Option Investor
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  Jeff Bailey   4/10/03,  10:29:59 PM
S&P futures (sp03m) settled at 871.70. As I leave, ticking softly at 872.10 with post-settlement high of 873.80 and low 871.20.

  Jeff Bailey   4/10/03,  10:27:45 PM
Pivot Matrix for tomorrow. Link

  Steven Price   4/10/03,  5:49:58 PM
I'm still holding May 5 puts here. Is it prudent to just get out or wait till there is a fade in the price?

This morning's development in ROOM was unexpected and unfortunately this type of activity sometimes gets in the way of what otherwise looks like a good play. The stock violated our stop loss and took us out completely. Depending on what strike you purchased and what the current bid is in the option, there are one of two strategies.

1) Hold the puts for a lottery play incase the takeover deal runs into trouble between now and expiration, or in case something happens that is extremely bearish for the company, regardless of the buyout, that would hurt the future value of the company. I don't recommend this strategy, unless you are playing it strictly as a lottery play.

2) Use a pullback in the stock after today's run to dump the options and mitigate the loss.

These downside puts will erode the longer you hold them, so sometimes you just gotta fold 'em. If the stock doesn't pull back after the run, I'd probably still dump them to avoid losing any more premium. However, if the bid were no more than $0.05-$0.25, I might hold them as a lottery play, but that's just me. The only scenario worse for option holders than a buyout for stock is a byout for cash. In that case, premiums usually go to zero, since the price is set and not subject to the price of the acquirer.

  Jeff Bailey   4/10/03,  5:28:57 PM
QLogic (QLGC) $38.32 +2% ... Jeff: dsclosure...currently hold short position in qlgc...jim's week-end high risk short(I think)....stockpickreport.com has short rec'o....shaffers newsletter has is as a contrarian call because of high put vol..looking for it to blast thru 40...and you like a day-trade!!WHEW!...What is a trader to do???..cp

Aha! I watched the stock on Level II today and there definately looks to be an active short in the stock. They were pretty firm in their belief too, and this is why I'm looking to use the break above $38.70 as trigger point. Now... I think I'm going crosseyed as yesterday's trade was NOT an inside day (of Tuesday's range). However, today's range $38.50-$37.60 is an "inside day" of Wednesday's range $38.70-$37.41.

This "inside day" pattern is one that a trader might look to play (I have a bullish slant). 1) The semiconductor sector is "bull confirmed" and QLGC trades ABOVE trend, but is still one of the stocks that isn't on a "buy signal" and would only give a "buy signal" at $41.00 Link 2) The break above the "inside day" may become a trigger point for jittery bears (NASDAQ-100 holding an important support level, SOX trading psychological support of 300, but just under the 200-day SMA and closely watched resistance level by sector bears).

In essence... tension's might be a little "elevated" for this stock and just trying to look for an action point (to the upside) where a "surge" in demand might trigger price action.

Same could be said for BEARISH trader and "inside day," but I'm more of a p/f guy and believe in the trend and bullish % indicators.

I've also looked at the RS chart of QLGC vs. the SOX and it is currently showing that it is on a RS "buy signal," but column of O's. Today's closing reading is 12.65 and pretty close to 13.00, which would have RS back in a column of X. Here's the RS chart of QLGC vs. the SOX Link

  Jeff Bailey   4/10/03,  4:57:40 PM
Geron Corp. (GERN) $4.10 -15% ... Jeff: With today's action in GERN do you still hold your bullish future outlook?

Hmmm.... I didn't see today's decline and news that the company planned to sell 4 million shares at $4.60 from Tuesday April 8th. My thinking is that like most "speculative" biotechs with promising drugs/therapies in the work, that are yet to see any type of revenue, that GERN is selling stock to generate some capital to continue to fund operations. I would have preferred them to sell 2 million shares at $7.00 as the willingness to sell at $4.60 is perhaps a statement that they see the stock as being "richly valued." Either that, or they are looking over their shoulder and doing the "right thing" considering how the SEC views any type of selling of stock in highly speculative venture.

I will stay as bullish now as I was at $4.00 on the 3-box reversal up, with stop at $3.00, which would be a double-bottom sell signal. Link I'm not sure what has happened to the bearish resistance trend that was broken to the upside at $5.00 and the bullish support trend that should be showing at $2.25.

Disclosure: I continue to hold small SPECULATIVE position in the GERN Sep. $5 calls (GQDIA)

  Jeff Bailey   4/10/03,  3:59:13 PM
Equity bulls have to like what they're seeing into the close. At least I do.

5-minutes left, but NDX 1,034 +1% is going to fight to try and close that 1,033 level from the WEEKLY 61.8% retracement.

S&P Retail Index (RLX.X) 287.53 +1.83% taking back yesterday's losses ahead of tomorrow's March retail data, despite some weak looking same store sales numbers from various retailers.

A little bit of selling in Treasuries on a day that stocks pulled back to some important levels of support.

S&P Banks Index (BIX.X) 274 +1.6% gets a strong session and now back at Friday's closing levels.

  Jeff Bailey   4/10/03,  3:44:49 PM
Same book, different cover Wall Street Journal reports that Worldcom will change its name to MCI.

Maybe AT&T (T) $14.32 -2.38%, which traded another 52-week low today will change its name to Mabell? The reverse stock split hasn't helped.

  Kent Barton   4/10/03,  3:21:48 PM
Per Jonathan's 13:31 post, here's a detailed report on that suspected plutonium discovery in Iraq: Link

  Jonathan Levinson   4/10/03,  3:19:50 PM
My question is... with your recent data regarding CBOE commercial and retail option spec's. I see commericals are the most bullish and retail investors are the opposite(bearish) but the investors intelligence is very bullish. Almost the most bullish they have been in a long time. What data would you look into with more importance? To me it tells me maybe one last push up to suck in the retail investors and then we have that climatic selloff going into the summur like last year. The VIX is already below 30 but the dow is only at 8200 and struggling just to break 8300. With both 200dma on the dow, OEX, and s&P... I think we could see a profound selloff into the summer. Your thoughts?

Good observations, Vick. To understand my thoughts, you have to know my premise, which is that the market is unknowable. It can be jammed by focus spurts of buying, but it cannot be predicted. The investors intelligence data is a contrarian indicator. The more bullish advisors there are, the more bearish I get- I believe it peaked in early 2000? Everyone was bullish then- leaving no one left to do any buying. Same goes for commercial long positions on the COT reports. As regards upcoming market action, I'm bearish, but I think the easy money has been made on the short side. Ultimately, I believe the market is going considerably lower, but I don't expect it to be as easy as it was last year. Last year I was buying puts and seeing the put to call ratio in low .40s, if memory serves. Now, everyone's tuned into the fact that it's a secular bear market. So, just as we saw in Japan over the past decade, I expect a gradual drift trend lower, but with bassomatic rallies like we've been seeing this year. This is all just idle speculation, but you asked. My approach is to protect capital aggressively, to permit me to short the "it's a new bull market" tops, and hopefully cover near the bottoms, or sell shorter term contacts against my core back month contracts, or close puts and buy calls. I'm still tuning my strategy, but this is how I see the future today.

  Steven Price   4/10/03,  3:19:19 PM
Swing Trade Signals
The run in the TNX has me concerned about being short. The action in the dollar, however, looks awfully bearish. I am also concerned about the bounce from the OEX 50% retracement and Dow 8150 - both significant levels. Conservative traders may want to simply take a small gain here and wait for a breakdown below those levels to think about getting back in.

  Jeff Bailey   4/10/03,  3:02:14 PM
Bond market closed with 10-year YIELD ($TNX.X) finishing out at 3.934%.

Should Dow Industrials "shadow" this YIELD, would look for a Dow close near 8,200.

  Linda Piazza   4/10/03,  2:46:13 PM
The 60-minute OEX 5(3)3 stochastics cycle up out of oversold territory, with the fast line now at 61.68 and the slow at 44.45. These stochastics have been making a series of lower highs since early April. If that pattern is to continue, they should top out just ahead of the overbought line on the stochastics indicator. A push above the descending stochastics trendline would be a signal that the trend of lower stochastics highs had changed. The slower-moving 21(3)3 hourly stochastics are just now cycling up, but have the slightest hint of a flattening just short of moving out of oversold territory. RSI appears to be rolling down again. All these oscillators can redraw themselves in a flash, but bulls might be alerted to be careful with today's minimal move up relieving so much of the oversold pressure on the 5(3)3's, just as bears might be alerted with the 21(3)3's trying to cycle up. The 60-minute 21-pma now measures 444.47.

  Jonathan Levinson   4/10/03,  2:44:19 PM
The FVX hit a low print right at support, +2.1 bps, and is now rebounding along with the QQQ which touched 25.61 on that downleg.

  Jeff Bailey   4/10/03,  2:28:40 PM
Fluor (FLR) $36.06 +4.3% ... stock has really gotten a move going from $35 at the 12:00 mark, and here too, pre prior comments post-Iraq war, is most likely beginning to put together further bullishness on thoughts it may be awarded a contract on "rebuilding Iraq." I continue to like this stock for bullish entries and it sure looks like bulls were accumulating just above $34.50 in recent sessions.

Disclosure: I currently hold bullish position in FLR.

  Linda Piazza   4/10/03,  2:19:10 PM
Today, the SOX simple 100 and 200-dma's lie at 307.82 and 306.58, respectively. With the SOX currently at 303.97 as I type, those might be good levels to watch, although as Jeff mentioned earlier, the SOX has been on either side of its simple 200-dma several times of late. For the SOX and many other indices, the exponential 200-dma has often proven more important, at least in my opinion. Experiment with the stocks or indices you're watching and see which averages prove most important.

  Jeff Bailey   4/10/03,  2:13:59 PM
10-year YIELD ($TNX.X) "swing-trader" chart on 60-minute intervals. Link

Back on upward trend after hovering around WEEKLY pivot yesterday and again today. Break was to the upside and should have some bullish capital coming back toward equities.

  Jonathan Levinson   4/10/03,  2:11:12 PM
The FVX has clearly broken its earlier resistance, now +3.1 bps and portending strength in equities even as the COMPX fights the 1365 resistance level. QQQ is trading just below its high of 25.74. The TRINQ remains low but sustainable at .47, TICK.NQ +318, and if this is merely a headfake, it's a very good one. The market looks and feels like it wants to go higher. Next resistance is above at 1377, QQQ 25.80, then 25.90-26.00.

  Jeff Bailey   4/10/03,  1:59:31 PM
01:00 Update posted at this Link

  Kent Barton   4/10/03,  1:59:28 PM
Is the SARS virus having a large impact on international companies based in Asia? Infosys, an Indian software company, cited SARS as one of the reasons for a downturn in revenue and net profit. Acoording to INFY's head of sales, some clients grew fearful of expsoure to the virus and cancelled visits. The company also lowered its forward-looking guidance. This news has plunged shares of the ADR to a loss of more than 29%.

  Linda Piazza   4/10/03,  1:52:41 PM
The OEX 60-minute 21-pma has declined and the violated ascending trendline has climbed, and now they coincide at 444.95. The top of the steeply descending regression channel is almost a point below, at 444, near the 444.09 50% retracement of the December-March move. If the OEX can break above 442, that key 444-445 level would be the next to watch for a possible rollover. To help determine whether a rollover or a push through next resistance is most likely, watch the oscillators to see how quickly they relieve the oversold conditions. On the 60-minute chart, the 5(3)3 stochastics have turned up, with the fast line already above 50, but the slow line lagging. The 21(3)3's have hinged up, but haven't yet crossed up out of oversold territory.

  Jonathan Levinson   4/10/03,  1:49:08 PM
The FVX set a new high there, currently printing a gain of 2.4 bps. The COMPX is printing highs at 1365, TRINQ .41, TICK.NQ +364. QQQ is trying for its next resistance level at 25.80.

  Jonathan Levinson   4/10/03,  1:39:21 PM
The five year yield has reached intraday resistance again at a 2 bp gain. COMPX is very close to its resistance, and QQQ is at or just above it. This should be a decisive moment for the day's direction.

  Kent Barton   4/10/03,  1:33:35 PM
AT&T (T) 14.07 -0.60: This PI short play has fallen to fresh lows, thanks in part to a Wall Street Journal report that the company will be losing two more high-level executives. Apparently investors aren't too keen on seeing more management changes during a time of extreme fundamental challenges in the telecom group.

Of course a lot of the selling could simply be chalked up to technical weakness as the stock decends to long-term lows. We'll probably be snugging down our stop-loss tonight in order to reflect the recent decline. Traders looking to protect a gain of roughly 9% could place stops just above $15.00.

  Jonathan Levinson   4/10/03,  1:31:32 PM
Fox is reporting that weapons grade plutonium may have been found inside Iraq.

  Linda Piazza   4/10/03,  1:09:56 PM
Here's an update of an old 60-minute OEX chart, showing that the support found by the OEX today came from more than one source. In addition to the retracement and historical support near 438, the descending line of the recent megaphone formation also crossed at that level. Not shown on this chart, however, is the 21-pma, which now turns sharply down, a development that hints at weakness. Link

  Jeff Bailey   4/10/03,  1:05:27 PM
10-year YIELD ($TNX.X) 3.915% ... has seen a YIELD high of 3.92%, but 5-minute bar chart hasn't been able to see a closing YIELD trade on this time frame above the DAILY pivot of 3.917%. As "micro" as this seems, I'm also trying to tie this YIELD together with QLGC trade. (see 12:46:14)

  Jonathan Levinson   4/10/03,  1:01:22 PM
Steve and I are on the same page as I look at what could be a bullish cup and handle setting up on the COMPX 5 minute candles.

  Steven Price   4/10/03,  12:54:39 PM
Swing Trade Signals
With the COMP 1350 level giving us a significant bounce and the DX00Y holding support back at the 50-dma and the SPX back in the green, I am starting to think we might be forming a base here. While I'm not going to close out the short just yet, I am getting more concerned about a bounce from these levels.

  Jonathan Levinson   4/10/03,  12:49:21 PM
Thanks to Alex, who pointed out what I see to be as a reverse head and shoulders on my QQQ 3 minute chart. Looks like it just fulfilled with that last blast to the HOD.

  Jeff Bailey   4/10/03,  12:46:14 PM
Day-trader long .... QLogic (QLGC) ... look for break above yesterday's high of $38.70 at $38.71 as bullish, stop just under yesterday's low of $37.41, and target a move to $39.75.

Swing-trade bull can also play, but uses the "inside day" trade technique of trailing stop, with higher target of $43. Link

  Jonathan Levinson   4/10/03,  12:34:08 PM
Hi Jonathan,

Would you add to your short position if this bounce fails at 1365?

Anyone else out there going stir crazy?

Thanks, Barb

The quick answer would be yes, but I don't like it. That was some firm support the COMPX / QQQ just found, and a failure here will feel more like a range than a failure. I'm already in and profitable, so will wait. However, the possibility of a reverse h&s exists, and I'd prefer to re-short from higher up than just above the latest bottom. The correct answer will depend on your own positions and risk tolerance, and while I see lower lows, I have no way to tell how long it will take or even if we will get there. Safer to wait for either a strong bounce, or a failure below last resistance. Or, you can enter on a 1365 failure with a tight stop. These are the different directional strategies I see here.

As for going stir crazy, yes. Here's something good for a laugh- possible depiction of the market today: Link

  Jeff Bailey   4/10/03,  12:31:01 PM
Hey! Dow Industrials traded 8,145 this morning. Wasn't it on 04/02/03 that the Dow gapped higher, I was holding a put from 8,150 and was looking for a pullback to 8,150 to close out that put and hold my calls? Yes it was. Maybe there are some hedge funds in here doing some of the same.

I ended up closing out the put for a loss on the move above 8,260 or so and would have to review the market monitor for exact level. It was on April 2nd though.

  Jeff Bailey   4/10/03,  12:25:01 PM
CBOE Internet Index (INX.X) 102.62 +2% .... was a sector gainer earlier in morning and builds to best levels of the morning. Trying to show some "leadership" here.

NDX 1,028 +0.46% looks to have held the 1,018 level, and first test of resistance would be the 61.8% retracement from WEEKLY at 1,033.

  Jonathan Levinson   4/10/03,  12:21:32 PM
First resistance after the trendline break seems to be holding, and FVX is so far not participating in the breakout, up 1 basis point now. TRINQ at .74 and TICK.NQ +246 shows steady, not extreme buying- for a change, this is behaving like an ordinary market. Perhaps Al Green and To Fukui are enjoying little spot of lunch, their streaming quotes, pagers and celphones momentarily forgotten. The put to call ratio is sticking in the mid .80s, off its opening high but above yesterday's range.

  Jeff Bailey   4/10/03,  12:15:17 PM
Per Linda's 12:11:52 could tie her observation in with the Dow Industrials (INDU) 8,181 -0.2% trying to make a move back above its WEEKLY pivot here.

  Linda Piazza   4/10/03,  12:11:52 PM
The VIX drops quickly again toward its supporting trendline. It's still interesting to see what will happen: a trendline break or yet another "save."

  Jonathan Levinson   4/10/03,  12:05:35 PM
The COMPX is challenging its descending trendline here. If it breaks, I expect to see resistance at 1365 COMPX/ QQQ 25.60. The FVX is only up .7 bps so far.

  Jeff Bailey   4/10/03,  11:53:03 AM
My "inchworm" stocks in the Dow Industrials have the "head" (MMM) $132.10 +0.37% Link and "thorax" (AXP) $34.50 +0.29% Link showing fractional gains, while the "tail" (AA) $21.19 -1.02% Link finds weakness.

This is somewhat "mixed," but shows that the tail may be slipping a bit, and may have the "head" looking back to see what's pulling on things and could have the "inchworm" itself slipping back lower.

Thinking here is that WEAKNESS leads a decline "tail" and has a pulling effect on even the strongest.

Today's action shows a "stretching" of the inchworm (using these three stocks) and something has to break, or pull the inchworm apart.

If Treasuries don't see some type of selling, there's going to be a "cash crunch" for stocks, and we know that if institutions don't sell their treasuries, they'll sell their weakest stocks first.

The "reason" I selected these 3 stocks to give me a quick look of an inchworm, is that these 3 stocks have "buy signals" associated with their charts, but each is in a much different stage of trend.

  Steven Price   4/10/03,  11:51:40 AM
Swing Trade Signals
The DX00Y has been walking its way down all morning and is below the early moring lows. Still no follow thorugh from equities and the COMP is holding 1350. The dollar is starting to bounce again, but remains below the 50-dma (99.61 v. 50-dma of 99.80) Not bullish here, but support is holding well in the OEX and Dow. Dow 8150 was key resistance and 8120-8150 has been key support. Without much volume today, those levels will be tough to crack, but I'm not making any current changes to the position. Conservative traders can thinking about taking some chips here as the support holds.

  Jeff Bailey   4/10/03,  11:44:34 AM
11:00 Update posted at this Link

  Linda Piazza   4/10/03,  11:42:23 AM
Total volume is 423 million shares traded on the NYSE and 471 million on the Nasdaq. Adv/dec ratios show a neutral 1.03 on NYSE-traded issues and slightly bearish .77 on Nasdaq-traded issues. Down volume leads on both, with down volume 1.8 times up volume on the NYSE and 1.43 times up volume on the Nasdaq. New highs still predominate, still a divergence that perhaps should be watched.

  Jonathan Levinson   4/10/03,  11:21:22 AM
The QQQ drawing a Fib Retrace from March hi/lo gives a 50% retrace @ 25.46. Which happens to be the very close to the 100-ema of 25.42. Stochs and MACD are pointing towards further declines. Would you say 25/61.8% level is doable on the downside?

Yes, I would. However, I need to see current support taken out first, and that 1350 COMPX level was expected to be tenacious. We remember COMPX 1350, then 1350, then 1333 by rote from all the prints back and forth this year. Watch the levels you've identified, as they coincide with the trendlines I'm following.

  Linda Piazza   4/10/03,  11:12:14 AM
The OEX 60-minute chart shows a mixed picture. Both 5(3)3 and 21(3)3 stochastics are deep in territory indicating oversold conditions, showing that bears face some risk that the OEX will bounce. Coupled with the close significant support, bears might keep a close watch. RSI is already cupping up. If stochastics turn up from here, they'll be signaling bullish divergence, too, with lower lows on the stochs and higher lows on the prices. However, we know that in strongly trending down markets, these oscillator levels are not particularly useful, and can give apparent "buy" signals that turn out to be false. The OEX also broke through the ascending trendline off the March 12 low, it's stuck in a steeply descending regression channel, and the 21-pma is strongly turning down. If the OEX manages a bounce, where would that bounce stop? As I study the 60-minute chart, my best guess is that while those oscillators attempt to rise and relieve oversold conditions, the 21-pma will be descending to the level of the violated ascending trendline near 444-445, also meeting the top of the regression channel that currently contains the OEX prices. OEX 444.09 is also the 50% retracement of the December-to-March move. That looks like a prime area to watch for a rollover if the OEX should manage a bounce today.

  Jeff Bailey   4/10/03,  11:06:57 AM
10-year YIELD 3.901% ... back at unchanged and WEEKLY pivot. Dow Industrials similar at 8,178 with WEEKLY pivot of 8,180.

Not much "meaningful" trade action, but bulls seem to be trying to defend some support levels, and bears at near-term resistance. Treasury action just not enough to get a bull overly enthused at this point.

Had offsetting buy then sell program premium alerts just after the open, and that's been it.

  Jonathan Levinson   4/10/03,  11:01:22 AM
Buying is pretty stressful, but then, so is holding. Nevertheless, I'm watching the COMPX inch its way higher beneath a descending trendline on the 5 minute candles, and I'll remain relaxed below 1360. FVX has flipped to green by .5 bps, really no direction here yet. QQV is flat now, TRINQ reflecting neutral bullish breadth at .75, TICK.NQ +38. Even HUI and XAU are flat, or nearly so, -.17 and .18 respectively. The entire question here as I see it is whether the bulls are feeling frisky enough to pony up another payload of cash. Bears have been traumatized this year and I expect them to remain cautious until 1350 support breaks.

  Steven Price   4/10/03,  10:59:19 AM
Swing Trade Signals
The bounce off COMP 1350, combined with the bounce from the OEX 50% retracement, has me wondering how much strength the bears have at this point. I'd love to see a bleed lower, but I'm starting to get concerned. The Dollar Index did take out the 50-dma, and that is certainly bearish for stocks, but for the moment it really feels like the market is trying its best to bounce.

  Jeff Bailey   4/10/03,  10:53:33 AM
Semiconductor Index (SOX.X) 300.08 +0.51% ... bidding back to fractional gains here. 50-day SMA at 294.56 with 200-day SMA at 306.56. SOX has been either side of 200-day SMA for past month and just hasn't been able to make a break either direction. Similar to NASDAQ-100 of 1,018, SOX support of 294 somewhat correlative.

  Jeff Bailey   4/10/03,  10:48:00 AM
Oil Service (OSX.X) 85.22 +2.08% ... sector gainer today and recapturing its 50-day SMA. Here's a p/f chart Link and break above 87 would be viewed bullish. At play here may be some bullishness from "development" of Iraq's oil fields under new regime. I've heard "blurbs" on the TV regarding opportunities of unfound and undeveloped reserves in Iraq. Mostly attributed to past production limits placed on Iraq in the form of sanctions, where it made little sense for Iraq to try and develop new production.

  Linda Piazza   4/10/03,  10:46:38 AM
The Russell was one index that broke out of its wedge on the daily chart to the upside. Since breaking through that wedge, however, the Russell has followed the descending top line down, and this morning again threatens to fall back inside the wedge, a bearish development if that should happen. It hasn't happened yet, and there's still the chance that the Russell will rebound. The 21-dma is rising from beneath to meet that descending top line. The wedge is shown in the thick red lines on the linked chart. Link

  Linda Piazza   4/10/03,  10:46:37 AM
The Russell was one index that broke out of its wedge on the daily chart to the upside. Since breaking through that wedge, however, the Russell has followed the descending top line down, and this morning again threatens to fall back inside the wedge, a bearish development if that should happen. It hasn't happened yet, and there's still the chance that the Russell will rebound. The 21-dma is rising from beneath to meet that descending top line. The wedge is shown in the thick red lines on the linked chart. Link

  Jonathan Levinson   4/10/03,  10:39:29 AM
The put to call ratio opened at 1.0, and just printed .88. That "light" feeling I experienced, with the market seeming to want to bounce this morning, was picked up by the p/c ratio. QQQ is walking slowly down a descending trendline currently being tested. FVX has just flipped red by .2 bps, and the TRINQ is up to 1.28. The real selling clearly hasn't started yet, and the only question is whether it will, or whether a bounce intervenes.

  Jeff Bailey   4/10/03,  10:37:09 AM
Market Volatility Index (VIX.X) 30.58 -1.06% ... I've got an "upside" alert set at my 38.2% retracement of 31.14 to signal any type of pickup in put buying.

  Linda Piazza   4/10/03,  10:35:57 AM
The VIX maintains a level that's in the upper 50% of the recent two days' moves, although new recent lows and new recent highs are both within reach today. During January, the VIX moved up and down in consolidation near the uptrending line for four or five trading days before finally rebounding off the line, but until there's either a definitive rebound or a fall through the level, we'll just have to wait. So far, the fact that the VIX has maintained that position above the 50% level appears somewhat positive for the VIX and, therefore, bearish for equities.

  Steven Price   4/10/03,  10:35:43 AM
Swing Trade Signals
As we approach the OEX support at that 50% retracement, the COMP is also sitting just above former resistance at 1350, which could now act as support. If that level holds, traders with short positions may want to think about taking some chips off the table.

  Jeff Bailey   4/10/03,  10:35:04 AM
Longer-dated 10 and 30-year YIELD now in the red. This is NEGATIVE for equities and may see pickup in selling in the indexes.

  Steven Price   4/10/03,  10:33:03 AM
While we are not seeing a large sell-off, I do find the action between stocks and oil interesting. It is not often we have seen the equities and oil futures heading in the same direction. I won't make any broad conclusions based on one day's movement, but I do wonder if the apparent coming end to the war in Iraq also may signal an end to the reliable inverse relationship between the two markets.

  Jeff Bailey   4/10/03,  10:30:31 AM
Pacholder High Yield (PHF) $7.83 +0.51% ... I'm a "bit surprised" that PHF finds a bid (junk bonds) and this action (buying of a basket of junk bonds) may be viewed as positive for stocks. Fractional selling in Treasuries and recent selling in equities may be finding its way into junk bonds today, which are RISKIEST of bond market. Next riskiest investment after junk bonds is stocks.

Now all we have to do is figure out the LEVEL that stocks are deemed "attractive" vs. junk bonds. I think we're close to the pullback bullish entry in the indexes.

NDX 1,021 -0.25% traded that 1,018 level of important support discussed in the Index Trader Wrap and just sitting here at WEEKLY S1. Dow Industrials (INDU) 8,168 just below its WEEKLY pivot. OEX 439 at session low here and below its WEEKLY pivot of 441.50. Equity bears probably shorting with stops just above today's high as YIELDS just can't get going higher in Treasury.

  Linda Piazza   4/10/03,  10:25:53 AM
Here's a snapshot of the Wilshire 5000, the broadest of all our markets. Yesterday, the Wilshire violated its wedge to the downside, a bearish development echoed by the bearish divergence seen on the RSI. However, the bottom line was so steep that some could argue that the Wilshire just needs to establish a more sedate upward support line. The almost equal recent peaks present the possibility of a double-top formation, a type of formation that's presenting on many index charts just now. Remember that a double-top formation is not confirmed until the index moves below the low reached at the trough between the two peaks. A downside target can then be projected, with the prediction being that the index will move down a distance equal to the distance from the peak to that low. It may be difficult to decide whether to use the intraday low at the trough or the closing low as the confirmation level for the Wilshire, as the closing low seems to have more validity as a support level. Link

  Jonathan Levinson   4/10/03,  10:20:21 AM
AMGN looks like it's cracking, possibly breaking out of that massive ascending wedge on the daily candles. The QQQ is fading as well, very orderly, with the TRINQ at a mere 1.16, TICK.NQ -145.

  Steven Price   4/10/03,  10:19:52 AM
Swing Trade Signals
OEX back below 440 and we are approaching a test of the 50% retracement of the Oct-Dec range, which comes in at 437.87. This level held for some time on the last test before giving in, so we could see a struggle here. The Dollar Index (DX00Y) is back below 100 and the 50-dma at 99.80 is an important level, as webounced at 99.81 in early trading. TNX falling back, but holding over 3.9%at 3.905.

  Jeff Bailey   4/10/03,  10:17:49 AM
Good observation from Jonathan at 10:05:52 regarding 5-year YIELD ($FVX.X) as it relates to what is taking place in the shorter-dated 5-year.

  Jeff Bailey   4/10/03,  10:14:53 AM
Dow Industrials (INDU) 8,170 -0.34% ... Watch things closely here as Dow dips below its WEEKLY pivot of 8,180, while 10-year YIELD ($TNX.X) 3.91% holds just ABOVE its WEEKLY pivot of 3.903%.

I wouldn't say this is "arbitrage" situation, but slightly "out of whack" as it relates to the pivot. I would BUY a Dow Indu decline at 8,120 if YIELD were at current levels.

  Jonathan Levinson   4/10/03,  10:05:52 AM
The FVX seems to run out of steam every time it reaches that +2 bps gain for the day. QQQ keeps trying but failing at the 25.58 resistance level, actually just below it. I have trendline support at 25.43 and resistance at 25.55.

  Steven Price   4/10/03,  10:05:21 AM
Swing Trade Signals
Not really sure what to make of this moring's action. Yields really not breaking down, which I think is bullish. VIX also testing support at 29-30% again. A breakdown below 29% would be bullish and I'm surprised we've stayed this low (30.45) here, considering yesterday afternoon's strong sell-off.

  Linda Piazza   4/10/03,  10:04:07 AM
Just as the U.S. markets opened, major European markets ticked up, with the FTSE and the DAX trading positive and the CAC still negative, but moving toward the top of its 25-point range for the day. Currently, out of the three, only the DAX remains positive, and that's by only 1.87 points. The FTSE 100 is currently down 18.10 points and the CAC 40 is currently down 40.83 points.

  Jeff Bailey   4/10/03,  10:03:20 AM
Children's Place (PLCE) $12.79 +18.79 ... childrens retailer jumping after Pacific Growth upped to "equal weight" after PLCE reported an 11% decline in March same store sales, which was better than the firms estimates for a 25% decline. This lead the firm to make adjustments to its EPS forecast and now raises 2003 estimates to $0.41 from $0.35 and 2004 to $0.50 from $0.43.

Equity bulls can perhaps view this type of action as "curious" and begin to wonder if the recent bullishness in retailing group didn't have the MARKET smelling out some overly cautious EPS estimates for other retailers?

I'll be posting some same-store sales in coming minutes, which don't look all that hot and PLCE might be just one stock that may have been "low ball" estimate, but this may partially explain the recent bullishness we've noted in the group. According to Dorsey/Wright and Associates, their retailing sector bullish % (BPRET) reversed up to "bull alert" status on March 21.

S&P Retail Index (RLX.X) 283 +0.26% showing fractional gains here and current levels of trade at early December levels, which is notable considering early December is when holiday shopping season was in "full swing."

  Jonathan Levinson   4/10/03,  9:59:49 AM
The fed has added 3.25B via overnight repo, and by adding a 4B 28 day repo, rolling today's expiring 28 day repo.

  Linda Piazza   4/10/03,  9:48:44 AM
At 440.51 as I type, the OEX currently dips below the 21-dma at 440.81, but it looks to be rising to test that MA again. That will be the first test of strength or weakness to come.

  Jonathan Levinson   4/10/03,  9:47:36 AM
QQQ "feels" like it wants to bounce, but the price is staying down. QQV is now +.54 to 36.24, TRIQN 1.03, FVX +.7 bps and off its highs of +2 bps, TICK.NQ -23. I'm having a difficult time holding on to my puts here.

  Steven Price   4/10/03,  9:42:59 AM
Looks like I sent that last note too soon. Quick rollover here in the last couple of minutes.

  Jeff Bailey   4/10/03,  9:42:24 AM
CIENA (CIEN) $4.44 -0.89% Link ... weak after Raymond James cuts to "under perform" from "market perform." Raymond James finds it "curious" that CIEN chose to use stock in the acquisition of WaveSmith given the company's strong cash position and makes notes of why CIEN may have chosen stock instead of cash. 1) $506 million may not be large enough cash cushion to see the company (CIEN) to breakeven, 2) Management believes CIEN stock is overvalued and 3) company requires cash for another acquisition.

Yesterday afternoon, CIEN announced it would acquire privately held WaveSmith Networks, which makes multiservice switces, for 36 million shares of CIEN stock and is expected to be accretive to 2004 earnings.

  Steven Price   4/10/03,  9:41:52 AM
Swing Trade Signals
One of the factors pushing equities higher this morning is a drop in oil futures. The dollar has also rebounded and bonds are still being sold. All bullish for equities, but not excessively so.

  Mark Phillips   4/10/03,  9:37:05 AM
Crud! Sometimes you just can't dodge the unexpected. Our bearish play on ROOM is toast this morning. After steadily grinding its way lower over the past couple weeks and then finally cracking below the $53 level yesterday, the stock is gapping up near the $60 level on news that USAI will acquire the remaining shares of ROOM that it doesn't already own. This is one of those times, where unpredicatable news thwarts even the most prudent money management plan. Any traders with stops on the play at all have found those stops triggered this morning. Given that ROOM has already risen more than $1.25 since the open, I wouldn't recommend looking for a new entry into the play on a fade of this moonshot. Obviously, we'll be dropping ROOM tonight.

  Jeff Bailey   4/10/03,  9:31:45 AM
Yesterday's P/F breadth According to Dorsey/Wright and Associates, yesterday's action saw 72 NYSE listed stocks rise on their charts (continued column of X) while 70 fell (continued column of O). There were 6 new "buy signals" and 4 new "sell signals" for a net gain of 2. 19 stocks reversed back up on their charts, while 32 fell.

NASDAQ found 100 stocks rising on their charts and 83 falling. 12 stocks gave new "buy signals" while 2 stocks generated new "sell signals" for a net gain of 10. 32 stocks reversed up on their charts, while 47 reversed down.

The above action would most likely be interpreted as a market where demand remains in control, with pullback weakness from profit taking. Stocks that reversed into "O" now become potential candidates for generating new "sell signals" that could show up in the bullish % charts should sell signals be generated.

  Jonathan Levinson   4/10/03,  9:27:05 AM
Following Steve's last post, I'm now actively trying to get over what I consider to be my addiction to news- the Joe Granville thesis is being well demonstrated as the market heads down on relatively good economic data, relatively good news from YHOO, and relatively good news from the war. The market chooses the direction, and the reporters try to tag the stories to fit it. Just my humble opinion, and I'll continue to follow the news, but I'll trust the oscillators above all.

  Steven Price   4/10/03,  9:23:06 AM
Swing Trade Signals
The dollar (DX00Y) looked weak earlier this morning, but got a bounce from the 50-dma at 99.80. That could be part of the reason for the bounce. I would have expected a little more bullishness following Yahoo's numbers last night, but it's still early.

  Jeff Bailey   4/10/03,  9:22:38 AM
09:00 Update posted at this Link

  Steven Price   4/10/03,  9:20:17 AM
Swing Trade Signals
Yields actually opened lower, but have built back up to just below the TNX 39.20 breakdown level from late yesterday afternoon. That could be our first line in the sand this morning. Traders who would like to avoid a bounce that has any legs can exit the 1/4 short position on the open, or set stops at break even (8273). My stop is set at 8415, where I will leave it there for the moment.

  Jonathan Levinson   4/10/03,  9:19:35 AM
I see QQQ resistance every 20 cents, from 25.58 to 25.80 and then 26.00.

  Jonathan Levinson   4/10/03,  9:16:57 AM
The US Dollar Index is back below 100.00. QQQ is trading 25.54, just below resistance set yesterday at 25.58.

  Jonathan Levinson   4/10/03,  8:57:42 AM
Just back from a doctor's appointment. News this morning:

8:30 am EDT: Initial Claims for week of 4/5, prior 445K, consensus 428K

8:30 am EDT: Trade Balance for February, prior -$41.1B, consensus -$42.0B

Initial claims surprised to the downside for a change at 405K. Link

I'm still digging for the balance of trades data but will post it shortly. QQQ is trading 25.49, down from its peak during the YHOO frenzy yesterday. NQ futures are +.50 at 1026.50, ES 867 for .25 gain. Gold is trading 325 even. Treasury notes are seeing very light selling, FVX -.5 bps, TNX -.4 and TYX -.3 bps. While I was typing, a friend dug up the balance of trades data for me:

The U.S. balance in goods and services trade stood at a $40.3 billion deficit that month, the Commerce Department said Thursday. That's a 2.2 percent change from the $41.2 billion shortfall on the books for January. The record imbalance -- $44.9 billion - occurred in December.

  Linda Piazza   4/10/03,  7:43:12 AM
Good morning. The Nikkei opened down 54.75 points, just above the key 8000 level, at 8002.86 and had fallen below that key level by midmorning. The Nikkei ended the day down 77 points or 1%, at 7980.12. The IMF's lowered forecast for the global economic growth impacted the Japanese market, some felt. Japan saw its own releases of economic numbers today. One number showed that February's 7.7% expansion in exports drove Japan's current account surplus up 2.4%, in an annualized number. In a statement that wasn't backed up by numbers and was somewhat unclear, one source said, however, that the "pace" of exports had slowed. Another number showed that March Japanese bank's lending fell 4.4%, in an annualized number. Worries over the impact of SARS and anticipated earnings later this month also impacted the markets. One example of the impact is that concerns about SARS led organizers to postpone for three months an annual exhibition for semiconductor-manufacturing equipment makers. Markets in Australia, South Korea, New Zealand, and Hong Kong also fell, although markets in China, Taiwan, and Singapore climbed.

In stock-specific news in the region, Qantas learned Thursday that Australian regulators might block the proposed alliance between Qantas and Air New Zealand. This came just a day after Qantas announced job cuts. Retailer Ito-Yokado, the operator of Seven-Eleven stores in Japan, announced that it would delist from the U.S. Nasdaq market. Japanese investors didn't agree with the company's decision, driving the price down 1.2%.

As I write, European markets are mixed. Stock-specific news in Europe included the news that AXA will revise 2002 full-year results, now showing a loss of 2.9 billion euros instead of the 1.6-billion-euros loss it had reported in February. The restatement was undertaken to account for marked-down assets according to U.S. GAAP accounting methods rather than French accounting rules. Nokia announced that it would cut 1800 jobs and take research-and-development costs under review. DaimlerChrysler shareholders raised the salaries of its supervisory board. British Airways decided to end trans-Atlantic high-speed Concorde flights. Roche reported worse-than-expected Q1 sales. All these stocks were down in early European trading. Stocks moving up in early trading included retailer Gucci Group, after the company announced intentions to expand its presence in Japan. Duetsche Bank was flat after Citigroup raised its price target and rating. Currently, the FTSE 100 is down 9.40 points or .24% to 3852, the CAC 40 is down 40.95 points or 1.42% to 2847.08, and the DAX is up 11.43 points or .42% to 2745.53.

Of interest to U.S. traders might be the news that Yahoo and Microsoft were trading up in Germany, while Genentech and Network Associates were trading down.

  OI Technical Staff   4/10/03,  7:35:10 AM
The Market Monitor Server is being rebooted in 2 minutes. You will need to restart your desktop to receive updates.

  Jeff Bailey   4/9/03,  11:40:58 PM
The Index Trader Wrap has been posted: Link

  Vlada Raicevic   4/9/03,  11:40:50 PM
The Futures Trader Wrap has been posted: Link

  Steven Price   4/9/03,  11:40:43 PM
The Swing Trade Game Plan has been posted: Link

  Steven Price   4/9/03,  11:39:49 PM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

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