explain what you mean by "selling premium" the institutions that is. Thanks Alex

The VIX reflects the level of implied volatility in the OEX. Often, when institutions become bullish on the market, they sell option premium, which generally falls on market rallies and increases on market drops, due to the fact that rising markets generally grow more slowly than they fall and covered writing is the most common option trade. It really doesn't make much difference whether they are seilling calls or puts, since either trade, when hedged (in the OEX it would be hedged with a basket of stocks or a percentage of futures), generally act the same. On a big rally, I would expect to see the VIX drop. Institutional pressure is usually required to move the VIX, since the OEX is a heavily traded index and one or two retail orders don't usually have much of an effect. If the institutions are still buying premium on the rally, the indication is that they may be expecting a reversal, or at least that they don't entirely believe in the rally.

 
 
  Steven Price   3/17/03,  3:53:22 PM
Closing Plays: Readers will note that I am planning on taking OI call plays ZMH ($48.91) entered at $43.96 and AMGN ($58.48) entered at $53.45 off our list to harvest gains. While readers can make their own decisions as far as whether to hold, both have approached profit targets and I'd prefer not to risk a pullback and give anything back.

 
 
  Jonathan Levinson   3/17/03,  3:52:51 PM
For what it's worth, I like Steve's signal and will post my picture next to his. Volume has been dropping as this bear flag advances, and the QQV VXN and VIX continue to diverge. I am not, however, chewing-the-tread-off-a-tire bearish here, because the TRINQ and overall heavy volume, combined with no significiant pullback, the selling in bonds, and the sheer speed and magnitude of the rally have me feeling timid about standing in front of a possible train. A partial position is the correct way to play it, if at all. Cash is the other attractive position. Bulls still long here should be trailing their stops to protect their profits.

 
 
  Linda Piazza   3/17/03,  3:49:52 PM
Currently at 2091.01, the Dow Jones Transportation Index now trades just above the July intraday low of 2090.32 and looks to move higher on short-covering into the close. As I mentioned in an earlier post, next resistance lies above that is the 2100-2120 area that provided support for the TRAN during its consolidation in late January and early February, in what would have been its right-shoulder area of a potential reverse H&S formation.

 
 
  Linda Piazza   3/17/03,  3:45:40 PM
I'm not throwing darts. The commentator speaking on CNBC right now is echoing some of Steve's skepticism, as this commentator mentions that the VIX is up and that volume is not as high as he would expect it to be on a third day of a an explosive new rally.

 
 
  Steven Price   3/17/03,  3:43:08 PM
Swing Trade Signals
Now moving to new highs of the day. Looks like we'll get our test of Dow 8150-8160.

 
 
  Steven Price   3/17/03,  3:37:36 PM
I am considering posting a picture of myself with a link. That way some of our readers can place it on their dart board. It appears some of you are wondering just why I am short. We approached my short target entry and it happened on a news rally. If I were 100% commited to the position I would not have enterd a 1/4 position and labeled it high risk. I still think it will take an awful lot of buying power to crack Dow 8160 and that is the reason for the tight stop. I am aware of the similarities to the October bounce, but after a gain of 700 points in 4 days on no real good news and the VIX actually HIGHER on the day (indicating institutions aren't selling premium on the supposed "good news"), something is fishy and I'm willing to take a small risk.

 
 
  Steven Price   3/17/03,  3:22:39 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Now short a 1/4 short position at 8119 at 15:21:48. Stop is set at 8180.

 
 
  Steven Price   3/17/03,  3:19:44 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
I've been looking for a short entry just below 8150, but the SPX jsut gave the second box at 860 and moved past the classic bull trap. I am going to step in with a very small position and a tight stop. I am going to swim against the tide of a news rally and go short a 1/4 position at Dow 8119. I am setting a stop at 8180.

 
 
  Jonathan Levinson   3/17/03,  3:19:18 PM
Well, it *is* a bearish flag on the 5 minute candles, in that it is rising in an even range, but sitting atop a massive move up, I hesitate to bet on its demise. I'd prefer to see more of a classic topping pattern. The news just reported about Turkey seems to be causing or coinciding with a renewed bid on the COMPX, and if this is the case, the point will be moot. Watching the highs of the day here.

 
 
  Steven Price   3/17/03,  3:15:39 PM
Apparently Turkey is going to allow U.S. trrops. Apparently it is better to take the winning team's money than be left on the sidelines now that war looks imminent.

 
 
  Linda Piazza   3/17/03,  3:15:13 PM
On the OEX five-minute chart, the OEX continues to trade in a slightly uptrending regression channel, with prices mostly supported by the five-minute 21-pma. Despite brief dips below that moving average, the OEX has mostly tracked its movements. Currently, the five-minute 21-pma slops upward, toward the top of the regression channel, and is located at 435.63, with the OEX currently 436.03.

 
 
  Kent Barton   3/17/03,  3:15:11 PM
Breaking news: Turkey allows U.S. troops into the country.

 
 
  Steven Price   3/17/03,  3:14:13 PM
Swing Trade Signals
As we run out of steam below that 8150 level I have highlighted in past wraps, aggressive bears can think about a short here. Of course 48 hours before a possible war it is a risky proposition. Also note that we have already jumped almost 250 Dow points and gotten PnF buy signls in the Dow, OEX and SPX. What I term running out of steam should be taken in context of an already big gain. The SPX buy signal was a triple top, but until we get a trade of 860 (today's high is 859.47) we are in bull trap territory.

 
 
  Kent Barton   3/17/03,  3:03:58 PM
03:15 Update is posted at this Link

 
 
  Jonathan Levinson   3/17/03,  3:01:14 PM
The bond market has closed with yields at their best levels of the day, FVX +10.2 bps, TNX +10.9 bps and TYX +7.9 bps.

 
 
  Jeff Bailey   3/17/03,  2:57:16 PM
NASDAQ-100 (NDX.X) 1,072 +4.1% ... has traded its MONTHLY R2 of 1,069.90 earlier this morning, after holding the 1,018 level that kept showing up in WEEKLY pivot analysis and then today's DAILY S1 of 1,019.50. This action from "leading strength" index now has upside potential in other indexes to their MONTHLY R1s as NDX has tended to "lead" by one level to the upside.

NASDAQ-100 trade at 1,125 would be significant sign of strength. Link A 3-box reversal to 1,000 from current levels would tie in niceley with WEEKLY pivot of 1,000 and now becomes excellent "pullback entry" for bull's as such a pullback of 3-boxes would have bullish support trend moving up to 975 and provide further technical support.

Would continue to "do nothing" with a QQQ straddle/strangle trade at this point.

 
 
  Jeff Bailey   3/17/03,  2:43:21 PM
Avid Tech (AVID) $20.79 +4.3% .... short interest has been building in recent month to 4.59% short ratio. This is similar level of short interest ratio as found in September of 4.38% , and interesting enough, is similary type of pattern from p/f chart. Link

 
 
  Jonathan Levinson   3/17/03,  2:40:51 PM
The put to call ratio is down to .66.

 
 
  Linda Piazza   3/17/03,  2:40:48 PM
Earlier today when I was having difficulties discerning a shape to apply to the five-minute candles, I decided to let Q-charts determine for me and snapped a regression channel onto the candles. Q-charts decided that the OEX was trading in an upward trending regression channel, and Q-charts must have been correct, because the OEX is following that regression channel fairly closely as the afternoon progresses. The OEX is currently (OEX 437.05) trading near the top of that channel, and will break out of the channel with a continued move up and will break down out of that channel with a close below 433.50. I note that although the OEX is trading in a tight pattern of higher highs and higher lows after this morning's big move, this would not technically be labeled a bear-flag pattern because the previous move was up and not down. Bear flags are patterns that occur after a strong move down. It's not technically a bull-flag pattern, either, as flags move counter to the previous direction. The previous direction was up, and a bull-flag pattern would show the OEX moving in a tight countermovement composed of lower lows and lower highs.

 
 
  Jonathan Levinson   3/17/03,  2:34:08 PM
A single new HOD printed at 1386. FVX up to +9.2 bps, TRINQ down to .16.

The TRINQ is telling me that the buying is strong enough at this point to keep going for a good while. What that means is that it's not like a small hysterical burst of program buying that momentarily drills the TRINQ down to an extreme "overbought" level and signals an imminent reversal. Those were common in 2002, and I made a pretty penny buying puts on those downward spikes. But in August, Oct, Jan, Feb and last week, the tell on those rallies was the TRINQ getting buried as if by a tidalwave of buying, and the sustained low readings was distinguishing characteristic. Whether this will hold true again remains to be seen- but the inability of any sellers to move the price at all after this violent upward move confirms my suspicion somewhat.

 
 
  Linda Piazza   3/17/03,  2:27:34 PM
When I'm having trouble making decisions about market direction, I take a look at the Wilshire 5000 for guidance. We're not as familiar with those S/R levels in the Wilshire, and it's possible to be less biased about what the chart shows us. A glance at the weekly chart shows that the Wilshire is still beneath its long-term descending trendline, so the long-term trend is still intact. I watch 10-week/30-week crossovers for signs of change in the intermediate trend. There's as yet been no bullish crossover, although the 10-week has flattened and perhaps hinged upward in a small way. Those crossovers sometimes occur late in a move, anyway, so it might be important to watch the 10-week's behavior, although I do note that it approached the 30-week in the spring of 2002 before falling toward the July lows. The daily chart gives mixed messages, too, with the Wilshire fast approaching its 50-dma at 8127.32 this afternoon. However, daily RSI is overbought, and stochastics (both 5(3)3 and 21(3)3) also approach or are currently in overbought levels. MACD is cycling up, however. I don't see bullish MA crossovers on this daily chart, either, with the 21-dma below the 50, the 50 below the 100, the 100 below the 200. The Wilshire remains below its rather well-defined H&S neckline. The 60-minute chart shows overbought stochastics, too. On balance, the Wilshire seems to have expended most of its push getting to these levels, but then it just keeps climbing anyway. Is this a last gasp or just the start of a new bullish tenor? Charts show me slightly mixed messages, but the "last gasp" scenario might be most likely. That's not the way it feels to be watching the markets today, and the implications of strong volume should not be ignored.

 
 
  Jonathan Levinson   3/17/03,  2:25:05 PM
The COMPX is pushing back up toward the highs of the day. For reference, the 200 day EMA is at 1415. The lack of significant failure at the top so far is a very bullish sign, as the oscillators work off their extreme overbought readings with little corresponding pullback in price. The TRINQ continues to register extreme buying pressure, .18, and the TICK.NQ is showing broad strength at +307. The FVX is up 9 bps, and the US DOllar Index is also holding near its highs.

 
 
  Steven Price   3/17/03,  2:24:34 PM
Swing Trade Signals
Testing Dow 8100 again with a high of 8099. A breakthrough here could take us to 8150.

 
 
  Jeff Bailey   3/17/03,  2:20:38 PM
Forest Labs (FRX) $50.20 +3.3% ... Jeff: I bought some FRX on a pullback near $48, with a stop under $47.50. What do you think of selling the March $50 calls for $1 with expiration this Friday? Or do you think I should just hold the stock and see what happens?

Hmmm.... not a bad idea as selling the $50's for $1 is obligating you to sell the stock for $51 and that's not a bad trade, even if the stock gets called away. I like the "odds" of a $50 settlement and with a little "Irish luck" the stock closes $49.99, then makes its break above $51.50 next week.

 
 
  Jeff Bailey   3/17/03,  2:05:21 PM
01:00 Update is posted at this Link

 
 
  Linda Piazza   3/17/03,  2:04:13 PM
Markets seem stalled near the day's highs. For example, the Dow Jones Transportation Index zoomed up to a high of 2082.07 today, stalling beneath the 2090 level that was next resistance. It's pulling back now, but will this be a pullback before another move up? Hourly stochastics--both 5(3)3 and 21(3)3--are in overbought territory, predicting that much energy has been used up to get the TRAN to this level. However, stochastics may not be the best predictor of this afternoon's action. A move over 2090 would be bullish, although it would soon face more resistance, and a move under 2040 would have more bearish implications.

 
 
  Jonathan Levinson   3/17/03,  2:04:07 PM
The COMPX price action has stopped at a descending trendline on the weekly candles from April 2002. I'd be confident of a failure at this level, except that the stochastics on that timeframe are nowhere near topping, and are in fact in a full bullrun.

 
 
  Linda Piazza   3/17/03,  1:44:03 PM
Volume patterns remain positive, while up/down patterns pull back a little from their earlier extremes. Up volume is now 8.1 times down volume on the NYSE and 8.3 times down volume on the Nasdaq. While still high, these ratios might be more sustainable than the earlier ratios. Adv/dec ratios are 2.3 for NYSE-traded issues and 1.64 for Nasdaq-traded issues. New lows remain ahead of new highs, although not by a large proportion. Volume remains strong, with 987 million shares traded on the NYSE and 1.17 billion on the Nasdaq.

 
 
  Steven Price   3/17/03,  1:40:12 PM
SOX 322.59 +17.44 The Semiconductor Index has broken its 200-dma (316.94) for the first time since May 2002. Granted it has rapidly descended since then, with the last failed test coming in December when it was above 400, but if the bears were going to step in and hammer the sector, this would have been a likely point. the next level of serious resistance is 330.

 
 
  Jonathan Levinson   3/17/03,  1:36:48 PM
The FVX has cranked higher as bonds continue to get sold. The COMPX is in narrow range near the top, classic flagpole rally action. The TRINQ is still buried at .20, TICK.NQ -56. This type of hysterical buying signalled by the TRINQ persisting at these low levels has had unpleasant longevity on the rare occasions during which it's occurred during past months. The way to play is defensively, by staying cash or keeping tight stops just outside the range. All but the most committed shorts should have been stopped out by now, and again, if you need to be in, then tight stops just above the high of the day at 1386 is the only way I'd consider it. One thing: The QQV, VXN and VIX are all positive. For the record, I see that as a bearish divergence- volatility should be lower, not higher, on a day like today.

 
 
  Linda Piazza   3/17/03,  1:00:59 PM
Just before the latest press conference at the U.N. broke into his interview, Art Cashin was speaking. He noted that while the previous two conflicts had seen "after the bullets started flying" rallies, we were seeing a similar rally ahead of the conflict. He was just making the point that he and many other oldtimers believed the markets might not continue to rally afterwards, but hadn't been able to explain his views before he was interrupted. Art Cashin is one of the CNBC commentators who commands respect and attention from many, including me. Too bad he wasn't able to finish his comments.

 
 
  Steven Price   3/17/03,  12:55:26 PM
Swing Trade Signals
Coincidence that the Dow topped out at 8095 with the 50-dma sitting at 8097? It certainly served as resistance in mid December, eventually leading to a rollover and appears to be back in play now.

 
 
  Linda Piazza   3/17/03,  12:48:18 PM
On the 60-minute OEX chart, the 5(3)3 stochastics have cycled up into overbought territory. The 21(3)3 stochastics have been there all day. Those stochastics can stay overbought for days while prices continue to climb, so this does not necessarily signal an imminent downturn. When they do turn down in concert, we will learn much about the sustainability of this rally. Next support is 432.50. Ideally, bulls want to see that support hold on a downturn.

 
 
  Steven Price   3/17/03,  12:42:08 PM
View from a bull:

Hi Steve; high risk is an understatement .... have been doing this for 30 years plus Steve with a lot of background in the whlole business of trading; the TREND is UP; u got just about everything going against u on the short side for anybody today .... Saddam could get killed, quit, whatever ... that is one way for a 500 up move .... Laden or some cousin of his could get captured or killed; thats another 500 point move; u got the war and if it really goes well and fast another 500 move UP so what will make it go down today or tomorrow; whew I suppose something could; but my contacts on the floor, etc., shorts are running for the hills right now; but again, what do I know haha .. just my thoughts .... ur doing a great job .. enjoy the service very much ... regards, Gerald M

 
 
  Linda Piazza   3/17/03,  12:38:09 PM
Currently at 361.09, the Russell 2000 maintains its position above its 21-dma (thanks, W.S.) and just above the broken supporting trendline that had been in place since October. If the Russell should close today at current levels, that might be considered a bullish development. We've been watching the small caps, as any rally must see the participation of the small caps if it's to be considered sustainable. However, even if the Russell does close at current levels, it soon faces descending MA's that are coursing down toward it, as well as a descending trendline that's been in place since May 2002 and that now crosses at about 375.50.

 
 
  Jeff Bailey   3/17/03,  12:37:53 PM
Notable new 52-week lows MO Link (bearish count of $29) , ISIS (bearish count of $1) , CHRT Link (bearish count of $0.50), CHRZ Link (bearish count of $1.50)

 
 
  Jeff Bailey   3/17/03,  12:35:49 PM
Notable 52-week highs ... YHOO Link (bullish count of $33.50) , eBAY Link (bullish count of $91), AMZN (bullish count of $27) Link , PSUN Link (initial bullish count of $26.50), EXPD Link (Bullish count of $47) and APOL Link (bullish count of $59).

 
 
  Steven Price   3/17/03,  12:33:32 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
I hate to be schizophrenic, but my entry was based on lower intraday highs. We just made a new high and I'm back to waiting for 8150. Cancel the entry at 8070.

 
 
  Steven Price   3/17/03,  12:27:23 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Call me a glutton for punishment, but I am going to short this rally just below resistance with a very small position. We continue to find resistance with lower intraday highs on the rally attempts.Go short a 1/4 position at a Dow trade of 8070. Set stops at 8170. I am willing to risk a small position and 100 points on the stop. However this is high risk and only those with aggressive risk profiles should join me.

 
 
  Steven Price   3/17/03,  12:26:19 PM
Can you offer any help! I went short last Thurday AM and am drowning. Any suggestions?

XL ($68.99 +0.49) I lowered the stop on this play to $70.06. The stock continues to find resistance there on the attempted bounce and as long as it remains below that level it seems the risk /reward from this level still favors bears. I think the bounce here today is actually weak compared to the rest of the market. That being said, I don't want to see any trader 'drowning' and would never suggest risking more than you are comfortable with. Everyone knows their level of max pain and I suggest sticking to it.

 
 
  Linda Piazza   3/17/03,  12:22:54 PM
An examination of volume patterns shows that the markets are seeing buying that's beginning to verge on the extreme, with up volume 9.47 times down volume on the NYSE and 10.57 times down volume on the Nasdaq. This isn't quite panic buying yet, but it's almost there. Adv/dec ratios show a 2.48 for the NYSE and a 1.69 for the Nasdaq. Volume is strong, with 750 million shares traded on the NYSE and 938 million on the Nasdaq, higher than is usually seen at this point in the day. New lows continue to outnumber new highs.

 
 
  Mark Phillips   3/17/03,  12:22:15 PM
The weather issues that kept me from getting my LEAPS content in on time this weekend is back with a vengeance this morning. High winds are once again gracing my corner of southern CA, and I expect my connectivity to be spotty at best for the remainder of the day. I've already had two brownouts this morning and my cable modem has been offline more than online so far. Now working on dialup connection, which is beyond slow!

Those still waiting for my LEAPS column should see it show up on the site tonight (as it got sent in over the weekend). Other than that, I won't make any promises today. So please don't feel slighted if you've written to me and not received a response. I'll get to it as soon as connectivity allows.

 
 
  Steven Price   3/17/03,  12:12:28 PM
Boots and Coots (WEL) $1.32 (+0.73 +125%) First the NDX 1018 recommendation and now the speculation play in WEL. Jeff, we're tatooing a big "S" on your cape today!

 
 
  Linda Piazza   3/17/03,  12:10:31 PM
The OEX movement predicted by the smaller-than-normal five-minute candles began almost as soon as I finished typing the entry concerning the predicted movement, but it didn't carry far, not topping OEX day's high.

OEX 432.50-433 proved important throughout most of February, capping rises from the February 18 move until today's move. Dialing down to a five-minute chart shows the five-minute candles grouped just above 432.50 since about 10:45 ET. The five-minute 21-pma has now risen above that level, to 433.24. Bears want to see prices pushed below that 21-pma and the 432.50 support. Bulls want to see that support maintained.

 
 
  Linda Piazza   3/17/03,  11:54:58 AM
On the OEX five-minute chart, we're seeing a grouping of tiny five-minute candles that usually heralds a bigger movement soon to come. Which direction will it be? The candles have been holding support just above 432.50, a level of historical support. The five-minute 21-pma also currently rises toward this area and is now just below at 432.29, portending that it will lend its support, too. In this trading climate, however, it's risky to trust anything you're seeing, even what price action shows you. That could change in a moment.

 
 
  Jim Brown   3/17/03,  11:44:23 AM
I had several requests on the QQQ put play in the Editors Plays this weekend. I do not recommend entering that play at this time. That play assumed a war start of next week and a potential dip once the decision was made. Obviously we did not get that dip and the explosion this morning has negated the suggested strikes.

 
 
  Jonathan Levinson   3/17/03,  11:42:57 AM
850 SPX, 1375 COMPX seem to be acting like magnets on the current price action here near the highs. FVX is up 7.2 bps, TRINQ back down to .18, QQV +1.79 to 41.31. The move higher in QQV and in VXN signals that something's awry with the current move- it scared bulls and bears alike. But price is the final arbiter.

 
 
  Linda Piazza   3/17/03,  11:37:06 AM
"Not a seller in sight." CNBC World just made this notation at the end of most European trading. The FTSE 100 closed up 122.20 points, and the CAC 40 closed up 91.70 points. The DAX currently trades up 85.78, but remains open longer than the other two markets.

 
 
  Linda Piazza   3/17/03,  11:33:09 AM
CSCO today tested its exponential 200-dma at 14.06, with CSCO currently trading at 13.97.

 
 
  Steven Price   3/17/03,  11:31:38 AM
Swing Trade Signals
What now? The rally is fading and I'm wondering if I should have left that entry at 8059? Aggressive traders can look to pick a top, as the resistance around 8050-8075 was just barely broken. However, with the Bush speech tonight, tomorrow morning's action is anyone's guess and entries will be based on technical resistance. I'm not saying you shouldn't pick a top up here, but keep it to risk capital.

 
 
  Linda Piazza   3/17/03,  11:30:31 AM
As Mark Phillips mentioned earlier, the VIX is up on today's market rise. Except for Friday, the VIX has tended to drop rapidly with every rise in the markets, so this is an aberration that bears watching. Today's move brings the VIX closer again to testing its descending trendline.

 
 
  Jonathan Levinson   3/17/03,  11:28:12 AM
The move in the US Dollar Index to the 100.50 level makes the jump in the COMPX look tame. Despite this, HUI and XAU are still in the green, though fractionally, and spot gold is +.90 on the day.

 
 
  Jonathan Levinson   3/17/03,  11:23:58 AM
1375 has just failed to support the second pullback, and we could be looking at a setup for a "finger formation" reversal from the highs. TRINQ is now at .21, still showing a very overbought COMPX, TICK.NQ -33. We need to see that TICK.NQ get much lower before we can be confident in the downside to come. FVX still +6.7 bps, off its highs now.

 
 
  Jeff Bailey   3/17/03,  11:23:32 AM
11:00 Update has been posted at this Link

 
 
  Linda Piazza   3/17/03,  11:22:32 AM
The Dow Jones Transportation Index has joined other indices in rallying this morning. What's next resistance for this index, currently at 2063.39? The July 2090.47 intraday low might be one level to watch. Just above that is the 2100-2120 area that provided support for the $TRAN during its consolidation in late January and early February, in what would have been its right-shoulder area of a potential reverse H&S formation. The $TRAN's subsequent fall to recent lows negated the possibility of a reverse H&S formation in this index. Bulls want to see a climb above that next resistance or at least for the 2008 support to hold on pullbacks.

 
 
  Linda Piazza   3/17/03,  11:14:09 AM
European markets erased earlier losses and joined the U.S. in making gains. The FTSE 100 now trades up 171.30 points, the CAC 40 trades up 115.60 points, and the DAX is up 114.60 points.

 
 
  Steven Price   3/17/03,  11:13:10 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Now that we took out the previous resistance at 8075, I am canceling that last signal to go short at 8059 and will look for a run to 8150. There are no current signals.

 
 
  Mark Phillips   3/17/03,  11:12:27 AM
ERTS $58.58 (+2.10) Shorts are running for cover here as well, as ERTS plows through more resistance this morning. While a bit off the highs of the day here, expect the stock to find significant resistance near the 200-dma at $60.10. I would seriously recommend harvesting partial gains on a move up to that level later today.

 
 
  Linda Piazza   3/17/03,  11:10:28 AM
From Wednesday afternoon until Friday mid-afternoon, the OEX five-minute chart showed prices climbing a steep ascending trendline. That trendline was too steep to be sustained. Today, the OEX's action brings it up near that steep trendline again. It now crosses near 440, an area of strong previous resistance for the OEX. Resistance hasn't seemed to matter today, however.

 
 
  Steven Price   3/17/03,  11:09:49 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Simply based on previous resistance levels, I am going to enter a small short position and label it high risk. Go short a 1/4 position at Dow 8059, set stops at Dow 8170.

 
 
  Steven Price   3/17/03,  11:03:54 AM
LLY $53.80 (-0.18) Looking for pockets of weakness in the current rally - look no further than OI put play LLY, which announced its joint trials with ISIS on cancer drug Affinitak showed no difference in overall survival rates.

 
 
  Jonathan Levinson   3/17/03,  11:02:44 AM
Colin Powell is still speaking and there appears to be a doji top printed on the 5 minute candles. That said, the pullback has yet to show any conviction- it looks as if the program trading robots blew a few circuits there and are reconfiguring for the next blastoff. The TRINQ is still subterranean at .18, FVX a complete flipflop and now up 6.7bps after being down by the same amount earlier. QQQ is holding at 26.50, COMPX at 1375. The put to call ratio was tardy but has now come out- second half hour was 1.01.

 
 
  Linda Piazza   3/17/03,  11:01:42 AM
Kudos to Jeff for pointing out the WEL trade several weeks ago. The price has more doubled this morning.

 
 
  Mark Phillips   3/17/03,  10:58:48 AM
AMGN $58.44 (+0.80) Driven by the rampant short-covering throughout the market this morning, our AMGN play is surging to another new high. As Steve just noted, AMGN was added to the call list down near the $53.50 level and we've been talking about harvesting gains in the $59-60 area. Keep that likely top in mind today when trying to determine whether to take some gains off the table or hold on for another surge higher. My preference would be to harvest gains near current levels.

 
 
  Linda Piazza   3/17/03,  10:58:26 AM
Currently at 321.43 as I type, the SOX has climbed above its simple 200-dma at 316.94, but has pulled back, at least momentarily, from the day high of 324.90. It also remains below the exponential 200-dma at 338.15. Bulls want to see the SOX remain above that key simple 200-dma and also want to see the index move up to challenge the exponential 200-dma.

 
 
  Steven Price   3/17/03,  10:53:56 AM
Swing Trade Signals
Rally starting to fade as Powell says Bush will give another ultimatum.

 
 
  Jeff Bailey   3/17/03,  10:53:46 AM
Boots&Coots (WEL) $1.18 +100% ... I'm going to suggest taking 1/2 of SPECULATIVE position off the table here. This removes risk from the table, but still allows for further exposure to potential well fires in Iraq.

 
 
  Steven Price   3/17/03,  10:53:18 AM
We are seeing some significant gains across the board and there are some profit taking opporunities on OI call plays available to those traders so inclined. Candidates are:

AMGN - entered $53.45, now trading 58.53

ZMH - entered $43.96, now trading $48.57

 
 
  Jeff Bailey   3/17/03,  10:49:24 AM
Dow Industrials (INDU) 8,021 +2% .... Triggers double-top buy signal on p/f chart. This becomes near-term bullish, with upside potential to 8,150-8200. Link

Traders long 1/4 bullish in previously profiled DIA Sep. $80 calls and leg up to 1/2 position here.

 
 
  Linda Piazza   3/17/03,  10:48:21 AM
In my previous post, I noted that many indices and stocks traded at key levels. Coca-Cola (KO) is one of those. Currently trading at 40.80, it moved up strongly today and now reaches toward multiple levels of resistance near 41. Those levels include a recently broken short-term support line that now crosses near 41, a longer-term descending trendline that crosses near that level, the simple 50-dma at 41.20, and a month-long high of 41.52. As KO reaches toward these levels, 5(3)3 stochastics are fully overbought, RSI is nearly so, MACD cycles up toward a broken supporting trendline, and OBV does not show marked improvement from months-long low levels.

 
 
  Steven Price   3/17/03,  10:45:48 AM
Swing Trade Signals
With the Dow now over 8000, looking at resistance at 8050 (or possibly all theway to 8075). Above those levels, I expect a run at 8150. SPX failure at 850 could be another signal for aggressive shorts to target Dow 8000 and SPX 850 with a stop at Dow 8170 and SPX 870.

 
 
  Jonathan Levinson   3/17/03,  10:45:38 AM
The TRINQ is now down to .18. COMPX is now going to deal with 1380 resistance, a significant level from December and January.

 
 
  Linda Piazza   3/17/03,  10:41:08 AM
As I scan the various charts, I notice many indices and stocks at key levels. (How many times have we said that lately?) The OEX currently challenges one version of its H&S neckline. The Russell 2000 challenges the former supporting trendline that it broke through in early March. The Dow Jones Transportation Index rises toward the apex of the consolidation pattern that had contained its prices in late February. I could name more. These could be breakdown points or points from which indices and stocks launch toward new daily highs.

 
 
  Steven Price   3/17/03,  10:37:21 AM
Chartless in Denver. Looks like QCharts decided to take an early lunch and I'm flying blind for the moment.

 
 
  Jonathan Levinson   3/17/03,  10:33:51 AM
The COMPX is now up better than 33 points from its gap down open. Yields have swung all the way into the green with FVX +1.1, TNX +1.7 bps, and TYX +3 bps. QQQ is at 26.24. HUI and XAU are still positive but are giving up their early gains. TRINQ at .28.

 
 
  Steven Price   3/17/03,  10:32:21 AM
Swing Trade Signals
Now that we are much closer to Dow 8000, I'd love to enter short, but I haven't seen any weakness. I think a COMP close below 1350 would be a signal, but right now, I am split between expecting a rollover and a run to 1400. I can't really predict how the markets will react to war and I think trying to pick a direction for 2-3 days will be awfully tough in the current environment. The President will speak tonight.

Just a thought - did France give the U.S. exactly what it wanted? A reason not to count votes and a reason not to blame Russia?

 
 
  Linda Piazza   3/17/03,  10:30:12 AM
President Bush will address the nation tonight at 8:00 ET.

 
 
  Linda Piazza   3/17/03,  10:29:10 AM
Secretary of State Colin Powell will hold a news conference beginning at 10:45 ET.

 
 
  Mark Phillips   3/17/03,  10:26:41 AM
Just label me one of the non-believers in this ramp job this morning. Take a look at the VIX -- fractionally higher, even though the market is posting a solid gain as I type. That tranlates to a war bid in the market, but the options premium sellers don't buy it, continuing to keep the volatility built in. I'm not the first to say it, but I'll echo the sentiments of other writers, this is a very high-risk situation to try and trade. Either you're in the market, watching open positions, or you need to be waiting for clarity to emerge. For what it's worth, I don't expect to see that clarity any time today!

 
 
  Linda Piazza   3/17/03,  10:24:38 AM
Most volume patterns confirm the positive reactions of the markets, with the adv/dec ratios being 1.43 on the NYSE-traded issues and a neutral 1.03 on the Nasdaq. There is perhaps some concentrated buying on the Nasdaq, however, as the up/down volume figures show 2.5 times more up than down volume. On the NYSE, up volume is 2.07 times down volume. Total volume is 163 million shares traded on the NYSE and 235 million on the Nasdaq. However, new lows outnumber new highs by more by almost 3:1 on both the NYSE and Nasdaq, a troubling sign for bullish traders.

 
 
  Linda Piazza   3/17/03,  10:18:37 AM
The OEX has also just exceeded Friday's high.

 
 
  Jonathan Levinson   3/17/03,  10:17:21 AM
The COMPX has just exceeded Friday's high with a print of 1353, QQQ 25.95, TRINQ .23. Next resistance is 1361.

 
 
  Linda Piazza   3/17/03,  10:16:35 AM
The OEX has not yet exceeded Friday's high. A study of the hourly chart shows that 420 continues to be support for the OEX, serving as a springboard for this morning's move off the lows. Stochastic evidence is mixed. The 5(3)3 stochastics cycle up, not quite having reached oversold levels. The 21(3)3 stochastics are fully overbought and had begun to turn down, but may be attempting an upturn again. When stochastic evidence is mixed in this way, market participants sometimes endure some chop until stochastics align themselves again. The last 5(3)3 top came in concert with Friday's highs, so a failure to exceed those highs before the 5(3)3 reaches overbought levels and turns down again would be bearish behavior. Bulls want to see Friday's high exceeded before the 5(3)3's and 21(3)3's turn down in concert.

 
 
  Jonathan Levinson   3/17/03,  10:12:26 AM
The opening put to call ratio has come in at 1.14. This is very high reading for the first 30 minutes of trading and could fuel a bounce over Friday's highs of the day. It might also, however, blow off to more normal readings as we've seen in recent weeks. Something to watch.

 
 
  Steven Price   3/17/03,  10:10:30 AM
Swing Trade Signals
So far the top in the COMP was 1349 - resistance still in place.

 
 
  Steven Price   3/17/03,  10:07:31 AM
No vote in the U.N. on new proposal due to France's stated intention to veto. U.S., Britain and Spain will take their own steps to insure disarmament of Iraq.

 
 
  Jonathan Levinson   3/17/03,  10:05:25 AM
The fed has just added 1.5B via overnight repo with no expiries today.

 
 
  Steven Price   3/17/03,  10:04:10 AM
Swing Trade Signals
Quite an impressive bounce, with the bulls bringing things all the way back into the green. I'm not convinced until we break out above COMP 1355-1360 that we are truly headed higher, but with war on the menu, we are not giving it up and I'm simply going to observe for weakness. Remember the downward sloping trendline I highlighted in Friday, here it is again. Link

In the time it took me to upload the image, the rally began to fade and the Dow is back in the red.

 
 
  Jonathan Levinson   3/17/03,  10:03:49 AM
A standing ovation for the bulls. The amount of power they can put together on these buy candles is astounding. Bears trickle the price down over hours and days, and the bulls just come in an vaporize the declines in mere seconds. This latest flagpole brought the COMPX right to the brink of a retest of Friday's highs as noted by Linda, but seems to be easing off for the moment. Whether it pulls all the way back or merely pauses before launching higher, or prints a narrow range at the current level for the rest of the week, I can only guess. Yields are falling alongside the COMPX as I type, and the TRINQ is now up to .75.

 
 
  Linda Piazza   3/17/03,  10:00:42 AM
Friday's OEX high was 428.21. As I type, the OEX has successfully tested its 21-dma and now looks to test that Friday high. The OEX currently trades at 426.52.

 
 
  Linda Piazza   3/17/03,  9:58:51 AM
The Dow Jones Transportation Index hit a 2008.12 low today before moving off that low. The October low for the index was 2008.31. Was this morning's low a coincidence? Not likely.

 
 
  Steven Price   3/17/03,  9:57:54 AM
Jeff pointed out to me on Friday a number of correlative pivots in the NDX that came in at 1018. His recommendation was not to short unless it broke that level. This morning's low was 1018.76. I don't care what they say about you Jeff, you're alright by me.

 
 
  Jonathan Levinson   3/17/03,  9:55:55 AM
Another surge of buying has the COMPX challenging 1340 resistance now. FVX has gained much ground, now down 2.4 bps, TRINQ .67 and TICK.NQ solid at +325.

 
 
  Steven Price   3/17/03,  9:52:17 AM
Swing Trade Signals
I think we are headed lower, but if I were going to set a stop, it's hard to set it any lower than 8000 based on the daily charts. I don't like the risk of over 200 points right now, especially after a drop already this morning. I do think aggressive bears can play on a failure back below 7800, especially if yields fill this morning's gap, as it appears they might, and then roll over. I'm getting conflicting signals from the bounce, so for now I'm just going to wait for something more clear to develop. As I typed, the ten-year yield filled the gap, but the five-yr has not yet done so.

 
 
  Linda Piazza   3/17/03,  9:51:43 AM
Currently at 304.82 as I type, the SOX remains below its 21-dma at 306.52, but appears to be rising to test that MA. That might be a good level to watch.

 
 
  Jonathan Levinson   3/17/03,  9:46:56 AM
It looks like the new COMPX range is going to be 1325-1333 for now.

 
 
  Steven Price   3/17/03,  9:41:51 AM
Swing Trade Signals
Aggressive bears can look to get in short at 7785, below this morning's low. I'm holding off f or the moment as yields moved higher into this morning's gap, but are now starting to fade.

 
 
  Jeff Bailey   3/17/03,  9:40:54 AM
Boots&Coots (WEL) $0.84 +42% ...

 
 
  Jonathan Levinson   3/17/03,  9:39:45 AM
A rush of buying from underneath 1332 resistance has that level being tested. FVX is coming up off its lows, now down 5.2 bps, but the TRINQ is holding its gains at 1.84.

 
 
  Linda Piazza   3/17/03,  9:33:10 AM
The OEX 21-dma sits at 420.91, near historical S/R, and only cents below the current OEX level as I type.

 
 
  Jonathan Levinson   3/17/03,  9:31:29 AM
10 point gap down to COMPX 1329.95, TRINQ 1.18, QQV +1.8 to 41.32.

 
 
  Linda Piazza   3/17/03,  9:30:56 AM
Studying the European intraday charts, it appears that European markets retreated to areas that had been support during the past couple of hours as they awaited the opening of the U.S. markets, with those levels being near 3572 for the FTSE 100, between 2660-2665 for the CAC 40, and near 2354 for the DAX.

 
 
  Jeff Bailey   3/17/03,  9:29:42 AM
09:00 Update is posted at this Link

 
 
  Linda Piazza   3/17/03,  9:24:25 AM
European markets turn down again, with the FTSE 100 currently trading down 30.50 points, the CAC 40 currently down 75.57 points, and the DAX currently down 44.02 points.

 
 
  Steven Price   3/17/03,  9:18:27 AM
Swing Trade Signals
With the new deadline of today for the UN to get on the U.S. side, I'm beginning to wish I had jumped in short on one of the many occasions I talked about it but did not act on Friday. Of course, as Jim has mentioned, we need to ask if we buy the dip ahead of war, or go with the flow. The indication on Friday was that we had temoprarily topped out and yields were weak, indicating bearishness for stocks ahead of the weekend summit. Yields are getting slammed hard this morning. I'm not going to jump on a big drop at the open and would prefer to short a bounce, but if we thought we were in high risk territory for the last month, the risk meter just jumped another notch. Only very aggressive traders with high risk tolerances should be targeting a 2-3 day move at this point as the reaction to world events is quite unpredictable. I'll probably be using tighter than normal stops to prevent too much slippage, but that also involves risking the bid-ask spread on multiple entries. I will provide more and less aggressive stops as alternatives and will try to fall somewhere in the middle. A drop below SPX 828 could lead to a quick slide to 820 and then the next leg down if we break that support should be 810-811. Of course the timing of any international development could quickly interrupt or reverse any trend. The bounces in the European markets is cause for some concern for entering bearish positions, but may also be providing short entry points. Yields right now are holding above Thursday morning's gap, but if those levels are violated I'll be looking for short entries at that point.

 
 
  Jonathan Levinson   3/17/03,  9:15:12 AM
Yields are down as money moves into bonds, with FVX -7.6 bps to 2.611%, TNX -6.1 bps and TYX -4.3 bps. These are substantial declines in treasury yields and point to quite a weak open for equities. QQQ is trading 25.48.

 
 
  Jonathan Levinson   3/17/03,  8:46:21 AM
The US Dollar Index got slammed last night and failed on two attempts to get back above 100.00, currently trading below 99.60. Gold made it to the 346/oz level, old support turned resistance, and has fallen to 342.60. The ND contract is trading 1027.50, ES 829.75, and QQQ is trading 25.48, down from its close of 25.72.

I'm looking forward to today because it will be a very educational session. My thinking is that the short covering, long momentum trades and other bullish forces pretty much spent their energy on Thursday and Friday. We will see how it goes today. If the Friday high holds (1352 COMPX), I expect that we've seen this rally. If it gets violated, we could be looking at the next move up a new flagpole.

 
 
  Linda Piazza   3/17/03,  8:23:19 AM
While still trading in negative territory, European markets trade near their day's high, with the FTSE 100 now down 16.30 points, the CAC 40 now down 55.96 points, and the DAX now down 23.72 points.

 
 
  Linda Piazza   3/17/03,  7:28:39 AM
Good morning. The "moment of truth for the world" arrives today, Bush announced at the conclusion of his weekend meeting with the U.K.'s Blair and Spain's Aznar. If the U.N. Security Council does not agree today on a new resolution authorizing the use of force to disarm Iraq, the U.S. will move on its own, in cooperation with willing allies. Bush renewed a telephone campaign to achieve the needed nine votes for approval of a new resolution, but amid little hope that he would succeed. The U.S. ordered non-essential embassy workers to leave Israel, Kuwait, and Syria, and advised U.N. weapons inspectors to leave Iraq. Hussein prepared for war by dividing Iraq into four military districts. Germany, France, and Russia called for an emergency meeting of the U.N. Security Council.

This morning's update begins with the geopolitical developments because those developments will likely drive the markets. Pundits attributed the Nikkei's 131.05-point tumble to war concerns, with exporters declining on fears that a war will stifle demand for their products. Financials fell, too. Airlines plunged. Asian telecoms fell, too, despite an expected profit jump in China Mobile when it reports tomorrow. The Nikkei's tumble represented a 1.6% decline, and it closed at 7862.43. South Korea's Kospi fell harder, suffering from the same Iraq war fears as well as the North Korean situation and the accounting irregularities admitted by SK Group last week. Crude oil rose and the dollar fell against other currencies.

European markets reacted in much the same way as did their Asian counterparts. European treasuries rose and equities fell, especially those companies exporting to the U.S. or involved in industries that might be hardest hit by a war. European airlines fell. Exporters fell. Allianz, a German insurer, fell. In addition to the usual worries about the stability of insurer's holdings amidst stock-market declines and the possible need to sell shares to raise capital, Morgan Stanley lowered its forecast for the company. As of this writing, the FTSE 100 was down 30.50 points or .85% to 3571.30, the CAC 40 was down 66.79 points or 2.44% to 2673.22, and the DAX was down 38.91 points or 1.62% to 2364.28.

 
 
  Steven Price   3/17/03,  7:28:16 AM
The Swing Trade Game Plan has been posted: Link

 
 
  Leigh Stevens   3/17/03,  7:27:59 AM
The Index Trader Wrap has been posted: Link

 
 
  Vlada Raicevic   3/17/03,  7:27:52 AM
The Futures Trader Wrap has been posted: Link
 
 
  Steven Price   3/17/03,  7:27:28 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.

 
 

Market Monitor Archives