Option Investor
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  Jeff Bailey   5/6/2003,  11:35:51 PM
Out of the office I will be out of the office starting tomorrow morning, Wednesday May 7th, but will be back next Thursday, May 15th.

I personally have not set a stop on my previously profiled QQQ Sept. puts (today's included).

I will probably pick up a newspaper between now and Monday out of curiosity to see where things are at.

For my QQQ puts Link , I would be "pleased" if the bullish % Link were to have reversed to at least 70% by the time I return on Thursday and that the QQQ be trading below $27.84.

I have set a profit stop under a bullish position in Intel (INTC) Link at $18.92 stock equivalent. My "goal" was $20, and with the stock just 52-cents from that goal and the NASDAQ-100 Bullish % up at these levels, I'm only willing to now risk what's left to my original goal.

The only thing I've done with my Geron (GERN) Link calls, is place a sell order at $2.90 for 1/2 of my partial position in the previously profiled SPECULATIVE September $5 calls. I know of nothing that might have the stock trading that level, but I'd be happy upon return if filled on part of the position.

  Jeff Bailey   5/6/2003,  11:21:52 PM
Cisco Systems (CSCO) last trade I see in after-hours was $15.59.

QQQ settled out at $28.56

S&P futures (sp03m) settled 934.70 and currently tick at 931.70

  Jeff Bailey   5/6/2003,  4:13:06 PM
Cisco Systems (CSCO) $15.90 +3.3% ... edging lower at $15.66 in after-hours after reporting EPS of $0.15, which beat estimates by a penny.

  Jim Brown   5/6/2003,  4:07:52 PM
ERTS earnings 40 vs est of 34 cents, raised guidance
Guidance for 2004 $3.10 to $3.25 vs estimates of $2.96

  Jim Brown   5/6/2003,  4:06:16 PM
CSCO earnings 15 vs est of 14 cents
Rev $4.62 b vs est $4.58 b
Environment still challenging, no time frame for recovery yet.
Days of inventory on hand increased due to slowing sales.

  Mark Phillips   5/6/2003,  4:05:46 PM
I've spent most of the day dealing with connectivity issues, and just got things back up and running normally in the past hour. Not much to comment on, either than the fact everything closed in the green -- except for bond yields that is. Remember the trend where the day after an FOMC meeting tends to reverse whatever the reaction was to the Fed's decision? Well, what do we make of this, then? Will we reverse the initial move (down) which would mean the markets go up tomorrow, or the final move of the day (up), which means we sell off on Wednesday? I don't have any answers, but it should prove to be an interesting day, especially with CSCO due out with earnings tonight.

  Linda Piazza   5/6/2003,  3:53:21 PM
I didn't get any definitive answers from today's action in the OEX. Here's how it looks with respect to the rising wedge on the daily chart. (Note the two possible upper trendlines, one green and one lavender): Link

  Jonathan Levinson   5/6/2003,  3:53:09 PM
I was thinking, in order to stimulate consumption, they could pay us to borrow. After all, Easy Al can just print the stuff, and the govt doesn't need to pay for its operations anyway. Maybe the next tax reform proposal will include a credit for interest or debt burden, so W can get into it too.

LOL! It's not so funny though. I caught a commercial the other day- zero down, zero payments for 1 year and $1,000 cash if you buy a Mitsubishi. I presume that you actually show up, sign a few pages, and drive away with a new ride and a fresh roll of twenties in your pocket. Perhaps by this time next month they'll also poke a stogie in your mouth and throw in the dayglo velvet leisure suit.

  Linda Piazza   5/6/2003,  3:49:53 PM
In either case--gravestone doji or bearish shooting star--the implication is bearish when it comes after an uptrend, but we've seen many instances lately when the bearishness does not carry through into the next day's trading. Today, the bearishness may not carry through even into the closing, demonstrating the danger in counting my chicks before they hatch. I'm glad I mentioned the "possibility" that bearish shooting stars might form. The bump up in the last few minutes may undo the bearishness that looked to be a possibility, as the bodies of the candles grow larger in proportion to the now-smaller upper shadows.

  Jonathan Levinson   5/6/2003,  3:45:59 PM
If the indexes tank how low can the bond yields go? Seems like their near the bottom now

Theoretically, I suppose that money can be free. I believe that Japan's yield went a lot lower. Perhaps the treasury will begin auctioning 100 year notes? In truth, I don't know the answer, but I'm glad I own some gold.

  Jonathan Levinson   5/6/2003,  3:44:17 PM
Thanks, Linda.

  Linda Piazza   5/6/2003,  3:42:48 PM
In my examples, Jonathan, it depends on whether the indices end on the opening prices (gravestone dojis) or have small real bodies (bearish shooting stars).

  Jeff Bailey   5/6/2003,  3:41:07 PM
5-year YIELD ($FVX.X) 2.674% saw strong buying right after the FOMC meeting and "plunged" from 2.82% into its close. This sets up a triple-bottom "sell signal" on this bond's YIELD on a trade at 2.65%.

For this reason... and perhaps this reason only, I've profiled addition partial positions in the QQQ Sept. 27 or $28 puts. Link

  Jonathan Levinson   5/6/2003,  3:38:51 PM
Interesting, Linda. I would have called it a Gravestone Doji, and then looked it up- in fact, the examples I have are identical for each.

  Linda Piazza   5/6/2003,  3:35:55 PM
Instead of the engulfing candles that appeared to be a possibility on today's daily charts, the possibility now exists that some of the indices may print bearish shooting stars today. Bearish shooting stars have long upper shadows, no or almost no bottom shadows, and small real bodies at the bottom of the day's range. At times, the upper shadow of a bearish shooting star pierces resistance, as happened today with some of the indices. This type of candle must appear during an uptrend to qualify as a bearish shooting star.

  Jonathan Levinson   5/6/2003,  3:35:25 PM
In a classic "DOH!ji" move, HUI and XAU have turned around and are both in positive territory, HUI +.61 at 133.80, XAU +.28 at 29.20. June gold is up 1.70 at 344.70 on the sustained weakness in the US Dollar Index. My only surprise is that gold isn't significantly higher, given the new bear market lows in dx00y.

  Ray Cummins   5/6/2003,  3:34:55 PM
Spreads/Combos & Premium Selling -- Reader's Write: One Final Comment

The target return in the Spreads/Combos section is really an abstract figure, but generally, I attempt to achieve a profit of about 10%-20% per month on most of the basic spread strategies. With credit spreads, that approach allows me to select out-of-the-money positions with a very high probability of profit, sometimes as high as 90% -- which corresponds roughly to the 2nd standard deviation of a normal distribution. (The market almost always trades within the 2nd standard deviation of a normal distribution). Obviously, it would be great if every published play were in this category but since that isn't possible, the best course of action is to choose positions with a favorable balance between probability of profit and potential downside risk -- that also fit your personal trading style. Despite the need for careful position selection, position management is just as (if not more) important and the best advice I can give on that subject is, "Focus on limiting losses and close the losing plays before they become costly, thus preserving capital for the next success."

  Ray Cummins   5/6/2003,  3:25:14 PM
Spreads/Combos & Premium Selling -- Reader's Write: Part II

(Condensed) Hello Ray, I have enjoyed some success with your picks in the Spreads section but I would like to see positions with larger credits and higher returns on the directional issues. Then it would take fewer winners to offset the losing plays...JY

First, thanks for your interest in the Spreads/Combos section of the OIN. It's obvious that you favor a more aggressive approach to selling premium in credit spreads and that's just fine. As with any option trading strategy, "probability of profit" is a major factor in the strike prices you choose and the decision to sell in-, at-, or out-of-the-money options will have a substantial affect on the risk-reward outlook of your credit spreads. You mentioned that you focus on spreads with a minimum of $1.75 profit on $3.25 invested, which is a potential gain of about 50%. That is a popular ratio for many traders, however the possibility of achieving such a large return comes at a cost and that is a (statistically) lower probability of profit. When you target plays that offer gains of 50%, the likelihood of a successful outcome is far less than with a similar position that offers only a 10% return on investment. Does that make your approach (or mine) unfavorable? No! It simply demonstrates the different ways that options and option-spreading strategies can be used to fulfill the risk-reward attitudes and trading styles of individual investors.

  Linda Piazza   5/6/2003,  3:20:13 PM
Volume now 1.2 billion on the NYSE and 1.7 billion on the Nasdaq. This is stronger on the Nasdaq than has been usually seen at this time of day, but I'm not sure that it qualifies as blow-out volume. Adv/dec and up/down ratios all remain positive, with new high/new lows ratios outlandishly high.

  Jonathan Levinson   5/6/2003,  3:18:26 PM
The US Dollar Index has just plunged to 95.20 on a very steep selloff.

  Jonathan Levinson   5/6/2003,  3:16:04 PM
Then again, many others think so too- the put to call ratio is up to .94, with the index pcr at 1.59 and the equity pcr .79. As you know, my concern is that too many puts spoil the broth.

  Jonathan Levinson   5/6/2003,  3:11:02 PM
I think we could finally be looking at the "mother of all put opportunities" :)

Barb, I think so too. If it is so, then we're in that zone now, despite being 40 QQQ cents off the high. Jeff's signal was well timed. The real test will come on the bounce following the first sign of real selling. The premise I've been clutching with white knuckles is that the October low was not a bear market low, and that bull markets have not launched from valuations such as were seen during that time.

  Linda Piazza   5/6/2003,  3:06:21 PM
The 60-minute OEX 5(3)3 stochastics are now rolling down out of overbought levels, with the 21(3)3's having made a bearish kiss and beginning to turn down, too. A move through 469 would turn the OEX red (key reversal day?) while also moving the OEX down to the bottom of the rising wedge.

  Jeff Bailey   5/6/2003,  3:01:10 PM
QQQ $28.59 +1.2% ... legging into additional partial position (if first was 1/4 for you, then another quarter and build to 1/2) in the September $27 puts on break back below "zone of resistance" from MONTHLY/CONVENTIONAL.

  Jonathan Levinson   5/6/2003,  2:57:49 PM
Jim, I think that one may be a charm. FVX now down 12.4 bps. They're buying bonds like there's no tomorrow.

  Linda Piazza   5/6/2003,  2:52:42 PM
The VIX fell to a low of 22.47, although it's a little higher now. This is not particularly good news for bulls, as this brings the VIX ever closer to the traditional 19-22 levels that signal a reversal in the markets. That doesn't mean the reversal is necessarily imminent, but bulls would rather the VIX hold steady, indicating a healthy amount of fear as the markets advance.

  Jeff Bailey   5/6/2003,  2:50:05 PM
U.S. Dollar Index (dx00y) 95.65 -0.73% ... the U.S. dollar is really gett hit to the downside with the June Swiss Franc futures (sf03m) surging to 0.7543 +1.16% and leading currency strength against the dollar.

I'd view this action in the Franc as a more "defensive" move than the momentum move the euro has been getting.

  Linda Piazza   5/6/2003,  2:45:11 PM
The OEX just moved above its January 475.09 high, and I now show it just barely breaking out of the rising wedge to the upside. Up ahead is the 487 high that has defined the top of the trading range for the OEX since last July. Without a quick pullback sometime this afternoon, I would expect a push toward that 487 level, at which point trading should get really interesting. I'm still evaluating the second of the scenarios I mentioned today: a continued move up this afternoon into the CSCO earnings, and then perhaps a sell-the-news event beginning tomorrow.

  Jonathan Levinson   5/6/2003,  2:44:17 PM
Yields continue lower, FFVX -7.4 bps, TNX -4.7 and TYX -2 bps. The US Dollar Index is camping down around 95.70 now, but no worries for the Qubes, just pennies off its high of the day. The put to call ratio is up to .88 now. Is it just too many bearish traders tripping over each other?

  Kent Barton   5/6/2003,  2:41:39 PM
Leading Dow stocks: HPQ, INTC, AXP, and MCD - all showing gains of more than 3%. Three components are trading in the red: T, PG, and MMM.

  Linda Piazza   5/6/2003,  2:35:31 PM
The VIX drops to 22.75.

  Linda Piazza   5/6/2003,  2:31:57 PM
Although it's difficult to concentrate on foreign markets just after a FOMC announcement and the attendant volatility in our own markets, I note that the DAX closed at the high of the day, at 3066.95, up 1.79%, at a level not seen since January.

  Jonathan Levinson   5/6/2003,  2:30:30 PM
US Dollar Index live: Link

  Jonathan Levinson   5/6/2003,  2:27:13 PM
Bonds are headed higher still, the US Dollar Index is still printing new lows, and the flight from quality continues- just saw fresh highs on QQQ and simply can't believe my eyes.

  Linda Piazza   5/6/2003,  2:24:50 PM
I'm waiting to let the initial volatility subside before I try to make any pronouncements about what's happening on the OEX. The 60-minute charts have already seen 5(3)3 and 21(3)3 stochastics make a bearish kiss, unkiss, and then kiss again, so clearly their signals are not yet reliable, as they often aren't during a trending market.

  Jonathan Levinson   5/6/2003,  2:21:10 PM
The US Dollar Index is back to its lows of the day.

  Kent Barton   5/6/2003,  2:19:58 PM
Dow hovering near previous short-term resistance at 8580

  Jonathan Levinson   5/6/2003,  2:18:31 PM
Yields have gone red across the curve, FVX -3.2 bps, TNX -4.1 bps and TYX -1.4 bps.

  Jim Brown   5/6/2003,  2:13:40 PM
Results of FOMC meeting

No change in rates, REPEAT NO CHANGE IN RATES

They see additional weakness is the greater risk, timing and risk of recovery uncertain.

  Linda Piazza   5/6/2003,  2:02:57 PM
Remember that the first move after the FOMC announcement is often reversed. Expect some volatility around that announcement. Plan now whether you're going to adhere to tight stops to protect your account or whether you'll widen your stops so as not to be stopped out during the initial volatility. It's your choice, depending on your account-management needs and style, but decide now and adhere to your choice.

  Jonathan Levinson   5/6/2003,  2:01:58 PM
For anyone wondering what a "shallow pullback" might be, the Qubes are currently showing us a fine example of one. The overbought extremes have slid off the oscillators and the price is just sitting inches below the summit.

  Jonathan Levinson   5/6/2003,  1:47:34 PM
The FVX popped and is now up 3.8 bps, as the five year bond began to sell. The put to call ratio is up to .86 now, June gold up .20 to 343.20, HUI -1.93, XAU -.67. QQV -.34, TICK.NQ flat, and TRINQ .41.

  Ray Cummins   5/6/2003,  1:43:42 PM
Spreads/Combos & Premium-Selling Plays - Reader's Write

How do you come up with the target credit listed for the Bull-Put and Bear-Call credit spreads?

Regarding "suggested" prices: The first thing you must understand is the Spreads/Combos section is produced for a target audience: less experienced traders that need simple strategies. One of the first skills new market participants must learn is to execute a favorable opening trade. A good technique for initiating a combination position is to place the order as a "net credit" (or "net debit") for both positions in the spread. For the newsletter spread candidates, we always list a target entry price to help traders open the play. This is simply a recommended entry point; just an opinion of what a trader might use as an initial "limit" for the spread order, and it should be a reasonable price to initiate the play even with small changes in the stock and option quotes. The target is always less than the straight BID/ASK numbers (Don't pay "market" for spread orders!) and generally, you can expect to shave a minimum of $0.05-$0.20 off the BID/ASK price when opening or closing even the smallest spread order. The margin can be more or less, depending on the price of the options, whether they are ITM or OTM, the time value remaining, the volatility of the stock, etc. We try to give beginning traders an idea of the value of the spread because the option prices are always different the next day. Of course, you may need to adjust this target based on the activity of the underlying issue, the trading volume of its options or the implied volatility of the series being traded. In closing the plays, we generally suggest a target return of 10-20% per month on most of the basic spread strategies and that is how the target profit or "return on investment" numbers are derived. We try to construct positions to reflect that goal, but not every play is a winner so the main objective is to limit losses and close losing positions before they become very costly, preserving trading capital for the next success. Hope that helps!

  Jonathan Levinson   5/6/2003,  1:35:16 PM
All I can say is "Wow!" They're buying like it was 1999. Only the lower volume and the sinking dollar offers any hint of trouble below the surface. Is the action in the indices a dog and pony show to distract investors from the destruction being wrought to the all-important dollar? Who cares, say the bulls. But the rally has a big problem with that tanking dollar, and the fact that 1999 has come and gone, and the "second half recovery" isn't half the story that the "new economy" was.

  Linda Piazza   5/6/2003,  1:33:28 PM
The first part of the scenario for the OEX I proposed this morning has now been completed. The 60-minute OEX 5(3)3 stochastics are now fully in overbought territory again, ahead of the FOMC announcement. The stage is set now, and we'll see what happens next: a continued rise while all 5(3)3 and 21(3)3 stochastics from hourly to weekly grow ever more overbought, more chop or consolidation while one or more turn down while others stay overbought, or a deeper pullback while all those stochastics turn down in a synchronized movement? Should be interesting.

  Linda Piazza   5/6/2003,  1:27:45 PM
At 474.77 as I type, the OEX approaches the January 15 high of 475.09. At 413.64, the Russell just hit its December 2 high of 413.64.

  Kent Barton   5/6/2003,  1:27:08 PM
BKX.X banks index (811.67 +9.98): Technicals bulls couldn't be more pleased with the action in the BKX. Following Friday's breakout above monolithic resistance at 800, the index pulled back to a picture-perfect retest of that level on Monday afternoon. We're now seeing new multi-month highs as the BKX leads the market higher with a gain of 1.2%.

Will those gains hold after the FOMC makes its announcement? Stay tuned!

  Jonathan Levinson   5/6/2003,  1:21:33 PM
Short interest data on the Qubes: Link

  Linda Piazza   5/6/2003,  1:19:43 PM
Reader Question: Would you describe the characteristics of a blow-off top?

Response: Great question. I suspect it was prompted by my comment that today's volume was surprising large. Rather than give my definition, here's one from Thomas Meyers, from his book, THE TECHNICAL ANALYSIS COURSE: Dramatic market action that is common at market tops and bottoms is known as blowoffs and selling climaxes. Blowoffs occur at market tops. They usually occur after prices have moved higher over an extended period of time. At the end of the up move, prices rally sharply accompanied by a large increase in volume. Typically, all of those that were going to buy at this level have done so. Profit taking occurs and prices reverse, often suddenly, to the downside. What form can blow-off tops take? They can be key reversal days, in which markets start off moving sharply in the direction of the previous move, then reverse and close in the opposite direction: i.e., the market would move sharply up if the trend had been up, but then reverse and close down on the day. Another form might be the last-engulfing pattern. In this form, a large white candle is produced, engulfing the previous day's red candle (as is so far happening on the OEX, for example). I'm not saying that today is a blow-off top and am merely answering this reader's question, but the overbought levels in many oscillators and the expansive volume today make this a possibility to keep in mind.

  Jonathan Levinson   5/6/2003,  1:05:02 PM
White House Budget Chief Mitch Daniels resigns: Link

  Jonathan Levinson   5/6/2003,  12:59:10 PM
QQQ volume is currently 34.5M, which is considerably lighter than at the equivalent time yesterday. FVX is still not going along for the ride, up .8 bps, but with the note sale taking place I'm not confident in t-bill prices today. The US Dollar Index bounced from below 95.80, currently trading slightly above.

A rate cut would open the door to a Japan scenario, or at least make obvious the fact that we're facing a similar plight. A rate hike would blow out the credit bubble. I expect the fed to sit tight, for what it's worth. QQQ has just broken above 28.71 resistance, printing new highs.

  Linda Piazza   5/6/2003,  12:50:29 PM
Volume is surprisingly strong today, with 717 million shares traded on the NYSE and 1 billion already traded on the Nasdaq. Adv/dec ratios are a strong 1.95 on NYSE-traded issues and 1.64 on Nasdaq-traded issues. Up volume is almost three times down volume on the NYSE and 3.7 times down volume on the Nasdaq. New highs vastly outnumber new lows.

  Jonathan Levinson   5/6/2003,  12:47:33 PM
The CBOE's data is running behind today. Latest p/c reading is .81.

  Linda Piazza   5/6/2003,  12:46:23 PM
The FTSE 100 closed just above the 4000 level, at 4006.40, up 1.36%. The CAC maintained the 3000 level, climbing all the way to 3057.56 at the close, up 2.05%. The DAX currently trades at 3048.05, up 1.16%.

  Jonathan Levinson   5/6/2003,  12:34:03 PM
The US Dollar has just dunked below 95.80, no reaction from gold except the HUI and XAU both down, and the Qubes are pulling off their highs with no drama, speed, or conviction. The move in the Qubes is so slow that it doesn't even qualify as on of Alan's "shakes", and the chart pattern looks like a bull flag off the top. TRINQ .44, QQV +.05, TICK.NQ +194, FVX +1.2 bps. The put to call ratio is up to .75 for its latest reading just in.

  Jeff Bailey   5/6/2003,  12:11:56 PM
Dow Industrials (INDU) 8,598 +0.78% .... testing yesterday's highs and bull-run highs. "Zone of resistance" on Dow looks to be from 8,671 (19.1% retracement from WEEKLY) and WEEKLY R1 of 8,682. Might be target just at the 02:15 mark and FOMC announcement.

  Jeff Bailey   5/6/2003,  12:07:16 PM
NASDAQ-100 Index (NDX.X) 1,153.53 +1.51% ... session highs here, but larget cap NASDAQ not yet achieving the 1,155.68 December high.

QQQ $28.67 +1.48% moves into our little "zone of resistance" from $28.65-$28.79 here. Volume "spiked" in last 5-minute bar at 3,872,000 in that 5-minutes, and most likely some type of hedge put on near-term by trader after NASDAQ Composite break to December highs.

  Linda Piazza   5/6/2003,  12:03:15 PM
Another of my alerts just sounded as the COMPX moved over the December 2 high of 1521.44. I note that the SOX has not yet exceeded yesterday's high, though.

  Jeff Bailey   5/6/2003,  12:03:08 PM
NASDAQ Composite (COMPX) 1,522 +1.19% ... breaking above its December highs of 1,521.44 here. Look for shorts to come in with some bias. They'd like to hold off until the FOMC, but bears have been "holding off" long enough perhaps.

  Linda Piazza   5/6/2003,  12:00:25 PM
The OEX sixty-minute chart shows the OEX pushing to/over? the top of a downward-slanting regression channel that began forming yesterday morning. At the same time, the 5(3)3 stochastics are zooming back toward overbought levels, as I thought might happen in anticipation of the Fed announcement. They're not at fully overbought levels yet, but the fast line is already at 90.53, with the slow line now at 63.58. The 21(3)3 stochastics did turn back up from within overbought levels. Barring anything particularly exciting happening between now and the FOMC announcement, then, all hourly, daily, and weekly stochastics should be at or near overbought levels when the announcement is made. That won't preclude a continued move up, of course, as stochastics aren't great at predicting down moves in a strongly uptrending market, but it will set the stage for a possible sustained pullback should the FOMC announcement or CSCO's earnings be greeted with disappointment. One possible scenario is a continued move up through the afternoon as oscillators grow more overbought, and then a sell-the-news event tomorrow, after CSCO's earnings this afternoon. While I'm creating possible scenarios, I'm remaining flexible about possible outcomes, and you should be, too.

  Jonathan Levinson   5/6/2003,  11:58:10 AM
Those toppy indicators have grown toppier above my 28.57 resistance level. FVX is up 0.8 bps, TRINQ .45, TICK.NQ +342.

  James Brown   5/6/2003,  11:52:40 AM
Jon, that sounds tempting but I'm the only one in my family that likes sushi. Go figure.

I do think the cooking for her is a good idea!

  Jonathan Levinson   5/6/2003,  11:50:54 AM
Hey James, if you know how to cook, that's always been a no-miss for me. Bought her a sushi cookbook and then made a few recipes from it and served the whole mess for dinner.

  James Brown   5/6/2003,  11:43:00 AM
Yes, that was a cry for help. Mom is way too tough to shop for these days but I'm willing to do my part to help the economy.

  James Brown   5/6/2003,  11:40:41 AM
Also showing strength today is the RLX retail sector, up 1.58% to 305.91, which is above the 300 level of resistance. Some preliminary reports are showing that retails sales rose some 2.5% last week. Analysts are claiming the upcoming Mother's Day holiday as the catalyst.

Not participating in the RLX strength today is its biggest component Wal-Mart (WMT), which is only up 0.4%. Maybe it's all those male investors showing their displeasure in WMT's decision today to stop selling the so called "racy" men's magazines MAXIM, STUFF and FHM. Actually, it's nice to know they listen to their customers.

This is a good time to remind you that there are only five days, counting today, to buy your Mother's Day gift. Speaking of which, I have no ideas this year. If anyone out there has any good Mother's Day gift ideas, I'd like to hear them. Maybe I'll post them on the monitor to share.

  Jonathan Levinson   5/6/2003,  11:38:46 AM
The US Dollar Index is back below 96, gold above 343 but showing little strength despite the breakdown in the dollar, ditto HUI and XAU, both in the red. QQQ is approaching resistance in the 28.57 area, and my array of short term intraday indicators are growing toppy. We should see the top of the intraday range shortly.

  James Brown   5/6/2003,  11:31:49 AM
Heads up on the XBD Securities Broker index. It's up another 6 points or 1.38% to 457. The 460 level has been strong resistance in NOV 02 and JAN 03. Not only does the XBD look short-term overbought but it's also nearing the top of its six to eight week rising channel.

Mark and I have been eyeing the brokers for short-candidates for days now and we might see another failed rally here soon.

  Linda Piazza   5/6/2003,  11:23:00 AM
My first alert of the morning just sounded, with the SOX moving above 350 resistance, currently at 350.21. Yesterday's high was 355.99.

  Jonathan Levinson   5/6/2003,  11:21:02 AM
The put to call ratio has printed .68 for its 3rd successive reading. FVX up to a 1 bp gain, TRINQ .52, QQV +.16, TICK.NQ +165.

  Jeff Bailey   5/6/2003,  11:18:57 AM
11:00 Update posted at this Link

  Linda Piazza   5/6/2003,  11:15:45 AM
I mentioned this morning that the Nikkei had given a new P&F buy signal today. The bar chart doesn't appear quite so bullish. For those wondering how the Nikkei looks on a bar chart, here's a glance at some important facets of the bar chart: Link

  Jonathan Levinson   5/6/2003,  11:09:27 AM
CBOE put to call data is tardy.

  Jonathan Levinson   5/6/2003,  10:57:28 AM
The US Dollar Index managed to clear 96 and is hovering there, as is QQQ above 28.40. FVX is sinking lower, now up 0.4 bps, TRINQ .49, QQV +.67 and TICK.NQ +188.

  Linda Piazza   5/6/2003,  10:53:41 AM
The FTSE 100 just lost in its most recent attempt to maintain an above-4000 level, currently trading at 3993.30. The CAC 40 currently trades at 3024.74, safely above the 3000 level, while the DAX inches into negative territory, to 3011.92.

  Linda Piazza   5/6/2003,  10:42:30 AM
At 411.31 as I type, the Russell 2000 nears its December 2 high of 413.64. Daily 5(3)3 stochastics and RSI are at levels indicating overbought conditions, but haven't yet turned down. MACD still looks bullish. OBV has been moving up with the increase in prices, a bullish sign. The 200-dma's have stopped their declines and flattened, while the shorter-term MA's have turned up. With all that said, however, the Russell's rise has probably been at too steep an incline to be maintained, and I would look for a pullback to a less-steep incline, perhaps to the 200-ema near 390, some time soon.

  Jonathan Levinson   5/6/2003,  10:38:34 AM
The put to call ratio has printed a second reading of .68. FVX +0.5 bps, TRINQ .47, TICK.NQ +64, QQV +.22 at 28.12.

  Jonathan Levinson   5/6/2003,  10:30:33 AM
In my Freedom-95 retirement account, I've just decided to move some money market funds into a Canadian bond fund. My reasoning is that the BOC rate hikes, which made no sense to me and continue to not make sense to me, have and should continue to boost the Canadian dollar. This will attract foreign investors, and should benefit bonds. Secondly, as Canada is a net exporter to the US, the booming dollar is a disaster for Canuckistan's economy, and will require a rate drop at some point, perhaps soon. That would presumably put a premium on bonds already purchased. Lastly, given that the .0x% I was earning in the money market fund barely buys lunch, I figure I have little to lose. I'll take bonds over the Nikkei any day :)

  Jonathan Levinson   5/6/2003,  10:26:49 AM
Al Green is taking no action today. No expiries for today, no additions. Take a good look, everyone- the market is trading without overt fed intervention right now. Of course, there's an announcement due this afternoon, a t-bill sale, etc. But, no open market ops this morning.

  Linda Piazza   5/6/2003,  10:23:02 AM
Volume patterns echo the buying Jim is mentioning on the Futures Monitor. Adv/dec and up/down patterns show strong buying, although volume remains light on the NYSE at 166 million shares. As Jeff mentioned in last night's wrap and as I've mentioned several times lately, the new highs/new lows are beginning to be unbalanced enough to become worrisome from a contrarian viewpoint.

  Jeff Bailey   5/6/2003,  10:20:06 AM
Budget Director Daniels to resign Fox News reported that Budget Director Mitch Daniels is resigning his post. Time table given is 30-days.

Drug Index (DRG.X) 322.91 -0.42% trading session lows here. Daniels was senior vice president for Eli Lilly (LLY) $63.90 -0.10% prior to being in charge as Budget Director.

Some drug industry execs were pleased with Daniels position as Budget Director as it eased some concern tht Congress might include price controls in its plan to add a prescription drug benefit to Medicare that may have price controls attached. Since Daniels would have been in "control" of the budget, drug execs felt more comfortable with a former drug exec in a position of power with regards to the Federal budget.

  Linda Piazza   5/6/2003,  10:18:23 AM
I haven't been able to find a candlestick term that describes the several successive engulfing candles, alternating red and white, that I noted in my 10:10 post as being seen on the five-minute OEX chart, but traditional technical analysts will recognize the pattern as a broadening one: a megaphone or bullhorn formation. These are not usually stable formations and usually break to the downside. This is a formation seen on a five-minute chart, so its outcome might not be as predictable as a similar formation found in a longer-term chart, however.

  Jonathan Levinson   5/6/2003,  10:11:02 AM
The opening put to call ratio was .68, equity component 0.66 and index component 0.73. QQV is now up .16, FVX +1.4 bps. This looks like chop to me, which is quite a feat given the current altitude of the Qubes. HUI and XAU are now flat, lightly in the red.

  Linda Piazza   5/6/2003,  10:10:50 AM
Those are some interesting-looking candles on the five-minute OEX chart, with the last three candles showing that each succeeding candle engulfs the previous one. I don't know if there's a name for that pattern, but since it's given first a bearish reversal signal and then a bullish one, I'm not sure about the stability that's being predicted here. As I was typing this entry, a fourth five-minute candle was printed: a doji.

  Mark Phillips   5/6/2003,  10:09:48 AM
AZO $84.77 (+1.17) All right campers, this is your final warning. We've been playing AZO up from the $75 area, with an eye towards an eventual target of $84-85. The stock probed into this area yesterday and is back up testing this firm resistance again today. It has been a nice run and there are plenty of gains on the table. In my sternest tone, I'm advocating harvesting gains here this morning and would NOT advocate new positions at this elevated price. For the record, we'll be dropping AZO from the call list tonight.

  Linda Piazza   5/6/2003,  9:55:52 AM
The OEX 60-minute chart shows 5(3)3 stochastics making a bullish kiss from just above oversold levels while the 21(3)3 stochastics slant down at a shallow angle from overbought levels and perhaps try to turn back up again. Often when stochastic evidence is mixed like this, I find that trading is choppy, which would make sense in light of the warnings Jim and Alan have given about typical trading patterns ahead of the FOMC meeting. Be careful. I'm building a scenario for this afternoon's trading, watching to see if the hourly 5(3)3 perhaps might cycle all the way back up to overbought territory ahead of the meeting. That would mean that 60-minute, daily, and weekly stochastics would all be at or approaching overbought levels simultaneously again. That happened yesterday morning, with only the hourly 5(3)3 cycling down while the OEX dipped only minimally. Will the next cycle down be harder, tugging some of those other stochastics down, too? We shall see. It's dangerous to make too many assumptions based on oscillator evidence in a strongly trending market.

  Linda Piazza   5/6/2003,  9:42:12 AM
A lot of the recent move up in the Nikkei is based on the rumors of the measures that might be contained in the BOJ's emergency relief plan that's soon to be announced, and today one BOJ governor spoke out against extraordinary measures. Until now, bank shares have not been included in the government's share-buying plan, but the three coalition parties are asking for these shares to be added. That's led to bounces in the troubled financial stocks, but unless the new plan has been announced within the last hour, those advances are based on media rumors and not on hard facts.

  Linda Piazza   5/6/2003,  9:37:53 AM
I see that Stockcharts.com has now updated the Nikkei's P&F chart, showing the double-top breakout Jonathan mentioned, as well as the move to the bearish resistance line. For those wishing to study P&F markets for the FTSE 100, CAC 40, and DAX, you can access them on Stockcharts.com using $FTSE, $CAC, and $DAX.

  Jonathan Levinson   5/6/2003,  9:37:50 AM
The USD Index is back over 96, QQQ is up 12 to 28.37 and yields are lightly in the green. TRINQ .59, QQV -.13 to 27.77, TICK.NQ +211. HUI +.77 at 133.96, XAU +.27 at 69.19.

  Jonathan Levinson   5/6/2003,  9:35:32 AM
Beware, though. The most recent daily candle on the Nicky shows a gap up into a gravestone doji, which would, I assume, be an unsupported island topping pattern on the 60 minute candles. Just guessing, but I won't be chasing this move in my mutual fund account. It doesn't look like a healthy advance to me, and there's a wall of resistance at 8500. Also, I don't like the idea of trading onside with Toshihiko Fukui and Al Green, so I'll let it go :)

  James Brown   5/6/2003,  9:33:19 AM
Wow! Will wonders never cease? Looks like Merrill Lynch put out a note this morning to BUY telecom companies. That's right, they said buy them. MER listed half a dozen big telecoms that had beaten Merril's earnings estimates and now offered better dividend yields than the average yield in the S&P 500.

  Jonathan Levinson   5/6/2003,  9:32:53 AM
James, select the Gallery View. Their default p&f chart has a double top breakout alert.

  Linda Piazza   5/6/2003,  9:31:47 AM
James, sorry I missed your earlier post for a while as I was studying charts. On Stockcharts.com, you can access the Nikkei by using $NIKK.

  Linda Piazza   5/6/2003,  9:29:18 AM
Although the CAC 40 and the DAX hold numbers above the psychologically important 3000 level, the FTSE 100 has had difficulty maintaining its psychologically important 4000 level today, and currently trades at 3992.90.

  James Brown   5/6/2003,  9:28:49 AM
My own pet-stock to watch Marvel Enterprises (MVL) beat earnings estimates by 20 cents this morning. Analysts had been looking for 37 cents and MVL turned in 57 cents. Revenues were up almost 53% year over year. I take it the $85 million opening weekend for their X-men 2 movie doesn't hurt (of course that probably won't show up until next quarter). Shares have jumped from $18.30 to nearly $22 in pre-market trading. This stock looks severely overbougth, up over 100% since late February. One of these days it might give us more patient traders an entry point we don't have to cringe at.

  Jeff Bailey   5/6/2003,  9:25:49 AM
Sirius Satellite Radio $0.90 Link ... trading $0.93 in pre-market after Sander Morris Harris upgrades to "buy" from "sell." According to Sander Morris Harris, their retail channel checks indicate that sales are improving and that survey reveals sales will likely improve as more product becomes available. SIRI is ecpected to report quarterly earning's on Wednesday, May 14th. I currently see no estimates.

XM Satellite Radio (XMSR) $9.70 Link gaining to $10.40 in pre-market. Also noting XMSR's SKYFi, which is being marketed by Delphi will be sold in 2,100 Wal-Mart store locations across the U.S.

  Jonathan Levinson   5/6/2003,  9:25:42 AM
Yields are now flat, and QQQ is unchanged at 28.25. Feels like Dodge City, too quiet.

  James Brown   5/6/2003,  9:23:26 AM
FYI...we've listed EchoStar (DISH) on the OI watchlist for a couple of weeks now. Shares broke out above the $30.00-30.50 level very strongly on Friday but gave back most of its gains again on Monday (probably due to COX Communications' Q1 loss yesterday). Well, DISH reported their own Q1 numbers this morning. Revenues rose 23% to 1.36 billion, fueled by 350,000 new subscribers. It appears that DISH beat the estimates by 2-cents with 12 cents a share. Last year Q1 numbers were negative. Before the bell, shares are back up to the $32.50 level.

  Jeff Bailey   5/6/2003,  9:13:24 AM
09:00 Update posted at this Link

  James Brown   5/6/2003,  9:12:22 AM
Linda, for those who are curious, what's the symbol for the NIKKEI's point-and-figure chart?

  Jonathan Levinson   5/6/2003,  8:34:52 AM
Bonds have opened to light selling so far, with FVX +.9 bps, TNX +1.1 bps and TYX +.3 bps.

  Linda Piazza   5/6/2003,  8:23:00 AM
Since my first post this morning, the FTSE 100 has again inched above the 4000 level, currently up 48.10 points or 1.22%, to 4000.70, just under the day's high of 4003.30. The CAC 40 and DAX maintain their levels above 3000, with the CAC 40 currently up 26.45 points or .88%, to 3022.67, and the DAX up 14.88 points or 0.49%, to 3027.92.

  Jonathan Levinson   5/6/2003,  8:10:32 AM
The US Dollar Index is setting a new bear market low below 95.80, as June gold prints 345.50. Link

  Jonathan Levinson   5/6/2003,  7:29:35 AM
After spending over an hour pondering how the USD tanking can be bullish for the COMPX, I came up nearly dry. On a technical basis, I see nothing bullish short term about the USD going down, period. Fundamentally, it will enhance demand for that record-breaking note sale by the treasury this week by foreigners looking for a forex play, assuming of course that the slide stops this week. It may also give a boost to retailers who export from the US- there are few of these, given that the US is a net importer, and such to a huge degree. But, what about online sales? AMZN, even EBAY? Perhaps those companies will see a boost in their businesses on the weakening buck.

  Jonathan Levinson   5/6/2003,  7:23:01 AM
The US Dollar Index has been sold to sub-96, currently trading 95.90, while June gold is up 1.40 to 344.40. Nevertheless, futures are higher, with NQ up 2.50, ES +1.75, QQQ up .01 to 28.26.

  Linda Piazza   5/6/2003,  6:48:42 AM
After being closed Monday for a holiday, the Nikkei made up for lost time, opening up 88.30 points and then climbing quickly above the 8000 and then 8100 levels. The Nikkei reached the day's high of 8133.34 just before the midday break, but eased slightly into the afternoon, closing up 176.37 points or 2.23%, at 8083.56. As I reported last week, news began circulating early in May that the three ruling coalition parties would ask the BOJ to include purchases of bank shares as part of their emergency economic proposals, with that news lifting bank shares. Announcements related to the emergency economic proposals were expected soon. Today, the coalition added plans to ask the public postal corporation to add to stock investments made in its savings and life insurance programs.

Although Stockcharts.com has not yet updated the Nikkei's P&F chart after today's trading, it appears that the Nikkei should have given a new P&F buy signal today, canceling the recent sell signal. The bar chart shows that the Nikkei closed just above the 50-dma at 8061.90, but couldn't maintain levels above the 8112-8122 resistance.

The FTSE 100 was also closed yesterday for a holiday, but today immediately began moving up toward the 4000 level. It has climbed as high as 4001.40, but hasn't yet been able to maintain that 4000 level, and currently trades up 41.50 points or 1.05%, to 3994.10. The CAC 40 and DAX both dipped into negative territory early today, perhaps impacted by the Eurozone April services business index, which came in at a slightly lower than expected 47.7, still showing a contraction. Some speculate that Germany has again dipped into a recession, with German unemployment expected to rise from its current 10.6%. Both the CAC 40 and the DAX have now moved above the 3000 level, however, a level the CAC was not able to maintain yesterday. Currently, the CAC 40 is up 24.87 points, to 3021.09; and the DAX is up 11.16 points or 0.37%, to 3024.20.

  James Brown   5/6/2003,  6:30:57 AM
The Market Monitor Server will be rebooted in 5 minutes. To continue to receive updates you will need to reconnect your desktop client.

  Jeff Bailey   5/5/2003,  11:11:52 PM
The Index Trader Wrap has been posted: Link

  Jim Brown   5/5/2003,  11:11:45 PM
The Futures Trader Wrap has been posted: Link

  James Brown   5/5/2003,  11:11:10 PM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

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