Option Investor
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  Jim Brown   4/25/03,  11:55:15 PM
The Market Monitor server will be down for maintenance for several hours beginning at midnight on Friday. It will be back up on Saturday morning.

  Jeff Bailey   4/25/03,  11:24:22 PM
SPX Intra-day chart Link and how next WEEK's level, came into play this past trading week. See if you can "envision" a weekly trade as it relates to the point and figure chart where we tried to envision a weekly trade.

  Jeff Bailey   4/25/03,  10:32:27 PM
To make sure I'm not "off my rocker" I went back and checked last Thursday evening's thoughts on what type of trade would take place this week. Link

Instead of saying "alert for follow through higher on Monday" I should have added Tuesday and Wednesday. I will say the SPX acted somewhat similar to the "pinch" trade as the SPX traded its WEEKLY R2 (I thought we'd only get to WEEKLY R1, then fall to S2 and rebound).

Well... here's how I "envision" this week's SPX trade. Link

  Jeff Bailey   4/25/03,  9:23:44 PM
S&P 500 Chart (SPX.X) with MONTHLY (red), WEEKLY (blue) and CONVENTIONAL (pink) retracements. Link

  Jeff Bailey   4/25/03,  8:16:42 PM
DAILY/WEEKLY/MONTHLY Pivot matrix for next week. Link

PINK highlight #1. BIX.X WEEKLY S2. From today's 01:00 PM Link something of this magnitude might fit in with BIX.X chart and lower end of regression. However... to get there, must break WEEKLY S1 and MONTHLY R1 along with starting to round out 200-day SMA. Regardless, put me down for 1/2 bullish position in the bank holders near BIX.X 275 this week if traded. Maybe 3/4 if 10-year YIELD stays above 3.822%.

PINK highlight #2. Per 01:00 Update and potential profit taking pullback in SPX. With SPX weekly pivot levels moving higher, no correlation this week at 844. Doesn't mean it can't be traded, but I really doubt it. More on this with SPX WEEKLY/MONTHLY retracement overlaid. You may see how a bounce on Monday and decline into the week might set up a trade the following week at SPX 844.

PINK highlight #3. March closing YIELD on 10-year ($TNX.X) was 3.823%. I'm thinking "end of quarter" re-allocation of assets. This 3.823% shows up in Monday's DAILY S2 and WEEKLY S1. Both in play near-term with 10-year YIELD close of 3.886% today (Friday). Now think... if YIELD lower on Monday morning, play the equity indexes short. This 3.82% YIELD was this past week's WEEKLY S2. Something important at this level that needs to be monitored. I think this is a level where the MARKET will make a decision as it relates to us having either seen the index highs, or if we've got one more leg higher in the indexes as the bullish % charts still indicate there is room to go before risk for bulls becomes too high.

DASHED Red Resistance: These are all correlative levels of near-term resistance, based on today's closing values. These are more "tentative" levels of resistance and they were traded today as the indexes fell through them.

SOLID Red Resistance: Many of these are at the WEEKLY R1. You will see that these are Tuesday's highs. Like the previous two relative highs in the SPX and OEX, these are a BEARS current risk assessment.

  Jeff Bailey   4/25/03,  5:13:54 PM
3M (MMM) 122.90 -2.24% ... I've updated my DAILY/WEEKLY pivot matrix for this stock.

DAILY S2= 120.60 S1= 121.75 P= 124.89 R1= 124.89 R2= 126.88

WKLY S2= 116.97 S1= 119.93 P= 125.56 R1= 128.52 R2= 134.15

MNTY S2= 112.66 S1= 121.34 P= 128.15 R1= 136.83 R2= 143.64

Attention drawn to support= 120 resistance= 128. Will tie in 50-day SMA at $128 right now. P/F chart shows past demand at the $120 level on December (red C) and early March (red 3) pullbacks. Link then 128 would also be right where recent supply outstripped demand on a more meaningful basis.

Will try and use these observation with Dow Industrials too. Might be Dow 8,200 or 8,150 on MMM near $120? Link

This makes sense to me if MMM is the "head" of my inchworm. Dow Indu index trader might take some notes, and monitor MMM near-term. Would want to find renewed leadership and sponshorship in MMM from institutions with thinking... "they must have been buying it on thoughts of stock benefiting from something, and if they're still thinking bullish, they should support at $120 after seeing $136."

Here's the RS chart of MMM vs. the Dow. I changed the box size to 0.25 to try and add a little noise. Otherwise, just a straight up column of RS. Link

Does it make sense, based on the RS chart of a MMM $120 and Dow Indu 8,200? If I divide MMM $120 by Dow 8,200, I calculate a RS of 14.6. Divide MMM $120 by Dow 8,150 and I get 14.72. Some important near-term support levels most likely coming up this week.

  Jim Brown   4/25/03,  4:01:21 PM
SFD 3-5 cents guidance vs est 14 cents

  Linda Piazza   4/25/03,  3:55:38 PM
Sixty-minute charts on many indices still show the potential for a short-term bounce while daily and weekly charts still show the likelihood that the pullback has not yet been completed. Perhaps we'll see a failed bounce early in the week and then a pullback that shows us exactly how much of an underpinning there might or might not be in these markets.

  Linda Piazza   4/25/03,  3:50:05 PM
Total volume so far today is 1.1 billion shares for the NYSE and 1.3 billion for the Nasdaq. New highs/new lows patterns still show more new highs, but down volume exceeds up volume by 3.9 times on the NYSE and by 3.7 times on the Nasdaq. Adv/dec ratios are .60 for the NYSE and .66 for the Nasdaq.

  Jonathan Levinson   4/25/03,  3:42:38 PM
Here's a graphic depicting the bounce off the lows of the day just now: Link

  Jonathan Levinson   4/25/03,  3:39:57 PM
Is that a gravestone doji just about done printing on the weekly COMPX? I think of a doji as a giant "Oops!" moment in a given timeframe, where the crowd turns 180 degrees on its heels and heads in the opposite direction. The lack of selling panic equal to the buying panic earlier in the week makes this a weaker "doji" signal than I'd otherwise want to see, but in any event, this week's closing candle is not bullish.

  Linda Piazza   4/25/03,  3:36:47 PM
About the best that can be said of the VIX over the last four trading days is that it's been consolidating just above 23-23.25. Consolidation patterns can be continuation patterns or reversal patterns. Daily oscillators give more credence to the reversal scenario as all are in territory indicating oversold conditions and rolling up, although they haven't yet moved up out of those oversold levels. The weekly chart shows a downward-sloping regression channel with the VIX near but not yet at the lower line near 21. The weekly chart also shows oscillators that are in oversold territory, but these haven't yet turned up. Perhaps the weekly oscillators are just more sluggish than the daily ones, but they're indicating more risk to the downside, down to 21, for the VIX (bullish for equities) than are the daily oscillators.

  Linda Piazza   4/25/03,  3:23:18 PM
The DAX closed down 53.39 points or 1.85%, at 2838.23.

  Jeff Bailey   4/25/03,  3:18:46 PM
3M (MMM) $123.07 -2.1% .... The "head" of my Dow inchorm is turning back. Stock looks "oversold" on the bar chart, and I'm monitoring closely here at lower Bollinger and bullish support trend. Link

  Jonathan Levinson   4/25/03,  3:15:46 PM
The US dollar index has found a new home at 98.30.

  Linda Piazza   4/25/03,  3:12:45 PM
The OEX is currently inching under the bottom line of the rising wedge as it moves back to the day's low. That bottom line begins at the move off the March 12 low. It could get interesting here in the last hour as 60-minute charts hint at the possibility for (need of?) a short-term bounce while the daily charts show there's plenty of downside to go.

  James Brown   4/25/03,  3:03:27 PM
If anyone out there likes to trade stocks going sideways in a channel, whether you like to scalp the range in the middle or sell options at either end, shares of Nextel Communications (NXTL) have been channeling for months now and they are near the top of their channel.

  Jonathan Levinson   4/25/03,  2:59:25 PM

  James Brown   4/25/03,  2:58:29 PM
You're going to have to come up with a better birthday present than that, Jim.

  Jeff Bailey   4/25/03,  2:56:25 PM
Unumprovident (UNM) $9.20 -26% ... Hmph.... I still hold a bearish position in the September $5 puts on this one. Things starting to unfold for speculative bears. Had mentioned this one about a month ago based on various events and Warren Buffett's comments on reinsurers. Link

What I "liked" about it was Mr. Buffett's fundamental analysis. I think he has a decent grasp of fundamental analysis. (GRIN). The looooooong column of "O's" that has a bearish vertical count of $0.00. Link and the volume spikes on distribution and dumping by institutions. Link

Still some work to be done, but yesterday afternoon's announcement that it will restate 2000-2002 results, and today's S&P rating cut has Mr. Buffett looking "wise" again.

  Jim Brown   4/25/03,  2:55:10 PM
Michael Jackson - Did anybody happen to film the Michael Jackson 30th anniversary special last weekend on VH1? My daughter missed it and I would really like to have a copy of the show if it exists.

  Jonathan Levinson   4/25/03,  2:54:56 PM
Wow! I don't think I've blinked in the past half hour. QQV has gained .01, yes .01 point since I last posted, now reading 28.01. QQQ is trading 26.97, TICK.NQ +6, TRINQ 1.88. The put to call ratio has eased off the slightest bit to .91. On the 3 minute candles, this entire range at the lows looks like a broad bear flag to me for the Qubes.

  Linda Piazza   4/25/03,  2:49:19 PM
There's something interesting about Jeff's advice to assess risk down to SPX 846 in the 1:00 intraday update. That number jumped out at me because it's within a range I mentioned to a reader today. This astute reader, B., asked if I saw the potential for a H&S pattern setting up on the SPX. I'd replied that I had noted a possible left shoulder at the March highs, and a head just now forming, but added that the potential formation was as yet very early, as the head had not rounded down toward the possible neckline again. I'd mentioned that the neckline would be between 842-848, and Jeff's 846 comes within that range. That's why the number jumped out at me when I read the update, although Jeff was looking at other potentials and not that of a H&S formation. I'm certainly not predicting a H&S formation on the SPX, but I can use the information to manage risk. If I were in a bearish play now, for example, and if Jeff's caution were to be fulfilled with a possible move down toward 846, I'd certainly be guarding my bearish profits as the SPX approached that neckline number. If the SPX started up again from that level and I elected to take a bullish play, I'd certainly guard my bullish profits when the SPX approached the March highs again, just in case. I'd probably want to know what bullish percents were doing by that time, too. Looking ahead like this is helpful in managing risk, although it would be far too early to make any other type of trading decision based on this possibility.

  James Brown   4/25/03,  2:48:32 PM
Well, it looks like the only green on my screen is coming from the Biotech Index (BTK) +0.21% and the VIX and the VXN.

  Kent Barton   4/25/03,  2:28:45 PM
Clear Channel (CCU) $36.97 -1.89: CCU was hit with some heavy selling this morning on no apparent news. Our long play on PremierInvestor was stopped out at $37.99. Shares of fellow broadcasting stocks ETM, CXR, and UVN are also underperforming the market today.

  Jeff Bailey   4/25/03,  2:28:12 PM
01:00 Update posted at this Link

I think important for Index Traders

  Linda Piazza   4/25/03,  2:26:35 PM
I, for one, am glad to see the markets behave in a more orderly manner over the last few days, whether the direction is up or down. In the case of the OEX, I've seen it steady where you would expect it to steady, for example. Yesterday and this morning, the OEX found support at the 60-minute 21-pma, with that average steadying prices for a while. The OEX had not had an hourly close below this level since the 17th, and so the drop through that level saw an acceleration in the descent, as would be expected. The descent slowed again when the OEX touched the bottom line of that rising wedge, as would be expected. All day, the OEX has traded in accordance with the direction predicted by the dollar, bond prices, VIX, and volume patterns. For the last couple of hours, the positioning of the hourly oscillators has warned bearish traders to be alert to the potential of a bounce, so that traders could make decisions about stops or new entries. That bounce might not occur, but there's been an orderliness that was lacking in recent weeks. Whether the markets are going up or down, this kind of action is tradeable, while recent weeks have seen crazy action in which technical tools were worse than useless, trapping even the best of traders in losing trades. In fact, the best of technical traders might have been at a disadvantage. I watched that happening on the Futures Monitor, with skilled technical analysts getting stopped out of plays day after day. I stopped entering new trades, unwilling to just toss my trading account monies at the markets, hoping that trade would go my way. This feels more familiar. I hope the orderliness lasts, whether the markets go up or down.

  Jonathan Levinson   4/25/03,  2:11:17 PM
The QQV is now down .77 to 27.94. I'm tempted to short some puts here to hedge against that possible stray bounce, but it feels wrong with the QQV down here, telling me that there's very little premium to sell. QQQ is either being distributed here or building a base, and we won't know until either the buyers or sellers run out of steam. FVX -4.2 bps, TRINQ 1.81, TICK.NQ -42.

  Linda Piazza   4/25/03,  1:59:04 PM
If that was the OEX bounce, it was a sickly one, not touching the 200-ema before retreating. On the OEX 60-minute chart, RSI turns down again. There's been a bullish kiss on the 5(3)3 stochs, but the slow line has flattened rather than turned up. The 21(3)3 stochs are deep in territory indicating oversold conditions but haven't yet turned up. The danger of a Friday-afternoon rally exists, but there have been no strong signs of it yet.

  Linda Piazza   4/25/03,  1:54:09 PM
Just as it seemed likely once again that AMR would be forced into bankruptcy, AMR's flight attendants accepted the latest proposal to help the company avoid filing. AMR introduced its new CEO Gerard Arpey in a Dallas conference a few moments ago.

  Jonathan Levinson   4/25/03,  1:48:14 PM
The put to call ratio has risen to .96, with an index p/c ratio of 1.21, equity risen to .88. This is too high to allow bears to relax- but so far, no sign of a bounce above 27.07 for longer than a few ticks.

  Linda Piazza   4/25/03,  1:46:55 PM
OEX, SPX, Wilshire 5000, UTY, and Russell 200 attempt to climb above their 200-ema's again. The SOX remains far below its 333.55 200-ema as of yet, as does the DJI, but the NDX, TRAN, and BIX remain above their 200-ema's.

  Ray Cummins   4/25/03,  1:32:16 PM
Spreads/Combos & Premium-Selling -- Portfolio Activity

The recent upside activity in stocks came to an abrupt end today and it was probably not a "moment too soon" as many analysts were starting to overlook the fundamental effects of a sluggish economy. Although it's more popular to be "bullish" on share values, the truth is that we haven't turned the corner in terms of employment and business investment, and the most valuable sentiment measurements suggest there is substantial downside potential at the current levels. Fortunately, the Spreads/Combos and Premium-Selling portfolios have maintained a relatively even pitch with regard to market direction and the sell-off is just what we needed to bring the majority of plays back to profitability. Some of the more notable (and fortuitous) retreats were seen in CCMP, MERQ, QLGC, QCOM, TOT, GM, MHP, EASI, MMM, BAC, VAR, IGT, BSX, WMT, and the QQQ. Surprisingly, one stock that appears to be headed higher, regardless of the broader market malaise, is Glaxosmithkline (NYSE:GSK) and with the sold call at $40, the bearish position (May $42.5C/$40C) is in jeopardy on any further upside activity.

In contrast, the bullish sections of the portfolio are performing fairly well with only a few stocks approaching critical levels. Issues we are watching closely for further downside activity include BBBY, CTSH, and KRON. One standout among the bullish picks is Getty Images (NYSE:GYI), which was offered as a candidate for a synthetic position in Wednesday's OIN. Since that time, the issue has climbed over $2, offering traders who initiated the play a favorable, short-term profit.

  Jeff Bailey   4/25/03,  1:32:06 PM
Geron (GERN) $5.21 +5.25% ... bids back into its "zone of resistance".... did market makers get enough on this morning's broader-market weakness? Is the demand there to drive above today's highs and test WEEKLY R2 of $5.64?

  Jonathan Levinson   4/25/03,  1:27:37 PM
Laugh time: Link

  Jeff Bailey   4/25/03,  1:26:21 PM
Dow Industrials (INDU) 8,329 -1.3% ... reclaims WEEKLY pivot here.

Now I'm beginning to wonder if that 4.8% YIELD trade in the 30-year served as a "wake-up call" of some sort. 30-year YIELD now edges up fractionally at 4.815%.

Came "too close" to SPX 900 not to be noted.

  Linda Piazza   4/25/03,  1:26:11 PM
The FTSE 100 closed down 28.80 points or 0.74%, at 3870.20; and the CAC 40 closed down 36.30 points or 1.25%, at 2866.74. Currently, the DAX trades down 46.67 points or 1.65%, at 2844.95.

  Jonathan Levinson   4/25/03,  1:21:20 PM
The QQV is dropping on this bounce/pause, down .67 a moment ago and now unchanged- I've been seeing strange readings and suspect that quote.com is pushing some bad data today. June Gold is down .80 now, at 334.30, hwith HUI down .25 and XAU up .33. FVX is gaining a bit off its lows, currently down 4.1 bps. Little else to report as the Qubes drift slowly higher.

  Jeff Bailey   4/25/03,  1:17:32 PM
CBOE Internet Index (INX.X) 109.29 (unch) ...

Biotechnology Index (BTK.X) 364.56 +0.10% ... just edging green.

... DOW= 8,320, SPX= 900, OEX= 457, NDX= 1,086, QQQ=$27.01, $TYX= 4.809%, $TNX.X= 3.882%

  Linda Piazza   4/25/03,  1:02:38 PM
OEX 60-minute chart shows the RSI flattening and fast line of the 5(3)3 stochastics hinging up and likely soon to make a bullish kiss if prices steady or move up. This potential is occurring just as the OEX touched the bottom line of the rising wedge and the bottom line of the BB. If a bounce occurs, watch that 200-ema to help gauge strength or weakness. Daily oscillators still look bearish, with the exception of MACD, which is somewhat inconclusive at the moment. If the OEX falls through 455 instead, 454 might be weak support with 450 perhaps offering stronger support.

  Jonathan Levinson   4/25/03,  12:56:10 PM
A higher low on that last rollover, but little loft. Is this a bear flag on the QQQ 1 minute candles? FVX -5.4 bps, TRINQ 1.68, TICK.NQ +75. I have a fib cluster at 27.07, then at 27.14 and 27.27.

  Jeff Bailey   4/25/03,  12:50:11 PM
30-year YIELD ($TYX.X) 4.796% ... Aha!... I see some correlation at the 4.75% YIELD level. I've got a conventional retracment from 52.14 to 46.06, which is the September low to October high, which would have 80.9% retracement at 47.22, or 4.722%.

  Linda Piazza   4/25/03,  12:48:27 PM
A reader asks for my input on MMM. I'm glad to comply with the caveat that this is meant to be an observation of aspects of the charts and not trading advice. The SEC does not allow me to give trading advice to individuals. Also, I think other writers might have covered MMM, too, so check their advice, too, as they might see something I don't see on the charts. I always look first at the P&F chart. MMM has given a sell signal, but is just now sitting on its bullish support line. When I see that happening, I know the stock is at one of those key moments when there's a battle between the bears looking at the bearish target projected by the P&F sell signal and the bulls looking at the long-term support offered by that P&F support line. That target is not yet determined because MMM has not yet reversed to a column of X's.

The daily chart shows that MMM violated its 200-ema and 200-sma this morning, at 125.21 and 124.68, respectively. Unless MMM can close back above those MA's, that's a bearish development that would lead me to give more credence to the P&F sell signal than to the bullish support line. That bullish support line at 122 does have some relevance on the bar chart, however, with that being the location of an internal or best-fit type of ascending trendline drawn from the March 1999 low. The daily chart shows lots of congestion at the current level, so that it's rather difficult to pinpoint support, but horizontal support does seem to exist in the 120-122 areas. Another version of the ascending trendline from 1999 crosses near 118, so that's another level to watch for support. All shorter-term MA's remain above longer-term MA's (bullish), but the 21-dma now turns down (somewhat bearish). Daily 5(3)3 and 21(3)3 stochastics and RSI are now deep in territory indicating oversold conditions, but haven't yet turned up. Both MACD and RSI have now violated a trend of higher lows. OBV had been performing well, but now turns down. All that daily oscillator evidence says to me that there's danger of a bounce, but that some technical damage has been done here, and the bounce might not be strong. One level of relatively strong overhead resistance on a bounce might be one of the 200-dma's, the historical resistance near 128 (also the current location of the simple 50-dma), and that 130-131.40 level everyone knows.

The weekly chart shows a possibility that MMM has been moving in a rising wedge shape since early 2001, and we all know the possible bearish implications of a rising wedge shape. This one still has room to go before narrowing to its apex, however, but a move below 120 would violate the wedge to the downside. When I study the 10-week MA and the 30-week MA, I note that the 10-week is still above the 30-week, although both have turned down. According to Pring, crossings of these two MA's are indicative of intermediate trend changes, but such MA crossings tend to occur late in a move. Also visible on the linked chart are several weekly oscillator studies, with those studies showing the possibility that MMM has much more downside and might break through that wedge to the downside. That's a possibility and not an assumption, as yet, and there could be another short-term bounce in the meantime, even if it does eventually break through. Link

  Jeff Bailey   4/25/03,  12:39:37 PM
Yield Alert on 30-year YIELD ($TYX.X) 4.8% ... Trade here at 4.8% is "first alert" to potentially longer-term weakness for equities. However, this comes at the bottom of lower Bollinger Band and bullish support trend on 0.5-box scale. Link

Equity Index bears currently become well advised to ONLY take partial positions!

The conventional 0.25 box scale also shows this 4.8% level (48.00 on the chart) with near-term YIELD downside to 4.75%, which just the opposite of the equity indexes that extended themselves ABOVE their Bollinger band, would have the TYX.X extending below to a more "overbought" on price type of bond trade. Link

  Jeff Bailey   4/25/03,  12:33:03 PM
S&P 500 (SPX.X) 901.06 -1.13% ... session low has been 989.75, which is/was about 1.25 points below today's DAILY S2 of 900.1, but this 900 level in the SPX most likely ties to the S&P 100 (OEX.X) 457.21 -1.23% correlative support outlined at DAILY S1 456.30 and MONTHLY R1 of 456.90. Session low for OEX right at this correlative resistance.

I would think we find some bears from last week sitting bids in here. This is also at the mid-point of our upper trending regression.

If this morning's lows of OEX 456 are taken out, then next risk level is the 38.2% retracement from WEEKLY pivot analysis retracement of 453.49.

Remember last night's discussion of the WEEKLY retracements and how a computer trades levels? Two "blue" levels have now been violated in the SPX and OEX, so computers should have a sell bias to OEX 453.

  Jonathan Levinson   4/25/03,  12:30:10 PM
I should add that most of my short term oscillators are getting very toppy here.

  Jonathan Levinson   4/25/03,  12:29:24 PM
QQQ is adding a few points to this slow bounce off the lows, currently 27.06. FVX still down 4.5 bps, QQV -.15, TICK.NQ +105. You know what I think about this bounce, but others are expecting one more push to the rally high before the expected failure. I have yet to be able to understand Elliott Waves well enough to used them, but this is some of what I've been hearing. What is obvious is that another push to the failure line, a "return to the scene of the crime" rally, would not be out of the question. For QQQ, that steeply ascending trendline is already in the neighbourhood of 27.75, which would be very surprising to me.

  Linda Piazza   4/25/03,  12:13:20 PM
Volume patterns remain negative, with the exception of the new highs/new lows figures. Adv/dec ratios are .54 on NYSE-traded issues and .62 on Nasdaq-traded issues. Down volume is 3.5 times up volume on both the NYSE and 2.7 times up volume on the Nasdaq. Total volume is 459 million shares traded on the NYSE and a robust 746 million on the Nasdaq.

  Jeff Bailey   4/25/03,  12:08:08 PM
June Fed Funds Futures (ff03m) 98.85 ... jumps to 40% chance of Fed rate cut at June meeting. This is up from about 25% yesterday. Most likely, its the preliminary Q1 GDP data impacting this thought process here.

  Jonathan Levinson   4/25/03,  12:02:22 PM
QQV is still down .15, despite the 53 cent drop in the Qubes and the anemic, sloth-like bounce off the day lows so far. FVX down 4.8 bps, TICK.NQ -15.

  Jeff Bailey   4/25/03,  11:55:56 AM
11:00 Update posted at this Link

  Linda Piazza   4/25/03,  11:55:05 AM
The SOX has now come to rest on the top line of the since-violated-to-the-upside neutral wedge. Although the move down since Wednesday has undoubtedly been painful for bullish players, these kinds of retests can be expected, and I would now expect an attempt, however weak, to bounce here. More troubling to bullish players, however, might be oscillator evidence, which shows that the SOX still has plenty of room to fall. That doesn't mean it will. Perhaps instead it will steady at the top of that wedge, finding support there and consolidating while the oscillators descend back to oversold territory. At this moment, that doesn't seem the most likely outcome, but it's a possibility that must be considered, especially as the SOX is still on a P&F buy signal and above its bullish support line. More than half of the recent column of X's is being retraced by the move down since Wednesday, however.

  Jonathan Levinson   4/25/03,  11:49:03 AM
Welcome, Jeff!

  Jonathan Levinson   4/25/03,  11:45:00 AM
I don't want to jinx it, but there sure hasn't been much loft to the bounces today.

I've learned a lesson this week. No matter how convinced you are, be really careful about trying pick top and bottoms. I got way too cute trying to frontrun the decline that I was certain was coming. At least I frontran it well, using backmonth puts and edging in gradually. However, greater patience would have made me money. I believe it was Gann who said to wait for the failed retest to apply shorts, instead of frontrunning the first or even second decline. Food for thought.

  Jonathan Levinson   4/25/03,  11:33:32 AM
Put to call ratio just .75.

  Jonathan Levinson   4/25/03,  11:32:31 AM
The US Dollar Index is back down to the 98.45 level after peaking at 98.90 briefly. FVX is down 5.6 bps now. TICK.NQ -172.

  Jonathan Levinson   4/25/03,  11:24:42 AM
QQQ is now dealing with support trendlines that go back 2 and 3 weeks, thanks to my "infinite trendline" function. I see support at 26.95, 26.88 and 26.80 in the near term. Currently, QQV is up .70 to 29.41, FVX is down 4.7 bps, TRINQ 2.06 and the TICK.NQ is displaying bad data- it's currently reading "724663616" Al Green? Nope- just ticked back to -50.

  Linda Piazza   4/25/03,  11:19:08 AM
The OEX touched the March 21 high of 456.36, also within a few cents of the April 21 high of 456.30. The five-minute chart shows a white candle and a hinge up in the 5(3)3 stochastics and RSI, although neither has yet moved up out of oversold territory. Is this the bounce attempt beginning? It's now happening from beneath the 200-ema, so that would be the level to watch on a bounce, with that MA at 458.66.

  Linda Piazza   4/25/03,  11:12:48 AM
Here's that OEX weekly chart depicting how the OEX is behaving with respect to the long-term descending trendline (aqua) and the usually-bearish rising wedge (green). A deeper fall today in the OEX might violate the rising wedge to the downside, and could set up the possibility of a weekly candle that's a doji or a shooting star. Both have bearish implications, especially when they form just under resistance. Their bearish implications would need to be confirmed by next week's candle, however, and bearish thoughts need to be tempered by the knowledge of P&F buy signals across many indices as well as those bullish percent numbers Jeff mentions. Whether bullish or bearish, be alert. Link

  Jim Brown   4/25/03,  11:10:26 AM
XMSR is getting killed today on no news. Appears to be due to an additional share issuance announced in January. Some of the new shares are hitting the market.

  Mark Phillips   4/25/03,  11:03:57 AM
BBBY $37.96 (-0.76) Danger Will Robinson, Danger! Sorry, I'm getting a bit punchy this morning, and lack of caffeine is causing those long-unused neurons to fire.

We talked about the importance of the $38 level as support for our BBBY play, and we can see that the stock is just starting to crack below that level here, continuing to be pressured by the steady grind lower in the broad markets. Unless there is a sanp back in short order, I would expect this play to trigger our raised stop at $37.75 before the day is out. More conservative traders may want to just take their exit here.

  Jonathan Levinson   4/25/03,  11:03:10 AM
TRINQ 1.96, TICK.NQ -210.

  Jeff Bailey   4/25/03,  11:02:20 AM
Geron (GERN) 5.28 +6.66% ... here is/was the chart of GERN I was trying to show in the 10:02:00 Post. Link

  Linda Piazza   4/25/03,  10:57:08 AM
The pattern of higher lows on the 60-minute OEX RSI and 21(3)3 stochastics has now been broken. So far, this confirms my impression that the to-be-expected bounce would likely be weak. I'm still watching that 60-minute 5(3)3 stochastic, however, as it's already nearly at levels indicating oversold conditions. When it turns up, we may get that bounce.

  Jonathan Levinson   4/25/03,  10:55:56 AM
Had a great day so far. Bought 500 contracts of amzn 25 calls at 1.45 yesterday. Right after I had emailed you. Bid and ask on them today is 3.50-3.70. Trying to sell them all now. Just thought it was a good bet to place when you see the short interest of AMZN at 9.10 days to cover and the put/call ratio was at the most bearish in over 52weeks. With AMZN's history when put/call and short interest is this high... they would have only had to beat by a little for the stock to go up. I guess I got lucky. Pure lottery play. Made a little money on QCOM yesterday and sold in the morning yesterday. Anyway, great service and keep the comments coming. Have a great day.

Way to go, Vic!

  Jonathan Levinson   4/25/03,  10:54:32 AM
Everyone who bought from Tuesday morning and held on the Qs is at least back to breakeven now, if not underwater. FVX is down 3.7 bps, confirming today's weakness, with the QQV is down .21, even as QQQ trades down .41. This type of denial is associated in my mind with the other major tops I've seen, such as last spring when the VIX kept falling even as the SPX was dropping. Nevertheless, I'm expecting some sort of bounce, having been conditioned this month every time the indices show some weakness. TRINQ 1.38, TICK.NQ -172.

  Linda Piazza   4/25/03,  10:53:36 AM
Along with the SOX, OEX, SPX and the Russell 2000, the Wilshire 5000 also tests its 200-ema today. With the Wilshire currently at 3554.88, the 200-ema is just above at 8555.79. Daily oscillators show a likelihood that these tests will result in a violation of these 200-ema's, but bearish players should still stay alert since oscillators aren't always the best predictors in a trending market. It's normal and natural that these levels should be retested after a push above them, and it would be expected that bulls would defend these levels. So far, there's no sign of a bounce from these MA's, however, and my best guess is that a bounce would be a weak one. That's just a guess at this point, however.

  Mark Phillips   4/25/03,  10:51:04 AM
AMZN $28.40 (+3.28)

Hi Mark. Would you still be looking at that AMZN Leap Put up here at 28.30? Bulls seem pretty enamored with any Internet stock that beats estimates. Just look at EBay. If I wasn't such a big EBay user I'd probably be looking to short that too based on valuation. I'd be interested in your current leap put strategy.

As you can see, yesterday was a busy day for LEAPS questions! I spent some time looking through the AMZN earnings release last night and the main conclusion I came to is that nothing on the fundamental front has changed. AMZN remains a horrendously over-priced money-losing venture. That's right, I said MONEY LOSING. No matter what kind of spin, the company's CEO wants to put on it, the company continues to lose money quarter after quarter.

Don't get me wrong, I was impressed that AMZN managed to increase revenues above estimates again last quarter, against a backdrop of a weak Retail environment. But much of the buzz in the after hours session seems to have come from the large upside surprise on the eps front. Hmmm, where did the earnings boost come from? While it is hard to decipher, I did notice some of the typical phrases such as cutting costs, continuing to promote the free shipping program and a beneficial exchange rate on international sales. None of those items is enough to get me excited about paying a premium for the stock, as they are not the stuff of which organic growth is made.

The only bright spot I see is that the company is planning on retiring some of its debt, and that is a very encouraging sign -- perhaps even the reason why the stock was so popular in the after hours session last night. Perhaps I just have a negative bias here, but how long will it take for the company to retire the remaining $2 billion of debt at the rate of $40 million per quarter (this quarter's number for net income)? My back of the envelope calculation pegs the answer at roughly 12.5 years -- and I think that is just too long to wait. I'm betting there are more than a few investors that will come to the same conclusion after the excitement of earnings fades into obscurity.

One final point that I think needs to be made is that comparing EBAY to AMZN is really not a valid comparison, except to say that they are both surviving Internet Commerce companies that measure their revenues in the billions of $$. AMZN has much larger revenue than EBAY, but posts much smaller earnings. The reason why is the difference in margins. AMZN posts a paltry 1.6% operating margin, contrasted against EBAY's 29.9%. Both companies are still sporting lofty P/E ratios, but you don't have to be a rocket scientist to see where the value lies.

We'll have to see how AMZN behaves in the cash market today, but barring a persistent charge higher from the $28 level, I'll be looking at initiating that put position at the close of trading today. We'll do the normal full writeup in the weekend LEAPS column.

  Jim Brown   4/25/03,  10:47:14 AM
We are still experiencing intermittent problems with the monitor. Please bear with us as we attempt to correct it.

  Mark Phillips   4/25/200,  10:37:56 AM
Sheesh! So much for my intentions of getting some questions answered bright and early! You've gotta love technology, but I'm the first one to rant and scream when it doesn't work just the way I think it should. I sure am glad those tech guys back in the Denver office know what they're doing, because if it was up to me, you'd all be looking at blank MM windows right now! GRIN

All right, here goes with the posts I was trying to get sent earlier.

AIG $54.38 (-0.99)

I know you're probably still on vacation, but I'll ask anyway. Did you login the put leap for AIG today?

That question came in yesterday, but I didn't get to it until working through my email later in the evening last night. The short answer is "Yes", but let's delve into it in a bit more detail. We were initially looking for a LEAPS put entry on AIG in the $57-58 area, but I hedged my bets a bit and set the entry target a bit lower at $56-57. In retrospect, the wiggle room wasn't necessary, as the stock ran as high as $58.50 ahead of earnings, which were released yesterday morning. I had cautioned in the initial play write up that we ought to wait for an entry following the earnings announcement to avoid the event risk.

Apparently investors didn't like what they heard from the company (despite beating estimates by a penny), as the stock got hit hard at the open, falling back under $55, rebounding a bit and then rolling over from the $56 level in the late afternoon. The key seems to have been comments that the SARS outbreak may dampen future sales. While I would have preferred to have a close closer to the $57 level, AIG delivered us the entry setup I was looking for and we'll log a Portfolio entry as of Thursday's closing prices. Traders looking for a better entry may be able to get that opportunity if the stock bounces into the $56-57 area and rolls over from there. Initial stops will be rather wide at $61 to allow for the expected gyrations before the recent uptrend is decisively broken. That will come with close below the $53 level, which would violate both the 20-dma and the ascending trendline from the March lows. Look for a full write up in the weekend LEAPS column.

  Jonathan Levinson   4/25/200,  10:37:18 AM
The put to call ratio is at .73, comprised of an index pcr of 1.67 and equity pcr .53. I'm loving these steady readings as the indices drop.

  Jonathan Levinson   4/25/200,  10:34:18 AM

  Linda Piazza   4/25/200,  10:32:49 AM
Lots of 200-ema's are being tested this morning. The Russell 2000 is the latest alert set off on Q-charts. The 200-ema for the Russell 2000 is at 289.60, and the Russell is currently at 389.55. Just because the Russell is a few cents underneath its 200-ema, we can't consider this average violated yet, but only tested. So far, the day is lining up as a bearish one, so a violation might be expected, but it's dangerous to draw too many conclusions too soon on these tests.

  OI Technical Support   4/25/03,  10:35:36 AM
This is a test. Sorry for any inconvience that this causes.

  Linda Piazza   4/25/200,  10:26:49 AM
The OEX sits on its exponential 200-dma 458.68. This is a tricky moment for traders, as a bounce from here would be considered bullish, while a fall through this level would be bearish. I expect bulls to defend this level strongly, so am watchful for at least a temporary bounce. Will it hold? Keep your eye on those volume patterns, VIX levels, and bond prices to help you gauge sentiment.

  Jim Brown   4/25/200,  10:23:02 AM
The monitor will be down about 3 min at 10:30 Eastern time.

  Linda Piazza   4/25/200,  10:22:59 AM
Over the last three trading days, the VIX has been forming a floor between 23 and 23.25. Oscillators give hints of bullishness for this volatility measure today (which is bearish for equities), but that bullishness is tentative. Currently the VIX measures 23.89, about midway through the day's range. Other relationships are mixed: crude is flat (neutral to bullish for equities), gold is down (bullish for equities), the dollar is up (bullish for equities, and bonds are up (bearish for equities). Early volume patterns are bearish for equities, with the exception of new highs/new lows patterns. So far, this isn't quite the all-my-ducks-in-a-row kind of day, but lately, volume patterns have been a fair indicator of market tenor, so I tentatively vote for a bearish tenor for the day. I'm keeping in mind that early volume patterns can be deceptive.

  Jeff Bailey   4/25/200,  10:19:42 AM
Existing Home Sales for March came in at 5.53 million annual rate, which was below economist's forecast of 5.72 million.

More important to economy was that New Home Sales came in at 1.012 million, which was well above forecast of 905,000.

I do think the MARKET had built in the new housing data though. What do you think? Link

  Jonathan Levinson   4/25/200,  10:16:29 AM
Did Tariq Aziz give it up in the hope of scoring a fat contract with O-Pee-Chee?

  Linda Piazza   4/25/200,  10:13:23 AM
I've mentioned a wedge rising into resistance on the OEX, seen on daily chart and visible but not as clear on the weekly chart. Wednesday's rally saw the OEX hit the top of that rising wedge, and yesterday's decline began moving it down toward the bottom of the wedge again. These types of wedges are usually but not always bearish. Depending on how quickly the OEX declines, a touch of the bottom line would occur between 455 (today) and 457 (Monday). It will be important to watch how the OEX behaves when/if it reaches that level. Bulls want a touch and a move higher, or perhaps a move higher before even touching that bottom support line. Bears want the opposite. This week's touch of the upper limit of the wedge also represented a touch of the long-term descending trendline seen on the weekly OEX chart. A fall through the lower line of the wedge would represent at least a temporary failure of that test of the long-term trendline.

  Jim Brown   4/25/200,  10:08:13 AM
EBAY has changed direction today after being up strongly yesterday and +1.50 in overnight trading. Traders are saying the start of the patent trial is the reason. SINA.com is also a drag based on the SARS impact to advertising revenue.

  Jonathan Levinson   4/25/200,  10:05:30 AM
Total put to call ratio .71, equity 0.53, index 1.69.

  Jonathan Levinson   4/25/200,  10:04:01 AM
Al Green just peeled 5.25B off his pocket rocket with a 7 day repo, for a 1.75B net drain against the 7B overnight repo maturing today.

  Jeff Bailey   4/25/200,  10:02:00 AM
Geron (GERN) $5.20 +5% ... on the move here. I can't put these charts together "fast enough." Here's why I had a close eye on GERN yesterday on my "upside alert." Important level of resistance here.

  Jonathan Levinson   4/25/200,  9:59:44 AM
Today's move has just busted the 2 week ascending QQQ trendline.


  Jim Brown   4/25/200,  9:59:17 AM
It appears we have overcome the login issues for everyone and the system is now functioning normally again. I apologize for the delay this morning. Security software is great when it works but a major pain when it doesn't. Most of the writers are in different states and coordinated communication in times of crisis is sometimes erratic. Jonathan is in Canada, Linda in Texas, Mark in California, Alan in PA, Jeff in Chicago, Ray in Alaska, etc. Hopefully this has all been resolved now.

  Linda Piazza   4/25/200,  9:58:00 AM
Yesterday, I mentioned that on the OEX 60-minute chart, both RSI and the 21(3)3 stochastics had been forming a series of higher lows. If the declines continue this morning, that pattern may soon be broken. There's now a bearish kiss on the 60-minute 5(3)3 stochastics, too, but that kiss does not come from a fully overbought condition, so it's difficult to assess as yet how the OEX will behave as this stochastic makes a quick cycle back down into levels indicating oversold conditions, while the longer-term 21(3)3's have much further to fall. What worries me is that the 5(3)3's could quickly turn back up while the 21(3)3's still cycle down, perhaps making for choppy and directionless trading.

  Linda Piazza   4/25/200,  9:53:13 AM
I'm the last of the writers with connectivity issues this morning, perhaps because I know the least about computers. My physics professors from my college years would be ashamed of me. After a Smith Barney report cutting the chip industry rating to "underweight" this morning, the $SOX has dipped back below its exponential 200-dma at 333.59, with daily 21(3)3 and 5(3)3 stochastics and RSI now in full bear roll. There's historical support, however, near 330, just below the current 330.90 level.

  Jonathan Levinson   4/25/200,  9:53:06 AM
June gold is down 1.20 to 333.90, with HUI +.39 and XAU +.49. We continue to see HUI and XAU doing the opposite of the metal, and I suspect that hedgies are playing one against the other as we saw earlier this year. QQV is now up to unchanged, 28.70 here.

  Jeff Bailey   4/25/200,  9:50:55 AM
University of Michigan Final Sentiment for April came in at 86.0. This was up from the prior 83.2 reading and economist's forecast of 85.0.

DOW= 8,401, SPX= 908.35, OEX= 461.2, NDX= 1095, QQQ= $27.21

  Jonathan Levinson   4/25/200,  9:49:31 AM
We have QQQ breaking to new lows here, FVX ticking back into the red after breaking above for a few minutes. I was offering some short front month puts as a hedge against my back month Q puts, but I moved the offer up out of range just now. TRINQ up to 1.36, QQV -.59 at 28.12, TICK.NQ -113.

  OI Technical Support   4/25/200,  9:48:09 AM
This is a test. Sorry for any inconvience that this causes.

  Jim Brown   4/25/200,  9:33:39 AM
Sorry for the lack of posts this morning. There was a problem with the authorization process and writers were unable to login. It appears there was an attempt to break through the firewall overnight and the domain security locked down the system. It has been fixed, thanks.

  Jonathan Levinson   4/25/200,  9:31:28 AM
Due to technical difficulties, we have been unable to post this AM.

QQQ is showing surprising strength after the 8:30 data was released. Immediately after 8:30, then indices dove, with QQQ breaking 27.20 for a few seconds before it ramped back up to its current levels. I won't speculate as to where the buying originated. FVX is down .5 bps, TNX and TYX are lightly green. TRINQ 1.05, QQV +.28, TICK.NQ -61.

  Linda Piazza   4/25/200,  9:30:03 AM
Good morning. James and Jim both mentioned last night that the Nikkei was expected to plummet in Friday's trading, and by the midday break, the Nikkei was again hitting fresh 20-year lows. The Nikkei closed down 155.07 points or 1.97%, at 7699.50. Most other Asian markets traded down, too, including Hong Kong's Hang Seng, which was down 0.39%; South Korea's Kospi, down 3.69%; and China's Shanghai Composite, down 1.09%. In recent days, Japanese pension funds had been unloading their Sony stock along with other blue chips in fear that earnings would not meet expectations, and those pension funds were right about Sony. James discussed their three-times-more-than-expected losses. In today's trading, the stock fell 13.4%, its daily 500-yen limit-down number. Other Asian computer-related stocks plummeted along with Sony. Sony's earnings report wasn't the only negative influence on the region's trading. Elevated worries over the economic impact of SARS, an increase in the Japanese March jobless rate to 5.4% from February's 5.2%, and the breakdown in talks with North Korea also impacted the region's trading.

Most European bourses trade currently trade down to flat, but CNBC Europe commentators mention that today's European holiday may lend the trading less significance than it would otherwise. Although the markets are open, banks are closed. The U.K. released GDP numbers today, showing a 0.2% increase rather than the expected 0.3% increase. Services expanded 0.3%, the slowest growth in a year. Some economists expect the second quarter GDP will be even weaker. European commentators all mentioned the dismal U.S. employment figures released this week and the importance of the U.S. economic numbers due out this morning, as Europe looks to the U.S. to fuel a recovery in Europe. Swiss bank Credit Suisse reported that cost-cutting measures and bond-trading revenues led to its first quarterly profit in a year. CFO Philip Ryan mentioned caution about the rest of the year but reaffirmed a goal of returning the company to profitability. The bank has trimmed a tenth of its workforce over the last couple of years.

Note: This was the post I had prepared for earlier this morning, but I'm having connectivity issues this morning. Of course, the US GDP numbers have now been released and were disappointing. European markets have not dipped much on the news, however. As I type, the FTSE 100 is down 16.90 points or 0.43%, to 3882.10; the CAC 40 is down 7.05 points or 0.24%, to 2895.99; and the DAX is down 19.77 points or 0.68%, to 2871.85.

  Jeff Bailey   4/25/200,  9:17:26 AM
09:00 Update posted at this Link

  Jim Brown   4/25/200,  9:11:46 AM
There was a problem with the monitor that prevented the staff from posting this morning. It is being corrected now.

  OI Technical Staff   4/25/200,  5:22:54 AM
The Market Monitor Server will be rebooted in 5 minutes. You will need to reconnect your desktop program to continue to receive updates.

  Jeff Bailey   4/24/03,  11:58:56 PM
The Index Trader Wrap has been posted: Link

  Jim Brown   4/24/03,  11:58:49 PM
The Futures Trader Wrap has been posted: Link

  James Brown   4/24/03,  11:58:15 PM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in many cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.


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