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  Jeff Bailey   4/3/03,  11:56:52 PM
S&P futures (sp03m) 877.50 and +4.2 points from settlement.

I leave with this thought... if futures are above 880.00 tomorrow morning and I see selling in bonds with 10-year YIELD above WEEKLY pivot... could be a good session for bulls.

I say it now... and will test in the morning! Good evening.

  Jeff Bailey   4/3/03,  6:11:42 PM
PeopleSoft (PSFT) $16.50 +2.16% Link ... hit lower at $13.79 after warning that it sees Q1 (March) loss of $0.02-$0.03 versus consensus of $0.00, on revenues of $40 million versus consensus of $49 million. The company said its revised guidance reflects impact of weak U.S. economy and war-delayed purchasing decisions.

  Jeff Bailey   4/3/03,  5:54:01 PM
Pivot Matrix for tomorrow Link

Really bunched up tight and depicts somewhat of a narrow range for tomorrow morning.

10-year YIELD found buyers for bulk of afternoon session on YIELD below 3.93% and there's a real nice trading range right now from the WEEKLY retracement of this bond's YIELD, which a YIELD break below today's low of 3.889% looks to have correlative 3.844% in play. If so, stocks will most likely trade toward WEEKLY S1s.

However... the "night is young" and Baghdad looks to be glowing with explosion in the city.

  Jeff Bailey   4/3/03,  5:37:03 PM
S&P futures (sp03m) settled at 873.30 and have seen downside of 870.90, with trade at 871.40 here.

I do see some interesting retracement/pivot analysis in the 10-year YIELD, which technically ties in with a Friday YIELD close of 38.43 or 3.843%, and futures traders may well be trying to leverage a short-term trade here with a morning bond market open, using any 10-year YIELD move above 39.30 or 3.93% as a stop.

Retracement on this futures contract from 03/31/03 low of 841.50 to 04/03/03 relative high of 888.70 has 38.2% retracement right here at 870.60, and there was a buyer that took some offers right here. A break much below 870 gives some room to 866.

  Linda Piazza   4/3/03,  4:06:38 PM
I had meant to add in my last post that late-afternoon trading today may be skewed ahead of tomorrow morning's economic numbers.

  Linda Piazza   4/3/03,  4:05:42 PM
The TRAN, BIX, and UTY have declined further since my last post noting that they were not turning positive along with the other indices, a possible warning to bullish traders. At 2169.34, the TRAN has fallen into the 2180-2120 consolidation zone from late January and early February.

In that same earlier post, I had noted that the Russell 2000 was trading positive and had popped above the top descending trendline of the wedge it had formed on its daily chart. I had cautioned to wait for a confirming move above 380 before drawing too many conclusions, however. This afternoon's action is bringing the Russell back down toward that broken trendline, so we may see a retest of the trendline (and, therefore, the wedge) before we get a test of 380. Link These indices are important to watch, as they give us insight into the strength or weakness of the broader markets.

  Steven Price   4/3/03,  3:51:41 PM
Swing Trade Signals
Dow testing support at 8250 here, the reversal after the bond market closed is always questionable, but I just haven't formed any opinions strong enough to enter a new trade today. I'm going home flat and will see what tomorrow brings. COMP fails to hold 1400 again.

  Jeff Bailey   4/3/03,  3:35:40 PM
MO 3 million shares in last 10-minutes.

  Jeff Bailey   4/3/03,  3:34:09 PM
Altria (MO) $28.80 -2.86% ... quickly reversing earier gains here. Not sure what is going on, but quick move impacting down in last 30-minutes. Stock fell sharp from $31.00.

  Linda Piazza   4/3/03,  3:25:55 PM
Without wanting to appear too negative, I feel compelled to note that a scan of the daily charts shows dojis or near-dojis setting up on the S&P's, the COMPX, the NDX, and the DJI. These dojis are setting up above or near the tops of the yesterday's big white candles. They're setting up after a climb. Candlestick theory says that we should be watchful for the possibility now that tomorrow's candles will be the third in a three-part formation known as an evening-star pattern, for those not familiar with candlestick theory. Big red candles that form below today's lows would be the classic formation, although Nison, the "father" of candlestick theory, says that some leeway should be given to indices because they do not gap the way a stock would. However, I must caution, as I often do, that even if today's candles do turn out to be dojis or near-dojis, confirmation of this pattern would not come until and if tomorrow's close showed red candles that completed the three-candle formations. I further caution that these setups prove reliable in normal trading, but perhaps not so well in trading driven by war news. Even if we get that confirmation tomorrow, I'm cognizant of the bullish undertone to the markets lately, and I don't know how I'd personally feel about holding bearish positions--or any positions--over the weekend.

  Jeff Bailey   4/3/03,  3:24:44 PM
PACCAR (PCAR) $54.83 +1.21% ... Hmmm... another "autos/parts" stock on the move higher. 52-week and all-time high today. Link

See notes on AZO Link from 14:23:53

Not sure what's going on here. Is it possible that struggling economy and perhaps consumer doesn't buy a new car this year, and instead spends a little money and fixes up "old Bessy" to get a few more years out of the car/truck?

  Jonathan Levinson   4/3/03,  3:24:36 PM
I've closed out half of my QQQ puts purchased today, and will be exiting the remaining half by the close at 4:15.

  Jeff Bailey   4/3/03,  3:06:05 PM
10-year YIELD ($TNX.X) .... pivot analysis will show YIELD resistance corrlelation between DAILY pivot of 39.25 and WEEKLY 39.30.

Thinking... if YIELD had closed ABOVE these two level, I'd definately say... "gung ho bulls for additional 1/4."

Right now... I would only weigh the "risk" as it relates to your own tollerance for putting on a bullish position here, and having to hold overnight.

Traders that already have a position, don't have as much "opportunity risk" if things go well in Iraq between now and tomorrow's open. So bull already long, probably errors on side of conservacy.

It is bulls looking to put on new position that really have to weigh their own risk/reward profiles or tolerance for risk and make a decision that is appropriate for their account. It's the YIELD close below 3.93% that would be the technicals that might be the "swing vote" toward waiting for tomorrow's open.

  Jeff Bailey   4/3/03,  3:02:28 PM
Bond Market closed with 10-year YIELD at 3.916. Dow Industrials 8,302 here.... let me run quick povit analysis on 10-year YIELD... just a second....

  Jeff Bailey   4/3/03,  2:53:58 PM
Dow Industrial trade setup ... I'm watching 10-year YIELD on 5-minute chart. Might look for current YIELD 39.26 pullback to 39.11, and Dow 8,300. Now... bond market about to close at 03:00 AM EST and we'll run out of bond market, but it has just been sitting here for most part today. If Dow does pull back to 8,300, then begins a move higher, off/near that level, look for rally into close. Then... stage/table set for tomorrow's open.

  Linda Piazza   4/3/03,  2:53:47 PM
All volume patterns are positive this afternoon, with the total volume now 951 million on the NYSE and 1.09 billion on the Nasdaq. Adv/dec ratios are not particularly strong, but up/down volume shows more strength, as do the new highs/new lows ratios.

  Kent Barton   4/3/03,  2:53:14 PM
Personally, I don't pay a whole lot of attention to the VXN.X (NASDAQ 100 volatility index). The VIX.X has much more historical data and tends to provide more reliable signals. But for what it's worth, the VXN has rebounded near its January lows at 41. It'll be interesting to see whether a breakdown will occur if the NASDAQ moves through resistance at 1426.

  Jeff Bailey   4/3/03,  2:45:35 PM
Dow Industrials (INDU) 5-minute chart shows last 2-days intra-day action. Link

Indexes starting to show some renewed strength. I'd like to see some selling in Treasuries (10-year YIELD back near unchanged) but Dow looks to bid. I'm going to suggest that those following Index Trader Wrap and previous mentionings of DIA calls look to leg in with another 1/4 bullish.

Note: I really don't use the Bollinger Bands on these time frames. I just forget to turn it off.

  Jonathan Levinson   4/3/03,  2:34:13 PM
Always remember to breathe. The 200 day EMA was touched, but has so far held back the Teflon Compx. FVX remains in the red, -2.6 bps, TRINQ .38, TICK.NQ -56.

  Linda Piazza   4/3/03,  2:32:23 PM
The DAX ended the day down 19.54 points or .75%, at 2569.81. Although the DAX tried to regain positive territory, it fell through the last hour and a half of trading, closing on the afternoon low and just above the morning low.

  Steven Price   4/3/03,  2:29:20 PM
Swing Trade Signals
WE're finally getting that follow through, moving to new highs. I think COMP 1426 is the next key level to watch across the board if we get through the 200-dmas. The OEX has cleared that 200-dma level, while the SPX is testing it now (885.59)and the Dow is just above at 8377.

  Linda Piazza   4/3/03,  2:27:59 PM
I note this afternoon that the TRAN, BIX, and UTY are not yet positive, which might alert bulls to keep watch on these three important indices. The Russell 2000 is positive, however, moving up toward the important 380 resistance just ahead. While the TRAN, BIX, and UTY all remain below their simple 100-dma's, the Russell currently rises to test this MA, with the Russell currently at 377.33 and the MA at 377.39. A look at the Russell daily chart shows that the Russell also has moved above its mid-March highs and just outside of the upper descending trendline of its own neutral wedge. The Russell also broke through this wedge to the downside earlier in March, so I would wait for a more substantial break before drawing too many conclusions. In particular, I would probably wait to at least see how the Russell behaves on a test of the strong resistance at 380.

  Jeff Bailey   4/3/03,  2:23:53 PM
Autozone (AZO) $75.08 +3.98% ... getting upside alert here as stock trades a spread-triple-top at $74. Link

Recent spread-triple at $68 saw $73, and pullback found support right at the prior spread-triple. Vertical count is bullish to $96.

sector bullish ?.... Dorsey/Wright and Assoc. has stock as "autos and parts" (BPAUTO) and currently "bull correction" at 33.72%. Needs a reading of 36% to reverse back up to "bull confirmed."

I (Jeff Bailey) might also view as a retailer (they sell through retail chain) and retailing bullish % (BPRETA) is "bull confirmed" at 35.05%

  Jonathan Levinson   4/3/03,  2:14:52 PM
I am now long a 1/4 QQQ put position, which I intend to close out for better or for worse by day's end.

  Jeff Bailey   4/3/03,  2:10:10 PM
Goldman Sachs (NYSE:GS) $73.27 +1.2% ... getting upside alert I had set here for partial bullish position trade in "wall street" per prior observations of sector bullish %. I like today's break above trend and bullish vertical count of $93, stop $57. Link

Goooooood volume yesterday of 7 million shares on break above 200-day.

  Jonathan Levinson   4/3/03,  1:57:16 PM
The COMPX is printing new highs on its way to 1412, the 200 day EMA. FVX is down 2.9 bps, above its lows but not yet painting a bullish picture for equities. I'm trying to add another 1/8th to my morning put position, but am not chasing it and may not get filled unless the QQQ pushes up for another surge.

  Linda Piazza   4/3/03,  1:56:46 PM
The 60-minute 5(3)3 stochastics did turn up from the support offered at the ascending trendline that began forming on March 24. This gives traders an important clue. (Well, it would in a normal market, although I'm not so sure about current conditions). If the 5(3)3's continue moving up and turn down in concert with the 21(3)3's, we can now watch for a break of that trendline as confirmation of weakness, although perhaps the signal will come late as the trendline won't be broken until the 5(3)3's move down considerably. If that ascending line again offers support on the next rollover of the 5(3)3 stochastics, we'll know the markets are still in rally mode.

  Steven Price   4/3/03,  1:52:49 PM
Swing Trade Signals
I am impressed with the bulls ability to take the Dow back over 8300, but even more so with the move in the COMP over 1405. It pushed to a high of 1407 and now the next important level of resistance should be 1426. I am now thinking short-term bullish, but with this morning's mareket indecision and disappointing economic data, combined with the 200-dmas jsut overhead, I am still in a wait and see mode. Conservative traders who took my alternate stops may want to think about raising those stops to just below 8250, which held up on today's pullback.

  Linda Piazza   4/3/03,  1:30:15 PM
At 31.53 currently, the VIX is at the day's low.

  Kent Barton   4/3/03,  1:27:33 PM
AT&T (T) $15.00 -0.90: As Jeff mentioned earlier, Ma Bell has tanked to new 52-week lows. The downward movement began in earnest yesterday after the stock was downgraded by Goldman Sachs. Further losses today have taken shares down to psychological support at $15.00. Traders who entered the PremierInvestor play at $16.48 should now have a gain of roughly 9%. Those with a short-term strategy might want to consider taking some profits if T bounces from current levels. We're aiming for an eventual decline to the $12.50-$13.00 region.

  Jonathan Levinson   4/3/03,  1:26:13 PM
A couple of days ago you commented about the COT report and how shorts sellers save markets from real crashes. I've done some reading and research on this but I still don't "get it". Could you give me a brief explanation or point me to a website or document that I could use to bone up on this?

If I feel the market is toppy but Steven feels the market is consolidating for a breakout, I sell short here and Steven buys. Assume that each of us is financed by Al Green, and my short sell to Steven is worth a few billion dollars. The market goes down. As it's going down, Steven and other traders long start hitting their stops, and they sell, which pushes prices lower, tripping more stops, and so on. Eventually, Maria B. and Dan N. and Jim C. and their pals finally tune in and say, "The market's looking bearish." At that point, as the bulls are all hitting their stops and selling, or becoming bears and shorting, I, who sold short at the top, decide to take my profits, and become a buyer. As the market is sliding, it's those who sold higher up who provide the buying, and hence the liquidity, to slow or even arrest the market slide. If there were no short selling, bulls panicking out on market declines would pile on, seeing their cash and margin dwindle, and on a decline, there's no fuel to buy the market. Bears provide that buying and liquidity when it's needed most.

  Jeff Bailey   4/3/03,  1:16:10 PM
SLM Holding (SLM) $115.31 +0.89% ... I received yet another e-mail regarding a short on this stock. Folks... shorting stocks at/near 52-week highs is a low probability trade (lack of overhead supply, few bears are profitable and not overly eager to press the stock). Here's the chart of SLM, where I've adjusted the stock's chart scale to reflect what this stock will look like if the shareholders approve the 3:1 stock split. Link

While price scale currently shows $114, think of it as $38. See that triple-top buy signal at $100 or $33.66 post-split? According to Professor Davis, the triple-top is profitable 87.9% of the time (so if you're shorting, you've got a 22.1% chance of being right) for an average gain of 28.7% (so if your short you might lose at least 28.7% in the stock) in 6.8 months. Now... it may well be that the stock trades it bullish count and probability study and then begins to see weakness, but....

Unless you the trader KNOW for certain that there is BAD NEWS coming (inside information) that the MARKET isn't aware of, try not to focus too much attention or capital on 52-week high stocks. Especially right now when the bullish % charts are reversing from lower levels of bullish %.

  Linda Piazza   4/3/03,  1:06:19 PM
As I scan OEX intraday charts across different time frames, I notice several in which the 21(3)3 and 5(3)3 stochastics are positioned with one indicating oversold conditions and one indicating overbought conditions. This is true of the 60-minute charts, for example, where the 21(3)3's are in a position indicating overbought conditions and the 5(3)3's are heading down toward a position indicating oversold conditions and perhaps trying to hinge up while doing so. Since March 24, the 5(3)3's have been forming a pattern of higher lows on the 60-minute charts. If they're successful in turning up from the current position, that pattern will be preserved, but a further move down will violate the ascending trendline. Often I find that when the shorter-term and longer-term stochastics are opposed in this manner, trade is often choppy or difficult to predict. Perhaps--dare we hope--when they align themselves again, we'll see "regular" trading assert itself again. At the current time, it appears that they most likely will align when the 5(3)3's complete at least one more cycle up into territory indicating overbought conditions and both turn down again, but nothing is certain. Instead, markets could dive this afternoon or tomorrow, driving the 21(3)3 down and keeping the 5(3)3 from rising, so that the next concerted move would be a move up out of oversold territory.

  Jonathan Levinson   4/3/03,  1:02:53 PM
good morning just went short chkp 15.58 would think with most computer sells slow that the stock is pricey here.rumers that thay miss are going arond Any way if you can tell me what the chart tells you with your great experance. thanks david

It's an aggressive trade, because there are no sell signals on the daily chart, and pretty decent trendline support underneath. The stochastic is on a buy signal (daily candles), and MacD hinting at a bullish cross above the zero line. I would have a tight stop on this one in the event that it continues higher. The link is below.

A lesson I've been learning the hard way since October is that fundamentals (what my friend and mentor refers to as "funnymentals") matter in the long and medium term, but are very difficult to trade profitably. As we've seen... all this week... is that short term market action sometimes makes sense in light of fundamentals and news, and sometimes does not. For this reason, I've learned to be careful about trading news. Rumors I try to ignore, because it becomes too close to a gamble for my taste. But, to each his own, as long as it works. Here's the chart on CHKP. Once again, I wouldn't be shorting or going long this stock (or any others) without a stop.


  Mark Phillips   4/3/03,  12:52:36 PM
MMM $134.52 (+0.86) At the risk of jinxing it, I'll point out that MMM is once again showing strength compared to the rest of the market and is nearing its 3/21 high of $134.95. Traders that took a position down near $130 are smiling here, but I certainly wouldn't be getting overconfident until we see the stock push through that $135 level. With the market caught between the competing dismal economic news and good war news, I would strongly suggest that traders in this play tighten stops to at least break even.

  Jeff Bailey   4/3/03,  12:51:14 PM
Teva Pharma (TEVA) $44.04 -0.59% ... I would appreciate your PNF analysis of TEVA and APOL. Thank you,

1) Stock is classified as "drug" and sector bullish % is "bull alert" at 36%. In essence for every 100 stocks, 36 are showing "buy signals" with their chart. Is teva one of the 36? Yes! (Notes: stock is a sector leader) Link

Now... stock looks a little "over-extended" on its p/f chart, but longer-term bullish count is bullish to $66, so plenty of longer-term price objective. One thing I'm eye-balling here is what would appear to be the stock trading at the upper end of a bullish channel. (See the high in May, then high in November "B"). I would think partial bullish position here would be "OK" with better pullback type of entry at $41. If memory serves me correct, TEVA was bullish play in October (red A) at $35. TEVA has broken out of MASSIVE base (two-years is considered MASSIVE).

Apollo Group (APOL) $50.89 -0.97% ... Stock is classified as "business product" and this sector is currently "bull correction" at 38.3% and would need a reading of 40% to reverse back up to "bull confirmed". In essence, 38 stocks for every 100 are showing a buy signal on their chart. Is APOL one of them? Yes!

Ooooooeeeee! The old "bullish catapult" Link was set up at $45, where a bullish trader will either purchase full or partial position (in January, SPX bullish % had reversed lower, so probably just 1/2?). Then the stock pulls back, but doesn't give the "sell signal and begins reversing higher and "catapults" higher at $47 with confirming buy signal (just so happens to be a spread-triple top buy). I think of this pattern as one where supply "thinks" it has control of the stock, but a trade like the "triple-top" at $45 is an alert that demand is beginning to outstrip supply. Still.... the stock pulls back, but "smart money" rushes in and drives the stock back higher to a "confirming" and additional buy signal (see the spread-triple at $47? "Silly bear" that shorted from $45-41 runs for the hills at $47).

The 2 versions of the triple-top are very bullish. Professor Davis' study had triple-top profitable 87.9% of time for average gain of 28.7% (from $45 would be $57.91) in 6.8 months. The spread-triple top profitable 85.7% of the time, average gain of 22.9% (from $47 would be $57.76) 7.7 months.

  Jonathan Levinson   4/3/03,  12:48:50 PM
Well Mark, I'm sure its feelings won't be hurt- not as much as bashing it against my intraday descending trendline connecting today's tops. I got a great entry on those puts purchased earlier today, but so far today is yet another carpet grower in my office. TRINQ .46, TICK.NQ -155, FVX -4.1 bps, QQV +.09. Nothing's happening one way or the other- just more rangebound chop near the top of yet another flagpole rally, as Al Green, Ben Bernanke, the Federal Reserve and the Bank of Japan line up to take a bow and receive my polite golfclap.

  Mark Phillips   4/3/03,  12:26:26 PM
I won't mince words, here. I HATE this market! A gap move nearly every morning -- some of which continue, and some which fail. Yesterday's gap held up throughout the day, and today's failed. Lately, we've had more gap days than not. I've lately taken to watching the Futures market for some clue as to what to expect, since it seems that the action in the indices and most individual equities is being controlled by the whims of the futures markets. Just like the 5 point consolidation range yesterday, after the initial plunge this morning, the ES has been confined between 876-881 -- another 5 point range. What's a trader to do? I went into that in great detail in my recent articles. I reluctantly sit on the sidelines, eagerly awaiting a conclusion to the war so that we can get back to focusing on meaningful market data again, making responsible trading decisions.

  Jeff Bailey   4/3/03,  12:19:32 PM
AT&T (T) $15.23 -4.15% ... notable 52-week low today. Link

  Steven Price   4/3/03,  12:13:36 PM
Swing Trade Signals
Drifting.... I really would have expected some follow through of yesterday's rally if we were going to continue to blast higher. We haven't given much back, say the bulls, but the last time we did this, there wasn't much pause on the way up. Of course the roll over was dramatic last time, as well and we aren't seeing that yet. Do I sound confused from here? Let's just say I'm undecided.

  Jeff Bailey   4/3/03,  12:07:52 PM
Whole Foods Market (WFMI) $56.13 -3.2% ... here's "my" bar chart on WFMI, using retracement to try and reflect the reverse head/shoulder pattern. Link

  Linda Piazza   4/3/03,  12:07:27 PM
The OEX five-minute chart shows another H&S formation, with a broken neckline at 446.57 already confirmed by an unsuccessful retest. As I mentioned yesterday, targets predicted by five-minute formations are often not fulfilled and certainly wouldn't be tradable with wide bid/ask spreads on the OEX, but sometimes it's useful to watch what happens near that target. A bounce? A fall through that level? The calculated target is 443.61, which would round prices over to the top of yesterday's first candle, completing that Roman arch Jonathan mentioned yesterday.

  Linda Piazza   4/3/03,  11:58:30 AM
The FTSE 100 closed up 17.70 points or 0.47% at 3771.10, and the CAC 40 closed up 44.81 points or 1.63% to 2788.69. Both closed near the middle of their day's ranges, coming down from the highs earlier in the day. The DAX currently trades down 18.51 points to 2570.84, having fallen into negative territory about the time U.S. markets opened, but currently attempting to move up again.

  Linda Piazza   4/3/03,  11:49:28 AM
A helpful reader answered the question I'd posed in my 11:16 post. On the CBOE page referencing the QQQ's, the following information can be found: Position and Exercise Limits: 150,000 contracts on the same side of the market. Thanks, BG. I guess I don't have to worry about exceeding the limit any time soon!

  Jeff Bailey   4/3/03,  11:46:23 AM
11:00 Update posted at this Link

  Jonathan Levinson   4/3/03,  11:45:01 AM
FVX is coming down, -4 bps currently. We note that Al Green threw 3 billion dollars at his dealers today, and I have no doubt that they're buying treasuries with it. Either that or QQQ and SPY shares :) TRINQ at .7 is bullish, QQV +.41 to 36.70, and TICK.NQ -89. HUI and XAU and spot gold are all treading water, and I'm up a dime on the 1/8th QQQ put position I bought earlier.

  Steven Price   4/3/03,  11:38:01 AM
Swing Trade Signals
The low in the TNX is 3.90%. That was yesterday morning's pullback low, as well. A move below that level looks bearish for the short-term and could get us rolling down hill for the day.

  Linda Piazza   4/3/03,  11:24:55 AM
I hesitate to mention it, but the five-minute OEX chart shows another infamous neutral wedge forming, with the OEX moving right into the apex of the wedge. I mention it only because of the fact that it's moved so far into the apex, and that gives me an opportunity to point out one possible outcome of these wedge formations. Breakdowns or breakouts often occur about 2/3 of the way into the wedge. The fact that prices have moved right into the apex may mean that they will trickle out through the apex, negating the significance of that wedge. There can be no breakdown or breakout if prices just move out through the apex. This happens sometimes with wedges, and may in fact happen with the wedge I've been watching on the more significant weekly chart. I hope not. I'll get more information from a breakdown or breakout.

  Jonathan Levinson   4/3/03,  11:22:02 AM
Sorry, Linda, I don't know.

I have a descending trendline linking the intraday highs, and it hasn't been challenged on this latest push, giving us a lower high on the 5 minute candles. It is currently at 26.62 QQQ.

  Linda Piazza   4/3/03,  11:16:24 AM
I've freely admitted that I'm self-taught and still learning some aspects of the market. Aren't we all? The mention today of the 26,000 QQQ put contracts reminded me of something I meant to ask Friday, when mention was made of an 80,000-contract sale of April QQQ puts. Not that I'm likely to exceed the limit any time soon and needed to memorize the figure, but I'd remembered the obscure fact that there was a 75,000-contract position limit on the same side of the market, and that the position limit extended to all "related" accounts managed by a money manager, too. How could someone be selling 80,000 contracts, then? Does the position limit not apply to index options? Jonathan? Steve?

  Steven Price   4/3/03,  11:08:08 AM
My two cents on the QQQ puts. I have seen some inncredibly high p/c ratios in the Qs lately (shown in Market Sentiment), but while I initially took these as bearish signs, in the short term they were unreliable. That doesn't mean someone isn't betting on a big drop in the future, but it could also mean someone is going long the underlying tech products and hedging downside.

  Steven Price   4/3/03,  11:05:07 AM
Apparently Germany's Chancellor is calling for the removal of Saddam for the first time. OK, I guess we can start the war now.

  Jonathan Levinson   4/3/03,  11:00:29 AM
was that you that just bought 26,000 qqq april 25 puts. right when you posted a 1/8 put position... wounder how many you buy when you are fully invested... hehe

Maybe in another life. If there was an account minimum at my broker, I might not have made the trade. I'm learning to think and trade smaller in these choppy, counterintuitive times. Trading against Al Green and To Fukui is intimidating. Also, on QQQ I'm becoming premium averse, and so bought a small number of ITM contracts. They're for scalping anyway.

  Steven Price   4/3/03,  10:57:52 AM
Swing Trade Signals
While we keep bouncing back into the green, I am still watching the TNX set a series of lower highs intraday and the last bounce failed at Wednesday afternoon's support level. I think the bears right now have the upperhand, but I'm not seeing enough of a trend to commit for a couple of days. Here is an updated chart of the TNX intraday Link

  Jeff Bailey   4/3/03,  10:55:20 AM
Point/figure breadth According to Dorsey/Wright and Associates...

Yesterday's trade for NYSE listed stocks saw 313 rising on their charts (you would have charted a continuation X) and 15 falling (charted a continuation O). 21 stocks gave reversing upward p/f "buy signals." There were 104 upward reversals (from O to X) and 8 downward (from X to O).

NASDAQ saw 225 stocks rising on their chart and 45 falling. 31 stocks gave reversing upward buy signals and 7 stocks gave reversing lower sell signals for a net GAIN of 24. There were 78 upward reversals (from column of O back to X) and 19 downward reversals (from X into O).

Very strong internals yesterday and confirmed the "outward" appearance of the chart action.

  Linda Piazza   4/3/03,  10:55:06 AM
Now that markets have had time to settle down after this morning's economic numbers releases, it's time to look at volume patterns. Adv/dec ratios rate .75 for NYSE-traded issues and 1.04 for Nasdaq-traded issues, showing more decliners on the NYSE and roughly equal decliners and advancers on the Nasdaq. Down volume is 1.24 times up volume on the NYSE but up volume is 1.81 times down volume on the Nasdaq. New highs are above new lows on both.

Yesterday, I noted the imbalance of new highs to new lows, particularly on the NYSE, and had mentioned that it was possible that the extreme imbalance could be a contrarian indication. I mentioned that I'd also begun noting a similar imbalance in early January. I went back last night and checked my Market Monitor postings beginning January 6 to refresh my memory. Here's what I was noting that day: New high/new low figures show the biggest differences I've seen in a while. The ratio is 90:9 for the NYSE and 80:13 for the Nasdaq. The VIX was near "support" that day and the markets were near resistance. Over the next days as the markets continued to rise, the new highs/new lows figure continued to be strong, but the adv/dec ratios began decreasing, and I began questioning the divergence in volume patterns, wondering if it signaled underlying weakness. So far, there's been no similar divergence, but it might be good to begin watching.

  Jonathan Levinson   4/3/03,  10:45:19 AM
I've just added a very partial position of QQQ puts here. I think there might be further upside, and so put on a 1/8 position- just getting my toes wet.

  Jeff Bailey   4/3/03,  10:44:17 AM
Relative strength of SPX vs. $UST creeping higher today per last night's Index Trader Wrap. RS= 837 on intra-day basis. I've "learned" over time that it is often best to wait until the CLOSE of trading when trying to play RS buy signals. I've played a few intra-day and have had mixed results. When they work they really work, and when they don't "confirm" at the close of trade, I usually get shook out the next day.

  Jonathan Levinson   4/3/03,  10:37:07 AM
Let me first say, thank you for taking the time to read and respond to my emails. Truely a great service. Now to my ? A trade just went off on the Aprial qqq 25 puts... all sold at the bid 50,000 contracts that is. This should pop up the put/call. Again, would you pay a lot of attention to index option trades like the DIA, DJX, SPX, OEX, NDX, QQQ's or would you concentrate more on individual stock option trades. I always pay more attention to the index trades but some days like this... it's hard to tell what to think.

I watch the total p/c ratio and the breakdown. An increase in index put/call ratio over the equity p/c ratio is bearish, generally, but overall, I don't trust it intraday and prefer to use a moving average and look at the total p/c ratio at the end of the day with weekly and daily candles. I post it intermittently intraday for that reason. Like Bertrand Russell, I don't trust subatomic data, and when a single trade can sway the p/c readings, I take it with a grain of salt. The exception seems to be very low intraday readings, which tend to show blowoff levels.

  Jeff Bailey   4/3/03,  10:37:01 AM
Buy Program Dow =8,302, SPX =881, OEX 448, NDX = 1,069

  Jeff Bailey   4/3/03,  10:27:50 AM
10-year YIELD ($TNX.X) 3.927% ... recovering from morning YIELD low of 3.905. Current trade here is just below its WEEKLY pivot of 39.30, or 3.93%.

This observation and comparison to Dow (see 10:23:16) gives the impression that there is some short-covering going on in equities at this point.

  Linda Piazza   4/3/03,  10:24:38 AM
You've gotten Jonathan's trading plan and then Steve's. Here's mine: I'm still not entering new positions although it's entirely possible I'll be closing positions. As Jonathan mentioned earlier, fundamentals don't seem to matter. As many technical traders can prove with lowered trading account balances, technical setups haven't proved trustworthy during TV trading, either. I know about the bullish percents rising, but I also know about proposed factory closings and travel advisories in Asia due to SARS, Japanese banks plummeting 7-10% today alone due to worries over their financial soundness, and universally bad economic numbers across Asia, Europe, and the U.S. Those factors paint a gloomy economic picture. Current market behavior doesn't make sense to me. Until it does, I'll stand back, watching those wedge patterns forming on the weekly charts. If I were entering new positions today, however, I'd be watching volume patterns, bond yields, VIX and VXN, the dollar, gold, and crude oil prices to give me some guidance. Right now, those intermarket relationships present a mixed picture.

  Jonathan Levinson   4/3/03,  10:23:59 AM
The TRINQ touched 1.12, I blinked, and now it's .63. QQV +.62 to 36.98, TICK.NQ +161. Still a very choppy market. HUI and XAU are down .72 and .64 respectively, and gold dipped below 325/oz before recovering. For those who have asked, I am still holding my precious metals and commodity fund longs. These are long term buy and hold positions for me.

  Jeff Bailey   4/3/03,  10:23:16 AM
Dow Industrials (INDU) 8,286 +0.04% ... will make early note here that this morning's low of 8,255.51 found support at WEEKLY pivot of 8,254.90.

  Mark Phillips   4/3/03,  10:22:42 AM
ROOM $55.81 (+1.25) In an impressive about face, shares of ROOM are actually getting a solid bounce this morning, now back over the $55 level. With weakness showing in so many other areas of the market this morning, it is impressive to see ROOM bouncing so strongly. So what's up? Today's rebound looks like a simple oversold bounce from yesterday's weakness that came on the heels of the Legg Mason downgrade from Hold to Sell. Clearly a rebound is overdue after falling from $61 to $54 in the past week. We don't want to be in a hurry to jump into new positions here, but when this bounce runs out of steam, we'll likely get another great entry point. Resistance levels likely to provide that entry are $56.75 and then up near $58.00-58.25. Note that our stop on the play has been lowered to $58.58. More conservative traders that entered up near $58-59 may want to err on the side of caution and tighten stops to $57, ensuring that at worst, the play would be closed for a small gain.

  Jeff Bailey   4/3/03,  10:21:10 AM
buy/sell premium alerts received one "buy program" alert at the open, as cash markets adjusted to overnight futures bullishness. However, since then, no program alerts.

  Jonathan Levinson   4/3/03,  10:12:02 AM
It's what makes a market, Steven :)

But, I won't short this range, certainly not here. If this is the top, I'll miss it. By the same token, I'd be inclined to buy a pullback, but also, not within this range. I spent hours glued to the screen only to get stopped out at the end of the session. I'd prefer to fade a move in either direction. I'm hoping for a blast to the highs of the day to evaluate a short from there. Well see how it looks at that altitude if and when we reach it.

  Steven Price   4/3/03,  10:10:47 AM
Swing Trade Signals
That looked like a short-term bounce and we are rolling over again. Good plan Jonathan, but those bullish percents.... With troops this close to Baghdad and no clear trend, I will be looking for a support level on a pullback to make some decisions.

  Steven Price   4/3/03,  10:08:47 AM
Swing Trade Signals
Dow back in the green, but OEX slightly red and yields getting a bounce. Really not sure how I want to trade this, so I'll watch until something more clear emerges.

  Jonathan Levinson   4/3/03,  10:06:33 AM
The futures are now higher than before the ISM data. I am waiting for an entry to short. This market looks like a flying pig to me, but that's my personal opinion only. I will be very patient, however. I see resistance at 26.59 and then higher at 26.79 QQQ. The 200 day EMA on the COMPX is at 1412.

  Jonathan Levinson   4/3/03,  10:03:23 AM
This is a very bad reading from the ISM, down from 53.9% in Feb and well below expectations. The Teflon Market has yet to react in any meaningful way.

  Jonathan Levinson   4/3/03,  10:01:41 AM
ISM at 47.7.

  Steven Price   4/3/03,  10:01:07 AM
Swing Trade Signals
We are seeing a major fade in yields here, not looking good for equities. The ISM report should be out in a minute or so. Here is an updated chart of the TNX. Link

  Jonathan Levinson   4/3/03,  10:01:06 AM
The fed has added a net 3B with a 10.75B overnight repo.

So far we see a range. Awaiting the ISM data.

  Jeff Bailey   4/3/03,  9:54:26 AM
10-year YIELD ($TNX.X) 3.921% .... now seeing fractional buying in 10-year bond and session low for YIELD here. While I was fighting with the morning newsletter to get it e-mailed out, was seeing 10-year turn from buying to selling as opening bell approached.

With NDX and OEX both back below the WEEKLY R1, traders may want to lighten up on index calls and book some profits near-term if short-term oriented.

  Linda Piazza   4/3/03,  9:48:50 AM
The VIX measures 32.14, up 0.85.

  Jonathan Levinson   4/3/03,  9:48:18 AM
One of my umpteen trendlines slices through 26.59 QQQ, which just capped the most recent rise.

  Linda Piazza   4/3/03,  9:42:45 AM
Instead of talking about today's first five-minute OEX candle, I'm going to talk about yesterday's. Today's move was a small one, but yesterday's first five-minute move produced a candle that was much larger than normal. According to candlestick theory, support on pullbacks should be found at the midpoints of such candles, or at the 50% retracement level. That level comes at 438.88. Over the last couple of weeks, we've talked about various levels of support near 438, so this candlestick support gains more significance. Before testing that level, however, the OEX would have to break through support, some minimal and some more significant, near 446.50, 445-445.50, 444, and 442.

  Steven Price   4/3/03,  9:41:58 AM
Swing Trade Signals
I'm having second thoughts about a long position, given the fade in the TNX back below yesterday's resistance level - here is a chart of this morning's action Link

  Jonathan Levinson   4/3/03,  9:35:36 AM
We're still waiting to see what Al Green is going to do with the remaining 7.75B in repos expiring this morning. No announcement yet.

  Jonathan Levinson   4/3/03,  9:31:48 AM
COMPX 1404, TRINQ .73, TICK.NQ +346.

  Steven Price   4/3/03,  9:29:31 AM
Swing Trade Signals
The TNX fell from its high, bounced off 3.94%, where it found resistance yesterday and has begun to roll over again. Some of the bullishness seems to be fading and a move back below 3.94% could signal further weakness.

  Linda Piazza   4/3/03,  9:29:17 AM
After my last report, European markets continued up, but have since turned down again and are off their highs. Currently, the FTSE 100 trades up 28.80 points, the CAC 40 trades up 50.99 points, and the DAX trades up 6.59 points.

  Jonathan Levinson   4/3/03,  9:28:26 AM
QQQ is trading 26.66 in the premarket, which, incidentally, has been where the bulk of market moves have been occurring lately. QQQ will open at or near the high for this week. A gap n crap open wouldn't surprise me at all, and we'll watch for a gap fill out of the gate. If it doesn't come, we could have another flagpole rally day. They will not get my money from me, period. I will use tight stops on any position I open, and will step aside if I don't see an entry that persuades me.

  Steven Price   4/3/03,  9:22:03 AM
Swing Trade Signals
Too bad the end of day dip stopped us out of the long position by 3 Dow points. I certainly would have liked to have been long heading into this morning, however, I'm not going to bemoan a gain in the current conditions. Those traders with wider stops at 8150 or 8050 still have something to gain here and we could make another run at the March 21 highs. The first challenges should be the simple 200-dmas and those are the first levels I'll be watching when deciding whether to jump back on the speeding train. OEX 450 and COMP 1400 are also important, but I expect those to be taken out early on, if the futures hold.

  Jeff Bailey   4/3/03,  9:20:34 AM
09:00 Update posted at this link.

  Jonathan Levinson   4/3/03,  9:02:36 AM
The fed has announced a 28 day repo in the amount of 4B, covering the expiring 4B from last month.

  Jonathan Levinson   4/3/03,  8:36:36 AM
The Teflon Market is simply not reacting to the pop in weekly unemployment. War, pestilence, economic oversupply, rising unemployment, crushing debt, waning productivity, threat of pandemic... this is the news of the past days and weeks, and nothing, nothing sticks to this market. Yields are still in the green, and the futures are holding their gains, ND3M +12 and ES3M +8.25. Bears beware. And, alas, bulls beware, because while the market is impervious to bad news, it's impossible to know when all this news will come home to roost. Or, perhaps it won't. Joe Granville: "News is for suckers." Jonathan Levinson: "So then, are fundamentals." We will trade what we see, either way.

  Jonathan Levinson   4/3/03,  8:31:54 AM


JOBLESS CLAIMS WEEK END 3/29 +38,000 TO 445,000

  Jonathan Levinson   4/3/03,  8:29:06 AM
8:30 am EST: Initial Claims for week of 3/29, prior 402K, consensus 410K

10:00 am EST: ISM Services for March, prior 53.9, consensus 52.5

  Jonathan Levinson   4/3/03,  8:27:16 AM
"Sell too soon!" I can remember that being Jim's mantra years ago, the closing of his market wraps for months on end. As I look at the futures, NQ3M +14.50 and ES3M +9.75, that thought occurs to me with regard to my puts purchased well yesterday and sold before the close. Glad I did so. QQQ is currently trading 26.70, up from its 26.36 close. The US Dollar Index got ramped from below 100.00 at 3AM to its current 100.50 level. Gold (GC3M) is struggling to hold the 325 level.

  Linda Piazza   4/3/03,  7:38:04 AM
Building on gains in the U.S. markets and enthusiasm over coalition advances, the Nikkei opened up 98.41 points in Thursday's trading and climbed as high as 8178.24. Although financials such as Mizuho Financial Group plummeted, gains in exporters led the markets. However, by the morning break, the Nikkei had cut its gains by more than half. News of fierce fighting near Baghdad, including the downing of a Black Hawk helicopter and a Navy fighter jet, dimmed the enthusiasm felt earlier, and the Nikkei closed down 52.10 points or 0.65%, at 8017.75, 160 points below the day's high.

Also impacting the region was a World Health Organization advisory against traveling to Hong Kong or China's Guandong province. Travel-related stocks fell. Tech-related stocks remained higher, however.

The ECB kept rates unchanged today. Despite troubling economic numbers released this week across Europe, ECB policy makers had been signaling that they would need more time to assess the effect of the war with Iraq before deciding on a rate change. Economic numbers released this week include German unemployment figures that show an increase to 10.6% from February's 10.5%. Adjusted to meet EU unemployment standards, the jobless rate was 8.9%. Commerzbank in Germany announced Monday that it will cut 3,100 more jobs.

Except for the Czech Republic, all European markets currently trade green. The FTSE 100 trades up 36 points or 0.96% to 3789.40, the CAC 40 trades up 69.92 or 2.55% to 2813.80, and the DAX trades up 35.92 points or 1.39% to 2813.80.

  Jeff Bailey   4/2/03,  11:09:27 PM
The Index Trader Wrap has been posted: Link

  Vlada Raicevic   4/2/03,  11:09:19 PM
The Futures Trader Wrap has been posted: Link

  Steven Price   4/2/03,  11:09:12 PM
The Swing Trade Game Plan has been posted: Link

  Steven Price   4/2/03,  11:08:40 PM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

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