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  Linda Piazza   5/5/2003,  3:46:03 PM
Reader Comment: It seems the BKX is at an important level, today's high is the best reading since the start of July last year. Every time the index gets to 800 it has been turned back. Will this be the breakout?

Response: This isn't an index I watch frequently, so any comments I make might not be as informed as those from some of the other writers on staff. Today's 809.33 high was just above the August 22 806.90 high, but probably close enough that the two might qualify as equal highs. As I type, the BKX has pulled back slightly, but remains above the 800 level. The BKX maintains a rather aggressive uptrend, but paid its dues by basing just under 800 for a little over a week before pushing over that level today. It's on a P&F buy signal and above its bullish support line, and has just given a new buy signal with a triple top breakout. With all that said, however, it may soon be time for a pullback or consolidation, perhaps just to a less aggressive uptrend. Few stocks or indices can maintain uptrends this steep, so a pullback would be natural and expected. However, there's also oscillator evidence that shows that daily MACD has flattened instead of turning up with the recent climb, and daily 5(3)3 stochastics appear to be trying to roll down from a lower high while prices made a higher high. Of course, the stochastics haven't yet completed that roll down, so there's still time for them to pull back up. ADX shows this index to be trending strongly (as if we needed the ADX to tell us that), so we may not be able to trust that stochastic evidence. More worrisome to me is OBV, which hasn't moved up appreciably since early February, and which hasn't moved up at all since the middle of April. In short, I'm not sure if this is the breakout. Prices say so. P&F says so. MA evidence says so, with longer-term MA's turning up and with shorter-term MA's making bullish crosses of the longer-term MA's. Weekly MACD says so, with the lines separating as the MACD moves up through the midline. However, other oscillators and that aggressive uptrend line may hint at the need for some consolidation or a pullback.

 
 
  Jonathan Levinson   5/5/2003,  3:43:11 PM
QQQ bounced right at support from the past 2 days, currently trading 28.41, while the TRINQ sinks back down, currently .38. Gold and HUI are still showing strength, HUI +2.02 at 132.84, June gold up .70 at 342.40. The put to call ratio is up to .71.

 
 
  Jeff Bailey   5/5/2003,  3:40:10 PM
Astrazeneca (AZN) $43.04 +3.68% ... did indeed receive FDA approval. Here's a link to a story from Reuters. Link

 
 
  Jim Brown   5/5/2003,  3:36:02 PM
Road Runner users  - Those readers on Road Runner who have not been receiving the newsletter should have seen that problem resolved today. Road Runner in their vast wisdom decided the newsletter was spam and blocked it for you. We believe RR has fixed the problem thanks to the dozens of readers that complained loudly to them along with us. If you are still not receiving email from us please send us an email to IT@OptionInvestor.com and we will turn your address over to RR as still being blocked. This has been especially frustrating as we cannot email readers back to tell them we got their complaint and we are working on it with RR. They were blocking anything from Option Investor.

I can still get dozens of spams a day offering to increase the size of specific body parts and reduce the size of others but I can't deliver a subscription newsletter. Go figure.

 
 
  Jeff Bailey   5/5/2003,  3:31:33 PM
QQQ $28.13 +0.17% ... I was eventually able to upload a 60-minute chart of the QQQ, with conventional (pink) and MONTHLY (red) retracement overlaid. I added this chart Link to my 11:56:42 post.

 
 
  Jim Brown   5/5/2003,  3:27:55 PM
We are experiencing some intermittent problems on the Monitor today which have prevented us from posting on a random basis and are preventing users from logging in. This shows up as an "invalid password" when it occurs. Please bear with us if this happens to you. I have had about 8-10 readers mention it today so the vast majority are not seeing it.

 
 
  Linda Piazza   5/5/2003,  3:19:02 PM
Bond yields closed at or near their lows of the day, and the VIX attempts to move up again. The SOX lost the battle with 350, at least temporarily, but the COMPX so far clings to 1500, and the Dow remains above 8500. Bellwether GE dips to support, but hasn't yet violated that support. Volume patterns deteriorate but advancers still lead decliners, and up volume still leads down volume. The OEX dips below the 470 support, but not so deeply that the violation is clear. While I'm leaning toward a modest bet on a put play, I'm far from convinced and will limit the amount I will commit to the play to "gambling" money. While several factors now begin to line up to support the idea that the current pullback could continue to next strong support, at least, the recent buy-the-dip sentiment still lends doubt to the downside the hourly indicators hint is coming and to those overbought levels showing up on daily and weekly charts. Without a deep dip while the hourly indicators cycle down, the daily indicators will remain bullish. A safer bet would be to wait until the OEX breaks through that rising wedge to the downside, if that should happen, and to wait until the FOMC meeting and CSCO earnings are out of the way.

 
 
  Kent Barton   5/5/2003,  3:17:23 PM
The 3:15 update has been posted: Link

 
 
  Jonathan Levinson   5/5/2003,  3:15:55 PM
QQV is now up .95 to 28.12. For those married to QQQ puts, this is what we've been waiting for. A trip back to QQV 40ish should proportionally lift our spirits as well, if it occurs.

 
 
  Jonathan Levinson   5/5/2003,  3:05:28 PM
My quote screen has flashed a most reassuring color on QQQ, being red. FVX closed near its lod, at -2.7 bps for the day, TRINQ .42, QQV +.74, TICK.NQ -7.

 
 
  Linda Piazza   5/5/2003,  3:04:52 PM
At 28.78 as I type, GE is dropping toward the 28.75 level that's provided support over the last two weeks. This is a possible bounce point, but below this lies support at 28.50-28.43 (21-dma at 28.43) and 28, and at the exponential 200-dma at 27.41. Daily stochastics, RSI, and MACD all point down.

 
 
  Jonathan Levinson   5/5/2003,  2:48:17 PM
I think this is the top and now down those 800 or more points. Hold on to those Q puts. They should be good by May 16.

Thanks, Russ. I've been knee-deep in all kinds of e-wave/fib timing/Gann sqare/astro counts all weekend, and my only conclusion that the market should drop, and that it needs to drop to confirm the drop, and that upon confirmation of the drop, the drop should be extreme. On that basis, I've resolved to keep an open mind and watch the bounce off the first drop worth noticing (so far there have been none). And, if no drop comes (which is a possibiliy), then business, spending, and the economy in general will pick up, and I'll begin buying the dips on pullbacks. Last possibility is a range going forward, and we'll ping pong up and down until it exhausts itself.

 
 
  Linda Piazza   5/5/2003,  2:47:51 PM
Those turning-higher 60-minute OEX stochastics are now trying to turn back down, but the 5(3)3 stochastics are doing so from a position that's not fully overbought. Right now, the oscillators, including RSI, could best be described as inconclusive: not yet the evidence I'd want for my kind of all-evidence-going-one-direction kind of trade, although the dipping bond yields and rising VIX are certainly beginning to provide that kind of evidence. While waiting for that kind of evidence may make me late to the party on any fast dip, so far today it's kept me from suffering through all these gyrations, too. Volume patterns have slightly deteriorated, but still show more advancers than decliners and higher up volume than down volume.

 
 
  Linda Piazza   5/5/2003,  2:36:54 PM
Perhaps someone has already mentioned this today and I missed the mention, but the NDX high today has been 1152.96, within three points of the December 2 NDX high of 1155.68.

 
 
  Jonathan Levinson   5/5/2003,  2:33:17 PM
QQQ has bounced several times from the 28.20-.30 level during the past two days. FVX is at its low of the day, -1.5 bps, the US Dollar flatlining between 96.30 and 96.40, and the TRINQ is still quite low at .38. We're headed fro an interesting close.

 
 
  Linda Piazza   5/5/2003,  2:32:25 PM
The SOX has just dropped below 350. (Addition to post: Of course, the SOX bumped back above 350 as soon as I made that post.)

 
 
  Linda Piazza   5/5/2003,  2:23:12 PM
For those wondering, CSCO reports after the market close tomorrow, with the conference call scheduled for 4:30 ET.

 
 
  Linda Piazza   5/5/2003,  2:10:08 PM
Ten-year and thirty-year yields are now edging into negative territory and moving toward their day's lows. The VIX is off its day's low, having bounced from just above 23. I wouldn't call these strong confirmations of a change in trend as yet, but these factors bear watching. The SOX maintains levels above 350 and the COMPX above 1500, levels I'd like to see fall before buying into the thesis that there's going to be a pullback and not just a consolidation at recent support. The OEX has found support just above 469 today, just above the thick green line pictured on the chart linked to my 9:42 post, but it has not been able to break above the lavender line pictured on that same chart. Sixty-minute oscillators are now mixed, with the stochastics trying to turn up while the RSI (more trustworthy, in my opinion) hooks back down.

 
 
  Jonathan Levinson   5/5/2003,  2:09:07 PM
FVX is now down 1 bp, while the USD has held above 96.30. QQQ is down to 28.45, with the TRINQ still compressed at .28, TICK.NQ -232. The QQV is up .72 to 27.93. It's amazing to me that the extreme readings are proving so persistent- it's rare to see the TRINQ hold such low levels for this long, and as for the VIX/VXN/QQV, don't even get me started.

 
 
  Linda Piazza   5/5/2003,  2:02:59 PM
One factor I'm watching today are the lower levels in the BIX and BKX, perhaps warning that it's time for a pullback in other indices, too?

 
 
  Mark Phillips   5/5/2003,  1:54:18 PM
EMC $9.88 (+0.42) This LEAPS Call play is charging to another 52-week high today, leaving the $9.50 resistance level in its wake. The listed options are now up sharply from when we entered this play down near the $7.00 area. In fact that '04 LEAP (LUE-AU) is sitting on better than 110% gain ($3.00 vs. $1.40 entry). That's right campers, it's time to start thinking about your exit strategy, at least for a portion of your position. As mentioned in the weekend LEAPS column, we want to target an exit in the $10-11 area, and as of the current price, we're getting mighty close to the lower edge of that range. Conservative traders may want to consider getting aggressive with their stops here -- on a trade through $10.00, raising stops to $9.00 (right at the ascending trendline) certainly makes sense.

 
 
  Linda Piazza   5/5/2003,  1:52:51 PM
Buyers appear to have a larger appetite for four-lettered stocks today, with NYSE volume at 846 million and Nasdaq volume at 1.2 billion. Up volume is 5.6 times down volume on the Nasdaq, too, with up volume being a more modest 2 times down volume on the NYSE. Adv/dec ratios are 1.37 on NYSE-traded issues and 1.35 on Nasdaq-traded issues. These adv/dec ratios are bullish, but only modestly so, which may actually be good news for bulls who don't want to see numbers so inflated that they signal bearishness from a contrarian viewpoint. Although I'm still not seeing breakouts over the next important levels on the COMPX or the OEX, neither am I seeing confirmation from these volume patterns that it's time to go short in anticipation of a pullback just yet.

 
 
  Jonathan Levinson   5/5/2003,  1:52:18 PM
I hope you had a good weekend... my week so far is not turning out so good. Nasdaq still taking it's daily steriod hit. This is so crazy that you just want to go bullish now, but I'm a hard head. Gotta say, when the dow was falling last july you had everyone saying there is more upside reward then downside risk. I gotta say with looking at all the Trinq, 9month and 14day RSI, Nasdaq and NYSE summation, the QQV, VXN, and even the VIX there all saying more downside risk than upside reward. Nasdaq has been up 12% in three weeks with Bonds nor USD or GOLD not confirming this huge move to the upside. Today I am going 100% short on the Nasdaq NDX. Buying NDX 1075 puts for June.

I have nothing to add. Thanks, Vic. Let's hope that we bears don't go from endangered to extinct.

 
 
  Jonathan Levinson   5/5/2003,  1:46:05 PM
"What we have here is failure to communicate." Somebodys gonna spend a night in the box.

Yes- the question is, will he have hooves or paws?

 
 
  Jonathan Levinson   5/5/2003,  1:44:47 PM
Caveat to that last post: The fed jammed over 5B into the markets today- I have no doubt that those funds are buying down the treasury yields. Are they also buying euros and yen? Recall that the big note sale is this week. Perhaps the fed is trying to incentivize foreign buyers of t-notes by dumping the USD lately?

 
 
  Linda Piazza   5/5/2003,  1:44:34 PM
Even though I'm an OEX trader for the most part, I'm keeping an eye on that 1521 level (1521.44 December 2 high) in the COMPX, as are most other traders, I imagine, watching to see whether that resistance holds.

 
 
  Jonathan Levinson   5/5/2003,  1:39:39 PM
Anyone remember Cool Hand Luke? Well, the US Dollar is reminding me of the repeat beatings that Paul Newman was routine administered in that film, currently struggling to hold the 96.30 level. Despite the selloff in the USD, we have the FVX now negative, which is a divergence from QQQ, which has been rising all afternoon. Now, QQQ is an important security, but it's like a pebble in the tread of the US Dollar and the t-bill markets. With USD getting hammered and treasuries being bought, I think the shelf life on this short covering frenzy in the Qubes should be limited.

 
 
  Mark Phillips   5/5/2003,  1:35:47 PM
KSS $54.50 (-0.95) Just like last Monday, KSS has fallen to a new intraday low today. The big question is whether this time will lead to the downside action we're expecting, or if we'll get another sharp bounce. Actually it looks a bit different this time, with the 50-dma (currently $55.12) looking like it will act as resistance. The tape continues to look weak and if KSS closes below $55, then it looks like a safe bet that we'll at least see our initial $52 target achieved. At this point, stops can be lowered to $57.40, which is just above the rolling lower 20-dma ($57.28).

 
 
  Linda Piazza   5/5/2003,  1:34:15 PM
As the VIX drops toward the day's low again, the OEX makes another run toward the day's high, still a point ahead at 473.72. The 5(3)3 stochastics have looped back up again and the 21(3)3's have made a bullish kiss from within overbought territory. As I suspected this morning, the apparent sell signal was not a true sell signal, as often happens in a strongly trending market. It's more important than ever that we wait for confirmation from other intermarket relationships.

 
 
  Mark Phillips   5/5/2003,  1:31:49 PM
ADTN $44.79 (+1.14) Profit targets are being hit all over, and ADTN delivered what we were looking for earlier today, hitting our initial target of $45. We're in no hurry to bid farewell to this play as it looks like it could keep running. However, the $45 area is a solid area of resistance and conservative traders should either harvest partial gains here or tighten stops to ensure a solid gain. We'll be raising our official stop to $41.50 tonight, although more conservative players may want to use a stop just under $42.50, which provided intraday support on Friday.

 
 
  Jonathan Levinson   5/5/2003,  1:11:07 PM
The CBOE has been revising its data today. The most recent total pcr is .74, with the equity pcr .64 and the index pcr 1.06. The high on the index pcr was 1.08, and not 1.74 as wrongly reported earlier.

 
 
  Linda Piazza   5/5/2003,  1:06:14 PM
The CAC 40 closed at 2996.22, having dropped about 30 points in the last hour of trading. The DAX is currently at 3004.70, having dived at the same time that the CAC 40 fell, but then recovering to move above 3000 again. The DAX trades longer than the CAC 40.

 
 
  Ray Cummins   5/5/2003,  1:04:06 PM
Spreads/Combos & Premium Selling -- Portfolio Activity

The best should always be saved for last and fortunately, we have a number of bullish positions that are performing very well in the current market environment. I'll be the first to admit that it's tough to maintain a balanced portfolio with so many technical indications favoring the recent upside activity, however we can be thankful that a few of the speculative picks really benefited from the trend. One of the best performers has been Getty Images (NYSE:GYI) and today the company's shares climbed to an 11-month high near $45. Our synthetic position in the issue has provided a credit of up to $1.50 and the stock appears poised for higher prices in the near term. Other recent candidates in that category include Overland Storage (NASDAQ:OVRL), Documentum (NASDAQ:DCTM), Semiconductor Holdrs (AMEX:SMH) and Adtran (NYSE:ADTN), all of which offered profitable opportunities. Among the "premium-selling" plays, Capital One (NYSE:COF) continues to lead the upside activity in the financial group while mid-cap semiconductor stocks such as Linear Technology (NASDAQ:LLTC), KLA-Tencor (NASDAQ:KLAC) and Xylinx (NASDAQ:XLNX) are propelling the rally in hi-tech issues. Finally, one notable position in the "delta-neutral" portfolio is the credit-spread strangle in the Oil Service Holdrs (AMEX:OIH). Despite the occasional volatility in the sector, the conservative spread combination is trading at maximum profit with the underlying comfortably between the sold strikes at $56.

 
 
  Jonathan Levinson   5/5/2003,  1:00:59 PM
The Qubes are continuing higher along their current path on the 30 minute candles, with the TRINQ still in extreme territory at .25, FVX +.6 bps, QQV +.49, TICK.NQ +29. Gold is off its highs at 342.50, HUI +1.62 and XAU +1.05.

 
 
  Jeff Bailey   5/5/2003,  12:38:33 PM
Astrazeneca (AZN) $42.82 +3.13% ... stock boosted to session high ahead of FDA decision on AZN's Iressa drug, which is expected at some point today (most likely after the market's close).

I was not aware of any of this when writing this weekend's "Ask the Analyst" column. Link

However, now thinking that today's FDA ruling may play into the "bullish vertical count" the trader was asking about.

 
 
  Ray Cummins   5/5/2003,  12:31:21 PM
Spreads/Combos & Premium Selling -- Portfolio Activity

Another day of "surprises" for market bears as stocks in the healthcare group continue to rebound amid bullish earnings data. Health benefit plan provider Oxford Health (NYSE:OHP) soared to recent highs this morning after reporting that quarterly profits edged up slightly as it hiked premiums to make up for a $45 million charge to settle shareholder lawsuits. Analysts said that the company offset rising medical care costs by overestimating them, a trend benefiting other HMOs in their earnings reports this quarter. After the opening bell, our speculative bearish position at $32.50 was quickly "in the red" and even the most timely exit left investors with a closing debit of $1.25 - $1.75. Other positions in that market segment include WellPoint Health Networks (NYSE:WLP), which is comfortably profitable, and Universal Health Services (NYSE:UHS), which is hovering near $40 and the sold (call) strike in our bearish spread. Obviously, further upside activity would suggest an exit or adjustment in the position and that statement also applies to some of the technology issues in the portfolio such as: Intuit (NASDAQ:INTU), Novellus (NASDAQ:NVLS), Qualcomm (NASDAQ:QCOM), CDW Computers (NASDAQ:CDWC) and Cabot Micro (NASDAQ:CCMP). Among the industrial stocks, Total Fina Elf (NYSE:TOT) is the most recent addition to the "early exit" watch-list while Dreyer's (NYSE:DRYR) may lose its slot, having retreated from the "danger zone" after two consecutive sessions of upside activity.

 
 
  Jonathan Levinson   5/5/2003,  12:24:04 PM
The USD Index found some support at 96.40. FVX is down at a mere .6 bp gain now, as buying returns to treasuries. The TYX is almost flat again, up .4 bps. Whether this is Ben Bernanke on another printing-press-induced buying spree, or actual asset reallocation is difficult to tell given the multi-billion dollar intervention announced this morning. The strength in the indices tells me that it's probably fed money behind the buying in t-bills. Currently, TRINQ .28, QQV +.59, TICK.NQ +164.

 
 
  Jonathan Levinson   5/5/2003,  12:20:49 PM
Back online.

 
 
  Linda Piazza   5/5/2003,  12:20:22 PM
As the 60-minute 5(3)3 stochastics cycle quickly down, now with the fast line at 39 and the slow line just below 54, the OEX oscillates around 470, just on top of the green ascending line that tops one version of the rising wedge in my 9:42 post. The 21(3)3 stochastics have hinged down, but haven't rolled completely out of the overbought zone yet, and the RSI shows the first hint of turning up again. This may be one of those cases I mentioned earlier, when an apparent sell signal on the stochastics signals only a consolidation or a modest pullback. Although the VIX did attempt a push over 24, bond yields eased, and volume patterns deteriorated, the VIX couldn't maintain that 24 level, bond yields steadied, and decliners never moved ahead of advancers. The SOX maintained its 350 level and the COMPX stayed above 1500. This still isn't an all-the-ducks-in-a-row signal, but a long still doesn't appeal to me, either, with those stochastics still cycling down.

 
 
  Jeff Bailey   5/5/2003,  11:56:42 AM
QQQ $28.51 +0.88% ... Jeff: Do you plan on holding your QQQ puts above 1,520?

Yes... I also plan on holding my Intel (INTC) $19.30 +1.41% calls, and Dow DIA calls (DIA) $85.50 -0.33% calls for awhile yet.

My QQQ bearish profile isn't necessarily a put by itself, but it is more of a HIGH risk for BEARS play at this point. So far... this HIGHER level of RISK has not paid off for the Sept. $27 QQQ put trade.

Here's a 60-minute interval chart of the QQQ, with MONTHLY (red) and conventional (pink) retracmenet overlaid. Perhaps as a mutli-month option expiration holder might view things. Link

 
 
  Mark Wnetrzak   5/5/2003,  11:48:20 AM
Covered-Call Update
American Airlines (NYSE:AMR), a covered-call candidate for this week (long stock, short MAY-$5 call, cost basis ~ $4.77), gapped-up at the open, making for a difficult entry (without rolling-in) in the May position as listed. A June position was also listed in the supplemental candidate list; and now the JUN-$5 call is currently $1.50 x $1.60. A June position with a cost basis around $4.56 would yield a monthly based 6%, if the stock stays above $5 over the next seven weeks (and yes, the stock would be called away). Remember, we view the covered write as a single entity and are not interested so much in stock ownership or bullish movement, but in the higher probability of obtaining a low (but reasonable) consistent (monthly) return on investment.

 
 
  Ray Cummins   5/5/2003,  11:42:59 AM
Spreads/Combos & Premium Selling -- New Positions

Today's session is a bit more subdued than Friday, however there has been some activity worth noting in our portfolios. Among the new positions, favorable opportunities were available in BZH, FDC, RCII, NBR, AXP, GENZ, IBM and SLAB. No contracts were traded in the Proctor & Gamble (NYSE:PG) "bear-call" spread and with issue moving lower, it appears the highest credit (on a simultaneous order basis) was near $0.40. A similar situation exists with Career Education (NASDAQ:CECO) and we have yet to observe the suggested credit in the bullish play.

 
 
  Linda Piazza   5/5/2003,  11:35:26 AM
Both the CAC 40 and the DAX have dipped below the psychologically important 3000 levels, with the CAC 40 currently at 2998.62, and the DAX just dipping into negative territory, at 2985.50.

 
 
  Jeff Bailey   5/5/2003,  11:35:01 AM
Gold/Silver Index (XAU.X) 68.83 +1.9% ... looks to challenge its 200-day SMA resistance for the second time in two weeks. Hasn't quite been able to "hold a close" above this key longer-term SMA.

According to Dorsey/Wright and Associates, their "presious metals" bullish % (BPPREC) is still "bear correction" status at 45.16%, after reversing up from "bear confirmed" status of 34% in late March/early April. It would currently take a reading of 78% to achieve "bull confirmed" status, while a reversal back lower to 38% would have the sector back in in "bear confirmed."

In recent weeks, I've liked PARTIAL bullish positions in Newmont Mining (NYSE:NEM) $28.07. Link as the stock's relative strength versus the SECTOR remains strong. Link

 
 
  Linda Piazza   5/5/2003,  11:26:00 AM
Volume patterns are deteriorating, now showing advancers just barely ahead of decliners.

 
 
  Jeff Bailey   5/5/2003,  11:22:47 AM
11:00 Update posted at this Link

 
 
  Jonathan Levinson   5/5/2003,  11:17:44 AM
It looks like a head and shoulders pattern setting up on the 3 minute QQQ, with an ascending neckline at approximately 28.35.

 
 
  Linda Piazza   5/5/2003,  11:14:13 AM
Reader Question: Could it be the Friday breakout on the Dow was merely a transformation from a triangle to an ascending wedge?

Response: Great question. Sometimes those patterns do transform, such as when a bullish triangle can transform into a rectangular consolidation pattern. I've actually placed an upward-slanting regression channel on the DJI now, rather than an ascending wedge, but if the DJI should turn down from this level rather than from the top of the regression channel, an ascending wedge is a possibility with the top line of the wedge forming over the last eight trading days. Link

 
 
  Jonathan Levinson   5/5/2003,  11:12:01 AM
The put to call ratio is up to .68, with the equity pcr at .50 and the index pcr up to 1.74.

 
 
  Jonathan Levinson   5/5/2003,  11:10:48 AM
HUI and XAU seem to mean business today, with June Gold up 1.80 at its HOD, 343.50, XAU +1.34 and HUI +1.93. June silver is at 4.79, challenging its long term downtrend.

 
 
  Jonathan Levinson   5/5/2003,  10:57:56 AM
This feels like the scene in Raising Arizona where H.I. scambles to hide under the car from the Hell Rider of the Apocalypse. Is QQQ basing here or is it getting ready to do some downside damage? Bears are digging in with their fingernails.

 
 
  Linda Piazza   5/5/2003,  10:55:57 AM
Sixty-minute OEX 5(3)3 stochastics and RSI are starting to roll now, but the 21(3)3's haven't yet rolled down out of overbought territory. Friday's consolidation was above the 470 level, and a fall through 470 would bring the OEX back into the wedge defined by the two solid green lines on the daily chart I posted at 9:42. The VIX has just turned positive again, but bond yields are still positive, volume patterns still favor buyers, the SOX remains above 350, and the COMPX maintains 1500 support. Acting on the rolling stochastics wouldn't be an all-the-ducks-in-a-row trade as yet, and might be a risky endeavor. I don't feel inclined to buy the dip, either, so I'll stand aside for a while.

 
 
  Jonathan Levinson   5/5/2003,  10:51:17 AM
The US Dollar Index is getting sold sharply Link and June gold is up to 343.10.

 
 
  Mark Phillips   5/5/2003,  10:45:42 AM
AZO $84.17 (+1.70) With an intraday high of $84.53, bulls have gotten just about the ideal opportunity to harvest gains on our AZO play this morning. Picked down at $75.24, the move this morning into our eventual target zone of $84-85 represents more than a $9 gain. Take the money and run!

 
 
  Jeff Bailey   5/5/2003,  10:43:58 AM
May Fed Funds Futures (ff03k) 98.785 .... On Thursday, jumped to 30% chance of 25 basis point cut, but now just 12% chance for tomorrow's FOMC meeting.

June FF Futures (ff03m) 98.82 .... showed 50% chance on Thursday, but falls to 28% today.

 
 
  Jonathan Levinson   5/5/2003,  10:43:52 AM
Put to call ratio .63.

 
 
  Jonathan Levinson   5/5/2003,  10:43:23 AM
Exclusive message for put-holders: If, like me, you have some back-month puts that are underwater, you can usually roll them back by selling them and buying further back month, more OTM puts for the same price or very close. This buys time but puts you more out of the money. This simple strategy can help by delaying expiration day, and avoids the steep premium decay as back month becomes front month. The downside is that by going futher OTM, your contract price won't appreciate as much on an anticipated drop in the underlying.

 
 
  Linda Piazza   5/5/2003,  10:37:42 AM
For the record, there's still been no OEX breakout above the upper lavender trendline of the rising wedge on the chart linked in my 9:42 post.

 
 
  Jeff Bailey   5/5/2003,  10:36:46 AM
NASDAQ Composite (COMPX) 1,518.52 +1.04% ... 2.92 points from the December highs. Technically speaking, a trade at 1,519 would be technical "bull market." As mentioned on Friday, even though I hold QQQ puts, I WOULD like to see NASDAQ Comp. trade something near the 1,550 level, so that true TECHNICIANS won't harp on "it was just a fractional" violation of the December highs and doesn't really count.

Still.... before we see 1,550, got to trade 1,521.44 first and today's high of 1,519.48 still shy of December's relative high.

 
 
  Linda Piazza   5/5/2003,  10:35:27 AM
The CAC 40 and DAX are still holding steady above 3000, with the CAC 40 now up 56.10 points, to 3019.22; and the DAX up 33.51, to 3019.51.

 
 
  Jonathan Levinson   5/5/2003,  10:35:12 AM
The TRINQ is down to .23. This is in blowoff low (ie blowoff top for the COMPX) territory. The only exception is if it's signalling the beginning of a tidal wave of buying. I've typed similar comments at the August and October lows. For this sensitive indicator to collapse to levels such as this takes hysterically unbalanced bullish buying. That only happens near extreme tops and extreme bottoms. I realize that this is a directionless comment, but that's how to interpret this particular indicator's message this morning.

 
 
  Linda Piazza   5/5/2003,  10:33:01 AM
Although NYSE volume is particularly light, volume patterns all reflect the upside being seen in the markets today. Adv/dec ratios are 1.7 for NYSE-traded issues and 1.7 for Nasdaq-traded issues. Up volume is 2.3 times down volume on the NYSE and 3.4 times down volume on the Nasdaq. Total volume as of a few moments ago was 165 million shares on the NYSE and 319 million on the Nasdaq. I don't think I'm getting an accurate quote on new highs/new lows.

 
 
  Jeff Bailey   5/5/2003,  10:31:28 AM
March, 26, 1991 FOMC notes. I've quick-read the release... most "interesting" part is at the end, but my document appears to be cut off....

 
 
  Jonathan Levinson   5/5/2003,  10:27:07 AM
The FVX is not going along for the ride here, up 2.7 bps on the day and .7 bos below its opening high. The US Dollar Index failed at its 2 hr MA and is now down at the 96.60 level. This rally is being domestically bought only, and it wouldn't surprise me if it isn't short covering. Little importance for the short term as price moves steadily higher on QQQ and the indices.

 
 
  Linda Piazza   5/5/2003,  10:24:54 AM
The SOX just pushed above 350 resistance, up to 353.62 as I type. Daily 5(3)3 stochastics and RSI show that the SOX still has room to move up. MACD is turning back up, although there's a possibility of bearish divergence setting up on some of these indicators. As yet, there's just the possibility, as it hasn't occurred yet. Earlier in the year, I had some concerns that OBV was not increasing as the SOX moved up. There's been a slight increase in OBV, from the -88,500 zone up to the current -78,739, although the number is still negative.

 
 
  Jeff Bailey   5/5/2003,  10:24:30 AM
March 26, 1991 FOMC notes. This would have been published just after Operation Desert Storm. Link

 
 
  Jeff Bailey   5/5/2003,  10:16:03 AM
Post-war trade May help to go back and review the 03/18/03 Index Trader Wrap. I'm doing this now, trying to figure out what "might be next." Link

Answer to this has obviously been.... BOTH

 
 
  Jonathan Levinson   5/5/2003,  10:12:13 AM
The put to call ratio (total) is .57, with an equity pcr of .44 and index of .87.

 
 
  Jonathan Levinson   5/5/2003,  10:07:03 AM
Al Green has ponied up 5.25B in 2 day repos to replace the 2B in weekend repos expiring this morning. The thirty year yield is currently +1.7 bps. Watch for that to come down, if my guess is right.

 
 
  Linda Piazza   5/5/2003,  10:06:53 AM
The OEX is now edging just above the November left-shoulder high of 472.47. The January right-shoulder high was 475.09. This zone might be an appropriate level for a pullback or consolidation, but we'll have to see how the OEX behaves.

 
 
  Jeff Bailey   5/5/2003,  10:02:56 AM
ISM Services rises to 50.7 in April, which shows expansion, and better than consensus of 49.0.

 
 
  Jonathan Levinson   5/5/2003,  10:02:42 AM
Beat me to it, Jim. 58,000 more jobs lost in April than March.

 
 
  Jeff Bailey   5/5/2003,  10:00:29 AM
ISM Services due out at 10:00 AM. Ahead of report, S&P Retail Index (RLX.X) 300.73 +0.01% and Retail HOLDRS (AMEX:RTH) 77.08 -0.27% Link hold the flat line.

 
 
  Linda Piazza   5/5/2003,  9:59:27 AM
Regarding the chart posted in my 9:42 post, note that I have two possible upper lines marked on that rising wedge. One is a thick green line. That line has been violated to the upside. The other is a thinner lavender line. The OEX has not yet violated that upper lavender line, although it's testing it this morning.

 
 
  Jeff Bailey   5/5/2003,  9:57:57 AM
Oxford Health (OHP) $34.60 +15% ... stock higher on 1.3 million shares after reporting Q1 EPS of $0.86 per share, which included a $0.32 litigation charge. OHP announced this charge on March 3, so analysts were aware, and may compare to consensus estimates of $0.89. OHP said revenues rose 15% year-over-year to $1.34 billion, which was inline with consensus of $1.33 billion. Link

 
 
  Jonathan Levinson   5/5/2003,  9:55:03 AM
The US Dollar Index is back to its 2 hr moving average on the 15 minute candles, 96.75. June Gold is up 30 cents to 342.30, HUI +.76 at 131.58, XAU +.51 at 68.06.

 
 
  Mark Phillips   5/5/2003,  9:54:27 AM
KSS $54.53 (-0.92) Still showing that relative weakness that was in effect on Friday, our KSS play cracked the $55 level again this morning, and is threatening to take out last week's intraday low of $54.35. But traders will remember what happened last week, as the stock dropped below our entry trigger, only to then stage a very strong rebound over the next 2 days. A break below $54.30 can be used for new entries, but in that event, I would favor a tighter stop just above the $56 level, which defined the intraday highs on Thursday/Friday last week. My prefernce for new entries would be a failed rally below the $56 level, while using our official stop of $58.

 
 
  Jeff Bailey   5/5/2003,  9:51:10 AM
Hewlett Packard (HPQ) $16.77 +.72% ... stock gaining 18 cents in early going despite The New York Times reporting that HPQ's $3 billion cost-cutting effort has analysts thinking the cost cutting may pose a challenge to the company's ability to innovate in a rapidly-consolidating computer industry. Many outside "experts" on corporate research say it is an open question whether the company can rekindle the synergies it once had in computing and materials science research before 1999, when it spun off its Agilent (A) $16.20 -0.3% division, which makes scientific testing equipment and medical instruments.

 
 
  Jonathan Levinson   5/5/2003,  9:50:36 AM
Agreed, Jim.

 
 
  Mark Phillips   5/5/2003,  9:48:34 AM
AZO $82.75 (+0.28) Traders that opted to hold AZO positions over the weekend got a nice surprise this morning, with the stock surging as high as $83.50 before pulling back from the early strength. With the opening gap now filled, AZO could go either way, depending on the whims of the broad market. Remember, the most important task at this point in the play is to not give our gains back to the market -- be aggressive in keeping them!

 
 
  Jonathan Levinson   5/5/2003,  9:45:47 AM
The TRINQ has jumped to .76 here, and the speed of that pop tells me that there are good many sellers waiting in the wings. FVX is off its highs at a 2.4 bp gain.

 
 
  Linda Piazza   5/5/2003,  9:42:25 AM
Here's where I show the OEX with respect to the rising wedge on the daily chart: Link

 
 
  Linda Piazza   5/5/2003,  9:37:49 AM
The OEX begins this week with 5(3)3 and 21(3)3 stochastics in territory indicating overbought conditions across hourly, daily, and weekly time periods. Be cautious about jumping in on the short/put side if those oscillators should turn down, however, as oscillator readings can be deceptive in a strongly trending market, as several of us warned last week. A "sell" signal from the oscillators can signal consolidation rather than a pullback in a strongly trending market. I would look for confirmation from other sources, such as volume patterns and other intermarket relationships, before trusting those sell signals, and then would set firm stops to get you out for minimal losses if you're wrong. One day, the trend will halt and the oscillators will give a true signal, and today could even be that day, but it's going to be difficult to discern the true signal from the false.

 
 
  Jonathan Levinson   5/5/2003,  9:36:36 AM
The TRINQ ticked up to .51 as the buyers relaxed for a moment, but it's back down to .32 now, despite the NQ futures sinking to 1140. QQQ is trading 28.31, and so far it's just shares changing hands. The biggest volume so far was on the sell side, but the session is very young. The bigger question will be how the market behaves on a pullback, if and when we see one.

 
 
  Jonathan Levinson   5/5/2003,  9:30:33 AM
Opening TRINQ .38, TICK.NQ +389, QQV +2.2 at 29.37.

 
 
  Jeff Bailey   5/5/2003,  9:29:31 AM
USAI buys TREE Merger news this morning has USA Interactive (NASDAQ:USAI) $34.96 Link falling to $34.57 in pre-market trade after announcing it will buy LendingTree (NASDAQ:TREE) $14.69 Link for approximately $734 million in stock. The deal values TREE at $21.67 per share.

 
 
  Jonathan Levinson   5/5/2003,  9:24:27 AM
I strongly recommend reviewing Leigh's weekend Index Wrap for those who have not yet done so.

 
 
  Jonathan Levinson   5/5/2003,  9:21:12 AM
Yields are climbing very gradually, FVX now up 3.4 bps. This move is commensurate with the drop in the US Dollar Index to the 96.70 level. QQQ is trading 28.43.

 
 
  Jeff Bailey   5/5/2003,  9:21:08 AM
09:00 Update posted at this Link

 
 
  Jonathan Levinson   5/5/2003,  8:59:10 AM
The fed has 2B in weekend repos expiring today. We await the announcement at 10AM.

 
 
  Linda Piazza   5/5/2003,  8:50:13 AM
The CAC 40 and DAX are holding steady, at about the same levels as during my first post this morning. The CAC 40 is currently at 60.32 points or 2.04%, at 3023.44; and the DAX is up 37.32 points or 1.25%, at 3023.32.

 
 
  Jonathan Levinson   5/5/2003,  8:39:48 AM
QQQ is holding at 28.42, with June gold finding bigs at 341.90, last at 342. Bonds are seeing some selling this morning, with FVX +2.4 bps, TNX +2.2 bps and TYX +.9 bps.

 
 
  Jonathan Levinson   5/5/2003,  8:38:29 AM
Data: 10:00 am: ISM Services for April, prior 47.9, consensus 50.0

 
 
  Jonathan Levinson   5/5/2003,  8:03:51 AM
The US Dollar Index is up to 96.80, with June Gold down 70 cents to 341/oz, despite a current bid at 342. QQQ is up to 28.41, with NQ3M up 5 to 1144 and ES3M up 4 to 931.50.

 
 
  Linda Piazza   5/5/2003,  7:17:16 AM
Good morning. The Nikkei and many other Asian markets were closed today for a holiday, but Taiwan and Hong Kong markets opened. Taiwan's Weighted Index closed up .34% and Hong Kong's Hang Seng closed up 1.23%. Hong Kong's new cases of SARS fell to eight. Singapore's market celebrated a forty-eight hour period with no new SARS cases by rising, with banks and Singapore Airlines among the advancers. Singapore's Strait Times closed up 2%.

Airlines and travel-related stocks led gains in Europe this morning, too. London markets are closed, but both the CAC 40 and DAX have climbed above the psychologically important 3000 levels today. As of this writing, the CAC 40 is up 62.80 points or 2.12%, to 3025.92; and the DAX is up 36.92 points or 1.24%, to 3022.92.

 
 
  OI Technical Staff   5/5/2003,  6:01:33 AM
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  James Brown   5/2/2003,  1:20:45 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

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