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  Jim Brown   5/7/2003,  4:20:32 PM
PIXR 15 cents vs est of 11

  Jim Brown   5/7/2003,  4:20:16 PM
WFMI down -7

  Jim Brown   5/7/2003,  4:16:36 PM
THQI -15 cents vs est of -15

  Jim Brown   5/7/2003,  4:14:49 PM
CPWR 6 vs est of 8 cents

  Jim Brown   5/7/2003,  4:07:35 PM
JWN (Nordstrom) halted for news

  Jim Brown   5/7/2003,  4:07:14 PM
AEOS guiding 8-9 cents vs consensus of 11

  Jim Brown   5/7/2003,  4:06:49 PM
WFMI 40 cents inline, guidance at low end of range, shares down -$4

  Jim Brown   5/7/2003,  4:06:06 PM
EDS actual 30 cents vs est of 31 cents, beats on revenues, not in a position to provide 2H guidance

  Jim Brown   5/7/2003,  4:00:27 PM
EXEL -39 vs est of -40

  Linda Piazza   5/7/2003,  3:58:56 PM
The day ends with yet another small-bodied candle on the OEX, yet another day of indecision when neither the bulls nor the bears could prevail. Anyone watching the tapes knew that without looking at the candles. Another day or two like this and the rising wedges seen on the indices will no longer have relevance, as prices will issue out the apex.

  Jonathan Levinson   5/7/2003,  3:42:31 PM
USD slipping below 95.60, matching the slight uptick in equities. The most recent put to call reading came in at .95. QQV and VXN near flat in negative territory, TRINQ 2.29, TICK.NQ -2.

  Linda Piazza   5/7/2003,  3:40:23 PM
The NDX bounced back above that 1134 neckline. Is this a rejection of the H&S neckline or just a move up to form another right shoulder, as sometimes happens? Sixty-minute charts across the indices show oversold oscillators hooking up into bullish kisses, so that second shoulder or even a total negation of the H&S pattern seems possible. Whatever happens, let's hope we're not doomed to yet another day of consolidation while oscillators oscillate.

  Linda Piazza   5/7/2003,  3:08:50 PM
The NDX is now just below the 1134 neckline of the H&S formation mentioned in my 12:08 post, with the NDX now at 1131.79, and falling quickly once it passed 1134. Of course that will probably change by the time I've made this post!

  Jonathan Levinson   5/7/2003,  3:03:12 PM
Yield dumps another .9 bps to close down 12.4 bps. Was it short covering in the bond pits today?

  Jim Brown   5/7/2003,  3:00:20 PM
March Consumer Credit ACTUAL +$931M compared with estimates of $3b, Feb of $1.5B

  Linda Piazza   5/7/2003,  2:57:54 PM
The OEX moves down toward a test of that H&S neckline and a break through the bottom of the rising wedge, both near 468.80, but as it does so, 60-minute 5(3)3 and 21(3)3 stochastics approach oversold levels. CCI registers a negative 101.69, RSI appears bearish and has room to run, and MACD rolls over and the lines separate, but I'm still aware of those nearly oversold stochs. (Rightly so, perhaps, because as I typed this entry, the OEX moved off the 469.41 low it was hitting as I began typing.)

  Jonathan Levinson   5/7/2003,  2:57:42 PM
Fiat money, that is.

  Jonathan Levinson   5/7/2003,  2:57:25 PM
Bonds heading into their close near their day highs, FVX -11.5 bps, TNX -10.8, TYX -7.1. Money became a little cheaper today.

  Linda Piazza   5/7/2003,  2:44:20 PM
As of a few minutes ago, total volume was just over a billion on the NYSE and 1.4 billion on the Nasdaq. Adv/dec ratios are .88 for NYSE-traded issues and .79 for Nasdaq-traded issues, with these numbers being stronger than the earliest ratios this morning, but still showing more decliners than advancers. The NYSE had a brief period of more advancers than decliners this afternoon, but that pattern has since deteriorated. Down volume is 1.7 times up volume on the NYSE and 2.8 times up volume on the Nasdaq. There's a divergence between these patterns and the new highs/new lows patterns, which still show extreme numbers of new highs in comparison to new lows. One pattern is a show of underlying strength: the other is a show of underlying weakness. Which is right?

  Jonathan Levinson   5/7/2003,  2:43:29 PM
The US Dollar Index is falling out of its bearflag, currently at 95.60, while the FVX is down 11.5 bps on the day and QQQ is taking a bounce at 28.24 after pushing to new day lows. TRINQ now 2.07, QQV -.02, TICK.NQ +244.

  Linda Piazza   5/7/2003,  2:30:07 PM
How to turning a winning trade into a nearly worthless trade: in a strongly trending upmarket, have one Morgan Stanley analyst upgrade the stock you're holding from equal-weight to overweight--not even to buy--and have the stodgy stock shoot up 2.29 points in a single day! KO is now trading at 43.31. This is why I prefer index trades rather than trades in individual stocks. I'm holding KO 42.50 puts and waiting vainly for a pullback to get rid of them, although I usually tend to hold until expiration, letting the play work. I haven't dared trade index puts in this market lately, but until early this morning, nothing seemed amiss in this put play. Fortunately, this was risk capital only, all I dare trust to options trades these days.

  Mark Phillips   5/7/2003,  2:27:03 PM
Laughing so hard, I almost fell out of my chair! Good old Abby, she never gives up. This must mean we're very close to the top for this market!

  Jonathan Levinson   5/7/2003,  2:23:02 PM
DJ Goldman's Cohen Sees S&P 500 Up 25% Over The Next Year

05/07/2003 Dow Jones News Services (Copyright 2003 Dow Jones & Company, Inc.)


NEW YORK (Dow Jones)--It's time to put more faith in riskier areas of the stock market, says Goldman Sachs chief investment strategist Abby Joseph Cohen, who sees the Standard & Poor's 500 Index rising roughly 25% to 1150 over the next 12 months.


  Jonathan Levinson   5/7/2003,  2:21:22 PM
Head and shoulders on the QQQ 15 minute candles with the neckline at approximately 1505. Projection if it fulfils to approximately 1480 COMPX.

  Jonathan Levinson   5/7/2003,  2:06:10 PM
FVX near its LOD, down 11.5 bps, and June gold is back to unchanged. But HUI Dumpty is still getting tanked, down 2.55 now at 131.83, XAU -.44 now. Is it hedgies going long on the metal and hedging against gold mining stocks?

  Linda Piazza   5/7/2003,  2:04:49 PM
I've got an alert set for a neckline violation for the NDX H&S formation I mentioned in my 12:08 post because the NDX H&S formation is the best formed of those on the various indices, but a reader and I were just discussing the neckline on the OEX, too. That neckline violation on the OEX would be somewhere between 468.80 and 469.30, depending on how many shadows are cut, but I think the lower number suggested by the reader actually has more validity. The market often shows participants when that neckline violation has occurred as the drop escalates, and the OEX has already moved through the 469.30 level today without a sharp drop. Thanks, P., for reminding me to add the neckline figures for the OEX in addition to those for the NDX mentioned earlier.

  Jonathan Levinson   5/7/2003,  2:00:45 PM
Hi Jon I like your comments, don't you think this is very odd that the bonds look to being bought very solidly today and the stocks won't tank??

Yes, I agree. Easy Al didn't pony up enough money to cause a massive buying binge in bonds, and the market is proving quite resilient but there's no sign of a ramp either. My guess is that there's a lot of shorting and covering going on here, as evidenced by the persistent put to call readings in the 1.0 area today. I suspect that there are a lot of program trading robots playing Pong with the indices (and our trading accounts), and they're playing equally long and short at this point. Either that, or the PPT is ramping to keep things lofted at current levels. An observation- the market has changed since retail investors got "cleansed" over the past 3 years. It seems more vicious to me now than it did even last year, but then, this is just my own observation.

  Jonathan Levinson   5/7/2003,  1:51:36 PM
Further to a reader question re currencies -- you can trade currency futures on the Euro, Yen, C$ and A$ on InteractiveBrokers. Each tick on the Euro is $12.50 and on the A$ is $10. However, IB doesn't do trading of currency options (these are pit traded). For the latter, an account with a regular commodities broker is required. Once acct opened, orders can still be transmitted on-line, but I'm not clear on whether the orders are actually transacted on-line or just transmitted to the pit. The currency options are options on the futures contracts. Hope this helps...Samir

  Jonathan Levinson   5/7/2003,  1:51:01 PM
We have a higher low here and a lower high earlier in the day, setting us up for a neutral wedge, which would be the perfect way to make all traders tear out their few remaining hairs and squeeze the shorts, longs and flats to an equal degree. The Teflon Market knows no mercy. However, with the FVX down 10.3 bps, perhaps the bears have a chance for a downside break. TRINQ 1.81 and TICK.NQ +59.

  Linda Piazza   5/7/2003,  1:47:13 PM
When I last wrote about the DAX, I mentioned that the intraday chart had shown the DAX moving above the neckline of a reverse H&S formation, but the DAX turned around on a dime and headed down again. It's currently at 3005.24, down 61.71 points or 2.01%, and looks to be heading for a test of the psychologically important 3000 level again. The day's low so far has been 2992.79.

  Linda Piazza   5/7/2003,  1:41:35 PM
After turning up early in the day, the 60-minute OEX 5(3)3 and 21(3)3 stochastics turn back down again, with the 5(3)3 downturn still somewhat in question. The shorter-term 5(3)3's are doing so from just over oversold levels, so don't have far to fall. While I usually favor stochastics over MACD, MACD often proves more helpful in trending markets, and the 60-minute MACD also shows a bearish cross and appears to be rolling. Particularly useful to me is RSI, and I note that 60-minute RSI has been forming a series of lower highs since Monday. All these oscillators must be watched with some skepticism, though, as long as the upward trend remains intact. The trick becomes finding the one time when a downturn signals a true change in trend! ADX is one tool that may be helpful in predicting that change. I note today that 60-minute ADX has been declining and is now below 20, showing a slowing of momentum in the recent trend. Moreover, the line that measures selling now comes up to meet the line that measures buying, and may be near a bearish cross. Daily ADX is not showing these same signs, however.

  Mark Phillips   5/7/2003,  1:36:24 PM
As noted in the 1pm ET Intraday update, today's session is one of rather muted range-bound action. Near support is being bought and near resistance is being sold, keeping the major indices pinned in the lower half of their intraday ranges. We're seeing this action largely reflected in the OI Play list as well, with only one play showing a move of more than $1. Here's the quick run-down for those that are interested.

ADTN $43.47 (-0.53) we were looking for a bit of a pullback after two days of banging against the $44-45 resistance zone, and it appears we're getting it. The stock is actually holding up fairly well, and we may not see a pullback all the way to $42 for new entries. Teim will tell, but probably not today.

SLM $113.02 (-0.84) Conmtinuing the pullback from the $115 resistance area, SLM is grinding along near the $113 level this afternoon, which just happens to be the center line of that ascending channel. This may be a decent entry point, although personally, I'd like to see SLM closer to $112 before taking the plunge on new positions. In either event, wait for the bounce.

KSS $55.55 (-0.49) The see-saw action continues with KSS pushing up near the $57 level this morning and now back under $56. While there is some mild weakness in the Retail sector (RLX.X), it isn't significant today. KSS remains in its shorter-term descending channel, the top of which is now just below $57, and in hindsight provided a solid entry for new bearish positions this morning. The next critical test will be to see whether the stock finds support at the midline of the channel, (currently $54.65) or plunges below it to seek out new recent lows.

  Kent Barton   5/7/2003,  1:36:13 PM
As James and Linda pointed out, the SOX.X is seeing a pullback today. On Tuesday the index closed above 350 for the first time since December, but we're not seeing any follow-through from that bullish performance.

Our PremierInvestor long play in Xilinx (XLNX) was activated about 90 minutes ago when the stock traded above yesterday's late-session high of $28.70. The intraday jaunt into positive territory followed a rebound from the recent trend of higher lows, which is visible on the 10-minute chart. That ascending support is now located in the $28.15-$28.50 region. Our play will be in good shape as long as that trend holds. It's also nice to see that XLNX is showing good relative strength versus the sector. Of course, the bulls are going to have a tough time pushing the stock to new relative highs without some leadership from the SOX. Momentum traders looking for new entries will want to wait for a move above $29.21 before considering any long positions.

  Jonathan Levinson   5/7/2003,  1:35:42 PM
hi jonathan, thank you for the good inputs. i am very experienced in stocks and options, but never done futures. i would like to. what is the best approach to learn furures. also, based on some reading and research i have done, i think the US dollar is due for a bounce. since i do not trade futures, how can i participate in a bullish trade in the $US dollar. Thank you.

This is a question for which I have no solid answer, because I'm confused about the intermarket action we've been seeing. A dollar bounce would be bearish for gold and commodities (so, XAU puts), but gold has been reacting very weakly to the destruction in the dollar. It would be bullish for equities (so long equities), but so far the decline in the dollar has coincided with the equity rally. Perhaps shorting the euro or yen would be a decent forex play, but my experience with currency contracts is nil.

  James Brown   5/7/2003,  1:21:24 PM
The 1:00 PM ET Update has been posted: Link

  James Brown   5/7/2003,  1:12:41 PM
I've looked through the news for six or seven home-building stocks and can't seem to find the catalyst for the big move higher in the DJUSHB index. Meanwhile, several of the homebuilders are showing lots of strength and hitting new relative highs.

As of yesterday, the homebuilders were giving us the impression that the rally may have stalled. The group was so overbought that we wanted to catch any sharp profit taking with a put play on HOV. After all, HOV came out with very good news yesterday (+16% in home orders) and the stock traded down! We wrote HOV up as a put play last night but it's not active until shares of HOV trade at or below $38.40. So far this has not occurred and we remain untriggered. By the looks of the rally in the home sector today, it may not occur for a while.

  Linda Piazza   5/7/2003,  1:12:41 PM
Advancers now lead by less than 100 issues on the NYSE and up volume is ahead by about 65 million, but decliners and down volume still lead on the Nasdaq. Total volume as of a few moments ago was 783 million on the NYSE and 1.1 billion on the Nasdaq. It's building to be another big-volume day on the Nasdaq, but today that volume isn't helping the Nasdaq to add to yesterday's gains.

  James Brown   5/7/2003,  1:00:01 PM
Oddly enough we're still not seeing any participation by WMT in the recent RLX rally (last three or four days). I can't imagine the RLX can continue much higher without its biggest component cooperating.

  Jonathan Levinson   5/7/2003,  12:58:31 PM
The high TRINQ makes this look like a distribution zone to me, currently +1.51, TICK.NQ +110. QQV is down .30 and VXN down .10.

  James Brown   5/7/2003,  12:57:31 PM
The SOX continues to be the sector leader to the downside today. Fortunately, for shareholders of QLGC, the stock is not paying attention. QLGC has been able to maintain its sterngth above the $45 mark and is building on yesterday's breakout.

Meanwhile, KLAC has managed a small pull back with the SOX.

  Jonathan Levinson   5/7/2003,  12:54:53 PM
The US Dollar Index is creeping higher, but is it doing so in a bear flag formation? Link Gold has recovered nicely, now down .30 at 342.50 for June contracts, but HUI is still down 2.03, XAU -.10. QQQ continues to flatline at 28.50.

  James Brown   5/7/2003,  12:54:51 PM
Shares of NXTL have fallen below our do-or-die level at $14.50. Aggressive traders can watch the $14.00 mark for any bounce but we'll probably drop NXTL on this weakness if it does not improve by day's end. Currently, our stop is $13.90.

  Linda Piazza   5/7/2003,  12:54:47 PM
Although the OEX hasn't yet violated its rising wedge either to the upside or the downside, here's a bellwether stock that has violated its wedge to the downside. Link After closing below that wedge for the first time on May 2, GE has been climbing the outside of the wedge, testing it from the underside. I wouldn't consider the wedge fully violated until and unless GE also falls through the 28.70 level that has supported prices since April 23, and this is especially true since GE is now on a P&F buy signal. Of course, resistance can be expected at 30, and also a few points over that at the location of the bearish resistance line. However, over the last couple of months, I've noticed a change in the way the market handles these violations. According to Pring and many other market experts, a downside violation of a bearish rising wedge should result in a quick fall, but lately indices and stocks have tended to do exactly what GE is currently doing--climb the underside of that violated wedge rather than plunge.

  Jonathan Levinson   5/7/2003,  12:25:26 PM
I'll take a lower high in QQQ if the current day high holds.

  Jonathan Levinson   5/7/2003,  12:24:05 PM
US Dollar Index printing new day highs above 95.80, June gold down 1.40 at 341.40, HUI down 2.13 and XAU -.28.

  Jonathan Levinson   5/7/2003,  12:21:55 PM
QQQ breaks that irritating little upchannel to the downside, but FVX is down just 5.8 bps, and QQV is down .11 but climbing off its day lows. Until the QQV and VXN start to get in gear to the upside, this will continue to look like a mere pause in the rally to me. No fear whatsoever with these volatility indices at such low levels. TRINQ currently 1.45, TICK.NQ -145.

  Linda Piazza   5/7/2003,  12:14:40 PM
The FTSE 100 could not maintain the over-4000 level, and closed at 3992.90, down 13.50 or 0.34%. The CAC 40 did maintain the over-3000 level, however, although it, too, closed down. The CAC lost 33.60 points or 1.10%. Currently, the DAX trades down 41.17 points or 1.34%, at 3025.78, having momentarily dipped below 3000 in afternoon trading before heading up again. The intraday chart shows the DAX now climbing above the neckline of a reverse H&S formation on its intraday chart, predicting a rise toward the 3040 level again although the index might not achieve those levels today.

  Jim Brown   5/7/2003,  12:13:46 PM
IBM - My call - I decided I would jump in on the IBM conversation. This was my pick for the newsletter but it was not because the PE was cheap or the chart was attractive. I picked it because of circumstances and market conditions. IBM has considerable resistance at 88.50 or so with the current price at 87.56.

I thought there were several factors that could make an entry now profitable.

First, Soundview met with the IBM CFO last week and came away very bullish. They said the PWC acquisition was working out much better than expected and was supplying more top line growth than expected on a global basis. They said the addition of the strong consulting business and relationships in addition to the already strong IBM services business was performing better than expected. They felt IBM would easily beat consensus estimates on revenue/earnings for the quarter and the year.

Secondly, IBM's chip business is alive and well and experiencing less order fade than the other chip makers. There have been several positive comments about a broadening of their products and new licensing deals recently. Their research and development division announces breakthroughs on almost a weekly basis.

Third, IBM is announcing a new state of the art mainframe called the TREX on the 13th. They announced the most powerful UNIX server ever on Tuesday.

This week Gartner Group announced that IBM had surpassed BEAS in the server application software market.

These points by themselves are just normal course of business. However, IBM is presenting at two tech conferences this week and those presentations will highlight these new events and could have given IBM a boost in the market place.

Fourth, in any continued rally IBM would have to be a leader. As a strong Dow tech component they benefit from the Nasdaq surge.

Lastly and one of the overriding reasons I picked it as a play was the resistance at 88.50. I felt a continued tech rally ALONG with the news from the tech conferences could combine to push IBM over 88.50 AND generate a strong short covering bounce. Everyone know there is a strong short interest in IBM and that short interest has got to be worried with the positive up trend in IBM over the last three weeks. If we were to get a breakout to new highs on the Dow/Nasdaq then IBM should break 88.50 with a bang.

In any research for an OIN play the emphasis is short term. The market was moving up and techs were leading. I weighed the news, the potential for a breakout and the potential for money to go into IBM as a safe large cap on any breakout. I am still comfortable with my decision. If you are going to bet on a continued market rally from this point then I think IBM is a good way to play it for the reasons listed above. I don't care if the PE is 27 or 127 for the next week. I am not buying it for the next ten years. I only want to speculate in a potential short covering bounce over 88.50 on a continued market bounce. If we don't get the continuation of the current rally then IBM will likely fail at 88.50. Your call now.

  Jonathan Levinson   5/7/2003,  12:12:39 PM
QQQ right on support.

  Linda Piazza   5/7/2003,  12:08:47 PM
An interesting possibility is setting up on some of the indices, although it's clearest on the NDX ten-minute to sixty-minute chart. Here's the ten-minute version: Link This chart shows the possibility for a H&S formation, with the left shoulder top at 1152.50 and that left shoulder being formed over Monday's trading; with a head at 1160-1161, formed on Tuesday's trading; and with a possible right shoulder being formed today. It looks as though the neckline would be at 1134-1134.50. The only pivot analysis correlation I see here is perhaps with the 1137.80 daily S1 for the NDX. Remember that this is a potential formation only, and a move over the 1160 level would negative the potential for a H&S. Similar formations are setting up on other indices, although they're perhaps not as well formed as this one appears to be.

  Jonathan Levinson   5/7/2003,  12:02:47 PM
QQQ has very short term ascending trendline support at 28.55. I mention it only because support seems to be meaningful in the Teflon Market, even if resistance has been abolished. FVX -6.3 bps now, gold down 1.30 at 341.50 on the June contract.

  Jonathan Levinson   5/7/2003,  11:53:11 AM
US Dollar Index climbing to 95.80, FVX up to -5.6 bps on the day, TRINQ 1.31, TICK.NQ +157.

  Linda Piazza   5/7/2003,  11:51:40 AM
Although market internals have been improving, volume patterns still show more declining than advancing issues and higher down volume than up volume, although up and down volume are now almost equal on the NYSE. Total volume is 550 million on the NYSE and 820 million on the Nasdaq. New highs still vastly outnumber new lows as the indices move to new highs on relatively weak internals.

  Linda Piazza   5/7/2003,  11:46:39 AM
Associated Press is reporting a new audiotape allegedly made by Saddam Hussein, in which he refers to the celebrations made by some in Iraq for his 66th birthday on April 28th despite the U.S. occupation. The voice on the tape has not been verified as that of Hussein's.

  Jonathan Levinson   5/7/2003,  11:41:07 AM
Put to call ratio now 1.01, with the index pcr falling to 1.65 but the equity pcr staying at .85. I think of a falling index pcr with a persistent high equity pcr as being a bullish shift, but this isn't the most reliable of indicators, mostly good for hunches only. Hope it fails here.

  Jonathan Levinson   5/7/2003,  11:37:51 AM
Just to put it mildly, WHAT THE HECK IS GOING ON WITH GOLD? USD is way down to approx 95.6 and gold dumps? Seems to be manipulated to me. Any ideas? TIA Grant

There are times when I hate to be right. Weeks or months ago I bought into AGF Managed Futures, which is a mutual fund that is primarily bullish on commodities. I was way too exposed to precious metals funds and felt that while the central banks could whack gold or silver, they don't have reserves of coffee, OJ, etc. to dump. Well, my managed futures fund is up double digits during this time, while my metals funds are flat. Note further that while the buck is down, other currencies are up, making foreign bonds a viable investment for those in the vast, vast majority who are not gold or commodity bugs. Because other jurisdictions have not been devaluing their currencies (such as Canuckistan, for example), the case for gold and silver has suffered. For this reason, I finally cracked and slid some money market holdings into a Canadian bond fund as a potential hedge against the miners and commodities. Wish I had bought a US tech-crap equity fund 2 months ago instead, but my bear goggles blinded me to that, which would have been the best hedge at the time.

  Linda Piazza   5/7/2003,  11:26:05 AM
As I mentioned earlier, the rising wedge on the OEX has now narrowed so much that almost any movement up or down brings the OEX to the boundaries of the wedge. This morning's move down toward 469 brought the OEX to the bottom supporting line and the recent rise brought it right up to the top line. The last two days, the OEX's daily candles have had shadows that pierced that line with the candle bodies residing below the upper line. Normally, that kind of action would have a bearish implication, as it indicates that the bulls have not been able to maintain the higher levels, but lately, market participants need to wear a pair of rose-colored glasses when making these kinds of interpretations. The bearish implications haven't been playing out, and may not this time, either, but this time the OEX was turned back at the top line of the rising wedge, rather than piercing that level.

  James Brown   5/7/2003,  11:25:20 AM
The 11:00 AM ET update is posted: Link

  Mark Phillips   5/7/2003,  11:24:23 AM
Re: IBM I got the same email request for analysis on IBM that Jonathan did, and while I won't disagree with Jonathan's response (actually I completely agree!), there are a couple comments I want to make with respect to the question.

There are a couple of things that jumped out at me where I think some commentary could help this reader, along with others in a similar frame of mind. Please understand that I'm not being critical of this reader, but trying to point out how he/she may be doing himself a disservice by using a self-definition that does him/her no good.

First the comment about being a "surprised and scared bear". I really don't like the idea of defining oneself as either a bull or bear as that denotes inflexibility and a desire to force one's will on the market. We know how futile that can be! I have a BEARISH VIEW of the market, but that doesn't mean that I'm trying to force that viewpoint on the market -- I trade what it gives me. The part about being "scared" indicates to me that perhaps this trader has gotten over-leveraged to the bearish side, taking more heat in their account than initially expected. If nothing else, over the past few years we should have learned that it is exceedingly dangerous to try to buck the near-term trend in the market, which for the past 2 months has been up. Listen to what the market is trying to tell us and we'll usually do alright, so long as we follow what it is trying to tell us. That should keep us from being "scared" regardless of what the market decides to do.

The other curious thing about this question that piqued my interest was that this reader is a bear, but likes IBM long-term. To me, this really makes no sense. IBM is a Tech giant with a PE ratio of 27-28 at current levels. To me, this screams OVER-VALUED, not attractive. Even down in the $70-75 area, I question the merit of a long-term position in Big Blue. If we're working from a bias of the market being in a major bear cycle (which I strongly believe), then the only stocks we should be considering are those with strong fundamentals when they are trading near strong support. With IBM now testing major resistance, and the overall NASDAQ looking very extended on a bullish percent basis, now wouldn't be the time to be trying to initiate a new long-term bullish position. I know IBM isn't in the NASDAQ, but from a business perspective, that's the index that makes the most sense to analyze when looking at Big Blue.

Again, I'm not trying to be critical or denigrating here. I'm just trying to help this subscriber develop a more disclined approach in their trading.

  Jonathan Levinson   5/7/2003,  11:20:00 AM
HUI is going for a dunk, down 2.71. June gold treading water above 340/oz. USD Index just below 95.60. QQQ failed just before the 50% retrace of yesterday's high (28.54).

  Jonathan Levinson   5/7/2003,  11:11:23 AM
Put to call ratio 1.06, equity pcr .86 and index pcr 2.11. Too many bears for my liking.

  Jonathan Levinson   5/7/2003,  11:01:49 AM
June gold is now down 2.50 to 340.30, USD still 95.50, FVX -7.4 bps.

  Jonathan Levinson   5/7/2003,  10:58:34 AM
I'd like your opinion on a trade. I am a surprised and scared Bear. I like IBM long term, and am a long term holder who lost his shares on a 80call last month. I'd like to own the stock long term. Yesterday I could have sold the 90Put for 3.20 and the 85 Call for 3.20. I can't imagine the stock over 90 before next week (though I can't imagine it where it is now!) I'd have been ITM all the way up to 91+ or bought back at a cost basis of 83.20. I'd like your thoughts. I was too afraid to pull the trigger and missed the trade, but I'd like your analysis please.

Here's the daily view of IBM Link If you've been following my recent wraps, the IBM chart should look pretty familiar. We see that peaking bear wedge and the very toppy oscillators. The MacD looks like it's getting ready to cross, but it's going to take some downside from here to get it. I'd be quite surprised if we see 90 on IBM, but then, it's been a year of surprises, hasn't it :( Nonetheless, the weekly view confirms the strong resistance before 90: Link

  Linda Piazza   5/7/2003,  10:46:24 AM
Jonathan, they might not be buying the QQQ's, but they're buying KO, gapping up 1.78 to 42.80 this morning on an analyst's upgrade, and butting up against the 42.80 resistance that has held back its advances since it dropped through that level in mid-January. This isn't good news for someone holding May 42.50 KO puts, as I am. Today's advance resulted in a double-top breakout pattern on the P&F charts, but brought KO right up underneath its bearish resistance line, in place since early '02. OBV has not been increasing of late in KO, but today's move also kicked the daily MACD back up, although it hasn't turned the daily 5(3)3 stochastics back up. Daily 21(3)3 stochastics slant up, and still have room to go.

  Jonathan Levinson   5/7/2003,  10:37:52 AM
Put to call ratio now 1.01, equity pcr .80 and index 2.19.

  Linda Piazza   5/7/2003,  10:37:41 AM
As of a few minutes ago, total volume was a light 239 million shares on the NYSE and a heavier 420 million on the Nasdaq. Adv/dec ratios were .50 for NYSE-traded issues and .58 for Nasdaq-traded issues, reflecting the selling we've been seeing. Down volume was 2.7 times up volume on the NYSE and 1.9 times up volume on the Nasdaq. New highs remain above new lows. Most of these volume patterns line up on the same side as the higher bonds and higher VIX and VXN, but the higher dollar and lower gold values throw a bit of a jinx into the mix. With oscillators from hourly to weekly (on the OEX, at least) lining up to show more weakness and with volume patterns, VIX levels, and bond prices lining up to show likely weakness, this should be a good day for trading the downside. The only problem is that support levels refuse to fall, and, until they do, I have to believe that the optimism that has boosted the markets still persists somewhere and that bearish traders could still find themselves shaking their heads at the end of the day.

  Jonathan Levinson   5/7/2003,  10:36:34 AM
The USD Index is up, scoping for day highs around 95.80, while the indices are scoping for day lows. This confirms a completely counterintuitive inverse relationship between equities and the dollar- Dollar down, indices up, and vice versa. Meanwhile, FVX is down 8.8 bps, near its lows of the day. It must be hedge trading creating this wacky effect seen today and over the past weeks.

  Jonathan Levinson   5/7/2003,  10:33:40 AM
Was Mr. Shelby bunkered down in the American Express 1st class lounge at LAX? Perhaps barricaded in the fitting rooms of Versace New York?

FVX is now down 8.7 bps, while gold is down $1 to 341.80 on the June contract and June silver down to 4.79. Looks like a flight from greater quality to lesser quality in my opinion, but at least they're not buying QQQ, near its LOD at 28.26. TRINQ 1.23, QQV +1.18 at 28.84, TICK.NQ -101.

  Jonathan Levinson   5/7/2003,  10:29:19 AM


  Jonathan Levinson   5/7/2003,  10:27:37 AM
LOL James!

  Jonathan Levinson   5/7/2003,  10:27:02 AM
Al Green must be feeling like a mensch, having just peeled off another 2.25B in overnight repos to be loaded into the cropdusters and dumped over the corner of Broad Steet and Wall. We now have a net addition 1B.

  Linda Piazza   5/7/2003,  10:23:19 AM
The OEX slips beneath the 60-minute 21-pma at 471.50. The OEX hasn't had an hourly close beneath this MA since May 1, although it's dipped beneath it since then, so it might be important to watch that MA this morning as a first sign of weakness. That's particularly true since a violation of that trendline would also move the OEX toward or to a violation of the rising wedge on the daily chart. However, so far the OEX continues to find support at the 468.75-469 level that has supported it since Monday. All 60-minute oscillators (stochastics, RSI, and MACD) are currently bearish, with all still having room to run, but if the buy-the-dip mood persists, it's possible for the OEX to consolidate above that 469 support while the oscillators cycle down and reset to oversold. Daily 5(3)3 stochastics and RSI begin to hinge down, but can still be turned back up if the fall in the OEX is not steep.

  James Brown   5/7/2003,  10:12:22 AM
The largest sector losers this morning is the SOX, the XAL, the XBD and the INX.

The SOX semiconductor index is down 1.80% and trading back under the 350 level of resistance. This isn't good news for our KLAC call play.

The XAL airlines index is down 1.6% to 44.75.

The XBD securities and broker-dealers is down 1.36%. We've been waiting for some weakness in this sector.

The INX Internet sector is down 1.26% and considering how strong this group has been, we're not surprised to see some profit taking.

So far most of this looks pretty minor.

  Jonathan Levinson   5/7/2003,  10:08:56 AM
The total put to call ratio has opened at .84 for the first 1/2 hour.

  Jonathan Levinson   5/7/2003,  10:05:36 AM
Wholesale inventories isn't supposed to be much of a market mover, and QQQ is back to its lows in the 28.20-.30 s/r zone. We'll call it a support zone because resistance has been recently outlawed (grin). FVX is near its lows of the day, down 6.9 bps, and the USD index is currently above 95.50. June gold is down .60 now to 342.20.

  Linda Piazza   5/7/2003,  10:03:36 AM
The earliest volume patterns this morning have shown selling, but these patterns can be distorted, so let's wait to see whether this early weakness is confirmed as the day progresses.

  James Brown   5/7/2003,  10:03:29 AM
Bears are probably salivating over shares of Progressive (PGR). The stock has been on a huge run since breaking out over $50 in late February. Shares are showing a little bit of weakness this morning and currently building on their fourth down day in a row. Today's move puts it below the $68 mark and its rising 10-dma. The only serious level of support is the $60 area.

  Jonathan Levinson   5/7/2003,  10:01:19 AM

  Linda Piazza   5/7/2003,  9:58:49 AM
The VIX gapped up this morning, and currently prints 24.49, near the HOD.

  Jonathan Levinson   5/7/2003,  9:58:08 AM
The fed has just announced an 8 day repo of 4B vs. expiring 5.25B from Monday =1.25B drain.

  James Brown   5/7/2003,  9:58:01 AM
One short candidate that the premierinvestor.net staff looked at yesterday was John Hancock Financial (JHF). It had broken through its 50-dma and below the $28 level on strong volume. Unfortunately, given the strong odds of support at $26, the risk-reward didn't seem worthwhile. Currently, JHF is down 2.1% to $27.00.

  Jonathan Levinson   5/7/2003,  9:57:38 AM
FVX just dumped 1.6 bps in the blink of an eye, now -6.5 bps on the day. QQQ 28.35 and headed for support in the 28.20-.30 area.

  Linda Piazza   5/7/2003,  9:56:26 AM
The SOX is doing battle with the 350 level this morning, not quite able to maintain that level so far. Currently, the SOX is 347.70, with daily 5(3)3 stochastics and RSI turning down, showing bearish divergence. However, although I remained skeptical of advances in the SOX for a long time because the OBV wasn't increasing, it now is increasing, so I find myself skeptical of pullbacks. ADX does not show an increase in selling and remains above 20, showing no decrease in the strength of the recent uptrend as yet. The 200-ema is below at 334.13 and the 21-dma slants up to meet it, now just below at 327.58. Do these mixed signs portend a pullback only to that MA support?

  James Brown   5/7/2003,  9:55:03 AM
Shares of MMM, the most heavily weighted Dow Jones Industrials component, have now broken to new seven week lows below the $122 level. A test of $120 may be on the way. MMM's point-and-figure (PnF) chart is also showing how the stock has pierced its rising bullish support trendline.

  James Brown   5/7/2003,  9:51:54 AM
The Biotech Index (BTK) has been pulling back to previous resistance near 380, which should now be some small amount of support. The group is being led by shares of AMGN, the largest component of the BTK. AMGN has been consolidating its strong gains after popping higher from its earnings report on April 23rd. Aggressive bullish traders could target a bounce at $60 but the rising trendline is much closer to the simple 50-dma near $58.75.

  Jonathan Levinson   5/7/2003,  9:51:46 AM
Gold has been sold down to 342.90 on the June contract but the dollar is still hovering around the 95.40 level. Heads up here for a possible flagpole jam, as these have been kicked off in the past by a selloff in gold, dollar ramp, and then equities last. FVX is up a touch, down 4.9 bps on the day. QQQ is down .18 to 28.43.

  James Brown   5/7/2003,  9:44:20 AM
Astrazeneca (AZN) has gapped open lower this morning after UBS-Warburg slashed their rating from "buy" to "neutral". Shares had been in a non-stop rally on rising volume from mid-April though this Monday. Looks like shares are pulling back to possible support at $40.

  Linda Piazza   5/7/2003,  9:38:46 AM
The rising wedge on the daily OEX chart has narrowed, now so near its apex that almost any movement up or down will violate the rising wedge. As it appears now, a move below yesterday's 469.07 low will either violate the wedge to the downside or else move the OEX down to sit on the rising support line. I've dialed down to look at the 60-minute charts, to gauge the likelihood of that happening. This morning's drop sent the 60-minute 5(3)3 stochastic into a steep fall, perhaps falling more quickly than a bearish trader would like. However, the fall has also been steep enough to turn down the RSI and the 21(3)3 stochastics, more reliable indicators. Both show bearish divergence. As Jonathan mentioned this morning, it's going to be the depth of the decline that tells us whether markets are still in a dip-buying mood or whether the mood has shifted. A shallow pullback or consolidation while oscillators reset to oversold is going to show prices issuing out the apex of that rising wedge, negating its importance.

  Jonathan Levinson   5/7/2003,  9:33:55 AM
Opening TRINQ .96, TICK.NQ +49, QQV +1.12 to 28.78.

  Jonathan Levinson   5/7/2003,  9:31:55 AM
I'm hearing trader talk (unconfirmed) that the investors intelligence data shows bullish advisors over bearish advisors 55.8 to 24.4, the widest spread since April 2000. If true, this is a very bearish indication, and reinforces my belief that we're looking at the top of a bear wedge on the indices as discussed in last night's futures wrap.

  Jonathan Levinson   5/7/2003,  9:29:01 AM
I've observed over the past interminable weeks that there's been no resistance, only support. Well, we see this again, but at least the Qubes are printing so red for a change. 28.25-28.30 will provide some support. Yields are still well in the red with FVX -5.6 bps, TNX -6.9 and TYX -5 bps. June gold is +1.70. Looks like Mr. Chambers is losing his panache.

  Linda Piazza   5/7/2003,  9:23:58 AM
European markets have slipped as the U.S. open approaches, with the FTSE 100, CAC 40, and DAX all currently trading in the red. The FTSE 100 trades at 3993.60, having temporarily lost its struggle to maintain the 4000 level. The CAC 40 trades at 3018.76, and the DAX trades at 3007.82.

  James Brown   5/7/2003,  9:23:24 AM
A new ABC/Money poll out late yesterday evening says that consumer confidence is slipping from its post-war gains.

  James Brown   5/7/2003,  9:09:04 AM
The 09:00 AM ET Update has been posted. Link

  Jonathan Levinson   5/7/2003,  8:36:16 AM
Bonds are being bought at the open, with FVX -6.3 bps, TNX -8.9 bps and TYX -7.1. QQQ is now down 12 cents at 28.49.

  Jonathan Levinson   5/7/2003,  8:02:09 AM
The futures were down all through the night, but I managed to fall asleep around 4AM, and they're now in the green, NQ +4 and ES +1.25. The US Dollar Index, is starting to print longer candles, showing a battle at the 95.40 level. Two conclusions: CSCO did not do much either way (for a change), and the USD is not bounching decisively off a surprisingly low low. Bear in mind that the currency markets are orders of magnitude larger and more important than the equity markets, trading an estimated 1.5 trillion dollars worth of transactions per day. To my bearish mind, this selloff in the USD index, aside from diminishing the value of my US paychecks in Canuckistani dollar(ette)s, is like the iceberg that took out the Titanic. The effect wasn't immediate, but the whole outcome was determined by the initial impact. We'll see. We know the levels to watch on the SPX/NDX/QQQ/COMPX/INDU in the meantime, to see if my theory plays out.

One last thing: I think it's inevitable that there will be a pullback. If that pullback is sharp and violent, then we'll be watching the bear wedges resolve. If, as I anticipate, the pullback is bought, the character of that bounce will help us see the status of the bear market in the wake of this rally.

  Linda Piazza   5/7/2003,  6:32:14 AM
Good morning. The Nikkei opened up 63.80 points last night, to 8147.36, above Tuesday's high and above the 8110-8125 resistance that turned back its advance on Tuesday. As has been reported for nearly a week, Japan's three ruling coalition parties have been hammering out plans to ask the BOJ to add a trillion yen to current 3-trillion yen program to purchase bank-held shares. The coalition also plans to ask the government to expand stocks purchased by the public postal savings and retirement funds. Other measures were included in the emergency plan. Those three parties apparently came to an agreement that will be presented on Thursday. The optimism soon gave way to volatility, however, with the Nikkei diving, falling twenty points into negative territory before moving off the day's low to close up 26.21 or .32%, at 8109.77. This is still just below the 8110-8125 resistance and below the day's open. The Nikkei never made it back to the opening price.

European markets trade somewhat differently today, with the markets I usually cover having all started out in negative territory, but climbing toward the current levels at or near the day's high. That day's high is still in the red in Germany, where today's unemployment number showed an increase in unemployment, as has been widely expected. The jobless rate rose to 10.7% from the previous 10.6%, with that current figure being 8.9% when adjusted for EU standards. Chancellor Gerhard Schroeder seeks to cut jobless benefits and reduce protection from dismissals, hoping to make it easier for small companies to hire workers, but his proposals face fierce opposition. Currently, the DAX trades down 13.98 points or 0.46%, to 3052.97. The FTSE 100 trades up only 8.90 points or .22%, to 4015.30; and the CAC trades up only 4.21 points or 0.14%, to 3061.77.

  Jeff Bailey   5/6/2003,  12:42:40 AM
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,  12:42:23 AM
The Index Trader Wrap has been posted: Link

  Jonathan Levinson   5/6/2003,  12:42:17 AM
The Futures Trader Wrap has been posted: Link

  James Brown   5/6/2003,  12:41:50 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

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