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  Linda Piazza   5/9/2003,  4:19:19 PM
Whoa! Check out those charts whose symbols are posted in my 16:13 post, courtesy of readers. I've been speculating for a while that the news highs vs. new lows was getting so imbalanced that it felt bearish from a contrarian viewpoint. Those charts show seriously "overbought" values, confirming my impression.

 
 
  Linda Piazza   5/9/2003,  4:13:12 PM
Thanks to all the readers who wrote with information about charts for new highs and new lows on Stockcharts.com. Here are some of the symbols for charts: $NAHLR-Nasdaq New High/Low Ratio; $NAHL-Nasdaq New Highs- New Lows; $NYHLR-NYSE New High/Low Ratio; and $NYHL-NYSE New Highs- New Lows.

 
 
  Jonathan Levinson   5/9/2003,  4:08:26 PM
I believe the symbol for New Highs New Lows is $NAHL for the Naz.

 
 
  Jonathan Levinson   5/9/2003,  4:06:54 PM
I posted a link to the PBS website for that show this morning, Alan- check it out around 8:30AM below.

Great weekend, all! Happy Mothers Day.

 
 
  Linda Piazza   5/9/2003,  3:56:58 PM
Reader Question: Do you know if stockcharts has a graph of new hi new lo. Is so what is the symbol? Thank You

Response: No, I don't know of such a graph. Does anyone else out there?

 
 
  Linda Piazza   5/9/2003,  3:48:00 PM
Although the SOX is not one of the indices that will likely end this week with a doji on its weekly chart, it may end with a small-bodied spinning top on that weekly chart. This can be another reversal signal. Beginning in January and perhaps arguably as far back as late last fall, MACD flattened on the weekly chart even while prices climbed. Other indicators have moved up with the price, however, with the possible exception of OBV which had a small blip up but which then flattened, too. Currently, the SOX inches above 350, but has not yet moved back to the week's high. A move up to that high would change the nature of the candle somewhat, giving it a slightly larger real body and no upper shadow. That would be more bullish than the spinning top.

 
 
  Mark Wnetrzak   5/9/2003,  3:38:50 PM
Covered-Call Update
Some good news for aaiPharma (NASDAQ:AAII) today as First Albany began coverage on the stock with a "strong buy" rating and a one-year stock price target of $19. The high-volume rally and move back above the 150-dma bodes well in the near-term, and should relieve any worries of move towards the March low.

 
 
  Jonathan Levinson   5/9/2003,  3:36:06 PM
QQQ is trying to pick up some steam here, with little change from the flatlined indicators. Support from the 21 period sma is now 28.31.

 
 
  Linda Piazza   5/9/2003,  3:34:38 PM
So far, it still looks as if the OEX, SPX, NDX, and COMPX weekly charts will all show doji's or near-doji's, possible reversal signals. "Possible" does not mean "sure, 100% guaranteed," but knowing those indices may end with doji's on the weekly charts can help you make appropriate account-management decisions this afternoon.

 
 
  James Brown   5/9/2003,  3:31:34 PM
03:15 PM ET Update is posted: Link

 
 
  Jonathan Levinson   5/9/2003,  3:30:22 PM
That "thinking of filing suit" might have done it :)

 
 
  Kent Barton   5/9/2003,  3:28:15 PM
No shortage of bullish chart patterns in the S&P 500 today; ADBE, BMS, BMY, CSCO, FDX, FMC, GDT, MAY, RKY, TIN, TXT, and VIB.B.

 
 
  Linda Piazza   5/9/2003,  3:22:03 PM
As Jonathan mentioned earlier, the volume is not particularly strong today, and so is not offering strong validation of today's gains. Given that this is a Friday, however, it's difficult to interpret the significance of the lower volume. Total volume now is just over a billion on the NYSE and 1.25 billion on the Nasdaq. All volume patterns remain positive, with advancers more than twice decliners, and with up volume more than three times down volume on the NYSE and almost four times down volume on the Nasdaq. The new highs/new lows figures remain imbalanced, especially on the NYSE, where 194 new highs are matched against 3 new lows.

 
 
  Jonathan Levinson   5/9/2003,  3:17:44 PM
Put to call ratio at low of the day, .80, getting back to a normal range.

 
 
  Ray Cummins   5/9/2003,  3:13:16 PM
Spreads/Combos -- Reader's Write E-mail Replies

Hi Ray, I have a question about playing the credit spreads offered in the newsletter. First, I am never sure how long to leave an order open when trying to initiate the spread. Sometimes I do not get a fill when I place the trade within the recommended "target" range, while other times my order is executed a day or more later -- when the stock is moving toward the sold strike. Can you suggest any guidelines to help decide what to use as an opening price and how to determine when the position is no longer a good trade. Also, it seems like leaving the opening order in place after the stock starts to move in the wrong direction could mean getting filled into a losing position. Any suggestions would be much appreciated! PY

Hello PY, First, I am glad you are using the OIN to supplement your search for profitable trading positions. All of us on the newsletter staff pride ourselves in offering some of the best stock- and option-related research available on the Internet. Second, spread trading can be a difficult undertaking for new option traders and unfortunately, the ability to profit consistently with this approach is something that takes time to learn. Regarding the "target" prices: Obviously, you can't always achieve the target credit in these positions. That's why it's called a target. It is simply a recommended entry point; just MY opinion of what a trader might use as an initial "limit" for the spread order, and it usually a reasonable price to open the play even with small changes in the stock and option quotes. As you mentioned, the problem comes when you don't get filled initially (do you chase the play?) or when the issue moves in opposition of the expected trend after just a few sessions, regardless of whether you have actually opened the position. In reality, every decision you make about trading should be based on your analysis of the underlying issue and your forecast for its future movement. That assessment is then factored into the risk-reward outlook for the strategy (or position) you are pursuing. Of course, that's a very subjective task, thus the best advice I can offer is: if the current conditions dictate that the position is no longer viable -- based on your personal criteria -- then it should be closed (or avoided). Good Luck!

 
 
  Kent Barton   5/9/2003,  3:05:34 PM
Random observation: Fedex (FDX) is trading at all-time highs, and threatening to break above short-term resistance at $62.00.

 
 
  Jonathan Levinson   5/9/2003,  2:57:29 PM
Good for a laugh: Link

 
 
  Linda Piazza   5/9/2003,  2:53:43 PM
The 60-minute OEX chart now shows bearish kisses on both 5(3)3 and 21(3)3 stochastics, with the RSI turning down under its descending trendline. ADX shows selling pressure increasing and buying pressure decreasing as the trend loses even more strength. However, the stochastics have not fully rolled and the RSI appears to be flattening again, and I wouldn't rule out another push up before the end of the day. That should end the week, however, with 60-minute, daily, and weekly oscillators showing overbought levels. That doesn't mean markets will dive first thing next week, but it does mean risk continues to shift so that bullish players are carrying more of the risk than they did.

 
 
  Jonathan Levinson   5/9/2003,  2:52:34 PM
QQQ is finding resistance at the 21 period sma on the 3 minute candles, currently 28.31.

 
 
  Jonathan Levinson   5/9/2003,  2:49:29 PM
Big move in commodities today, with the CRB up better than 3 points to 237.81. Perhaps Mr. Snow should have address comparisons to 1920's Germany instead of 1990's Japan.

 
 
  Jonathan Levinson   5/9/2003,  2:46:48 PM
From CBS Marketwatch: Overcoming Democratic objections, the Republican-controlled House voted 222-203 to pass a $550 billion tax bill that includes most elements of President Bush's $726 billion tax-cut plan, but scales back the White House's call to eliminate the double taxation of dividends.

 
 
  Linda Piazza   5/9/2003,  2:45:37 PM
For those Road Runner readers scanning the Market Monitor only and not checking the Futures Monitor, too, Jim has just posted an email from Road Runner claiming that the problems have been resolved. I know I've heard from at least one reader today who was having difficulties with my emails and the newsletters.

 
 
  Linda Piazza   5/9/2003,  2:42:10 PM
Reader Comment: Hi, Linda. DAX closed at days high at 2957(+2.44%).At the close auction it made 20 points!

Response: I waited through several checks of the DAX's final price before printing it, but I guess I should have waited another couple of minutes! Thanks for updating me.

 
 
  Jonathan Levinson   5/9/2003,  2:40:21 PM
FVX is now flat, a low of the day, with QQQ at finding support at 28.20. The two 3 minute downside candle spikes point to decent support at that level.

 
 
  Kent Barton   5/9/2003,  2:36:49 PM
Jeff leaves for a few days, and look what happens to poor "Frixie!" Forest Labs (FRX) was pressured on Wednesday by the release of a study involving memantine, the company's experimental Alzheimer's drug. The study showed unfovarable results in treating neuropathic pain in diabetes patients. While it remains to be seen whether memantine will eventually be approvated for Alzheimer's, analysts had speculated that the secondary use as a pain treatment could equate to $100 million in annual sales.

The stock gapped lower on the news and quickly tested the $50.00 region. That area of psychological support has kept a floor under the stock for the past three sessions. But with shares showing relative weakness today, it wouldn't be surprising to see a breakdown early next week. Should that occur, there is no clear technical support until the rising 200-dma at $47.53.

 
 
  Linda Piazza   5/9/2003,  2:33:08 PM
Just scanning the charts, I noticed that unless there's a big movement at the end of the day, the weekly OEX chart is going to end with a doji.

 
 
  Jonathan Levinson   5/9/2003,  2:25:19 PM
We're headed for a very light volume session today, with NYSE so far trading 1.16B shares and COMPX 1.12B shares with 1.5 hours to go.

 
 
  Linda Piazza   5/9/2003,  2:24:18 PM
There was no confirmation of the upside breakout of that five-minute potential bull-flag pattern on the OEX. The retest was unsuccessful and the OEX did not move back above the day's high. At 470.93 as I type, the OEX has edged just below the bottom of the pattern. It would now take a sustained fall through 470 for me to trust this downside violation of the pattern. Again, this action points up the skimpy risk/reward potentially offered up by a bullish play on the OEX this morning. Such a play might have been profitable already and might even be more profitable by the end of the day, but so far, the profits would not have been great and the risks were that the OEX might have turned down ahead of that resistance rather than at it.

 
 
  Jonathan Levinson   5/9/2003,  2:17:21 PM
FVX is at its lows of the day, up 1.4 bps now, with QQQ dropping back below its 21 period sma. QQV is near its lows, down .63, and ..LOL Jim! My sentiments exactly!

 
 
  Linda Piazza   5/9/2003,  2:08:22 PM
The OEX five-minute charts show the OEX breaking out of that bull-flag pattern to the upside. I would wait for a retest of the pattern or until a move over the 472.69 high of the day before I would consider that pattern confirmed. Those already in bullish plays can feel good about this breakout if it is confirmed, but should also be evaluating daily and weekly charts when deciding whether to hold over the weekend.

 
 
  Linda Piazza   5/9/2003,  2:05:02 PM
It looks as if the DAX settled at 2938.10, up 52.02 points or 1.80%, less than two points off the high of the day.

 
 
  Kent Barton   5/9/2003,  2:04:39 PM
Xilinx (XLNX) $28.86 +1.18: XLNX, currently residing on the PI bullish play list, is responding quite nicely to the semiconductor strength today. Shares are showing good relative strength as they close in on the multi-month high of $29.21. Traders looking to enter new positions could do so on a move above that level; although you may want to first confirm sector momentum by waiting for the SOX.X to clear its own relative high at 356.45.

 
 
  Jonathan Levinson   5/9/2003,  2:03:30 PM
Quote of the day from Treasury Secretary John Snow: "I don't think the U.S. has any risk of being in a significant deflationary period and any comparisons to Japan I think would be inappropriate."

 
 
  Linda Piazza   5/9/2003,  1:53:49 PM
I'm watching that potential bull-flag pattern on the OEX five-minute chart, noting that it's forming just under today's daily R2 for the OEX. As it's forming, the five-minute 21-pma has risen underneath the OEX current price, perhaps offering support. At the same time, the 60-minute oscillators begin to look toppy. So will the resistance win out or will the support offered by that rising five-minute 21-pma and the bullish-appearing potential bull-flag pattern? We'll have to see. Although I would normally think a day that ushers in a falling VIX, rising bond yields, strong volume patterns, and rising equities would be a good day to consider a long play, this close overhead resistance was the reason I would have been hesitant to initiate a long play today. Although it's possible to make money on a six-point move in the OEX, the wide spreads mean that you better get in on the bottom and out at the top if you're going to do so, or else buy very deeply in the money to capitalize on each movement. The risk/reward parameters just didn't seem good enough.

 
 
  Jonathan Levinson   5/9/2003,  1:48:28 PM
QQQ has flatlined, with the 13 and 21 period sma's almost superimposed on the price candles, everything moving sideways. QQV is down .57, TRINQ .51, TICK.NQ +159. FVX is up 3.9 bps. USD Index trading just south of 95. June gold up 30 cents at 349/oz.

 
 
  Linda Piazza   5/9/2003,  1:32:37 PM
On the OEX five-minute charts, we've seen a quick run up the chart and then a stalling while candles form a tight series of lower highs and lower lows. This could be a bull flag pattern. However, turning to a 60-minute chart shows that the RSI definitively is turning down under that descending trendline formed off the lower highs (see my 11:56 post for more information), and the 5(3)3 stochastics have made a bearish kiss. The 21(3)3's look to be trying to roll down, although not from fully overbought levels. These hourly oscillators don't appear too bullish, but keep the possibility of a bull-flag patter in mind as you watch the five-minute charts.

 
 
  Ray Cummins   5/9/2003,  1:27:28 PM
Spreads/Combos & Premium Selling -- Portfolio Activity

Stocks rebounded today as buyers returned to the market on the heels of positive news from Nvidia (NASDAQ:NVDA), which makes graphics processors, and chip stalwart Intel (NASDAQ:INTC). In the technology group, our portfolio saw considerable gains in semiconductor (ADI, LLTC, MRVL, OVTI, XLNX) shares and also biotech issues (BGEN, GENZ, IVGN). However, industrial stocks joined the bullish fray as well with homebuilders (BZH, CTX,), auto parts suppliers (AZO), heavy machinery (CAT), and educators (CECO) among the best performers. Energy shares continued their recent ascent with the natural gas sector posting a big advance in the wake of the commodity's upside activity this week. Our new position in BJ Services (NYSE:BJS) is off to a good start, but we are closely monitoring the bearish spread in Nabors Industries (NYSE:NBR) and the neutral-outlook play on the Oil Service Holdrs (OIH). One stock of interest in the bearish camp is ImClone (NASDAQ:IMCLE), which is down for a second straight session on concerns that the company's new financial auditor will be unable to finish its review before May 15, when a NASDAQ panel will consider whether to de-list the stock because of the delay in filing its 2002 financial report. Our sold put at $15 is in no danger (yet) but the stock has a very volatile past and it deserves regular attention in the current market environment.

 
 
  Linda Piazza   5/9/2003,  1:22:17 PM
To the reader whose mail was returned to me as Road Runner is treating our emails as spam, I have received your article request and will look into the possibility. Jim is also addressing the mail issue with Road Runner.

 
 
  Jonathan Levinson   5/9/2003,  1:15:58 PM
Looks like a good entry, Jim. On the Qubes, the 21 period sma has cracked and is rolling over.

 
 
  Jonathan Levinson   5/9/2003,  1:08:47 PM
A moment of silence for bears in NVDA, one awful squeeze.

 
 
  Jim Brown   5/9/2003,  1:06:32 PM
Calendar for next week
Monday
Kansas Fed Mfg Index
Goldman Sachs Tech & Telecom Retreat
Earnings: CMNT, MRN, PSUN, WTW
Tuesday
International Trade (March)
Richmond Fed Mfg Index
Chain Store Sales
Piper Jaffray Tech Conference
Earnings CVC, CPN, DE, EAGL, EP, ESPD, FOSL, FOX, HELE, JCP, LTXX, MAY, NWS, OMX, PCG, PIOS, SGP, TJX, WMT, OATS, WMB, ANF, AMAT, CSC, ENZN, HIG, NTAP, PKS, SCMR.
Wednesday
April Retail Sales
Import/Export Prices
SSB Tech Conference
Earnings FD, TOO, PSS, THC, TIF, AAP, ADI, ANN, BEAS, BRCD, CA, ECIL, FTUS, INTU, NPSP, SBAC.
Thursday
New York Mfg Index
Jobless Claims
Philly Fed Survey
Industrial Production
Business Inventories
PPI
Earnings AEOS, PLCE, FLO, PNRA, PBY, TGT, URBN, ADIC, DELL, ISLE, KSS, OCA, XOMA.
Friday
Housing Starts
Michigan Sentiment
CPI

Key earnings would be WMT, AMAT, CSC, BEAS, BRCD, INTU, DELL

 
 
  Jonathan Levinson   5/9/2003,  1:05:34 PM
Seems to be working :)

 
 
  Linda Piazza   5/9/2003,  1:00:28 PM
The SOX challenges the 350 level that has proven problematic for the index over the last week, with the recent high at 356.45 on May 6. The daily chart pattern looks a little like a bullish triangle (flat top, bottom supporting line sloping up toward that top), but the daily oscillators are inconclusive, not giving many predictions about breakdown or breakouts. MACD has flattened, RSI oscillates just under overbought levels, and the 5(3)3 stochastics still cycle down. The 21(3)3's have made a bearish cross, but haven't fully rolled down out of overbought territory yet. Weekly oscillator evidence seems just as mixed.

 
 
  Jonathan Levinson   5/9/2003,  12:59:28 PM
I've been watching the QQQ walk steadily up the 21 period sma on the 3 minute candle chart since 10:30 this morning. That line will provide support at approximately 28.38. The TICK.NQ has been strong, currently +275, showing good breadth under this advance, combined with a low but not extreme .49 TRINQ reading. The put to call ratio has come down to .89, which is lower but still too high for bears to be able to relax. In short, today's advance looks pretty solid on an intraday basis. Having noted that, the QQQ is now free to plunge :)

 
 
  Linda Piazza   5/9/2003,  12:51:51 PM
One of the emails I sent out this morning has been returned to me as undeliverable, without any identifying information. If you wrote to me and haven't received a response, it is probably your email that was returned.

 
 
  Linda Piazza   5/9/2003,  12:47:31 PM
The FTSE 100 ended the day up 40.50 points or 1.03%, to 3969.40, near the day's high but never having tested the important 4000 level. The CAC 40 ended the day up 28.72 points or 0.98%, at the day's high, also never having tested its psychologically important level at 3000. The DAX currently trades up 48.24 points or 1.67%, and is just under the day's high.

 
 
  Linda Piazza   5/9/2003,  12:43:48 PM
At 44.13 as I write, KO now challenges its 200-ema at 44.17. It has not traded above this MA since October 15.

 
 
  Linda Piazza   5/9/2003,  12:36:25 PM
As the VIX moves to a new low, the OEX moves above the daily R2 at 472.14. My daily chart also shows it moving back into the rising wedge and headed for another test of the top lavender line, now near 475. The 60-minute RSI shown on the chart linked to my 11:56 post appears to be rolling down from just below that descending trendline that marks the tops of lower highs, however. The 5(3)3 hourly stochastics are deep in overbought territory already, but haven't rolled, and the 21(3)3's still have room to go. Hourly ADX shows that selling pressure is still decreasing and buying pressure is still increasing, but that the strength of this movement has been decreasing. Mixed messages.

 
 
  Jonathan Levinson   5/9/2003,  12:07:17 PM
The decisive move above the 13 dma at 28.24 on QQQ profiled last night brings us into a congestion zone, but re-establishes the rising wedge and implies upper potential to 28.90 and higher. However, there is a good deal of stranded supply at current levels, and I'm not anticipating a revisit all the way to the upper ascending trendline just yet. FVX is back to its opening levels, +3.5 bps. QQV is positive at 27.85, +.07, TRINQ .52, TICK.NQ +345.

 
 
  Linda Piazza   5/9/2003,  12:04:19 PM
The VIX has just dropped below 23. This will eventually be good news for bears who want to see the VIX drop to those 19-22 levels that are so dangerous for bullish trades. That doesn't mean that a reversal will come immediately, even upon a VIX move much lower, but it signals that the risk is growing greater for bullish trades.

 
 
  Linda Piazza   5/9/2003,  11:56:18 AM
This move up on the OEX is certainly easing some of the oversold pressure on the hourly oscillators, but they're not back to overbought levels yet. The 60-minute RSI shows a pattern of lower highs as the OEX makes higher highs, with that descending trendline soon to be tested again and with the RSI looking as if it wants to flatten. Link Note: the two lines on the price chart are my original green line that demarked the bottom of the wedge rising off the March 12 low and the alternative bottom trendline suggested by the reader this morning, rising off a later candle low. These trendlines were drawn on a daily chart, and so don't translate exactly onto the 60-minute chart, but still this depicts that this morning the OEX seemed to find support from the alternative trendline and may soon be finding resistance near the original green one.

 
 
  Jonathan Levinson   5/9/2003,  11:43:08 AM
At the first sign of a pullback, the put to call ratio jumped back to .98. This remains for me the most convincing bullish argument out there- the readiness of bearish speculation to spike at every relative top. That said, however, the five year yield is finally giving up some gains, now up just 1.9 bps as the flow of money out of treasuries begins to slow. QQV is down .18, VXN -.22. TRINQ .53, TICK.NQ +63.

 
 
  James Brown   5/9/2003,  11:27:14 AM
The 11:00 AM ET update: Link

 
 
  Linda Piazza   5/9/2003,  11:22:21 AM
Reader Comment about OEX Chart: Relating to the earlier conversations about inaccuracies in Q-charts, W.S. writes the following: You might recall our conversation the other day about the OEX vs OEX.X charts. Not only am I confident that the OEX 3/21 bar is incorrect, but I also notice a double bar at 4/17. Also wanted to suggest trying another alternative line complimenting your pink one. Start it on the 3/31 lows and keep the current price within the wedge.

Response: Thanks, W.S. Although I don't see the double candle to which this reader referred, the problem with the other candle is apparent on the following two charts. Here's an OEX chart showing a March 21 candle that juts above the next day's red candle: Link Here's the OEX.X chart to which this reader referred, showing a March 21 candle with a top at the same level as the next day's candle: Link On further investigation, it becomes clear that the problem doesn't appear to lie with the March 21 candle as much as it does with the next candle, produced on March 24. The two charts show the same high for the March 21 candle, 456.38, while showing different highs for the March 24 candle, 453.66 and 456.41, respectively. Which value is correct? While I'm not sure, here's a chart from Stockcharts.com, with this chart clearly showing equal highs on March 21 and March 24, and showing the 456.41 high for March 24: Link

As the reader's post indicates, problems such as these can sometimes impact the way the chart lines are drawn. Also, there's sometimes a bit of an art to drawing them, as decisions must be made about when to include shadows or when to draw through them. Usually, after I begin a line and it has several touchpoints, I don't like to redraw it because there's too much temptation to redraw it to fit a preferred viewpoint. I did add that lavender trendline to the top of my rising wedge chart, posted earlier today, as an alternative line, and I can see the reader's point about the alternative bottom trendline, too. That may explain why the OEX isn't breaking down quickly with a violation of the trendline drawn off the March 12 lows. We'll watch and see. For now, I'll keep the trendline I've got, but you might want to watch the alternative on your own charts, too, as I'll be doing.

 
 
  Linda Piazza   5/9/2003,  11:18:49 AM
The OEX has been running back up toward yesterday's late-morning highs just over 470, also near the level of the April 29 spiking-up high. A break above this level should send the OEX up to test daily R2 at 472.14. Hourly oscillators are rolling up, with the 5(3)3 stochastics and RSI in full bullish mode, so it's possible that those higher yields and positive volume patterns could have been trusted after all. However, that 470-472 level also will bring the OEX up to test the underside of the broken rising wedge, which appears to be a risky place to put faith in long positions just yet.

 
 
  Jonathan Levinson   5/9/2003,  11:09:33 AM
The put to call ratio has dropped to .92. QQV has dropped to 27.22, VXN to 33.17. FVX is holding steady at a 4.4 bps gain. This is so far just a shake after that spike high.

 
 
  James Brown   5/9/2003,  11:06:11 AM
Mark, we've listed COF on the OI watch list a couple of times recently. So OI readers probably saw it there. Shares of COF have been bouncing off its simple 10-dma since April 2nd, 2003. The low today was a bounce off the 10-dma again. Would I go long here? Gosh...it looks so overbought...I agree that a pull back to $40 looks better. Maybe a super aggressive bull could go long with an extremely tight stop but that looks pretty risky.

 
 
  Mark Phillips   5/9/2003,  10:55:36 AM
COF $43.82 (-1.06)

COF is dropping like a leaf. It was an option call and wondered if you thoughtthose that didnt get in could get inat 40?

Wow, now that's a blast from the past. Checking my records, the last time COF showed up on the OI play list was back in January. Since then, the stock broke down to $25, worked its way back up to the $40 resistance level and then finally broke out in late April. That run took the stock all the way up to the $47 level and now it is pulling back with the overall Banking sector, which is losing a bit more ground this morning. With the weekly Stochastics buried in overbought and starting to look weak and daily Stochastics already having turned bearish, I'm not very interested in a bullish play at this time.

Turning to the PnF chart, Link we can see a very long column of X off the $25 level that gives a bullish price target up in the ozone. This week's pullback has the PnF finally reversing into a column of O. Is it the beginning of a rollover, or a pullback for new bullish entries? It's hard to say, but buying a rebound from the $40 level might work, depending on when and how the stock gets there. Right now, that level is both the site of historical resistance (perhaps new support), as well as the rising 20-dma. While there's little to indicate a favorable bearish play, I have a hard time seeing the merits in a bullish play either. It looks to me like the move has already occurred.

 
 
  Jonathan Levinson   5/9/2003,  10:46:55 AM
The US Dollar Index is faking everyone out today- it just dropped .35 in less than 1 hour, back to its 95.00 s/r zone. I expect to see more draining from Al Green such as we saw this morning, because the fed certainly can't support the US Dollar (and therefore keep demand for treasuries up, thereby keeping rates low, thereby preventing the credit bubble from "disinflating") by printing more dollars. Here's where the "Rookie", Ben Bernanke, demonstrated either an astounding lack of judgment, lack of experience, or simply a lack of respect for fiscal responsibility. Since his fateful "we are the fed, we have a printing press, and we're gonna use it" shpiel last fall, the US Dollar Index has dumped to new bear market lows. Talking about wilfully inflating the dollar is the best way I can imagine to kill a currency. Well, The Rookie is well on his way. This tells me that savers will be roadkill, and that gold, silver, and other commodities will be the beneficiaries of the Greenspan, or rather the Bernanke Put.

 
 
  Linda Piazza   5/9/2003,  10:46:01 AM
It's time to check volume patterns. Those volume patterns show buying to be prevailing, with adv/dec ratios of 1.68 on NYSE-traded issues and 1.48 on Nasdaq-traded issues. Up volume is 1.79 times down volume on the NYSE and 2.64 times down volume on the Nasdaq. Volume is light, however, at 265 million shares traded on the NYSE, and 375 million on the Nasdaq. With bond yields up, markets over their daily pivots, and the VIX down, these volume patterns would normally point to a continued move up, but the hesitancy in early trading makes that assumption somewhat problematic.

 
 
  Jonathan Levinson   5/9/2003,  10:40:09 AM
The most recent put to call ratio from the CBOE is .99, back into high-but-normal territory.

 
 
  Jonathan Levinson   5/9/2003,  10:39:25 AM
Next resistance for QQQ is above at 28.20. TRINQ .46, TICK.NQ +266.

 
 
  Jonathan Levinson   5/9/2003,  10:29:09 AM
QQQ is providing support, and should test 28.10 from here. FVX, TRINQ .54, TICK.NQ +115.

 
 
  Linda Piazza   5/9/2003,  10:23:18 AM
At 467.02, the OEX hovers just over the 466.91 pivot.

 
 
  Mark Phillips   5/9/2003,  10:19:27 AM
KSS $51.43 (-1.82) Time for a reaction bounce? As we commented last night, the close below $54 should have had KSS moving down towards the $51-52 area, with the possibility of a reaction bounce at the bottom of that gap. Talk about not wasting any time! KSS plunged at the open and is still falling. At 2.2 million, volume doesn't rival yesterday's 13 million share day (triple the ADV), but then the day isn't yet an hour old. Given the wild swings KSS has given us during our coverage of the stock, conservative traders may want to harvest some gains near the $51 level on the first sign of a meaningful bounce. However, this slide looks like the real deal, and it looks like our secondary target at $50 may be in the cards. In either event, our conservative stop at $56.50 now appears too wide. With the stock trading so close to our eventual target, it is time to lower our stop to $55.50, which is just above that $55 support level that ought to now act as resistance.

 
 
  Linda Piazza   5/9/2003,  10:18:41 AM
Here's the now-violated rising wedge on the daily OEX chart. As I've mentioned before, Pring and other pundits advise that a broken rising wedge usually results in a precipitous fall, which hasn't occurred as yet. However, the OEX may still be in the process of retesting that wedge, and it's that retesting that's going to give us the most information. A successful (successful from a bullish perspective) retest will swing the OEX back into and perhaps above the wedge. An unsuccessful retest might result in the precipitous fall that Pring advises should happen. Lately, though, the underpinning in the markets has resulted in these bearish formations setting up, but not following through in the typical manner. Link

 
 
  Jonathan Levinson   5/9/2003,  10:14:20 AM
Once again, we have an astronomic put to call ratio of 1.41 early in the morning. FVX is well off its highs, now up 3.2 bps at its opening levels. The US Dollar Index has made it to 95.30, yet June gold is actually in the green by 20 cents, and June silver is flat at 4.82.

 
 
  Linda Piazza   5/9/2003,  10:07:40 AM
Coca-Cola (KO) benefits today from the Bear Stearns upgrade, currently trading up $.69 to $43.57. For those who like to trade inside days or haramis in candlestick terms, KO printed an inside day or harami yesterday and currently is above Wednesday's high. That's normally a signal to go long, and perhaps that's also backed up by the new P&F buy signal. Yet, I keep looking at a couple of worrisome signs that prevent me from suggesting a long just yet. First, there's that big gap up on Wednesday morning and the more than three points this stock has gained in the last few days. I note that KO remains below its 200-ema and 200-dma, as well as below its bearish resistance line on the P&F chart. It's punched through the top Bollinger band, normally a sign that it needs to retreat a bit and regroup, perhaps at least testing the top of that gap up the other day. OBV has not increased. There's strong historical horizontal resistance at current levels, extending back through January 2000. Balancing all those worrisome aspects of the chart is the ADX showing that buying pressure is increasing while selling pressure is decreasing. Perhaps the fact that I own now-worthless May 42.50 puts colors my interpretation of what I'm seeing on the chart, but I can't bring myself to recommend a long position in KO just yet.

 
 
  Jonathan Levinson   5/9/2003,  10:01:38 AM
Volume is dropping on QQQ as it rises in what looks like a sloppy bear wedge this morning. FVX +6.4 bps doesn't portend any weakness for equities yet.

 
 
  Jonathan Levinson   5/9/2003,  9:57:24 AM
The fed has drained a net 2.5B, just announcing a weekend repo of 2.5B agains the 5B expiring.

 
 
  Jonathan Levinson   5/9/2003,  9:55:43 AM
Yields are all deep in the green, FVX +5.4 bps, TNX +6 and TYX +3.3. This should coincide with a persistent bid under equities such as we've been seeing. QQQ at current levels has violated the descending trendline that commenced and remained unchallenged from Wednesday's peak.

 
 
  Linda Piazza   5/9/2003,  9:52:28 AM
For those who like to follow pivot analysis, a quick computation of OEX pivot levels shows the following using yesterday's OEX high of 470.31, low of 465.08, and close of 465.34: S2-461.68; S1-463.51; Pivot-466.91; R1 468.74; R2-472.14. Today's open was under the pivot, and the high came within .01 of the R1, with the OEX currently rising again toward that R1 level. That level has historical significance, too, so would be important to those who use standard technical analysis tools as well.

 
 
  Jonathan Levinson   5/9/2003,  9:51:38 AM
Just a flare :)

 
 
  Linda Piazza   5/9/2003,  9:41:26 AM
So far, the 468.80 level that was so important earlier in the week held back the OEX advances, but it's too early to tell what might happen the rest of the day. The 9:50 reversal period is not quite upon us yet, and that period should give us more information about OEX direction.

 
 
  Jonathan Levinson   5/9/2003,  9:41:22 AM
28.18 QQQ was strong resistance yesterday and it's held so far today. June Gold is down 1.00 to 347.70, with HUI -1.39 and XAU -.43. FVX up 4.1 bps, holding its gains.

 
 
  James Brown   5/9/2003,  9:38:34 AM
The combination of NVDA's positive guidance last night and news that Intel's President Paul Otellini said that Intel sees strong demand in China and that he expects a recovery in the semiconductor industry later this year is really giving the $SOX some strength. Currently the SOX is up two percent to 344.

 
 
  James Brown   5/9/2003,  9:34:37 AM
Tug of war for the DJIA...an SG Cowen analyst reiterated his strong buy on HPQ claiming the hardware company was undervalued at $17.00 and that HPQ's printing business is worth $20 a share by itself. This should lend strength to shares of HPQ and maybe other tech components in the Dow.

Meanwhile shares of Johnson and Johnson (JNJ) are opening lower after USB Piper Jaffray downgrads the stock from "out perform" to "market perform".

 
 
  Linda Piazza   5/9/2003,  9:34:03 AM
The OEX opened today in the bottom 50% of yesterday's range, but has quickly climbed above the 50% retracement of yesterday's move, at 467.70. Bears would have preferred to see the OEX stay below that 50% retracement while bulls want to see the OEX remain above that level.

 
 
  Jonathan Levinson   5/9/2003,  9:33:17 AM
The TRINQ is buried at .30, TICK.NQ +98, QQV +.83 to 28.61, QQQ trading 28.12, with a roughly 30 cent gap up from its close.

 
 
  Jonathan Levinson   5/9/2003,  9:29:18 AM
The US Dollar Index is back to the 95.00 level, and yields are holding their gains. Canada is reacting to a disappointing employment report, with the national rate surprising to the upside at 7.5%. This is causing speculation that the BOC won't hike rates again at their next meeting, which is causing a flurry of buying in Canadian treasuries while whacking the CDN/USD ratio. The weakness in the USD seems to be coming from continued strength in the euro.

 
 
  James Brown   5/9/2003,  9:27:11 AM
Countrywide's stock price (CFC) has been on fire lately. The company has been riding the latest wave of refi's and new home loan applications with mortgage rates at 41 year lows. CFC put out a press release this morning. Here is an excerpt:

"The servicing portfolio continued its uninterrupted climb in April, reaching $520 billion and setting a new Company record. The growing servicing portfolio is expected to generate significant earnings when mortgage rates rise given that impairment costs will diminish. Servicing portfolio growth is fueled by internal production efforts. The Company funded $19 billion more in loans than those which prepaid from the servicing portfolio in April;"

Shares already look extremely extended but this could spark another round of short covering. On the other hand, if the stock falls under $65.75, which is the top of the gap up, look for the stock to attempt to fill the gap.

 
 
  James Brown   5/9/2003,  9:18:35 AM
One stock to watch today will be NVIDIA (NVDA). The company came out with its Q1 earnings report last night. Sales were terrible, down 31% on poor Xbox sales (NVDA makes the graphics card for the Microsoft console). This drop in Xbox sales brought NVDA's net income to 12 cents a share, down from 55 cents a year earlier. Management said MSFT fell from 22 percent of all sales to just 10 percent, so NVDA is broadening their customer base. More importantly, NVDA expects earnings next quarter to improve significantly and shares are up almost $3.00 to $18.80 in pre-market trading.

 
 
  Linda Piazza   5/9/2003,  9:11:31 AM
As the open of the U.S. markets approaches, European trading remains mixed, but the FTSE 100, CAC 40, and DAX hold onto most of their gains. Currently, the FTSE 100 is up 28 points or 0.71%, to 3956.90; the CAC 40 is up 7.45 points or 0.25%, to 2946.62; and the DAX is up 25.44 points or 0.88%, to 2911.52.

 
 
  Jonathan Levinson   5/9/2003,  9:04:00 AM
Yields have marched farther but are now pulling back, with FVX +3.3 bps. The US Dollar Index touched the 95.20 level but has also pulled back. QQQ is currently trading 28.01.

 
 
  James Brown   5/9/2003,  9:02:44 AM
The 09:00 AM ET update is posted: Link

 
 
  Jonathan Levinson   5/9/2003,  8:38:09 AM
Futures are higher, with NQ up an impressive 10.50 and ES +3.75 at 1128.50 and 924 respectively. QQQ is trading 28.02. Treasuries are looking to open lower, with FVX showing +2.8 bps, TNX +2.4 and TYX +.4 bps. The US Dollar got slammed last night, with dx00y trading below 95 and currently trying to retake that level. There was a special on PBS last night about Wall Street getting a great deal of buzz on the internet today: Link

 
 
  Jonathan Levinson   5/9/2003,  8:29:52 AM
Futures are higher, with NQ up an impressive 10.50 and ES +3.75 at 1128.50 and 924 respectively. QQQ is trading 28.02. Treasuries are looking to open lower, with FVX showing +2.8 bps, TNX +2.4 and TYX +.4 bps. The US Dollar got slammed last night, with dx00y trading below 95 and currently trying to retake that level. There was a special on PBS last night about Wall Street getting a great deal of buzz on the internet today: Link

 
 
  Linda Piazza   5/9/2003,  7:07:22 AM
Good morning. Today, the Nikkei finally cleared the 8110-8125 resistance that had been repelling its advances all week. The beginning of trading didn't look so promising, however, with the Nikkei falling quickly to the day's low of 8009.37. Japan's economic calendar included the release of the March index of leading indicators. The number fell below 50 for the first time since October, signaling a contraction in the Japanese economic, but that troubling news was balanced by Chief Cabinet Secretary Yasuo Fukuda's announcement that government ministers would meet sometime early next week to begin discussing emergency economic plans, including those proposed by the three ruling coalition parties. The yen was also easing against the dollar. Soon after the meeting was announced, the Nikkei zoomed up, retraced a bit, and then climbed into the day's high of 8152.16, closing up 120.61 points or 1.50%. Early gains were made without the participation of the tech stocks, as investors instead searched for safe havens, sending the drugmakers and companies that sell goods in the domestic market higher. Later, exporters gained, too.

In addition to the other challenges facing the Japanese economy, a threatened strike by transportation workers may shut the Busan port. Truck drivers have been striking for a week, slowing steel deliveries to companies such as Hyundai Motor Company.

At I prepare this report, European markets are mixed. The major markets I cover all dipped below next support this morning, but are now off those day's lows. March German industrial production fell 1.1%, almost twice the expected 0.6% decline. Currently, the FTSE 100 trades up 19.60 points or 0.50%, to 3948.50; the CAC 40 trades up 5.87 points or 0.2%, to 2945.04; and the DAX trades up 18.05 points or 0.63%, to 2904.13.

 
 
  Jonathan Levinson   5/9/2003,  3:31:41 AM
The Index Trader Wrap has been posted: Link

 
 
  Jonathan Levinson   5/9/2003,  3:31:35 AM
The Futures Trader Wrap has been posted: Link

 
 
  James Brown   5/9/2003,  3:30:53 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

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