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  Jeff Bailey   3/31/03,  9:53:23 PM
S&P futures settled 847.00. Last trade on my way out the door is 847.00. Post-settle low has been 843.10, while post-settle high has been 847.00.

 
 
  Steven Price   3/31/03,  9:35:20 PM
SARS - Tomorrow the number of cases of this disease reported in the news should jump by a large number. This is due to a change in the definition of the disease. Up until now, the geographical requirement for defining who had it and who did not qualify as an official case did not extend to mainland China. The definition is being changed to include the entire country so the reported number of cases should increase due to that fact. The CDC is apparently close to developing a test for the disease that will tell us who has it, rather than defining it by symptoms.

 
 
  Jeff Bailey   3/31/03,  6:07:45 PM
DAILY/WEEKLY/MONTHLY Pivot Matrix, with MONTHLY pivot analysis updated for today's close.

Few correlations line up, and today's trades at WEEKLY S2 and selling into the close has indexex above/below key correlative levels. Tomorrow's open may well dictate rest of weeks trade. Not how BROAD the MONTHLY S2-R2 range is. This to me spells of GREAT volatility and uncertainty coming. Gee... I wonder why?

OEX close of 429 comes below DAILY pivot of 431.50 and WEEKLY S1 of 430.50, but just above the MONTHLY pivot of 428.60. We'll see tonight how the indexes closed right in many of these types of "zones."

Certainly looks like "straddle/strangle" type of option trading. Bar chartists will also see a rising 21-day SMA and declining 50-day SMA on major indexes, where these two short and intermediate-term moving averages now look to be on collision course.

 
 
  Mark Phillips   3/31/03,  4:25:09 PM
LEAPS UPDATE Lots of carnage here today, with the broad market having another very blue (or red, as the case may be) Monday. The LEAPS Portfolio was on thin ice already, as we noted over the weekend. We had established several bullish positiions in recent weeks and then benefitted nicely from the war rally, moving nicely into the black. We took the prudent action of tightening up stops to preserve small gains or at least avoid a loss and then waited for the normal profit taking to run its course. Well, it doesn't appear to be finished yet, and we had four triggered stops today to close out our AA, BEAS, DJX and MSFT plays. In retrospect, I think I erred badly in the management of these plays. Either I should have given the stock's more room to move (i.e. left stops under major technical levels) or I should have been much more aggressive with stops to ensure little of the unrealized gains slipped away.

Alas, I chose poorly. This is what can happen in the midst of an irrational, news-driven market. I hope we all understand that nothing fundamental has changed in the market over the past 3 weeks. This is pure emotion (grred and fear) playing havoc with even the best laid plans.

I'll have further details in the LEAPS column next weekend, but we will be officially dropping each of those listed plays. For those of you that want to take the additional risk and give those plays some more room to work, I would suggest revised stops as follows:

AA - 18.40

BEAS - 9.25

DJX - 78.50

MSFT - 23.25

Note that each of these revised stops would expose those positions to small losses in the event of a continued deterioration. This is an added risk that I personally wouldn't take (I NEVER adjust stops in the direction of increased risk), but each trader has to make his/her own decisions, and I thought it might be useful to some of you that have been following those plays.

 
 
  Jeff Bailey   3/31/03,  3:57:45 PM
S&P Banks Index (BIX.X) 264.18 -1.85% ... session low here and now trades its WEEKLY S1 of 264.21. This is slight negative as BIX.X was only sector/index in the matrix to have held above its WEEKLY S1 today.

 
 
  Steven Price   3/31/03,  3:56:02 PM
Swing Trade Signals
If we finish the day with a close below Dow 8000, I'd expect another run at 7900 in the near future. I think Jeff's nibbling on a long position makes sense in this area, but I'd rather see something closer to this morning's lows to nibble myself. SPX below 850, OEX below 430 and COMP under 1350 again. I'd like to see how we react to the bottom of tha Jan consolidation level, wich coincides with retracement of Oct-Dec range, as well.

 
 
  Jeff Bailey   3/31/03,  3:55:18 PM
Sell Program Premium Alert SPX 849.22

 
 
  Jeff Bailey   3/31/03,  3:49:12 PM
10-year YIELD ($TNX.X) 3.823% ... I've placed today's high/low/close YIELD in the matrix. As of today's close, there is a "zone of resistance" in 10-year YIELD between DAILY and WEEKLY of 3.825% and 3.842%. If bullish the equity indexes today, but YOU are very short-term, then I'm thinking we would need to see a move above 3.842% YIELD level in 10-year tomorrow.

 
 
  Jonathan Levinson   3/31/03,  3:39:32 PM
The COMPX is back to its range, with INTC just printing its low of the day. TRINQ is at 1.79, TICK.NQ -34. The shorter intraday oscillators confirm the tumble from the highs, and so far the move through resistance at 1351 COMPX looks to have been a headfake. This is why good entries and appropriate stop losses are critical- an entry in the middle of the range in the morning would have increased the risk and reduced the potential reward. If you got stopped out on that headfake, your loss was minimal because the stop was very close to your entry. If you're still in the play, it's because there was leeway to allow a wider stop, again due to a favorable entry.

Meanwhile, the HUI and XAU are both in positive territory, HUI +.45 and XAU +.35.

 
 
  Jeff Bailey   3/31/03,  3:37:49 PM
High pole warning question... Jeff: Buying the $INDU (DJX/DIA) when the PNF chart is indicating a Alert High Pole Warning?

This is "good" observation, but think of this. Here's the chart of the DIA as an example. Link

Now... try and think about "what stage" might we be in as it relates to a cycle, or at least the bullish %, which was "bull alert" status at Friday's close. We've come from a relative low correct? Usually, the "more important" high pole warnings come when the bullish % have been more "overbought" above/near 70%.

In August of last year (red 8), the DIA chart also signaled "high pole warning" when the DIA fell back more than 50% of column of X from 77-87.

Now... think about the current "high pole warning" with respect to that found in August, but then look at the "high pole warning" in mid-December (just after red C) when the DIA reversed lower.

I've profiled 1/4 bullish position today in the DIA and subscriber's notice of "high pole warning" is good, but I'm also trying to think about what stage of a cycle and level of risk the bullish % are and have been in the past couple of weeks.

 
 
  Jeff Bailey   3/31/03,  3:17:25 PM
Bond market closed at 03:00 PM EST. 10-year YIELD ($TNX.X) finished at 3.821%.

 
 
  Jeff Bailey   3/31/03,  3:09:10 PM
Bulls need Index leadership ... in our Index Trader Wraps, have classified NASDAQ-100 (NDX.X) as strongest sector. Today's violation of WEEKLY S2 did find support at conventional 38.2% retracement. So... for signs of "renewed strength" really need to see something north of 1,037 or WEEKLY S1 of 1,035.60. Here's a 60-minute interval chart with WEEKLY pivot analysis retracement (blue) and CONVENTIONAL (pink) from October lows-December highs. Link

 
 
  Steven Price   3/31/03,  3:07:46 PM
My last post was intended to include a chart of the 10 and 5 yr yields, but only showed the ten. Here is a chart of the five-yr. Link

 
 
  Jonathan Levinson   3/31/03,  3:05:21 PM
While yields are not confirming an equity rally, they are well off their lows of the day, which confirms the move higher in equities.

 
 
  Steven Price   3/31/03,  3:02:33 PM
please tell me how to read what the bonds are telling us. To me, they are not confirming an equity rally. PO

You are correct, they are not confirming any rally, as the yields continue to drop. However, those yields have bounced from a significant level once again, and bears are up against a possible asset allocation at these levels. Here is a chart of that support. Link

 
 
  Kent Barton   3/31/03,  3:02:01 PM
The 3:15 intraday update has been posted: Link

 
 
  Jonathan Levinson   3/31/03,  2:59:53 PM
While the shorter intraday oscillators are getting toppy on this move, the tighest stops on short positions applied earlier should be getting hit. FVX is up to a 7.5 bp loss on the day, and the TRINQ is down to 1.63. This does not look like an upside breakaway rally, but the move is young, which is why stop losses need to be kept on and respected. If this level was a no-no to you at noontime, it should still be so now.

 
 
  Jeff Bailey   3/31/03,  2:52:06 PM
Dow Industrials (INDU) 8,054 -1.12% ... would now begin to think that "old bears" that didn't take some action near 8,000 begin to step up short-covering near-term with further upside risk assessment to 8,120.

 
 
  Steven Price   3/31/03,  2:46:14 PM
Swing Trade Signals
We are getting quite a bounce following the news of U.S. troops securing oil fields on Northern Iraq. We've taken out the afternoon high of 8024, the SPX has bounced all the way back through 855 and the COMP is back over 1350. Still news driven, but we are getting a bounce from Dow 8000. Let's watch for a close above that level after the euphoria wears off to give us an indication of whether we are seeing a buy the dip opportunity.

 
 
  Jeff Bailey   3/31/03,  2:40:57 PM
3M (MMM) $130.57 +0.07% ... back in the green here and session high. Some "leadership" coming in from a leadership stock.

 
 
  Jonathan Levinson   3/31/03,  2:37:56 PM
The commodities index, the CRB, is now up .99%. However, precious metals have given up their earlier gains today, with HUI -.21 to 123.18, XAU -.12 to 66.86.

 
 
  Jeff Bailey   3/31/03,  2:35:09 PM
SBC Communications (SBC) $20.28 +0.19% ... this is a Dow component I classify as "weaker" Dow stock. Action here hints that bears are perhaps locking in some gains. Short covering? Dow 8,000?

 
 
  Jeff Bailey   3/31/03,  2:31:27 PM
Question Jeff: What is a buy/sell premium alert? ...

Often asked question. For more complete discussion, I wrote an "Ask the Analyst" column on this topic. Check out this Link

On q-charts, I set my $prem.x upside alert at this morning's HL Camp & Company buy program premium level of $0.46, and sell program premium alert at $-2.06.

 
 
  Jeff Bailey   3/31/03,  2:27:51 PM
Here we go... says the bull. Dow Industrials (INDU) afternoon high of 8,025 here.

 
 
  Jeff Bailey   3/31/03,  2:27:17 PM
Shorter-dated 5-year YIELD ($FVX.X) ... hovering near afternoon highs here for YIELD. Found some YIELD support this morning at conventional retracement from the October lows (violated in mid-March) at 80.9% retracement. Link

 
 
  Jonathan Levinson   3/31/03,  2:26:39 PM
The carpet has failed to grow perceptibly in my office during the past hour. During that same time, the FVX has risen to a loss of 8.1 bps on the day, TRINQ has risen to 1.58, QQV up 1.6 to 38.43, and the TICK.NQ to +138. The market feels like it's building its resolve to take another run at the highs of the day, but so far, nothing but narrow rangebound trading. As noted earlier, the expected dumping after testing the day high and strong resistance simply didn't come. Traders who shorted there are still above water. I'd be watching my stops on the position, because the market didn't behave as anticipated for the move. That said, when I ask myself whether I'd prefer to be long or short below 1351 COMPX, the answer remains the same as earlier.

 
 
  Jeff Bailey   3/31/03,  2:19:16 PM
Buy/Sell Program premium alerts haven't seen a sell program alert since 01:15 PM EST. No "buy program" alerts so far today.

 
 
  Jeff Bailey   3/31/03,  2:16:05 PM
3M (MMM) $130 -0.4% ... talked about this stock in this weekend's "Ask the Analyst" column. I would think Dow bulls somewhat encouraged with one of the "strongest stock" in the Dow clawing its way back from morning low of $127.92 to almost get back to unchanged.

 
 
  Jeff Bailey   3/31/03,  2:11:31 PM
10-year YIELD ($TNX.X) 3.823% ... just off its hourly-high and afternoon YIELD high of 3.828%. Equity bulls would like to see a move above 3.831% to perhaps "spark a rally" or some type of thought for some asset shift.

Dow Industrials 7,993 -1.86% has dipped back below 8,000 and stocks/YIELD diverging a bit here. Something has to give.

 
 
  Jeff Bailey   3/31/03,  1:46:09 PM
01:00 Update posted at this Link

 
 
  Jonathan Levinson   3/31/03,  1:35:15 PM
Add 4 Canadian deaths as reported by the Montreal Gazette this morning.

 
 
  Steven Price   3/31/03,  1:32:18 PM
Most recent data on SARS, which has now led to economists lowering GDP estimates for Hong Kong, due to the effect on tourism, has a total of 1622 cases and 58 deaths. Some of the breakdown is as follows:

China: 34 deaths; Hong Kong: 13 deaths; Singapore: 91 cases/ 2 deaths; United States: 59 cases/ 0 deaths

 
 
  Jonathan Levinson   3/31/03,  1:12:16 PM
There's little for bulls or bears to cheer about as price takes a slow fade down from gap resistance, which so far held. Well, as a bear, I'll cheer, but the fade is much slower than either anticipated or hoped. The TRINQ is on the high side of neutral at 1.38, FVX down 10.3 bps, QQV +1.17 to 38 even. Again, the plan is to stay short below the gap open on the COMPX, with a stop close above it.

Disclosure: I have a small, underwater position in QQQ puts.

 
 
  Jeff Bailey   3/31/03,  1:02:53 PM
Sell program premium alert SPX 851.44.

Note: SPX WEEKLY S1 is 849.10. Bulls want 849.10 to absorb the sell program.

 
 
  Steven Price   3/31/03,  12:56:48 PM
One concern I have heading into earnings are the retail warnings from this morning. Last week's data indicated a positive shift in consumer sentiment as soon as the war started, but this morning's announcement from Wal-Mart that March same-store sales would be at the low end of projections shows a defeinite departure from just a week ago when the retail giant said the impact of consumers staying home to watch war coverage was minimal. Apparently that jump in consumer sentiment has yet to translate into spending.

 
 
  Jeff Bailey   3/31/03,  12:54:50 PM
Geron (GERN) $5.42 +24.5% ... I "like" today's action as I feel this one may be benefiting from some short-covering on broader-market weakness or even seeing bullish accumulation on market weakness. While this isn't a "key" stock, it is also my opion that current index levels are areas that should see some short covering from "old bears" and find some "new bulls on pullback" after previous week's rallies.

 
 
  Steven Price   3/31/03,  12:51:27 PM
TNX, XAU & USD verify that money flow is reversing course and the rally is now dissapating from last week. My opinion is that many institutional funds had to reallocate their portfolios before the end of the quarter. They were holding off as long as possible until any resolution on the war. They actually jumped the gun and bought on the premise that it would be a quick and decisive outcome. Now that reality has set in and it appears not to be so, these same managers are selling taking profits and the hedge funds who covered last week are pouncing on this move down. I like your take on the COT report and how commercials maybe selling now as short covering is not there to add support. Any thoughts on my observations?

All of your observations seem to fit with the downtrend of the past few days. I'm not sure I buy into funds having to reallocate, but that doesn't meant they didn't do so, taking some profits, after switching from bonds to equities when yields hit their October lows and triggered the recent equity rally. Those yields, as well as the dollar, are approaching areas of support and if the bullish percents are accurate and we should be buying a dip, then we are nearing the area in which to do so. If those percents are wrong, then I imagine we'll get another wave of selling when those supports are broken, given the positions reflected in the COT data. I have been talking to Jeff quite a bit about a target area in which to buy a pullback, although it troubles me that the COMP gave up the 1350 level. I'm still thinking another drop to 7900/425/843 is that area, but I wouldn't be willing to bet more than a 1/4 position, giving the carnage we are seeing today. It also seems that the war sentiment pendulum has now swung back to the negative side where we are expecting a drawn out process and any victory as we get closer to Baghdad could be a pleasant surprise. This is the opposite from where we were two weeks ago, when the news seemed almost "too good." Of course, it may be wishful thinking that things can't get worse, because we have yet to see a biological or chemical attack and if our troops aren't adequately protected, things could certainly get a whole lot worse.

 
 
  Jeff Bailey   3/31/03,  12:50:50 PM
buy/sell programs have seen several sell program premium alerts so far, but no buy program premium alerts.

S&P 500 (SPX.X) 851.92 -1.34% recent pullback found buyers just above WEEKLY S1 of 849.10 after SPX fell to morning low of 844. Need a move above 855 from here to set stage for rally.

10-year YIELD ($TNX.X) 3.813% trying to help equity bulls, but equity bulls still need some selling with YIELD move above 3.831% viewed as near-term bullish for equities (in my opinion).

 
 
  Jeff Bailey   3/31/03,  12:42:37 PM
Filled on 1 DIA Sep. $80 call (DAVIB) $5.20.

Currently hold 1 DIA May $82 Put (DAVQD) from Friday @ $3.40 and offset on today's pullback with 1 DIA Sep. $80 call (DAVIB).

Dow Industrials (INDU) 8,003 here, with DIA at $80.12

For bullishness, would now consider a Dow close above 8,050 "positive" for early test.

Point/figure chart of Dow Industrials Link

 
 
  Jonathan Levinson   3/31/03,  12:06:08 PM
Traders waiting to get short are at a possible entry point here. I would only think of doing so using a tight stop in case of the possible gap fill from this morning's open.

 
 
  Jeff Bailey   3/31/03,  11:53:34 AM
Dow Industrials (INDU) 8,017 -1.56% ... taking 1/4 bullish in the DIA

 
 
  Jeff Bailey   3/31/03,  11:49:01 AM
11:00 Update posted at this Link

 
 
  Steven Price   3/31/03,  11:36:30 AM
Swing Trade Signals
This morning's bounce at Dow 7929 was awfully close to the support level that marked the bottom of the January consolidation. It also came as the TNX tested support at 38%, although the OEX didn't quite make it down to 425-426. If not for the upturned bullish percent, I might be thinking about shorting those levels if broken, but right now I'm still looking to buy a pullback. The failed bounce at 8000 might be signaling another leg down and I'd like to see it stop above 7900/425/842 for a small long entry point. I'd be setting a stop below 7800 if I enter.

 
 
  Jonathan Levinson   3/31/03,  11:25:42 AM
This feels like one of those moments preceding a hysterical jam job such as we've seen during the past months, but so far, the COMPX can barely put together a bounce to the opening gap resistance. QQV is up 1.32 to 38.15, FVX down 10.8 bps, TRINQ 1.33. This feels like a consolidation of today's losses, and where it goes from here is up for grabs. But below 1351 gap resistance, it doesn't look positive. We have a tentative range of 1325-1350 right now.

 
 
  Jeff Bailey   3/31/03,  11:01:11 AM
Dow Industrials (INDU) 7,996 -1.82% .... recovering some of lost ground from early morning and now back to WEEKLY S1 of 7,994.9.

 
 
  Jonathan Levinson   3/31/03,  10:59:55 AM
It seems to me yours and Jim’s take on the COT report is bearish. That if the Commercials are wrong on the duration of the war and they reverse then there is nothing to hold the market up. I am not sure the Big Money could get sucked in here thinking this plays out like Dessert Storm. But I’ve been bearish for years and them going long has me spooked. I mean the Commercials have been short for 3+ years. These guys have vision and deep pockets... couldn’t this be the sea change a bull could be looking for ? These guys accumulating after a final flush ?

Definitely possible. But look at March 2000, the other time they were net long. The fact is that they have expended massive ammo getting the market to this level- who's left to buy it higher? I've heard (anecdotally) that mutual funds are at around a 4.3% (?) cash level- historically low. I think that the commercials getting long WAS the rally. That's just my own opinion, which does NOT sway markets. The opposite interpretation is possible, but I don't find it as persuasive. Others will differ, which is the beauty of the market.

 
 
  Steven Price   3/31/03,  10:59:33 AM
Steve, I agree with your gut feel stated this morning; seems the only bullish thing to be found is the bullish percents - given all the negativity unfolding in front of us, would you consider the BP figures a "lagging" indicator, and playing against these can be appropriate when the fundamental information supports the opposing direction? DS

This indicator has really thrown a wrench in my analysis. If I threw out this factor and looked at all of the broken support levels this morning, I would have jumped in short. However, the bullish percent has been very reliable and is still telling us to look at buying a dip. However, what I have said in some of my past wraps is that the bullish percents ran up so quickly that we could see a pullback there, as well- we may see that now. Jeff posted a chart over the weekend of the sector shift in bullish percents, which also looks bullish to me. I am suffering from paralysis by analysis right now and trying to keep the big picture in mind when trying to pick my next entry point. I realize there are traders wondering why I haven't entered a trade in so long ( a couple of weeks). I have nibbled a little in my personal account, but we are simply seeing no definite trends right now that I am willing to bet on with someone else's money for a few days.

 
 
  Steven Price   3/31/03,  10:52:43 AM
May Oil Futures (CL03K) $30.45 +0.29 are coming off their highs, mirroring the bounce in equities, but still holding over the $30 per barrel mark, where we found support on Friday. There is still plenty of bounce room here and a move over Friday's high of $31.05 could be very bearish for equities.

 
 
  Steven Price   3/31/03,  10:47:09 AM
Semiconductor Index (SOX.X) 297.04 (-12.88) The SOX has not only given up the 200-dma (it closed just below on Friday), but has now given up support at the 300-level, as well. The next support I see for the chips is the 50-dma at 291, which would coincide with its H&S neckline on the breakdown in late January. That line was upward sloping and comes in around 290 now.

 
 
  Jonathan Levinson   3/31/03,  10:46:32 AM
We're seeing strength from the CRB, +.30% so far, with broad based buying in the commodity index' components. Gold is up, as are the precious metals indices, with HUI +2.67 to 126.06 and XAU +1.32 to 68.06. This is very impressive after Friday's spectacular rally in the miners.

 
 
  Jonathan Levinson   3/31/03,  10:38:34 AM
Last put to call reading .82. Getting higher, but still shows net balance of bullish speculation.

 
 
  Jeff Bailey   3/31/03,  10:37:12 AM
Procter Gamble (PG) $88.68 +0.04% ... second Dow component to "turn green" with gractional gain. JNJ $57.80 +0.73%

 
 
  Mark Phillips   3/31/03,  10:36:38 AM
MO $28.70 (-3.43) Altria Group getting killed again this morning. The big news last week was the big ($10 billions) legal judgement again Philip Morris USA, followed by speculation that the company would post a bond as it heads towards the inevitable appeals process. It seems all of the debt rating agencies have now placed the company's debt under review and there is talk that MO may not post a bond afterall. This morning the company stated that it is "presently uncertain" if it will be able to make its next payments to state governments under the 1998 tobacco settlement because of the large bond it is being required to post by the Illinois court. At any rate, I curently view the tobacco stocks in much the same way that I did in early 2000. Litigation issues had pounded the stocks to multiyear lows and it seemed there was nothing but doom and gloom on the horizon. Sound familiar? Back in early 2000, MO bottomed near the $19 level and then something changed, propelling the stock above the $50 level over the succeeding 12 months.

Will it be the same this time? I don't know, but I'll certainly be looking for a repeat. But keep in mind that I won't even be considering it until after some sort of bottoming process. And given today's -10% pounding, we're not even close yet. This is one for the radar screen, but not even close to a speculative bullish play right here.

This morning's break gives MO another PnF Sell signal, and I must confess to being out of my depth here. I've never quite figured out how to calculate a new bearish price target for a stock when it has already exceeded its initial bearish target. MO hasn't been able to generate a PnF Buy signal since last August. The initial bearish target from the September Sell signal was $34, and that has clearly been broken. Maybe Jeff can chime in here and provide some guidance?

 
 
  Jeff Bailey   3/31/03,  10:32:08 AM
Johnson & Johnson (JNJ) 57.45 +0.12% ... first Dow component to show green on this morning's session.

Dow Indu (INDU) 7,972 -2.12% down 174 points, but just off the lows of 7,929

 
 
  Jonathan Levinson   3/31/03,  10:29:42 AM
If I'm right in my interpretation of the COT report and the put to call ratio, I expect a bounce to 1350 (if it makes it there at all), to fail, because of the minimal short interest. Most of the buyers have bought, and there are much fewer shorts out there to become buyers. Bounces should be weaker than we've seen during the past few months.

 
 
  Jeff Bailey   3/31/03,  10:27:32 AM
10-year YIELD ($TNX.X) 3.811% ... session low has been 3.80% and fractional selling at that low YIELD here. This 3.8% is a technical level we looked for potential selling in the bond after recent weeks sharp rounds of selling.

On the alert for some firming in the indexes here.

 
 
  Jonathan Levinson   3/31/03,  10:27:03 AM
I'm seeing a buy signal on the short term oscillators I follow. Poor entry here though for all but the shortest of scalps, because of 1350 resistance looming so close overhead. Better to wait to short a failure in the 1350 area, I think.

 
 
  Jeff Bailey   3/31/03,  10:23:14 AM
S&P Banks Index (BIX.X) 265.55 -1.34% ... only sector/index in our pivot matrix that has not traded its WEEKLY S1. BIX session low so far 264.50 with WEEKLY S1 at 264.21.

Might give some "firming" to SPX OEX near-term. SPX trades 846 here with WEEKLY S1 849.10.

 
 
  Jonathan Levinson   3/31/03,  10:18:37 AM
Friends from the options trading desk are telling me that there is a huge amount of put selling and a some amount of call buying. Esp. in the QQQ's and the OEX. You think there can be a turn around when you have a .61 put/call in the first half hour of trading? I've never seen one when there is a flood to call buying!

Exactly. An abundance of bullish trading sets the market up for one outcome, and it's not bullish. The reverse is true too, of course. At 1337, the COMPX is at a weak support level, but the only technical bounce I'd expect should come from lower, around 1325. The market has managed to shrug off bad news for a long time, and it could be time for the "news is bad" phase to reassert itself.

 
 
  Steven Price   3/31/03,  10:14:11 AM
Swing Trade Signals
How quickly the picture changes. Sitting on the sidelines for the past couple of weeks due to the unpredicatability of a war market has been a lesson in just how quickly sentiment can change. How bullish we were when the economy didn't seem to matter. We were going to win the war and and that's all investors cared about. Two weeks later, still no war result and all we are left to deal with is the economy again. If anyone can tell me what tomorrow's focus will be , I'd love to know. I'm struggling to see anything bullish and the fact that we are approaching previous significant support levels is about all I can find (and those bullish percents). Here is a chart of the TNX, which is approaching a level that has given us big bounces in the past. Link

 
 
  Jonathan Levinson   3/31/03,  10:07:20 AM
The put to call ratio opened at .61. They actually tried to buy the dip this morning.

 
 
  Jeff Bailey   3/31/03,  10:03:39 AM
Chicago PMI for March came in at 48.4, which was below consensus of 50.8.

This is a negative number not only being below consensus, but below the 50.00, which signals contraction in March.

 
 
  Jonathan Levinson   3/31/03,  10:03:23 AM
Easy Al just added 3B in overnight repos, for a net add today of 6.75B.

 
 
  Jonathan Levinson   3/31/03,  10:01:49 AM
Bad news from the Chicago PMI, 48.4.

 
 
  Jonathan Levinson   3/31/03,  10:00:11 AM
The absence of a bounce as the session progresses bodes very ill for the markets- the gap should start filling shortly if it is to fill at all today. QQV +1.45, TRINQ now up to 1.96, FVX down 9.4 bps- I'd treat 26.50 QQQ / 1351 COMPX as a shortable resistance here, but I'd want my stop close overhead. I'd be waiting for a low of 1325 COMPX before even thinking of going long for a possible bounce- better to sit out a trade than get committed to a poor entry point. Note, however, that my bias is to the short side- I'm just surprised that the bulls were able to shock and awe the markets as much as they did.

 
 
  Jeff Bailey   3/31/03,  9:58:08 AM
Geron (GERN) $5.00 +15% ... stock jumps sharply in last 10-minutes. Mentioned this one as bullish SPECULATIVE play in biotech on Friday.

 
 
  Steven Price   3/31/03,  9:55:46 AM
Swing Trade Signals
Dow below 8000, COMP under 1350, SPX under 850, OEX under 430. I'm not yet ready to try and catch a falling knife with all of those levels broken. Looks like the bottom of the January consolidation around 7900 will be the next test. Correlative levels are OEX 425 and SPX 842-843. What happened to all those emails telling me we were going back to Dow 8750?

 
 
  Jeff Bailey   3/31/03,  9:55:38 AM
NASDAQ-100 (NDX) 1,023 -2.26% ... session low has been 1,021.74, which was below WEEKLY S2 of 1,024.50. Would look for "first bid" to be present here with some pretty strong technical support at 1,018.

 
 
  Mark Phillips   3/31/03,  9:54:04 AM
MMM $129.19 (-1.32) Well, after calming down over the weekend, the bulls have apparently decided they don't really have any conviction. that has started things out in the red, with our MMM play losing the $130 level at the open. For those that have asked, I certainly wouldn't be interested in trying to catch a falling knife today. In fact, it is entirely possible the stock could continue to slide throughout the day. If so, then we'll likely drop it with a close under our $128 stop. Despite the recent strong breakout in the stock, it is the broad market weakness that is the dominant factor right now.

 
 
  Jeff Bailey   3/31/03,  9:53:27 AM
S&P 500 Index (SPX.X) 848.21 -1.7% ... session low has been 847.93 and WEEKLY S1 is 849.10. Have upside alert set at 853 here.

 
 
  Jeff Bailey   3/31/03,  9:49:59 AM
Dow Industrials (INDU) 7,990 -1.9% ... just breaking WEEKLY S1 of 7,994 here and continues lower. Will continue to sit the sidelines here for bullish pullback entry and Treasury YIELDS continue lower with Treasuries seeing buying. However, I will look to add 1/4 bullish position in DIA or DJX calls at 7,900 if traded.

Disclosure: I currently hold 1/4 bearish position in DIA May $82 puts (from Friday's market monitor)

 
 
  Jeff Bailey   3/31/03,  9:44:42 AM
Sell Program Premium Alert SPX 851

 
 
  Steven Price   3/31/03,  9:43:26 AM
Swing Trade Signals
So far our low in the Dow is 8015, just 2 points above the 50-dma, but we are testing that low now and it looks likely we will test 8000.

 
 
  Jeff Bailey   3/31/03,  9:42:55 AM
Sell Programs after the opening sell program premium, have received 2 others at -2.06.

 
 
  Jonathan Levinson   3/31/03,  9:42:10 AM
The COMPX is below 1350 support, not a good sign. The likelihood of a gap fill diminishes as the session progresses. If it fills, a short at 1375-8 would be a decent entry. If it does not fill, 1350 should act as resistance.

 
 
  Jeff Bailey   3/31/03,  9:39:58 AM
Dow Industrials (INDU) 8,027 -1.46% ... session low here. Per Friday evening's posts in market monitor regarding importance of 7,995-8,001 zone of support, will monitor this level closely, along with Treasury YIELD. Will only trade bullish at this point if 8,010 traded and then see some type of rebound back near 8,100, but would want to see combined selling in Treasuries at that point.

 
 
  Jonathan Levinson   3/31/03,  9:38:29 AM
Y do U think the COT been net positive sets up a dangerour situation? I would think that it would B a positiive 4 the market.

Thanks for asking- I was hoping someone would. The long commercial position poses a risk because the absence of short positions removes support from the market. I won't editorialize here, but the view that shorting stocks is somehow evil or unpatriotic just doesn't hold true. In a serious decline, the only buyers are shorts covering their positions. The market action since September 2002 is a demonstration of how short sellers save markets from real crashes- if not for short covering (and intervention, perhaps), the markets would be at significantly lower levels. If the commercials are now long, they have nothing to cover on the way down- in fact, they need to sell on the way down to avoid losses. When the big money is weighted to one side of the boat, the risk exists to the other side- and with the commercials long for the first time since March 2000, we know where the risk lies. Remember what happened then?

 
 
  Jonathan Levinson   3/31/03,  9:32:53 AM
19 point gap down to 1350 COMPX, TRINQ .75, QQV +2.04 to 38.87.

 
 
  Jeff Bailey   3/31/03,  9:30:30 AM
09:00 Update posted at this Link

 
 
  Steven Price   3/31/03,  9:23:46 AM
Swing Trade Signals
Early bird gets the worm! Nice trade Jim. It appears we will get our test of Dow 8000, which will coincide nicely with the 50-dma at 8013. The OEX 50-dma and 21-dma coincide at 430. The SPX 5-dma is at 848.95, 21-dma at 846.30. Those 50 & 21-dmas in the Dow/SPX/OEX are converging in all three and another day may have laid them on top of each other. TNX has broken the 50-dma, but its 21-dma sits just below 3.8%, which has been a strong bounce point in Nov and Dec. If we get support at 8000 I may nibble at buying the pullback with a 1/4 long position, but the fact that the futures broke 850 to the downside gives us just as good an argument for shorting the bounce. Any long entry is based on the rising bullish percents. However, the Dow actually has correlative support with OEX 425/SPX 843/7900. So if we break 8000, those levels should provide the next level of support.

 
 
  Jonathan Levinson   3/31/03,  9:22:58 AM
Al Green has 2.25B in weekend repos draining this morning, and 6B being added via forward repo, for a net add of 3.75B. We'll see if anything new gets added to the picture with the 10AM announcement.

 
 
  Jonathan Levinson   3/31/03,  8:55:17 AM
For anyone who might have missed Jim's weekend market wrap, go read it now. I spend hours each weekend chatting with other traders, reading articles and following the news and weekend commentaries. I could have saved many hours this weekend by simply reading Jim's wrap, which encapsulates everything I was following. I agree with his conclusion on the COT reports as well, as the commercial hedges being net long since the March 2000 peak sets up a very dangerous situation. I'd add that the SARS outbreak worldwide has a very ominous feel to it- it's rather big news here in Canuckistan.

 
 
  Jim Brown   3/31/03,  8:47:14 AM
Linda will not be posting today. She was called out of town unexpectedly yesterday. Thanks.

 
 
  Jonathan Levinson   3/31/03,  8:46:52 AM
It's a sea of red for world markets, with the Nikkei -3.71%, FTSE -2.38%, CAC -4.31%, Hong Kong -2.58%.

 
 
  Jonathan Levinson   3/31/03,  8:37:02 AM
Money is flowing back into bonds, with FVX down 5.8 bps, TNX -4.3 and TYX -3.3 bps, confirming the selling in equity futures and the breach of 100.00 support by the US Dollar Index this morning.

 
 
  Jonathan Levinson   3/31/03,  8:34:28 AM
Worldwide chip sales fell 3.3 percent in February from January to $11.8 billion, extending a decline that started in December, the World Semiconductor Trade Statistics (WSTS) trade group said Monday.

Link

 
 
  Jonathan Levinson   3/31/03,  8:12:47 AM
It's not looking pretty this morning, at least not for traders in bullish positions from last week. NQ futures on Globex are down 21 to 1030.50, ES down 14.50 to 848.50. QQQ is down 52 cents from its close of 26.08. The US Dollar Index got rescued at 99.00, currently holding the 99.20 level. Gold is trading 334.60 spot.

 
 
  Jeff Bailey   3/29/03,  1:46:29 PM
Broadcom (BRCM) $12.88 -0.23% ... question from subscriber regarding BRCM from Thursday... Jeff: I own the BRCM April $15 puts at $0.85. The stock is down over $2 today, what would you do here?

No harm no fowl as I'm trying to get caught up on some e-mail today. Yes, BRCM got "whacked" on Thursday. Dorsey/Wright has stock classified as "semiconductor" and right now that sector is "bull confirmed." BRCM is headed the other way Link , but a holder of April expiration most likely follows trade with tight stop just above each previous day's high to protect the gain. You see, on Wednesday, you were holding a $15 put when the option was then "out the money," but now you hold a gain! Three days ago, I (Jeff Bailey) would have probably been thinking... "this thing is going to expire worthless." While BRCM's current vertical count is bearish to $9.00, don't let the gain slip away and simply keep a tight stop just above each day's high.

Relative strength of BRCM has been bearish since mid-January (RS char of BRCM vs. $SOX.X) Link

 
 
  Jeff Bailey   3/29/03,  1:25:30 PM
Sector Bell Curve ... Link showed modest bullishness this week. Restaurant (BPREST) and Healthcare (BPHEAL) both reversed back up into "bull confirmed" status this week, with Protect/Safety (BPPROT) reversed up from "bear confirmed" to "bull alert."

 
 
  Steven Price   3/28/03,  12:07:02 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

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