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  Jeff Bailey   4/15/03,  5:26:33 PM
AMR Corp. (AMR) $3.55 ... released for trade at $3.80 over New York ECN after the company and flight attendants agreed to extend concession votes after flight attendants narrowly rejected agreement.

Flight attendants may re-vote within next 24-hours.

 
 
  Jeff Bailey   4/15/03,  4:46:34 PM
S&P 500 futures (sp03m) settled 893.70. Current trade is 898.40.

 
 
  Jeff Bailey   4/15/03,  4:45:06 PM
QQQ $26.64 ...whoooosh!

 
 
  Jeff Bailey   4/15/03,  4:22:46 PM
QQQ $26.43 after 04:15 mark of $26.28.

 
 
  Jeff Bailey   4/15/03,  4:21:36 PM
Intel (INTC) $17.13 -0.17% ... stock jumps to $17.80 in after-hours trade after headline number has INTC reporting $0.14 per share, which was 2 cents better than consensus. Revenue was $6.75 billion, which was below year-ago $6.78 billion, and came in right at previous mid-quarter guidance given for range of $6.6-$6.8 billion.

 
 
  Jonathan Levinson   4/15/03,  4:16:43 PM
4:08pm 04/15/03 [MSFT] MICROSOFT EXPECTS Q4 EPS OF 23-24 CENTS

4:07pm 04/15/03 [MSFT] MICROSOFT Q3 REVENUE $7.84 BLN VS $7.25 BLN YR AGO

4:08pm 04/15/03 [MSFT] MICROSOFT SEES Q4 REVENUE IN $7.8-$7.9 BLN RANGE

4:07pm 04/15/03 [MSFT] MICROSOFT Q3 EARNS 26 CENTS VS 25 CENTS YR AGO

 
 
  Jeff Bailey   4/15/03,  4:13:57 PM
Microsoft (MSFT) $24.60 -0.56% ... reports $0.26 per share, which was 2 cents better than consensus. Company said revenues rose to $7.84 billion, which was up from year-ago $7.25 billion and slightly above consensus of $7.75 billion. Stock rises to $24.80 in after-hours trade.

 
 
  Jeff Bailey   4/15/03,  4:09:57 PM
Texas Instruments (TXN) $17.22 +1.65% ... reports Q1 earnings of $0.07 per share, which was 1 cent better than consensus. Revenues rose 20% year-over-year to $2.19 billion, which was also better than consensus for $2.15 billion.

This has QQQ jumping to $26.33 +1.15%.

 
 
  Linda Piazza   4/15/03,  3:57:01 PM
Reader Question: I took a look at the option activity on the SPX. There is volume in the May 900 and 925 Calls and May 850 Puts. However, if you look at the June strikes there is heavy volume in the 700 and 800 Puts and Calls. I have been following the June 800 strike and the open interest has been building through this year. Back in the end of January it was just over 50,000. So I would read this as the market belives lower levels ahead. The bullish % for the SPX is still under 50% and on the way up. Commercials are net long for the first time since 2000. So that would indicate still higher prices. The VIX indicates we are close to a top. With the thought that we are close to a top, maybe MSFT and INTC push the market down as they did in January. Or they give the market one last push higher. What are your thoughts?

Response: I applaud your assiduous tracking of SPX trades and your efforts to develop a scenario to describe what you're seeing. A few months back, I began tracking block trades in the SPX, since my thought was that the bulk of these trades represented institutional trading and so might help me forecast the direction of the markets. Sometimes I could find enough information to guess at the direction being taken in the trades--calls going above the high of the day might indicate institutional buying, for example. But was this buying to offset a short position, perhaps in some of the big caps? As part of a strangle or straddle? That proved more difficult to determine. In the end, I didn't prove proficient at interpreting the meaning of those block trades. In the same manner, I watch the COT figures, but since the timing of my trades and those of the institutional players can differ quite a lot, that information can warn me where risk might lie, but didn't prove particularly helpful in timing my own trades. My own trading strategy would be to let the markets react to the MSFT and INTC earnings before plunging in, in either direction, but perhaps your trading style differs. Waiting means risking the opportunity to participate in a big gap in your favor, while not waiting means you might suffer from a big gap moving against you. Good luck with your choice!

 
 
  Linda Piazza   4/15/03,  3:37:07 PM
The VIX just dropped to its day's low at 25.79. This could be a good sign for bulls . . . but only if the VIX is going to continue down toward its historical trading-range lows near 20. Otherwise, the VIX is growing ever-closer to its maximum 34% deviation from its 200-dma, a number calculated by Mark Phillips. Yesterday, that number stood between 24.50 and 25.20, I believe, although I haven't recalculated it today.

 
 
  Linda Piazza   4/15/03,  3:31:37 PM
The OEX found support this afternoon from that 449.69 retracement level, but in the way of oscillators, the 60-minute 5(3)3's have redrawn themselves, not cycling quite as deeply toward oversold territory, and making a bullish kiss in mid-fall. The RSI turned down and then up again, following a pattern of higher lows that has been forming in the hourly RSI since April 10. Since patterns in the RSI can be more important than the empirical numbers and since some consider the RSI a leading indicator, I'll be watching for a break of that pattern of higher lows. It hasn't happened yet.

 
 
  Jonathan Levinson   4/15/03,  3:21:59 PM
The COMPX is putting in lower highs, and, until a minute ago, lower lows. 1382 is clearly the key support for the remainder of the session.

 
 
  Jonathan Levinson   4/15/03,  3:13:56 PM
With the bond market closed, I'm left contemplating a still-bullish TRINQ at .84, a recovering QQV -1.12, VXN -2.69, TICK.NQ -168, and the stochastic rollover on the shorter timeframes just above major support. A break below before the close may be too much to wish for, but we'll have to see. The put to call ratio remains in the low .90s range.

 
 
  Jeff Bailey   4/15/03,  3:10:27 PM
AMR Corp. (AMR) $3.41 +10.7% ... stock dropped sharply to $3.41 from $4.00 and now halted for trade as flight attendants voted down concessions.

Question now is... will AMR try and get a revote, or go into bankruptcy?

 
 
  Jeff Bailey   4/15/03,  3:07:40 PM
Bond Market Closes 10-year YIELD ($TNX.X) finishes out at 3.971%, which would be under its WEEKLY pivot of 3.983%.

A quick run of today's range has tomorrow's DAILY pivot at 3.981%, which would be correlative to the WEEKLY pivot of 3.983%.

As I look at an intra-day chart of this bond's YIELD today, I see the break below the 3.983% YIELD level then a "failed" intraday rally attempt back at that level and lower YIELD trade into its close. This had me thinking the bond market "knows" or "sensens" something that the stock market might not on a near-term basis.

 
 
  Jeff Bailey   4/15/03,  2:57:31 PM
May/June Fed Funds Futures ... despite today's bullishness in Treasuries, Fed Funds Futures for both May and June finished "unchanged."

15% chance of Fed cut in May, while MARKET sees about a 22% chance of Fed cut in June.

 
 
  Jeff Bailey   4/15/03,  2:52:50 PM
Dow Jones Home Construction (DJUSHB) 352.92 +0.85% ... setting 9-month highs today, and looks very similar to the S&P Banks Index (BIX.X). Tomorrow morning we get economic data in the form of March housing starts and Building permits.

 
 
  Jeff Bailey   4/15/03,  2:49:37 PM
Pacholder High YIELD $8.00 ... let's see... the MARKET is buying Treasuries, it's buying HIGH YIELD and its buying stocks? About the only thing I see finding selling is the U.S. Dollar Index (dx00y) 99.77 -0.19% and healthcare services (RXH.X) 256 -5.89%.

 
 
  Linda Piazza   4/15/03,  2:39:40 PM
So far, the 60-minute 5(3)3 stochastics appear to be cycling down rather quickly on a minimal move down on the OEX, with the fast line already at 38.86, and the slow line at 55.85, and with the OEX hovering at 449.70. If the OEX does not break strongly below that 449.69 level before the 5(3)3's cycle completely down, the 21(3)3's may not be dragged completely out of overbought territory before the 5(3)3's cycle back up again. In fact, the longer-term stochastics already look to be flattening. This feels like a market that "ought" to go down, but just won't. I'm sure there are bulls, too, who believe that it feels like a market that ought to go up, and just won't. Bullish or bearish: deadly boring days of static ranges punctuated by morning gaps one direction or the other have punished all alike.

 
 
  Jonathan Levinson   4/15/03,  2:38:06 PM
The US Dollar Index and treasury yields are doing a tango down the escalator, with the FVX down 5.2 bps and the USD down to 99.70. Doing so without hurting the equity averages was quite a feat.

 
 
  Vlada Raicevic   4/15/03,  2:37:35 PM
CAT is down 2.5% on no news I can find...looking really weak. Broke below its daily uptrend line and indicators starting to roll over: Link

 
 
  James Brown   4/15/03,  2:34:31 PM
Just an observation... but with the financials moving higher, I noticed that Wachovia Corp (WB) has just broken out of a reverse head-and-shoulders pattern. If the pattern holds, then one could target a move close to $40. However, I see three issues that would make me hesitate. First, the stock moves rather slowly and premium decay may be a real issue here. Second, the stock struggled with resistance near $38.50, which is only two points away. Third and most important, the company is expected to announce earnings tomorrow. Now, if they blow past estimates like some of these banks, then you could be fine.. but you'd be gambling on the report.

 
 
  Jonathan Levinson   4/15/03,  2:24:15 PM
Dose of perspective: COMPX +.47 on the day, INDU -7.64, SPX +.66, OEX -.20, RUT.X -.01. The market has gone exactly net nowhere today.

 
 
  Jeff Bailey   4/15/03,  2:19:52 PM
Dow Indu (INDU) 8,345 -0.07% ... off just fractionally, but has been seeing a lower trade as bond market nears its 03:00 PM close. 60-minute chart Link and previously discussed "aggressive upward trend" looks to have come into play in today's trade and perhaps it, along with buying in Treasuries keeps Dow from hitting our WEEKLY R1 today.

 
 
  James Brown   4/15/03,  2:16:11 PM
For those readers following the trade on UNH, the company is expected to announce its earnings report before the bell tomorrow. Estimates are currently at 0.83 cents a share. This is a call play and any negative guidance (assuming they don't miss) could spark a serious bout of profit taking. Then again, for you aggressive traders out there, UNH is in one of the strongest sectors possible with health care costs expected to hit double digit increases for the third year in a row this year. Officially, OI will be dropping it as of tonight's close.

 
 
  Jonathan Levinson   4/15/03,  2:12:06 PM
FVX is now down 5.2 bps, QQV and VNX still buried out behind the woodshed, and the TRINQ has risen to .87. .87 is an ordinary bullish day, breadth-wise, so it gives you an idea of how extreme the pressure was on this ascent to resistance. HUI and XAU are adding to their gains, and it looks to me like some anticipation of less-than-stellar news after the bell. However, we have a few hours left, and much can change in the meantime.

 
 
  Kent Barton   4/15/03,  1:59:37 PM
AT&T (T) $13.78 -0.27: Ma Bell has plummeted to levels not seen since Reagan's first term! The stock has been trending lower for more than two weeks and seems to set a new historical low on almost a daily basis. Our PI short play: Link is showing a gain of 16.3%. If the downtrend continues we may see T eventually reach our exit target at $12.56. Traders can now be using stops slightly above yesterday's high ($14.15) or $14.50.

 
 
  Linda Piazza   4/15/03,  1:57:59 PM
Advancers and decliners are now even (only one issue apart) on the Nasdaq, although the adv/dec ratio remains a bullish 1.43 on the NYSE-traded issues. Up volume remains stronger than down volume on both, although not by as large a percentage as earlier. New highs still eclipse new lows. Total volume is 841 million shares on the NYSE and 808 million on the Nasdaq--not particularly strong, but stronger than yesterday's weak volume at this time.

 
 
  Jeff Bailey   4/15/03,  1:54:29 PM
01:00 Update posted at this Link

 
 
  Linda Piazza   4/15/03,  1:47:09 PM
The 60-minute OEX chart now shows that the 5(3)3 stochastics have begun a full bearish roll, with both lines now moving out of overbought territory, and the 21(3)3's have made a bearish kiss in overbought territory. RSI looks as if it wants to kick up again, however, although it's nearing territory indicating overbought conditions, too. If that 5(3)3 cycles quickly down on a minimal move down or consolidation at current levels in the OEX, the 21(3)3's might not make a full roll before the 5(3)3's turn up again. The OEX could then make another run for the day's highs as the 5(3)3 cycles back up again and the 21(3)3's turn back up. However, if the fall is steep on a slow move down on the 5(3)3's, the 21(3)3 is liable to be pulled into a full bearish roll, too.

 
 
  Jonathan Levinson   4/15/03,  1:45:19 PM
The suspense was killing me, so I switched to 5(3) stochastics. The bounce seems to be running out of steam, and if it continues to do so, then that's a lower high, again. The market can keep falling down the stairs as far as I'm concerned. The FVX is down 3.9 bps now, HUI is up 1.43 now, and the decline looks pretty solid so far. Only QQV and VXN, both unconscious now, are confusing me, with VXN -2.57 and QQV -1.74. The put to call ratio is up to .93 again- also confusing.

 
 
  Linda Piazza   4/15/03,  1:35:55 PM
The OEX now tests that 449.69 level (38.2% retracement of the October-to-December move) from the top. The outcome of that test may tell us a lot about what to expect next. Here's a 60-minute OEX chart that shows what's happening today. (My apologies in that the chart is growing somewhat confusing with various chart formations marked, but I sometimes find that those chart formations later become important again, so I hesitate to delete them too soon.) Link

 
 
  Kent Barton   4/15/03,  1:32:36 PM
Timberland (TBL) $47.80 +4.51: Our PremierInvestor long play was closed out last night, prior to Timberland's earnings report. And what a report it was! Shares are trading higher by nearly 10.5% after the company announced a Q1 profit of 53 cents/share. The analyst consensus was only 32 cents/share.

Traders who took the very aggressive approach of holding over earnings should strongly consider taking profits at current levels. The stock has blasted higher over the past hour, but might see some consolidation as we move into the closing bell.

 
 
  Jonathan Levinson   4/15/03,  1:31:08 PM
The trendine has been broken, and now we need to deal with the various support levels below. 1382, 1377, 1375 are the ones to watch.

 
 
  Jonathan Levinson   4/15/03,  1:19:16 PM
HUI and XAU are getting frisky, HUI +1.01 and XAU +.76, while FVX goes lower, -3.5 bps and bringing my mood out of "oversold". That lower trendline is getting tested again for equities and I'm expecting a break to bring some selling volume with it. Time will have to tell, but it could be soon.

 
 
  Mark Phillips   4/15/03,  1:08:23 PM
Re: BBBY Was that round number as the target to harvest profits 40.00?

I thought I had been clear that $40 was a good point to harvest profits, but in looking back at my 12:43 post, I see what the problem was. I seem to have a stubborn shift key that doesn't like to stay down long enough for me to get a '$'. As a result, my initial post said to look for a move to 440 for harvesting gains. Hmmm, now wouldn't that be nice? Kind of reminds one of those heady days of 1999-2000, with the $800-1000 price targets on stocks like AMZN and QCOM, now doesn't it? HUGE GRIN

Sorry for the confusion. The initial post has been corrected.

 
 
  Mark Phillips   4/15/03,  1:02:27 PM
AZO $77.17 (+0.68) While not showing a big %Gain today, here's another call play that is looking pretty healthy. After finding support at $75 yesterday, AZO managed to crawl over the $76 level at the close. And after a brief dip at the open today, the stock is once again making progress to the upside, now over the $77 level that we had suggested could be used for momentum-type entries into the play. A close at current levels would represent the stock's best closing performance so far this year, but we do have looming intraday resistance at $78 and then $79. I'm still expecting a push to the $80 level over the near term, and that would provide a good opportunity for conservative traders to harvest some partial gains. stops should now be raised to $73.50, which is just below last week's intraday lows.

One point of concern is the fact that volume has been downright anemic on this rise, and a lack of volume denotes a lack of conviction on the part of the bulls. Note that the 10-dma (currently $75.41) has been providing support on the dips and more conservative traders may want to be a bit more aggressive with their stops, perhaps setting them just below $75 just in case this rally falls apart.

 
 
  Jeff Bailey   4/15/03,  12:52:12 PM
Asset allocation Stockcharts.com was having some "update" problems with their 10-year Treasury PRICE ($UST) and it hadn't been updated since April 8th. However, it looks like they are making progress and it is now updated through yesterday's trade (April 14th close). Link

Still, I "know" that the cash bond ($UST) must be higher today as the 10-year YIELD ($TNX.X) falls to 3.993% and I don't get a true and accurate reading from my relative strength chart where I like to compare the Dow Industrials or SPX against this bond, looking for a RELATIVE STRENGTH buy signal to signal that a real shift is being seen from Treasury into stocks.

Isn't it "suspicious" that bonds see selling two day (Friday and Monday), while stocks rebound yesterday and today, but bonds see selling today? What's next? Will stocks see selling tomorrow?

I say "suspicious" that bonds see selling today as I looked at the RS chart of the Dow Industrials vs. the 10-year cash bond (yesterday's close) and check out just how darned closed the RS chart was to giving a "buy signal" yesterday. Of course we're seeing a "buy signal" today, but it is probably due to using Monday's close for the 10-year bond. Link

I'm trying to find a "cash bond" price right now. I don't know what the q-charts symbol is for the "cash bond".

 
 
  Jonathan Levinson   4/15/03,  12:51:22 PM
Thanks to James for pointing out a typo I made earlier about the index and equity put to call ratios (pcr). When the index pcr breaks away from the equity pcr (index pcr moves away from the equity pcr to the upside), I view that as bearish. Conversely, when the index pcr drops lower and the equity pcr moves higher, I view that as bullish. I trust the index pcr as being indicative of the "bigger" money, while I think of the equity pcr as the "little guy." I fade the equity pcr (little guy) and follow the index pcr. I don't trade on this alone, but it's tended to work as a secondary indicator for me, for confirmation or clues- just one I keep in the toolbox.

 
 
  Mark Phillips   4/15/03,  12:43:41 PM
BBBY $39.08 (+0.53) Turns out that breakout over $38 yesterday was the real deal, as BBBY continues to churn higher, now taking out the $39 level and the move is coming on respectable volume. While it is a decidedly light volume session across the market, BBBY has already traded 2.4 million shares today, already over 70% of the ADV. The stock is likely to find resistance at the round number of $40, and that would certainly make a viable target for traders to harvest some partial gains, looking for a dip back near the $37-38 area to get back in.

 
 
  Linda Piazza   4/15/03,  12:37:13 PM
At 2302.83 and again approaching the day's high as I type, the Dow Jones Transportation Index has moved above its exponential 200-dma at 2296.75. On January 6, the index had a one-day close above that moving average, but then moved below it on subsequent days and fell away, signaling the decline to come in other indices. It was already falling away from this average as many other indices were just approaching their January highs and their own 200-ema's, in some cases. The TRAN was one of the first to test important resistance and one of the first to signal the likely outcome for other indices--a decline in that case. As was true during the January test of the 200-ema, the 21(3)3 daily stochastics are now in territory indicating overbought conditions and the RSI is approaching that levels, too. Unlike the January touch of this ema, however, the 5(3)3 stochastics are not yet at levels indicating overbought conditions, and have plenty of room to run. We'll all be watching the TRAN to see the signals it gives next.

 
 
  Jonathan Levinson   4/15/03,  12:37:12 PM
The market has flatlined as it nudges agains the lower ascending trendline of the upchannel on today's 5 minute candle chart. It will either pierce that line, and lift my spirits accordingly, or bounce back up and take my stochastics with it. The FVX is down 2.6 bps and gold and the miners are looking good here. Wait and see for now.

 
 
  Jonathan Levinson   4/15/03,  12:29:17 PM
It looks like the bounce attempt is coming under pressure here.

 
 
  Jonathan Levinson   4/15/03,  12:13:03 PM
Incidentally, I finally downloaded the updated Market Monitor applet and have finally begun following the combined futures and options threads. If you haven't already done so, I highly recommend it. Jim, Vlada, Alan and John are rocking the house in there.

 
 
  Jonathan Levinson   4/15/03,  12:09:50 PM
Is FNM a reasonable SHORT/PUT play on a technical/fundamentals basis ?

Let me be specific. I believe that FNM is a short candidate, but I don't believe that any company should be a put candidate on funny-mentals alone. The sole reason for this is that the market, particularly this year's market, can remain irrational far beyond our contracts' expiry dates. I learned this lesson the hard way last year, giving back my considerable profits made with GE puts on more GE puts. I believe that when the credit bubble goes, FNM is going to be roadkill- just my opinion, and others will differ. I don't recommend jumping on puts or shorting calls because of its report. Let the funny-mentals guide you, as they have, and start studying the daily and weekly charts for a setup. That would be my approach.

 
 
  Linda Piazza   4/15/03,  12:04:30 PM
Here's an update of the Wilshire 5000's daily chart, showing an overview of the broadest of our markets. Like the OEX, the Wilshire climbs the underside of a violated trendline and is within reaching distance of further strong overhead resistance. The Wilshire pushed through a descending trendline this morning, but did so last week, too, before falling back. Let's see what happens, but stochastics evidence hints that it's possible that the Wilshire will move up to challenge that overhead resistance, but that much strength may already be depleted by the time it makes that challenge. Link

 
 
  Jonathan Levinson   4/15/03,  12:04:22 PM
The FVX is down from nearly flat to -1.9 bps now, while QQV is up to -.65 and VXN remains buried at -1.96.

 
 
  Jonathan Levinson   4/15/03,  12:02:40 PM
Great comments!!! These days like this I tend to break down the put/call. Esp on options exp week. One thing to note.... the equity put/call is at a .65 while the rest of the put action is the result in index trading. With all these option daytraders and retail investor rolling out of there position.... I would pay more attention to the equity put/call and bond action as well. Your thoughts if you have the time of course? thanks again

For better or for worse, I use the equity put to call ratio as a contrarian indicator, and I trust the equity put to call ratio dead on. When the equity pcr starts to diverge higher than than the equity pcr, I view that as bearish. Once again, good eye, Vic!

 
 
  Jonathan Levinson   4/15/03,  11:55:20 AM
The 10(5) stochastics are rolling on the shorter timeframes, and I'm now watching to see what kind of downside traction we get for this downphase off the top. A shallow pullback with the stochastics becoming quickly oversold will tell us that the upchannel is very steep indeed, and will portend higher highs. On the other hand, a deeper pullback could signal an end to this light volume rally.

 
 
  Linda Piazza   4/15/03,  11:48:15 AM
Volume patterns are now all positive, with adv/dec ratios at 1.44 for NYSE-traded issues and a more neutral 1.07 for Nasdaq-traded issues. Up volume is almost twice down volume on the NYSE and almost 2-1/2 times down volume on the Nasdaq. New highs strongly outnumber new lows.

 
 
  Jeff Bailey   4/15/03,  11:41:04 AM
11:00 Update posted at this Link

 
 
  Jonathan Levinson   4/15/03,  11:41:01 AM
It feels like a lot more than 8.28 COMPX points and 41.87 INDU points have been added today, but so far, that's all it is.

 
 
  Jonathan Levinson   4/15/03,  11:33:55 AM
They're buying bonds despite the appearance of a rally to challenge major resistance. Volatility is way down on the COMPX and QQQ, while the put to call ratio is very high. My bearish thought is that if it were retail investors buying those puts and market makers writing them, we'd see much higher QQV and VXN readings, as the big boyz drill the small investors for higher premiums. The reverse is occurring. Combined with the weakness in the yield, this leads me to conclude that market makers are buying back their short puts here. After that, will it be time to blow out the calls in time for op-ex Thursday?

 
 
  Mark Phillips   4/15/03,  11:20:19 AM
This session certainly had a hard time deciding what it wanted to do, but right now, things seem to be leaning in favor of the bulls, with all the indices green and the ADVDECV readings also in positive territory. Not a runaway session, by any stretch of the imagination, just a reluctant grind higher.

WFMI $58.42 (+0.49) This play finally started to look bullish late yesterday afternoon, as it crept up to its high of the day in the final hour. There wasn't much of a pause this morning either, as the stock pushed right through the $58.25 resistance and is now just a few pennies below its new all-time high of $58.53. As long as the move doesn't fade into oblivion later today, this is a solid breakout through resistance. Those still looking for an entry into the play will want to either seek a pullback and bounce from the $58 level or a sharper pullback to the ascending trendline, now just below $57. At this point, stops should be raised to protect gains and our official stop will be raised to $56 (just below both the 20-dma and the ascending trendline) tonight.

 
 
  Linda Piazza   4/15/03,  11:18:18 AM
For those at work, President Bush now makes statements regarding the economy.

 
 
  Jonathan Levinson   4/15/03,  11:15:16 AM
QQV has bounced to flat for the day, VXN still -1.30. FVX has crept up to -1.4 bps on the day.

 
 
  Jonathan Levinson   4/15/03,  11:11:44 AM
The put to call ratio has risen to 1.04, a bullish reading.

 
 
  Linda Piazza   4/15/03,  11:10:13 AM
The OEX is climbing the outside of its former supporting line, with that former supporting line so far providing resistance this morning. That resistance is currently being challenged again as the OEX moves to 451.38 as I type. The OEX can continue to climb for some time while stochastics (not shown on this chart) continue at overbought levels, however, without the OEX ever breaking through that resistance. That circumstance would not be particularly cheering to OEX bears. OEX bulls aren't off the hot seat, though. They should keep the VIX level in their radar, as any VIX rally could signal trouble with the VIX near one level of support.

 
 
  Jeff Bailey   4/15/03,  11:09:17 AM
S&P 500 Index (SPX.X) 888.61 +0.4% ... getting upside alert here at WEEKLY 38.2% retracement.

Quick check has the S&P Banks Index (BIX.X) 280.52 +0.8% "confirming" at session high.

 
 
  Jonathan Levinson   4/15/03,  11:08:19 AM
The COMPX / QQQ have reached resistance, COMPX 1392, QQQ 26.28. Last Friday's flagpole rally failed right here, if memory serves. The FVX has gained, now up to a 2.3 bp loss for the day. QQV has caught up to VXN on the downside, both down 1.33 even as I type. HUI and XAU are still lightly in the green. Because I see no reason why this drift higher can't go on forever and because we're at significant resistance, the move should about soon. No sign of weakness during the past half hour.

 
 
  Jonathan Levinson   4/15/03,  10:57:50 AM
The QQV and VNX are down, with the broader VNX leading the way, VXN -1.40, QQV -.96. If the tech indices are leading, we could see the VIX seriously challenging its support line.

 
 
  Jeff Bailey   4/15/03,  10:57:26 AM
Dow Transports (TRAN) 2,290 +2.64% ... strong move higher today takes the transports above their 200-day SMA.

 
 
  Jonathan Levinson   4/15/03,  10:55:52 AM
Still no confirmation from bonds. FVX is down 3.5 bps- hasn't budged on this push to new equity highs.

 
 
  Jonathan Levinson   4/15/03,  10:44:44 AM
The put to call ratio has risen to .84. I keep wondering to myself whether the option writers are trying to run up the indices to blow out the put holders, just before running them back down to blow out the call buyers. No way to know til we get there, but this *is* op-ex week.

 
 
  Jonathan Levinson   4/15/03,  10:42:19 AM
The top of that move has blown off into a spike, but the COMPX is still hanging comfortably above the 1382 breakout point. Treasury yields remain well in the red, FVX -3.5 bps- no confirmation of any rally so far. This makes it difficult to go long, but the tenacity of that lower end support around 1377 makes it difficult to go short. Gotta love these ranges.

 
 
  Jonathan Levinson   4/15/03,  10:34:24 AM
We have an assault on what is now a triple top on the COMPX, printing highs of the day on a return to the pre-market highs from this AM. FVX is down to a 3.2 bp loss currently.

 
 
  Jeff Bailey   4/15/03,  10:32:58 AM
S&P Banks (BIX.X) 279.95 +0.6%... getting upside alert here per last night's Index Trader Wrap!

 
 
  Jeff Bailey   4/15/03,  10:29:10 AM
Fluor (FLR) $35.74 +0.39% ... Jeff: Any updates on FLR? I haven't seen you mention it recently? It has just been sitting here in recent days and MACD is starting to roll. Do you think its time to take profits?

I've "struggled" with taking profits in FLR too, but I've decided it isn't worth the "risk" that as soon as I take profits, they might announce they were awarded a contract for the rebuild of Iraq. So.... I'm going to hold on. I bought quite a bit of time in the Oct. $30 calls. If I owned current month or sooner, then I'd have more reason perhaps to lock a gain from $29 level.

Earnings are scheduled to be released on April 29th, after the close. Consensus is for $0.50 per share, which would be 5-cents above year-ago.

 
 
  Linda Piazza   4/15/03,  10:24:44 AM
Gold and crude oil up, bonds down: these are bearish for equities. Dollar down and then up, but only minimally: let's count that neutral. VIX up, but below the middle of yesterday's range, VXN down: that's neutral to bullish for equities. What about volume patterns? Although volume patterns can be deceptive in early trading, they currently show more decliners than advancers, but roughly equal up/down volume, and far more new highs than new lows, so I count that a wash so far. So far, the picture presented by these relationships is mixed.

 
 
  Jeff Bailey   4/15/03,  10:19:26 AM
S&P 100 Index (OEX.X) 448.56 -0.23% ... Here's a chart with WEEKLY/MONTHLY and CONVENTIONAL retracement overlaid. Right now, finding morning resistance at the CONVENTIONAL 38.2% retracement, and most likely takes a BIX.X above 280 to help OEX to upside. With 10-year YIELD below its WEEKLY pivot here, I'm thinking OEX near-term pullback into its WEEKLY pivot minimum, with potential to 441. Link

Bulls willing to give some room can hold long here, using today's DAILY Pivot of 446.70 and WEEKLY pivot 446.60 as near-term correlative support on intra-day basis.

 
 
  Jonathan Levinson   4/15/03,  10:14:34 AM
If this morning's pattern holds, the COMPX should bounce from here within yesterday's 1377-1382 range. A break below 1377 would be nice, but I'd wait for 1375 to get breached before acting on it.

 
 
  Jonathan Levinson   4/15/03,  10:11:47 AM
The put to call ratio opened at .78, which I would characterize as a neutral reading. The FVX is down 4.4 bps, TNX -4.9 bps, TYX -3.9. Gold and precious metals in the green, TRINQ risen to 1.04.

 
 
  Linda Piazza   4/15/03,  10:08:15 AM
The VIX is up today, but still at levels that keep it in the lower half of yesterday's large red candle. Equity bulls want to see the VIX level keep moving lower or at least remain in the lower half of yesterday's range, while equity bears want to see a bounce in the VIX that produces a large white candle today. Note: As I typed, the VIX eased off its high.

 
 
  Jeff Bailey   4/15/03,  10:05:56 AM
S&P Banks Index (BIX.X) 279.29 +0.35% .... approaching DAILY R1 and WEEKLY R1 of 279.80 here. I'm a bit "surprised" the major indexes have bid as well as they have in early going and "bucked the buying" in Treasuries. Banks may be near-term key to bull's continued success.

 
 
  Jonathan Levinson   4/15/03,  10:03:17 AM
The fed has announced a 2B overnight repo. With no expiries today, this is a net add.

 
 
  Linda Piazza   4/15/03,  10:02:14 AM
The OEX briefly moved above the April 11 high but is also jammed against the underside of the violated ascending trendline that began forming March 12. Both 5(3)3 and 21(3)3 stochastics are in territory indicating overbought conditions, but they can stay there for days while the OEX continues up. Still, this indicates the need for either a pullback or consolidation to ease the overbought conditions. Which will it be?

 
 
  Jonathan Levinson   4/15/03,  10:01:21 AM
That bearish stochastic cross I was waiting for is starting now. I would be inclined to wait until a break below COMPX 1375 before trusting the move.

 
 
  Jonathan Levinson   4/15/03,  9:52:26 AM
The QQV is positive, up .31 to 33.59, while the VXN is -.52 to 38.99. Still a cliffhanger as to which way today wants to go.

 
 
  Jonathan Levinson   4/15/03,  9:51:05 AM
The 10(5) stochastics are trying to cross from deep within overbought on the 60 minute COMPX candles, but a bounce from previous resistance seems to be taking hold. FVX is off its lows but still down 4.5 bps. This is already an exciting day.

 
 
  Linda Piazza   4/15/03,  9:47:33 AM
After closing ten cents over its simple 200-dma, the SOX has fallen back below that 305.29 MA this morning, trading at 302.83 as I type. The day is young and the average remains within striking distance again, but as I mentioned yesterday, the exponential 200-dma actually appears to have more significance for the SOX, in my opinion, at least.

 
 
  Jeff Bailey   4/15/03,  9:46:17 AM
NetScreen Tech (NSCN) $18.88 +1.23% ... stock seeing gains this morning after CNET published an article last night which highlights one of the few "bright spots" in IT spending being the hardware and software security sector. The article points to funding for security technology increasing 60% from 2002 to 2003. In addition, the article charecterized the September quarter as a "potential inflection point" for security vendors give the projected increases in security related spending. The article mentioned NSCN as a beneficiary of this type of growth momentum given its inexpensive firewall and virtual private network server products.

 
 
  Linda Piazza   4/15/03,  9:44:30 AM
The OEX closed yesterday right below its 38.2% retracement of the October-to-December move at 449.69, and now is headed back to retest that level, with the OEX inching toward that retracement level as I type.

 
 
  Jeff Bailey   4/15/03,  9:39:40 AM
Geron (GERN) $5.19 +17.7% ... received patent this morning that covers the use of its Telomerase inhibitors, including GRN163. Telomerase inhibitors of this type are currently undergoing pre-clinical testing at Geron for use in treating a range of human cancers.

 
 
  Jonathan Levinson   4/15/03,  9:33:38 AM
Chips are leading the way down in a big way, SMH -2.32% 2 minutes out of the gate, while QQQ is down .46%.

 
 
  Jeff Bailey   4/15/03,  9:32:08 AM
QQQ $25.98 -0.23% ... I'm going to move to the sidelines here in my 1/2 bullish position from Friday.

 
 
  Jeff Bailey   4/15/03,  9:31:11 AM
10-year YIELD ($TNX.X) 3.973% .... treasuries see strong round of buying here and has 10-year YIELD falling below our WEEKLY pivot after release of March Industrial Production which fell 0.5% and below consensus of -0.2%.

 
 
  Jonathan Levinson   4/15/03,  9:29:26 AM
The Bank of Canada has unexpectedly raised its overnight interest rate 25 basis points to 3.25%.

 
 
  Linda Piazza   4/15/03,  9:26:32 AM
European markets have eased off their earlier highs, but still remain positive, with the FTSE 100 now up 56.20 points or 1.46%, and holding onto the 3900 level, at 3905.60. The CAC 40 is now up 33.91 points or .69%, and holding onto the 2900 level, at 2908.89. The DAX is up 47.65 points or 1.72%, to 2824.43.

 
 
  Jeff Bailey   4/15/03,  9:26:01 AM
09:00 Update posted at this Link

 
 
  Jonathan Levinson   4/15/03,  9:24:00 AM
Spot gold is now up over 1$, trading over 325/oz. FVX is back down to a 3.6 bp loss, QQQ 25.99.

 
 
  Jonathan Levinson   4/15/03,  9:22:41 AM
9:15 March industrial output -0.5% vs -0.2% expected

9:15 Industrial output falls -0.5%; capacity use 74.8%

9:15 Capacity use 74.8% vs 75.3% forecast

9:15 Manufacturing output -0.2%; durable goods -0.4%

9:15 Factory output ex-autos down smaller 0.1%; autos -1.8%

 
 
  Jonathan Levinson   4/15/03,  9:14:54 AM
Futures are headed lower, QQQ now trading 25.98, yet yields are moving up, with FVX -2.1 bps now. This is a lack of confirmation from the bond market so far, which should have equity bears cautious.

 
 
  Jonathan Levinson   4/15/03,  8:53:45 AM
That exhilirating dip in the futures could have something to do with JaPalM (NYSE:JPM) being alerted to a possible SEC action due its alleged conduct in the Enron affair: Link

 
 
  Jonathan Levinson   4/15/03,  8:41:39 AM
The US Dollar Index is back below 100.00, though gold has yet to regain the 324/oz level.

 
 
  Jonathan Levinson   4/15/03,  8:34:51 AM
The drop continues, with QQQ now trading 26.04. Bonds have opened, with FVX -3.5 bps, TNX -3 bps and TYX -1.2 bps. ES futures now +.25 at 886.25, NQ +.5 at 1049, and YM -1 at 8341.

 
 
  Jonathan Levinson   4/15/03,  8:17:34 AM
Data this morning:

9:15am Capacity Utilization for March prior 75.6% consensus 75.4%

9:15am Industrial Production for March prior 0.1% consensus -0.2%

 
 
  Jonathan Levinson   4/15/03,  8:15:30 AM

Off topic:

Good morning, Jonathan,

What's the good news for Quebec??? It seems that we only hear war news here.

Thanks for asking. For the past nine years, the Parti Quebecois has been in power. Its vision is based on the concept of sovereignty for Quebec, based on a tired mix of xenophobic ethnic and cultural nationalism. They were defeated last night in a landslide victory for the Liberal Party, headed by Jean Charest, on a platform of tax reduction, improved health care, economic stimulous, and renewed federalism within Canada. Jean Charest, unlike every other Canadian politican since perhaps Pierre Trudeau, appears to be an honest, eloquent, level-headed, perfectly-bilingual leader, representative of what I like to think of as the majority of voters. He has made no attempt to hedge his view against the separatists. This is the first time ever that I'm feeling political optimism in Canada, Quebec and Montreal.

 
 
  Jonathan Levinson   4/15/03,  8:07:33 AM
The futures have suddenly dropped back from what felt to me like nosebleed territory, ES now +2.75 at 888.75, ND +2.50 at 1051, and YM +30 at 8372. QQQ dropped from 26.20 to 26.09. Looking at the VIX chart, not only is it at support (see James' market wrap), but it's gotten there in a bullish descending wedge. What's bullish for the VIX is bearish for the SPX/OEX/INDU.

 
 
  Linda Piazza   4/15/03,  7:36:28 AM
Good morning. Cheered by IBM's higher-than-expected Q1 sales and affirmation of projections for full-year earnings and also ready for a relief rally, the Nikkei climbed 86 points or 1.1%, to end at 7838.83. Tech stocks led the Nikkei higher. Sony, Fujitsu, and Toshiba each gained more than 2% by the morning break. Tech companies gained in other bourses, too, and gains extended to companies such as the carmakers, all buoyed by rallies in U.S. markets yesterday. Financials were also helped by two developments. Tokyo's just reelected governor Shintaro Ishihara plans to set up a new bank, with plans to change the way banks lend money. Also, the Industrial Revitalization Corp., created to buy the bad debt of companies from banks, said it expects to be profitable after the first few years of operations.

Most other Asian markets climbed, too. Chinese investors had reason to be cheered, with the release of China's Q1 GDP, showing it rose 9.9% from year-ago levels. However, the economic impact of SARS may not yet be felt. China's Shanghai Composite chose to focus on the more cheerful GDP, climbing .95%.

Reporting European companies also offered cheer to those markets, with Royal Philips Electronics, Adecco, and Novartis beating forecasts, although that meant reporting smaller-than-expected losses in some cases. IBM rivals and suppliers also were gaining in Europe, as well as in Asia. Telecoms climbed after Deutsche Telekom forecast that higher operating profits, lower interest expenses, and other factors would result in improvement in its 2003 profit. Invensys may have been one of the biggest gainers, climbing 7.8% in early trading on news that it would sell half its business. As of this writing, the FTSE 100 was up 66.70 points or 1.73%, to 3916.10, the CAC 40 was up 67.90 points or 2.36%, to 2942.88, and the DAX was up 88.48 points or 3.19%, to 2865.26.

 
 
  Jonathan Levinson   4/15/03,  6:55:07 AM
Despite the first piece of good political news in my home province in my recent memory, I was unable to sleep last night, and had occasion to reflect (for hours) on the big picture. Short term, I'm seeing big runup in the futures, ND +11 to 1059.50, ES +4.75 to 890.75, and YM +45 to 8387. The QQV wouldn't go down, barely budging yesterday, ditto the VXN and VIX. This is because they're all on solid support, and if that support holds, the indices should turn back. Where/when? At next resistance. Given the current levels in the futures, we should be there, or are close to it. Nothing guarantees it, but that's how I see it.

Yesterday was a puzzling day, and I'm still baffled at who was doing the buying. There was little volume overall, but whether you're a bull or a bear, that rising 60 minute trendline is cold comfort in the face of corporate earnings due, a very "soft" set of economic data, geopolitical uncertainty, possibility of plague and pestilence, etc. I've been struggling to remain neutral, but zooming out from even the shortest term, I see little to convince me of the bullish case. We are approaching a level that has been met with solid selling in recent months, and in my view, these sudden rallies that subsequently fade have served only to deplete the buying power of those who have attempted to go long on them. Only the savviest swing traders and scalpers can ride them profitably. The market continues to feel toppy to me, and on anything but the shortest term basis, I believe that this is what we're seeing. Given yesterday's light volume and the continued net long bias in the COT reports, I expect support to be thin on the way back down if the current upmove aborts. A gap n crap scenario for this morning is a possibility.

The key remains to trade safely, underleverage, and watch your stops. Disclosure: I am holding bearish positions.

 
 
  Jeff Bailey   4/14/03,  12:49:32 AM
The Index Trader Wrap has been posted: Link

 
 
  Vlada Raicevic   4/14/03,  12:49:21 AM
The Futures Trader Wrap has been posted: Link

 
 
  James Brown   4/14/03,  12:48:49 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

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