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  Jeff Bailey   4/8/03,  3:58:32 PM
Forest Labs (FRX) $54.26 +0.9% .... I've seen some comments on FRX in market monitor and gotten e-mail regarding p/f chart and levels of support.

I'm not a "candle sticker" so three-black crows? I've placed FRX in a MONTHLY/WEEKLY pivot matrix and see no correlative support levels between the two, but do see correlative resistance for this WEEK at WEEKLY R1 of $57.02 and MONTHLY R1 of $57.35.

P/f chart (per Linda's comments) remains bullish, and would look for reversal back higher after recent 3-box reversal.

First sign of meaningful weakness would be trade at $50 Link on conventional $1 box scale. Here are this WEEK's pivot levels (S2=51.78, S1=53.49, P=55.31, R1=57.02, R2=58.84.

We used the unconventional $0.50-box size to set up a bullish entry point at $51.50 and might look for this chart scale (unconventional) bullish support of $53.00 as support. Link

 
 
  Linda Piazza   4/8/03,  3:44:49 PM
As the end of the day approaches, both the NYSE and Nasdaq have seen low volume, with slightly over a billion shares traded on each. Adv/dec ratios show more decliners than advancers, with a .77 NYSE ratio and a .71 Nasdaq ratio. Down volume is 1.8 times up volume on the NYSE and 2.55 times up volume on the Nasdaq. New highs continue to outnumber new lows, a divergence from the other patterns. I'm always alerted when there's a divergence. In early January, I began to see just this kind of divergence--negative price patterns except for new highs/new lows, which were strongly positive. That's not an indication that the result will be the same this time, but only an indication that we might study whether this divergence continues.

 
 
  Steven Price   4/8/03,  3:44:13 PM
Swing Trade Signals
Looking for nuggets of wisdom in what I see. The TNX continues to walk its way down - bearish for stocks. Oil still up, but not by much - neutral/bearish. Gold up, but not by much - neutral/bearish. Dow holding back over 8300- bullish. Dollar down - bearish. It doesn't look like we'll get much to go on today, but if we close above 8300, conservative traders may want to close out and look to fight another day. I'll stick with the 1/4 short overnight, but I'm not so convinced as to recommend anything but a small position.

 
 
  Jonathan Levinson   4/8/03,  3:28:57 PM
Gold is showing some green here, up 50 cents in afternoon trading. No strength from QQQ, except that support is holding up well. TRINQ 1.85, QQV -.44, TICK.NQ +106. Little direction, just rangebound chop today. I will be holding my put positions overnight.

 
 
  Linda Piazza   4/8/03,  3:04:54 PM
The VIX has touched the current ascending trendline at four periods since forming: March 27, 2002; May 17 and 23, 2002; a few days in mid-January, 2003, ending January 14; and today. The March 27 touch actually occurred a few days after the March OEX 2002 highs near 595; the May touches occurred at and just after the May 2002 OEX high of 553.33; and the mid-January touches occurred about the time of the January highs, with the 475.09 high occurring one day after the last touch. Does that mean the markets have reached an interim-term high? Not necessarily. Ascending trendlines are eventually broken. This could be the time that happens. It's not yet certain whether the VIX ascending trendline will be broken to the downside, provide a bounce point, or serve as a support for several more days before the VIX heads one direction or another. What is certain is that this could be a decisive level for the VIX, and, by extension, for the markets.

 
 
  Jonathan Levinson   4/8/03,  3:04:26 PM
FVX closed down 8 bps, near its low of the day. HUI and XAU are both in the green. QQQ is down to 26.05, no challenge to its earlier lows but rejected at the highs. This is more rangebound trading, but bears are happy to see the 26.20 (call it 26.25) resistance area reinforced by that last failure.

 
 
  Linda Piazza   4/8/03,  2:35:21 PM
European markets closed as follows: The FTSE 100 closed down 67 points or 1.70% at 3868.80, the CAC 40 closed down 42.17 points or 1.44% at 2893.51, and the DAX closed down 41.15 points or 1.46% at 2767.79.

 
 
  Jeff Bailey   4/8/03,  2:22:05 PM
Dow Industrials (INDU) 8,334 +0.4% ... "bulls need to be careful" right here on new positions. See that 38.2% retracement from "conventional" retracement? This is the upper-end of our little "zone of resistance."

I'm not really seeing a lot of "confirmation" from the 10-year YIELD ($TNX.X) 3.946% at this point to really help "explain" the current bid in equities.

 
 
  Jonathan Levinson   4/8/03,  2:20:36 PM
If QQQ doesn't break through and make a run for 26.40, then this formation becomes a rising wedge on the 3 minute candles, according to my very cluttered chart. A break below 26.12 should give the downside a kickstart if it happens from here. So far, the trendline at 26.20 is serving as support. FVX -7.1 bps, not confirming the bullishness in the Qubes.

 
 
  Linda Piazza   4/8/03,  2:16:04 PM
The OEX still climbing the underside of that violated rising regression channel, the VIX hovering just above its ascending trendline, the VXN just above 41 support, the SOX trading almost even with its converging simple 200 and 100-dma's: something has to happen soon. Doesn't it?

 
 
  Steven Price   4/8/03,  2:14:55 PM
Swing Trade Signals
I've been having some chart problems, so maybe that's the reason for the divergence on my readings (GRIN). I really don't have bias right now. My reliance on bullish percents has been reliable lately and has had me leaning bullish, but yesterday's action told me to widen my view and shook my confidence that we would head higher. However, if we do head higher and I am stopped out, I may shift back to relying on those percents until they show a sign of a reversal.

 
 
  Linda Piazza   4/8/03,  2:08:08 PM
Reader Question: It looks to me that FRX's chart has turned bearish both on the candles and the pnf. I am wondering where we can expect the support to be? The 50 dma is at 51, but I'm wondering if you see potential for a larger correction? When do you use the 50dma and when do you use something else? Is that a three dead crow pattern that we have just completed? If so, doesn't that foreshadow a LARGE decline?

Response: We all know that Jeff is the P&F expert, so I won't embarrass myself by giving too many specifics of the FRX P&F chart, except to say that although FRX has recently turned down into a column of O's, it's still on a P&F buy signal, and it's also making a series of higher lows on that chart. It's above the bullish support line. So far, that looks bullish, although I haven't checked the sector chart for this stock.

I thought this stock might be particularly interesting because of the reader's astute mention of the possible three-dead-crow pattern. I'm familiar with the term "three black crow," but I assume it's the same pattern. This is a pattern in which three consecutive days print black candles (or red, in the case of those using Q-charts and many other charting services). Other conditions include the following: each day's close is below that of the previous day's close, each day's opening value is within the body of the previous day's candle, and each day closes at or near its low. A couple of those conditions were not met. One day's candle sprang up, closing near the middle of the day's range rather than at the low. One day's candle opened minimally above the previous day's candle.

Even if the pattern doesn't fit the classic "three black crow" pattern, it's certainly close enough that the bearish implications can't be ignored and the stock's pattern on the charts "appears" somewhat bearish, too. This is particularly important since this "almost" three-black-crow pattern formed at or near the January high, so that there's also the potential for a double-top pattern. That pattern wouldn't be fulfilled until and if FRX fell below the February low, however. Is that likely to happen?

Most oscillators are turning down, so it looks as if it's possible that FRX is due for a pullback, although we all know that oscillators can turn right back up again in mid-fall, too. Will it be more than a pullback? The reader mentioned the 50-dma near 51, and as I study the chart, I see that this MA has been important over recent weeks. I also notice that an ascending trendline can be drawn from the February low through March lows and up to the current time period, with that line crossing just above the 50-dma. The reader is wise to look at first support in that area, especially with the P&F chart still showing a buy signal. I note that the 21-dma made a bullish cross of the 50 near the end of March. The 50, however, has made a bearish cross of the simple 100-dma, sounding one bearish warning, although both now slant up, as do both 200-dma's. Those 200-dma's are somewhat far below current prices, however, and the February to current period supporting trendline is somewhat steeper than the more sedate longer-term trendline (July-to-present) that crosses just above the exponential 200-dma.

With the current P&F buy signal, one possibility is that FRX will steady near its 50-dma and the newest and steepest ascending trendline near 51, so that this reader could assess willingness to stay in for a test of that area. An alternative would be a move below 49, which would give a new P&F sell signal. If I were in a bullish trade, I'd also assess whether my account management style, option choice, and other matters also allowed me to feel comfortable with a deeper pullback to the longer-term and more sedate trendline and the 200-ema, between 47.26 and 47.50, as that's a possibility, too.

 
 
  Jonathan Levinson   4/8/03,  2:03:10 PM
A fews weeks ago the trend was to buy in the afternoon because of the overnight news factor and I'm now wondering if the new trend is to sell off in the afternoon from fear of companies reporting after the bell. I'm looking for a move down this afternoon to see if I'm right. This market has been quite unpredicatable over the last few weeks with the exception of a few moments in the day. I think late afternoon has been one of the moments. We'll see soon enough.

Thanks for sharing your observations.

QQQ is challenging its highs of the day here, at resistance.

 
 
  Jeff Bailey   4/8/03,  1:57:52 PM
01:00 Update posted at this Link

 
 
  Jonathan Levinson   4/8/03,  1:55:45 PM
It feels like a countertrend bear flag or pennant, a pause on the way down with some minor upside. However, like Steven, I'm susceptible to wishful thinking here and am watching carefully. Unfortunately, the market's giving us little to watch for the moment.

 
 
  Steven Price   4/8/03,  1:51:58 PM
Swing Trade Signals
I'm having a hard time reconciling what I see today. Maybe it's wishful bearish thinking, but I see oil up, gold up, bonds up, yields down and the dollar down. So why are the equities holding? The TNX looked as though it was about to collpase, but bounced again. I think a break below 3.94% in the TNX could signal a wave of equity selling, but so far it has bounced at that level.

 
 
  Mark Phillips   4/8/03,  1:48:19 PM
VIX Hi Linda. I'm glad you mentioned that. I had a reader question about that 17% calculation yesterday and it turns out that I did the calculation wrong. Not sure how I screwed up and arrived at the 17% number, but it turns out that the correct number is actually about a 32% deviation from the 200-dma. OOPS!

At any rate, based on the current level of the 200-dma (35.90), that gives an appropriate floor near 24.4. Sorry for any confusion this caused. Of course, we still have the ascending trendline from the lows last March that lines up near 29, so I think that level is still in play. If that trendline is violated, then I think it is reasonable to expect a VIX down near the 26 level, where we saw that double bottom in November/January. In my opinion, it would take a powerful upward move in the market in order to give us a VIX below 26, and I would expect to see the SPX challenging the 940 or 960 levels I spoke of in last night's article to correlate with a VIX that low.

 
 
  Kent Barton   4/8/03,  1:39:54 PM
AT&T (T) $15.09 +0.22: Last night we suggested on PremierInvestor that new entries could be targeted on a violation of the multi-year low at $14.84. But instead of breaking down this morning, T climbed back towards the recent $15.00-$15.20 trading range. Does this constitute a successful test of the lows? At this point it's a little early to say for sure. It seems doubtful that T would be able to hold near current levels if the Dow began to head lower. However, the oversold daily stochastics (5,3,3) are hinting that the latest downward leg may been completed. Some traders might want to saddle the stock with a tight stop-loss slightly above yesterday's high of $15.58. Our stop is currently set at $16.04.

 
 
  Linda Piazza   4/8/03,  1:34:32 PM
If I'm remembering Mark's article correctly, he once calculated that the VIX typically corrects back toward its 200-dma no later than a 17% deviation below that moving average. If I've done my calculations correctly, the VIX just briefly bumped below that 17% deviation (35.902 simple 200-dma - 6.10334 (17%) = 27.79866) before inching back up to the current 29.81. That supporting trendline lies just below, too, between 29 and 29.40, depending on how you draw the line. This could be a critical juncture for the markets here.

 
 
  Jonathan Levinson   4/8/03,  1:33:28 PM
I'm switching between different charts, and see 1390 COMPX / 26.20 QQQ as the challenge for bulls here, the top of the range. FVX is staying low, -6.6 bps, taking the edge off the low volatility measures, QQV currently -.99.

 
 
  Steven Price   4/8/03,  1:14:49 PM
Swing Trade Signals
We are starting to see a succession of higher lows intraday, but the early morning bounce high has yet to be broken. The activity of the last couple of hours looks slightly bullish from here, but I think we still seeing churning, rather than decisive moves. Oil futures are back in the green, which I think is bearish for stocks, but yields have been mostly flat.

 
 
  Linda Piazza   4/8/03,  1:12:54 PM
Random observations: As markets move up, watch the SOX 307.50-308 area for signs of strength or weakness, as this is the location of the simple 100-dma (307.97) and 200-dma (307.44). At 305.85, the SOX so far remains below these MA's. The SOX is important to us as it's one gauge of tech strength.

Turning to the VIX five-minute chart, I note that the VIX broke through its own bear-flag formation about twenty minutes ago, and currently rises to test the bottom of that formation again. Today's current 29.88 low is just above long-term support for the VIX, so it will be interesting to see how the VIX level changes as the day progresses. Is the current move up a bounce from that support that will signal a new move down in the markets, or will this be a failed test of that VIX bear-flag formation that will send the VIX back down to test support again?

On the OEX 60-minute chart, I note that the OEX keeps rising to test the bottom of that upward-slanting regression channel (not a bear-flag pattern since it didn't occur after a sharp fall and other factors), but so far, still appears to be failing in those tests. Of course, if you're trading bearish and the OEX keeps climbing the underside of that regression channel, that's still not helping your plays.

 
 
  Jeff Bailey   4/8/03,  12:54:30 PM
3M (MMM) $133.28 +0.54% ... here we go with MMM showing some gains above this morning's highs.

Let's see if bond market "wakes up" a bit and confirms bullishness. Right now, hints of short-covering stepping up.

 
 
  Jeff Bailey   4/8/03,  12:53:03 PM
Dow Industrials (INDU) 8,325 +0.29% .... looks to challenge this morning's high of 8,330.16 here. Dow breadth starting to improve with 19 gainers and 11 decliners. Weakness from HQP $15.76 -2.83% starting to see modest lift from the low, while earlier strength in Altria (NYSE:MO) $30.58 +5.37% builds.

 
 
  Jonathan Levinson   4/8/03,  12:48:49 PM
We are looking at a pennant formation on the 3 minute QQQ, with a pattern of lower highs and higher lows. This is generally a continuation pattern, and so should resolve lower, but that rangebound support / resistance struggle makes me unsure, given that 1380 COMPX is far stronger support than 1390 is as resistance. We should see a resolution soon enough.

 
 
  Jeff Bailey   4/8/03,  12:44:58 PM
3M (MMM) $132.96 +0.3% ... Stock trading just about where it was Friday afternoon when subscriber was wondering if he should close out gain in an option. At the time, thoughts were that stock might rally to $134 by the close, and stock did move higher to close $133.98, then gap higher on Monday.

Point of interest here perhaps to get feel for Dow Industrials and SPX/OEX with stock at similar level. Would look for a move above morning high of $133.22 to hint of bullishness coming back into equities. Today's trading below Friday's low a slight sign of near-term softness in equities, but fractional. I would think today's lows are in on MMM.

As a benchmark... Dow Indu 8,305 +0.4%, or +4.8 points here.

 
 
  Linda Piazza   4/8/03,  12:41:48 PM
In addition to the other levels of OEX support I've detailed near 444-445, the nearly horizontal simple 100-dma lies at 444.96.

 
 
  Mark Phillips   4/8/03,  12:27:53 PM
ROOM $54.85 (+0.14) While the broad market has been chopping in a fairly tight range today, it's nothing compared to what is happening with ROOM. Trading volume has been almost non-existent (about 15% of the ADV) today as the stock drifts in an $0.80 range so far. I have a hard time coming to any meaningful conclusions on this one based on today's trade. It can't really lift very far off support, but neither is there much selling interest. That low volume is certainly a point of concern, as it wouldn't take much volume to come in and really move the stock under those conditions. I still favor entries on failed rallies below the 10-dma (now at $56.71), but need to caution that in a light volume drift, the stock is susceptible to a sharp move in either direction, possibly driven by whatever the next breaking news is related to the SARS epidemic.

 
 
  Jonathan Levinson   4/8/03,  12:13:57 PM
While today feels bearish to me, there has been no breach of QQQ 25.90-26.00 support. The TRINQ is up just enough to balance out some of the recent low readings, but it has not shown any significant selling pressure so far. QQV is still negative and VXN is flat. Only treasury yields are really reflecting a bearish tone for equities, but at -6.1 bps on the FVX, it's not showing anything approaching a buying frenzy in treasuries. Caution remains the order of the day.

 
 
  Jeff Bailey   4/8/03,  12:09:07 PM
Junk Bonds One security a trader can monitor from time to time during the day to perhaps get a feel for the "junk bond" market is the Pacholder High Yield Fund (NYSE:PHF) $7.68 -0.5%. This is a closed-end fund that trades like a stock. The fund pays an $0.08 dividend PER MONTH and recently declared an $0.08 dividend for March. Link . With PHF trading $7.68, this has the effective YIELD at 12.5%. Since December 31, PHF is up roughly 24.6%, not including 3-months dividend of $0.24.

In my mind, equity bulls would like to see such a "fund" hold above $7.50. I'm actually thinking of picking up a position on a pullback into $7.25-$7.50 for the retirement account. There may be other closed-end funds similar to this out there. I'm familliar with it as an old client of mine held some in his retirement account as an income producing instrument back in the early to mid-90's when equities were doing very well.

 
 
  Mark Phillips   4/8/03,  12:00:53 PM
Hey LEAPS Traders!

Noting that EMC is surging sharply higher in the past 30 minutes, once again inching over the $8.00 level and nearing yesterday's intraday high of $8.10. The company issued its Q1 guidance this morning, stating that it expects to post at least $0.01/share on revneue of $1.35-1.40 billion, which appears to be in line with the consensus view of $0.01/share and $1.38 billion in revenue. My take is that the market is encouraged by the fact that it isn't a warning! As noted over the weekend, if EMC manages to hold above the $8 level at the close, I would recommend lifting stops to $6.50, just below its intraday lows in mid-March. Take note of the 200-dma at $6.76, which is just now starting to curl upwards and should add further support on any significant pullback.

 
 
  Linda Piazza   4/8/03,  11:53:30 AM
With the OEX attempting to climb back above near resistance and the VIX dropping toward the supporting lower line of its long-term wedge, I have the feeling that something of import should happen soon. Either the VIX is going to drop right through the bottom of that wedge, signaling another leg up in the rally or the VIX will find support and the OEX hit resistance, and another leg down in the longer-term bear market will begin. Either way, it should prove interesting. Of course . . . there's always the possibility that the VIX and OEX could just meander around a bit in their respective wedges.

 
 
  Jeff Bailey   4/8/03,  11:53:11 AM
10-year YIELD ($TNX.X) 3.967% ... finding some morning YIELD support in the 39.51-39.54 area and seeing a little more selling in the benchmark bond. Intra-day level I'm setting an alert at is last hour's YIELD high of 39.83 or 3.983%. A move above their could spark an equity rebound. Per the 11:00 Intraday update, and chart of SPX, that would be approximately SPX 883.

SPX trading 880 here.

 
 
  Jonathan Levinson   4/8/03,  11:51:08 AM
I'm now hearing that, per MSNBC, Al Jazeera denies reporting Saddam is dead.

 
 
  Jeff Bailey   4/8/03,  11:49:49 AM
Bull Confirmed Yesterday's action was enough to have the very broad NYSE Bullish % ($BPNYA) Link reversing back up into "bull confirmed" status!

This now has all of the Bullish % NDX, OEX, SPX, COMPQ and INDU back in X as demand continues to outstrip supply as more and more stocks generate p/f buy signals.

A review of the time line has been... NDX "bull alert" 3/17/03, INDU "bull alert" 3/17/03, SPX "bull confirmed" 03/18/03, OEX "bull alert" 03/19/03, COMPQ "bull confirmed" 04/03/03 and finally NYSE "bullc confirmed" 04/17/03.

 
 
  Jonathan Levinson   4/8/03,  11:48:44 AM
The CRB is quoted at 230.64, up .1%. Spot gold is up 1.10 to 322.30/oz, and the HUI is up 1.05 to 120.56, XAU +.24 to 64.06.

The COMPX is trading just above the lows, rangebound for the moment as the market tries to decide which s/r zone to violate next. COMPX 1380 below, 1390 above. The TRINQ at 1.78 shows steady selling breadth, TICK.NQ -39, with QQV down .48 to 36.40. I managed to nail another 1/8th of my put position near the high of 26.18 QQQ or so, and am happy for the moment. I will wait for a trend to assert itself before going any further. I paid more for the same contracts my new account refused to allow me to purchase yesterday significantly higher, but if this is indeed a significant topping zone, there should be plenty of downside left. In the event that it is not, there is relatively little capital exposed, and I have yesterday's range for guidance.

 
 
  Linda Piazza   4/8/03,  11:37:26 AM
Note that the VIX is sharply lower today, down to 30.24 as I type. Just below (near 29.40, and rising) is the lower line of the wedge Mark has pointed out in some of his wraps. If the VIX continues to drop, that lower support line might be tested today.

 
 
  Steven Price   4/8/03,  11:35:40 AM
Swing Trade Signals
Oil futures (CL03K)remain down on the day, which is a departure from this morning's action. If that price can move higher, the short play could have some potential, but right now it is holding steady.

 
 
  Jeff Bailey   4/8/03,  11:34:46 AM
11:00 Update posted at this Link

 
 
  Linda Piazza   4/8/03,  11:28:16 AM
Here's an update of a 60-minute OEX chart shown yesterday. Note that the last hour's bump up in the OEX brought it up to test both the underside of the broken regression channel that began forming on March 21 and the 21-pma, pictured in blue. So far, the OEX has failed from that test, but a move below next support at 444-445 would help confirm that failure. Below that is support from the megaphone shape, outlined in green, coinciding with historical support. Link

 
 
  Mark Phillips   4/8/03,  11:15:12 AM
BVF $40.75 (-0.46) Interesting action in this Call play. After gapping up and consolidating near the $42 level last week, the stock has pulled back to fill that gap this week. Now trading below the bottom of the gap, but just above our $40.50 stop, I'm having a hard time getting a good read on the stock. I expected the $41 level to provide support on a pullback and the fact that it didn't has me a bit more cautious on the play. Aggressive traders could still target a rebound from current levels for new positions. But I would feel more comfortable in seeing BVF back above the $41 level before taking the plunge.

 
 
  Jonathan Levinson   4/8/03,  11:13:53 AM
I'm hearing an unconfirmed rumour that Al Jazeera is reporting Saddam dead.

 
 
  Linda Piazza   4/8/03,  11:11:52 AM
Most volume patterns validate the selling seen in the markets, with adv/dec ratios at .56 for NYSE-traded issues and .63 for Nasdaq-traded issues. Down volume is three times up volume on the NYSE and 2.64 times up volume on the Nasdaq. These levels are sustainable. New highs remain above new lows on both, a divergence from the other patterns, but the proportion by which news highs predominates is not as large as it had been previously, so perhaps there's a change underway there, too. This divergence bears watching, however, if it continues. Total volume is 313 million shares on the NYSE and 402 million on the Nasdaq.

 
 
  Steven Price   4/8/03,  11:11:51 AM
Swing Trade Signals
If that's the "Saddam is dead" rally, then maybe the economy is back in play. I realize playing against the bullish percents, which moved higher again yesterday is a play against some internal strength, but yesterday's action certainly looked like a reversal on the daily charts. The war reactions are why I am playing with such small positions. Traders looking for a more conservative stop can target the 200-dma in the Dow, which now sits at 8359. I am certainly less convinced about the downside after this spike, but I don't think it is as powerful as I would have expected.

 
 
  Jonathan Levinson   4/8/03,  11:02:55 AM
Thanks to Matt for catching an intersting divergence from the fed's website and its news release relating to its open market ops for the day. The fed website says ON RRP, which is either a reverse repo or a typo on the "R". I belive it's the latter in light of the following:

Fed says buying Treasuries dated 1/31/05-2/15/06

Tuesday April 8, 10:31 am ET

NEW YORK, April 8 (Reuters) - The Federal Reserve said on Tuesday it was buying Treasury coupons dated Jan. 31, 2005 through to Feb. 15, 2006. The Fed excluded two issues, details of which are available on the New York Fed's Web site Link.

Earlier the Fed added a combined $2.25 billion in temporary reserves through overnight repurchase agreements. Federal funds were trading at 1.25 percent, matching the central bank's target for the rate.

Link

 
 
  Jeff Bailey   4/8/03,  10:45:14 AM
Relative Strength chart of S&P-500 vs. 10-year Treasury PRICE ($UST) Link did not generate a RS "buy signal" yesterday. I'm guessing that it may have during the early part of the day yesterday, but didn't make it by the close as Treasuries saw enough late-session buying and stocks selling to bring things back near unchanged.

Equity bulls really want to get a RS buy signal to hint of further shift from bonds toward stocks.

 
 
  Jonathan Levinson   4/8/03,  10:32:08 AM
The COMPX/QQQ are holding on by their fingernails here, 1377/ 25.90. Below that is an airball zone to next support. The FVX is down 6.4 bps, and the market is just hanging here. TRINQ 2.06, QQV +.24, TICK.NQ -270.

 
 
  Linda Piazza   4/8/03,  10:30:13 AM
The SOX has dropped through its simple 200-dma and 100-dma's. At 303.22 as I type, this index now trades in a zone of congestion that has provided support in the past. However, daily 5(3)3 stochastics have rolled, 21(3)3 stochastics have made a bearish kiss in mid-rise, and RSI has rolled. It seems we may be getting a test of the strength of the recent rally. If this is merely a pullback, the oscillators should cycle down rather quickly on a minimal move down or even on consolidation. If the SOX instead falls precipitously and particularly if it makes a new short-term or interim-term low, bulls should be concerned. For several weeks, I've been commenting that OBV was not rising with rising SOX levels, a troubling development for those trading bullish.

 
 
  Jeff Bailey   4/8/03,  10:26:12 AM
10-year YIELD ($TNX.X) 3.952% ... holding right in a "zone of support" from WEEKLY and Conventional retracement. Shows "fill of gap" from yesterday, but look to me as if WEEKLY Pivot is in play of 3.903%. Link

 
 
  Steven Price   4/8/03,  10:25:23 AM
Swing Trade Signals
No real follow through on the breakdown and we got a bounce in yields. So far the yield bounce is a lower high and the Dow bounce took us just shy of 8300 (8296). Ah, the fun of trading in a news driven market. If the Dow remains below 8300, preferably with a close there, I'd be plenty happy with the small short. A close back above 8300 would have me a little nervous. Still lots of time to sweat today.

 
 
  Linda Piazza   4/8/03,  10:21:03 AM
This morning, the OEX fell out of the upward-slanting regression channel that had been containing its prices since March 31. Currently, it's rising to retest the bottom of that regression channel, however, and a sustained move over 448.50 would move it back into the channel. As I often say, it's the retest that shows us more about the strength or weakness of a movement. If the OEX fails to move back into that channel, 444 is next support, with the descending megaphone-shaped support below that, at 441.30, but descending through the day. This 441.30-442 level also corresponds to historical support.

 
 
  Steven Price   4/8/03,  10:20:32 AM
Specifically, when there is talk about the Fed cutting rates, invariably somebody computes a percentage probability, as in there is 35% chance the Fed will cut rates. 1) HOW is that percentage computed - what's the formula? 2) Is there a public site where anyone can see the raw figures and do the math themselves? Thanks, Mark

Mark,

You can pull up a chart of FF03K to see how the Fed Fund Futures are trading for the month of May. You can substitute M for June or Q for August. The next FOMC meetings are May 6, June 24/25 and Aug 12.

By subtracting the FF rate from 100, you will see how they are pegging the rate for that month. (i.e. The May FF03K reading is 98.845, which would correlate to a rate of 1.155 vs the current rate of 1.25).

the current rate is 1.25%. A 1/4 point reduction would put the rate at 1.0%. Anything below 1.125 would be more than a 50% chance of a cut, while anything above 1.125 would be less than a 50% chance of a cut. You can do the math for the levels within the range of 1.0 (100% chance) and 1.25 (0% chance).

 
 
  Mark Phillips   4/8/03,  10:13:27 AM
LLL $37.34 (-0.91) While not exceedingly weak, the Defense index continues to deteriorate this week, and that is helping our bearish play on LLL. Yesterday's close saw the stock still holding just above the $38 level, but that level has cracked this morning and LLL is now approaching our first downside target of $37. Conservative traders can look to harvest partial gains on a touch and bounce from that level, or at the very least, tighten stops to just above yesterday's intraday high. We'll be lowering our official stop to $41.50 tonight, as that is just above the descending trendline. Recall that our eventual downside target is $35.50 and if that is achieved, we'll recommend exiting the play with a nice quick gain.

 
 
  Jonathan Levinson   4/8/03,  10:12:53 AM
Al Green has just added 2.25B via overnight repo.

 
 
  Jonathan Levinson   4/8/03,  10:10:55 AM
The put to call ratio has printed .92. The FVX is down 6.4 bps. It feels like the market wants to bounce, except for the price, which feels very heavy. I got my first 1/8 June position, and hoping to get a chance to leg in at better prices. The 10AM data was bad news, and I half-expected a plunge protection bounce, but it hasn't come so far.

 
 
  Jonathan Levinson   4/8/03,  10:03:36 AM
News: FEB. WHOLESALE SALES UP 0.5% VS. 1.4% IN JAN.

FEB. WHOLESALE INVENTORY-SALES RATIO RECORD LOW 1.22

 
 
  Jeff Bailey   4/8/03,  9:58:07 AM
Pivot Matrix for today. Link

Bulls may want to exercise some caution today. Yesterday, SPX and OEX both traded WEEKLY R1 and MONTHLY R1 (just above) and that seems to have been where the rally ended. I'm looking at WEEKLY Pivot support right now.

 
 
  Steven Price   4/8/03,  9:58:03 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the 1/4 short when the Dow traded 8273 at 9:57:10. Stops are set at 8415.

 
 
  Jonathan Levinson   4/8/03,  9:54:24 AM
QQQ is putting in the sorriest bounce I've seen in a long time off 25.97 or so, but the move is early. FVX is not moving off its lows, down 5.4 bps on the day. I'm bidding on a 1/8 June QQQ put position, but am not chasing it. A bounce from here would be expected, but so far, nothing.

 
 
  Steven Price   4/8/03,  9:46:20 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
With yields not getting much of a bounce and equities not holding either, I am going to risk a small short position with a tight stop. Go short a 1/4 position at Dow 8273. Set stops at 8415.

 
 
  Linda Piazza   4/8/03,  9:39:15 AM
At 309.41 as I type, the SOX challenges a convergence of the simple 100-dma at 307.996 and the simple 200-dma at 307.45. The SOX has dipped as low as 308.33 this morning.

 
 
  Jonathan Levinson   4/8/03,  9:33:24 AM
I prefer to short high and buy low, but if 25.90 QQQ gets taken out to the downside, I'll evaluate jumping on some puts from there.

 
 
  Jonathan Levinson   4/8/03,  9:31:30 AM
Flat open on the COMPX< TRINQ 1.5, QQV +.89, TICK.NQ -162.

 
 
  Jeff Bailey   4/8/03,  9:28:11 AM
09:00 Update posted at this Link

 
 
  Steven Price   4/8/03,  9:24:18 AM
Swing Trade Signals
With yields down and futures higher, I don't see enough confirmation to plan a trade on the open directionally. My guess is that we are eventually headed lower. I would have expected a bigger bounce on news that Saddam might really, really be dead this time. However, after yesterday's intraday sell-off, we may have now seen our war rally. I'd like to hang my hat on the bullish percents and look to buy a pullback, but I just don't have the same confidence in long positions I did yesterday morning or last week, after yesterday afternoon's action. I don't want to put too much weight on anything in the war trading environment, so I'm going to keep an open mind, but I'd like to at least see equities and yields headed in the same direction before committing.

 
 
  Jonathan Levinson   4/8/03,  8:58:47 AM
The fed is taking current developments very seriously: Link

 
 
  Jonathan Levinson   4/8/03,  8:51:16 AM
Yields are all down today, with FVX -3 bps, TNX -3 bps and TYX -2.6 bps.

 
 
  Jonathan Levinson   4/8/03,  8:46:11 AM
I was hoping for a nice pop today, but the lustre is fading quickly, with ND futures now up 3 and ES futures up 3.75, QQQ 26.16 after trading the 26.40 level 45 minutes ago. The US Dollar Index is back in the 100.50 area, yet gold is trading unchanged at 321.20.

I have been very bullish on gold, and continue to so be, but I'm increasingly coming to doubt the wisdom of betting heavily on it. Don't worry, goldbugs, it's only for very cynical reasons. Until the world begins to actively reach for gold and silver, these two commodities will continue to suffer from central bank interventions. No central banker likes to see gold appreciate in value, as it's an indictment of his/her fiat money. It's easier for Al Green to print dollars and dump or lease gold to cover his tracks. But commodities as a whole? What central bank has stores of coffee, fcoj, sugar, cotton, etc.? And as dollars continue to be devalued, commodities should continue to appreciate. I currently hold a position in a managed futures mutual fund that is bullish on commodities, and don't recommend buying or selling such funds- just food for thought.

 
 
  Linda Piazza   4/8/03,  7:36:43 AM
Good morning. Hopes that the ongoing Bank of Japan meeting would initiate policy changes that might help small and mid-sized businesses weren't sufficient to send the Nikkei higher at the open in Tuesday's trading. After the declines in the U.S. markets yesterday and numerous earnings warnings to start Tuesday's trading, the Nikkei opened down 75.18 points to 1874.80, and fell another 25 points by midday. Matsushita Electric Industrial Co, the world's largest consumer-electronics maker and manufacturer of Panasonic and National products, said that it would report a net loss for the second year in a row. This is the first time the company has seen a loss two years in a row since its founding more than eighty years ago. Without revising its earnings forecast, Hitachi said it would book a 55.3 billion yen loss on shareholdings. Nintendo had earlier lowered its full-year profit forecast, mentioning weak sales of GameCube machines. Early Asian trading may also have been affected by a U.S. report showing shrinking consumer borrowing for February, says Bloomberg. About midday in Asian trading, news began circulating that coalition forces had struck a "leadership target," a target where Hussein and his sons were reportedly meeting with other Iraqi leaders, and that all might be dead. U.S. S&P futures saw an immediate 12-point rise, but the Nikkei still ended the day down 118 points or 1.4%, at 8131.41.

The Bank of Japan did state that it would consider buying asset-backed commercial paper, something it has already been doing through repurchase agreements. The BOJ's decision could promote the market for the asset-backed commercial paper, issued by companies to raise short-term funds. The hope is that the ability to raise short-term funds in this manner might help small companies avoid bankruptcy.

As I type, U.S. futures have lost some of their gains, and most European markets trade down as market participants look ahead to the end of the conflict in Iraq and gauge the likelihood of a quick economic recovery. European banks and media companies dropped, as did U.K. retailer Marks & Spencer Group and German luxury carmaker Bayerische Motoren Werke. U.K. numbers recently showed lowered consumer spending, affecting revenue growth at the U.K. retailer, and Germany numbers showed lower industrial production. These worries spread to other companies dependent on consumer spending. Currently, the FTSE 100 trades down 34.30 points or .87% to 3901.50, the CAC 40 trades down 14.86 points or .51% to 2920.82, and the DAX trades down 16.82 points or .60% to 2792.12. All have climbed off their day's lows, however.

 
 
  Jonathan Levinson   4/7/03,  11:02:33 PM
The Index Trader Wrap has been posted: Link

 
 
  Vlada Raicevic   4/7/03,  11:02:24 PM
The Futures Trader Wrap has been posted: Link

 
 
  Steven Price   4/7/03,  11:02:17 PM
The Swing Trade Game Plan has been posted: Link

 
 
  Steven Price   4/7/03,  11:00:48 PM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

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