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  Jim Brown   5/15/200,  6:42:31 PM
The Semi Book-to-Bill report for April was released, which showed a drop to .86 in April from .91 in March. This was the lowest number since November when the recent rise passed 80 to the upside. This is a three-month moving average, which means the actual numbers are much lower. The three-month average of global bookings fell to $737 million in April. March bookings were revised down from $822 million to $777 million.

For the average to fall to $737 the actual bookings are probably below $675 million for April. They do not release the actual numbers to prevent judgments based on volatility in a specific month. If you calculate backwards it would appear something in the $673 million range should be in the ballpark. It will be hard for the bulls to spin this downward revision for March by -5.4% and then another -5% drop in April numbers. (-13.3% drop in April if you use the actual $673 million) This is not painting a positive picture for the semi sector and shows the reason for caution in Andy Bryant's comments. Link

  Jeff Bailey   5/15/200,  5:53:32 PM
Dick Arms on CNBC discussing his ARMS Index and how it is signaling a more overbought market and looking for a pullback.

Over the past couple of years, I've followed some of Mr. Arms' "market calls" based on his ARMS Index interpretation.

Some have been rather poor, and it has been those "poor" calls when the the bullish % charts had not yet reached an "oversold" or "overbought" level of bullishness.

His "best" calls have come when the the ARMS Index has reached a point at which he looks for a reversal in the markets, but these have also coincided with more extreme levels of bullish %.

I'm not a follower of the ARMS Index, but I've made some notes over time. I find tonight's comments from Mr. Arms interesting with the bullish % charts either at or nearing some more historical "overbought" levels.

  Jim Brown   5/15/200,  4:00:41 PM
Dell actual earnings 23 cents vs est 23 cents
guidance 24 cents, $9.75 billion revenue for current quarter

  Linda Piazza   5/15/200,  3:50:35 PM
The VIX is at the low of the day, currently at 21.48. The VIX has been bumping along the bottom of its BB, although it hasn't yet reached the bottom of a huge regression channel that can be plotted on the weekly chart, beginning with July of last year. A reader first alerted me to this regression channel. The bottom of the channel currently crosses at 20.75, just below the current level. This will be the third touch of the bottom line since last July, and the top line has also had three touches.

  Mark Phillips   5/15/200,  3:45:30 PM
GM $34.99 (-0.92)

I haven't seen any comments on the Monitor today about the GM Put Play. Sure looks like GM is under selling pressure today with volume behind it. the 35 signal is holding, but just barely. Could this be the day to jump in? I'm torn between harvesting some small gains or doubling up. Any comments would be appreciated.

I've been patiently waiting for GM to crack the $35 level to issue some commentary, and I sure like the way the stock is acting here. I think breaking the $35 level is a good sign for the bears, and could be the beginning of another downward leg -- especially with the heavy selling volume today. However there are a couple issues to deal with. First, there is more support at the 50-dma ($34.60), along with historical support in the $34.24-34.50 area. That doesn't mean the stock won't fall, just that it is likely to be a rather slow decline. That's a big part of why we listed this one as a long-term play and advocated longer-expiration options.

The other issue is of a more immediate nature. With option expiration tomorrow and GM right at that $35 strike, I would be very surprised if GM moves very far from that level between now and tomorrow's closing bell. So if looking to add new positions here, I think it would be useful to try to low-ball the market maker and try to get filled a bit cheaper. Otherwise, it just might make sense to wait for next week when the expiration shenanigans will be out of the way.

  Jonathan Levinson   5/15/200,  3:45:08 PM
Actually, Alan, I heard (but have not verified) that Michael Dell already went- unloaded millions of shares just recently.

I've just adjusted my intraday chart colors to remove the black background for those readers who prefer white. I see a potential reverse head and shoulders, and we're right at the neckline here: Link

  Linda Piazza   5/15/200,  3:37:51 PM
Great reader question: In your 10:31 post, and at other times recently, you've mentioned a correlation between ADX behavior and validity of stochastics - would you mind expounding on your observations? I've only used ADX in the classical sense, e.g. to determine basic trend strength, or seek divergence patterns.

Response: I'm glad you asked the question as others might have been wondering, too. The information about the ADX's use came from a Futures Wrap written late last year, included in only a paragraph or two. I'd always known that oscillators gave false signals in a strongly trending market, but I didn't have quantifiable information and only subjective information about when markets might be trending. The article mentioned that oscillators generally prove helpful and the market is considered range-bound when the ADX level is below 20, and oscillators are not as valuable and the market is considered trending when the ADX level is above 20. At that time, it's better to watch market behavior with relationship to moving averages. Of course, I don't just use that 20 level as an absolute cutoff, but do consider the level. I've found this to be a helpful tool, although none are ever foolproof, as I'm sure you know. I looked for the article, but couldn't find it.

  Linda Piazza   5/15/200,  3:26:21 PM
Hourly OEX stochastics still slope up, but the RSI isn't doing so, showing a propensity to roll over again. If it does, it will be making a lower high.

  Linda Piazza   5/15/200,  3:19:55 PM
Coca-Cola (KO) $44.65, up $.40 KO often ramps up during opex week, but this week it had an extra impetus both from an upgrade a couple of weeks ago and from the declining dollar, as it is a multinational company. Today, KO tested its simple 200-dma at 44.91, reaching a high of 44.98 before falling back to its current 44.63. It's above its 200-ema at 44.19. As KO has moved up this week, volume has fallen, not a bullish sign. Stochastics and RSI are in territory indicating overbought conditions, but not yet turning down. Knowing KO's history of ramping up into opex week and knowing that it's jammed right up under strong resistance, I'm tempted to buy new puts, but ADX slopes up slightly, while buying pressure flattens and selling pressure declines even further. That gives me pause, along with my belief that the dollar may continue to stagnate or decline, perhaps changing the fundamentals for the short-term for this company.

  Jeff Bailey   5/15/200,  3:15:53 PM
Genentech (DNA) $40.00! Trying to write this one up for 03:15 Update and it is already here. Taking 1/2 bullish in $40 strike.

  Jonathan Levinson   5/15/200,  3:05:28 PM
QQQ is still holding below its lower high this afternoon, but that could be a transient thing. Bonds have closed for the day, with FVX +4.3 bps at the close, TNX flat and TYX -2.8 bps. 3 guesses where today's extra repo and coupon pass money went...

  Jim Brown   5/15/200,  3:02:59 PM
PVN - Cut by Merrill Lynch to neutral, raised by Lehman to overweight. After a nice run to $9.00 this morning we are seeing a pull back to support at 8.40.

  Linda Piazza   5/15/200,  2:57:29 PM
The DAX ended the day at 2989.38, up 63.35 points or 2.17%, and at the day's high.

  Jonathan Levinson   5/15/200,  2:55:47 PM
The US Dollar Index has climbed to 95.34 now, and that's either massive short covering or intervention or both: Link

  Linda Piazza   5/15/200,  2:55:25 PM
The VIX has again dipped below 22, currently at 21.82, but that may be partially due to options expiration.

  Jim Brown   5/15/200,  2:54:46 PM
Editors Play - Preview of coming attractions
I am thinking about making EBAY my next editors play for this weekend. The current rally has stalled at $98 and after searching the news there is no mention of the warning from EBAY that a substantial drop in ad sales could hurt revenue. This is a high risk play but with the June $95 put at $2.30 represents a cheap bet as long as you keep a tight stop at say $99.25, just above today's high. Readers of the monitor today can get a head start. High risk shorting a winner but the gains this week SHOULD be due for a pullback.

  Jonathan Levinson   5/15/200,  2:53:45 PM
QQQ has a lower high this afternoon, but with yields showing decent strength off their lows, and QQQ is still unwilling to show us any real selling. TRINQ at .75 and TRINQ +166 are very healthy, QQV -.35 as well. The negative VIX, VXN and QQV continue to look bearish when combined with the low put to call ratios today, but I'm reaching at this point.

  Jeff Bailey   5/15/200,  2:52:48 PM
Genentech (NYSE:DNA) $39.60 +2.88% ... earlier trade at $39.76 was enough to get this biotech name to a new 52-week high. Good name to jot down for a bull on a break at $40, which is a level this stock has NOT been able to trade dating back to late April of 2002. A trade at $40, would be a spread triple-top. Link

PnF chart is bullish, with vertical count $42 (column of X from $30-$33). On break at $40, would certainly consider 1/4 or 1/2 bullish. While stocks can exceed or never meet their bullish vertical counts, bull willing to play Professor Davis' study of spread triple being profitable 85.7% of the time for an average gain of 22.9% in 7.7 months. According to Dorsey/Wright and Associates, biotech sector bullish % (BPBIOM) is "bull confirmed" at 57.9%, after having reversed up into "bull confirmed" status in early April at 32%. A 22.9% gain from $40, would give further upside target to $49.16. I do see what appears to be a potential reverse head/shoulder pattern Link with neckline at $40, head at $32, which if neckline broken at $40, would give pattern objective of $48. OK... bullish $40, longer-term objective $48.50.

  Jonathan Levinson   5/15/200,  2:45:28 PM
A golfclap is in order for the huge ramp job over resistance on the USD Index, currently 95.23. I wonder how many Yen that one cost :) Link

  Linda Piazza   5/15/200,  2:38:47 PM
So far, the OEX 478.50-479 level is holding. If it continues to hold and the OEX dips below 472.50, it will have confirmed a double top pattern on that hourly chart, predicting a fall down to the 466 area. However, downside targets often haven't been met in this trending market, and the now-turned-up hourly stochastics don't predict a fall just now.

  Jonathan Levinson   5/15/200,  2:33:23 PM
Has anyone noticed the relative weakness of MSFT to QQQ? I wonder how far QQQ can get with MSFT lagging.

  Linda Piazza   5/15/200,  2:26:28 PM
I was thinking about Jeff's comments in his intraday update about the possibility that the news doesn't really matter so much and that markets might just cycle from oversold to overbought. Doesn't it seem strange that so many of the global markets hit key levels so near the same time? The FTSE 100 challenging 4000, the Nikkei 8000, and DJI 8700, the SPX 950, the CAC 40 3000, the Wilshire 5000 9000, all within weeks or days or sometimes hours of each other? Wouldn't you think that some of them would be on a different cycle? Germany has seen two quarters of negative GDP (last quarter's was a -0) and has more than 10% unemployment, so it's clear that Germany's economy is not the same as that of an economy that's performing relatively better. Just musing.

  Linda Piazza   5/15/200,  2:15:02 PM
Jim mentioned the Wilshire 5000 ($WLSH on Stockcharts.com and $TMW on Q-charts) in his wrap the other day. This is the broadest of our markets. As Jim said the other day, the index has several times this week traded above the important 9000 level, with today being one of those days. So far, it hasn't managed a close over that level, but it's currently trading just over that level, at 9005.54. As with the other indices, daily oscillators look toppy and are showing bearish divergence with the price, but haven't yet turned down.

  Jonathan Levinson   5/15/200,  2:07:42 PM
The most recent put to call ratio came in at .61, comprised of an equity pcr of .49 and an index pcr of .98. The VIX, VXN and QQV are all down today, and combining these two data, it continues to look like calls are being dumped.

  Jeff Bailey   5/15/200,  2:07:01 PM
WilTel Communications (WTEL) $14.50 +36.7% ... saw this one up early this morning and didn't think much of it. However, stock now halted after Leucadia National (LUK) $37.76 -2.3% announced it sent a letter to WTEL's board relating to a proposal to acquire the remaining shares of WTEL it doesn't already own. Early details are for a stock-for-stock dividend offering WTEL holders 0.3565 LUK shares for each of their own. Based on LUK price deal would have valued WTEL at $13.60 per share and this may be part of reason for WTEL halt at $14.50.

Seems somebody "knew" of letter and acted on it. Rather bullish market environment brings out speculators (short-covering too) and willing to pay "any price" to get in on the action.

Just a month ago (April 11), Kaufman Brothers issued a "sell" on WTEL based on valuation with stock at $13.00.

  Linda Piazza   5/15/200,  2:03:53 PM
The daily chart of the BIX shows that it's still trading safely within its rising wedge. Oscillators are still toppy, but not yet giving clear evidence of when they might finally roll, although the RSI is forming slightly lower highs as it squiggles around while the BIX trades in a tight range. It's going to be necessary to just watch price action here as the oscillators may not react until price does, swinging them down out of overbought territory or else swinging them up higher into overbought territory. It's going to take a price swing below 289 or above 300 to bring the BIX out of the rising wedge. The longer-term 21(3)3's have been fully in overbought territory since mid-April. Gravity has to work sometime or another. At least that's what they taught us when I majored in physics.

  Jeff Bailey   5/15/200,  1:59:03 PM
Intra-day Internals continue to build to the bullish side on both the NYSE and NASDAQ.

01:00 PM EST mark has NYSE reporting a/d of 17:14 with 198 new 52-week highs vs. 4 new lows.

NASDAQ a/d at 16:13, with new highs building to 152 and new lows steady since 11:00 AM at just 11.

  Linda Piazza   5/15/200,  1:53:04 PM
Here's what I'm watching on the 60-minute OEX chart: Link The former broadening formation is beginning to look like a saucer formation, but the puzzling aspect is that these usually occur after a decline, not at tops, I don't believe. Watch how the OEX behaves as it approaches that 478.50-479 level again, as well as the resistance levels I've already listed today.

  Jonathan Levinson   5/15/200,  1:52:05 PM
QQQ has cruised to the 28.84 fib resistance line, burying the short term oscillators on my 3 minute chart in overbought territory, but there's no sign of weakness yet. Yields are well off their lows, QQV is down .46 currently, TRINQ .70 and TICK.NQ +164.

  Jim Brown   5/15/200,  1:42:01 PM
Editors Play
The DIA 85 put appears to be headed to oblivion with the mixed economic reports this morning. We have a cost basis of 5 cents in the play after selling the call side for 95 cents. We bought the call and put for 40 cents each, sold the call for 95 cents, doubled up on the put for 20 cents. Total outgo $1.00, total income $.95 cents. Total loss .05 cents if we do not get a major move before expiration tomorrow. At this point we would need a -250 point drop in the Dow to boost the put option to any reasonable price. The bad economic reports were seen as good news once again.

  Jonathan Levinson   5/15/200,  1:23:38 PM
The US Dollar Index is up to 94.96, with yields pulling up off their lows, FVX +2.5 bps and TYX -4.2 bps. TRINQ .77. QQV -.07 and TICK.NQ +146 as QQQ holds above 28.73. It's still very quiet, and there's still been virtually no downside whatsoever. The put to call ratio has been hovering in the mid .60's for most of the day.

  Linda Piazza   5/15/200,  1:19:47 PM
The OEX is right back to the 476.17 area again.

  Linda Piazza   5/15/200,  1:04:29 PM
Total volume is 751 million on the NYSE and 1.2 billion on the Nasdaq. Advancers still lead decliners on both the NYSE and Nasdaq, but by smaller percentages than earlier this morning. Up volume is still ahead of down volume, but not by the 2:1 proportion that was seen earlier. New highs continue to vastly outnumber new lows.

  Linda Piazza   5/15/200,  12:55:47 PM
I agree with Jonathan. Nothing much is happening.

  Ray Cummins   5/15/200,  12:54:26 PM
Spread/Combos & Premium-Selling -- Portfolio Activity

Another issue on the portfolio "watch" list that is making some headway despite the retreating indices is PolyMedica (NASDAQ:PLMD). Shares of the medical products and services provider, which mainly delivers diabetic testing strips, insulin and other supplies to senior citizens, climbed to a recent high near $35 this morning as investors turned their attention to stocks that will weather the short-term slump in equity values. Polymedica is best known for its bout with the Securities and Exchange Commission, which investigated the company in connection with accounting matters, financial reports, other public disclosures and sales of the company's securities. Federal agents had previously raided one of the firm's divisions in conjunction with a criminal investigation for suspected Medicare fraud and the blemish on their record will not soon be forgotten by investors.

Fortunately, analysts say the company is "on track" with regard to fundamentals and should report sales growth of 25% a year, along with $4 in earnings in fiscal year 2004. Polymedica backed this optimistic outlook in April, saying it expects higher earnings in the current quarter as existing customers renew their contracts. Of course, only time will tell -- quarterly results will be announced during the week of May 26th -- but the chart indications suggest there may be some upside potential in the issue. Our (speculative) bullish position at $35 expires tomorrow, so all we need is a lateral trend for the next 30 hours and the play will close profitably. (A rally to "peg the strike" would simply be icing on the cake!)

  Jonathan Levinson   5/15/200,  12:50:04 PM
Nothing has happened in the past 20 minutes that I can see.

  Linda Piazza   5/15/200,  12:34:52 PM
The FTSE 100 ended the day up 36.10 points or 0.91%, clearing the 4000 level and closing at 4011.10. The CAC 40 closed up 34.15 points or 1.15%, at 2995.98. Although the CAC did manage to trade over 3000 today, it could not sustain that level. Currently, the DAX trades up 41.55 points or 1.42%, at 2967.58.

  Linda Piazza   5/15/200,  12:32:12 PM
Hourly stochs have definitely rolled down on the 60-minute OEX chart, although not from fully overbought levels. We'll have to see whether this signals only a slight pullback.

  Jonathan Levinson   5/15/200,  12:30:28 PM
The 50% retracement line from yesterday's low to today's high is 28.66, where the Qubes continue to be pinned. Internals are neutral to bullish, with the TRINQ .81, QQV -.12 and TICK.NQ +252. No letup in bond buying just yet, so it continues to look like a flood of cheap money chasing stocks, bonds, and commodities all at once.

  Linda Piazza   5/15/200,  12:18:34 PM
The OEX now trades within the gap from yesterday's close to this morning's open. Over on the Futures Monitor, Jim has been talking about the 130-period MA, and I've been watching that on my five-minute charts this morning. It does seem to have played a part in today's OEX action. Here's a chart: Link

  Linda Piazza   5/15/200,  12:18:33 PM
The OEX now trades within the gap from yesterday's close to this morning's open. Over on the Futures Monitor, Jim has been talking about the 130-period MA, and I've been watching that on my five-minute charts this morning. It does seem to have played a part in today's OEX action. Here's a chart: Link

  Jonathan Levinson   5/15/200,  12:15:44 PM
The put to call ratio is up to .66. Recall that this is opex week. Perhaps the low put to call ratio is market makers selling calls here in preparation of a nice down day tomorrow? VXN is -.51 and VIX is -.55, which would coincide with aggressive selling of calls. QQV is up .62, doesn't fit the theory for QQQ.

  Jonathan Levinson   5/15/200,  12:12:36 PM
Particularly for the Teflon Market, Linda. But, bonds are getting bought aggressively here, with TYX down 8.8 bps, TNX down 4.5 and FVX now flat.

  Linda Piazza   5/15/200,  12:09:58 PM
We're seeing the immediate reaction to the Philly Fed numbers in the OEX, SPX, and DJI, although the NDX reaction appears a bit more muted. Remember that the first reactions are not always the final reactions.

  Jeff Bailey   5/15/200,  12:08:45 PM
Gold/Silver Index (XAU.X) 72.68 +1.72% ... breaking to some relative highs here today. Discussed XAU.X vs. $HUI.X (AMEX Gold Bugs Index) in recent Index Trader Wrap Link .

Difference today looks to be Barrick Gold (ABX) $17.69 +1.2%Link , which is component of XAU.X, but not $HUI.X 136.24 +0.7%.

Haven't seen any news on first glance on ABX to explain today's rise. They are known to be more of a "hedger" on gold and with lack of inflation in today's PPI data, might be finding more attention.

  Jonathan Levinson   5/15/200,  12:08:13 PM
Weak Philly Fed, this is still good news, so bad news is good, and good news is really good. Like last spring?

Yes, except that the oscillators, bullish percents, etc, are all in nosebleed territory- that cycle should be rolling over by now. If it goes higher still, I'll have to conclude that this is a trending cycle, and that the bulls might actually have a point. Like a flashback to 1999-2000.

  Ray Cummins   5/15/200,  12:06:12 PM
Spread/Combos & Premium-Selling -- Portfolio Activity

Traders are enduring another volatile session on Wall Street today and one of the morning's big surprises was Intuit (NASDAQ:INTU), which climbed 10% to a high near $43 after the company reported a quarterly profit that more than doubled from last year. The financial software-maker posted net income of $294 million, or $1.40 a share, up from $144 million, or $0.67 a share, in the same period last year. Revenue rose to $634 million from $491 million, roughly equaling a lowered analyst forecast of $633 million. The software firm also forecast sales in line with Wall Street expectations for the fourth-quarter and fiscal 2004. Regarding the rally, one note of interest comes from Briefing.com, which mentioned that the "report also caught some traders leaning short, as there had been rumors circulating trading desks that the number would come in light." If that's the case, it's easy to see why a report that "met lowered expectations" would cause such a flurry of buying pressure and it will be interesting to see if the bulls can hold this one in a positive trend for very long.

  Jonathan Levinson   5/15/200,  12:05:25 PM

  Jonathan Levinson   5/15/200,  12:05:04 PM
On the subject of repos, I saw the addition of7.75B overnight and the expiration of 4B + 4B expiration today that is a drain of 250M. What do you mean by 1.75B net addition?

There was a 4B expiring 28 day repo which was refunded with a 6B 28-day repo.

Let's keep track of that call, Linda. The more bulls to keep down that put to call ratio and keep up that bull:bear sentiment ratio, the merrier.

  Linda Piazza   5/15/200,  12:02:59 PM
This might interest you, Jonathan. I just noticed on Marketwatch.com that Jim Awad (Awad Asset Management) says that a new bull market has "definitely" arrived.

  Jonathan Levinson   5/15/200,  12:01:28 PM
Philadelphia Fed Survey Reports Manufacturing Still Weak


  Jonathan Levinson   5/15/200,  11:54:04 AM
Note that the fed, in addition to the net 1.75B added today via temporary open market operations, added another billion and change via coupon pass, which is a permanent addition to liquidity.

Sure wish somebody topped up my account by a billion or three each day :)

  Linda Piazza   5/15/200,  11:52:23 AM
The Philly Fed number comes out in a few moments, at noon ET.

  Jeff Bailey   5/15/200,  11:47:19 AM
Broadcom (BRCM) $19.92 -0.59% ... Nice to have you back. I would really appreciate your input and thots on brcm I have been doing quite well with it, but am alittle afraid to get back in. thank you and have a nice day.

My first thought is that "I don't like" the NASDAQ-100 Bullish % ($BPNDX) Link at these high of levels for anything more than short-term bullish trading in some of these stocks (like BRCM).

With that said, BRCM's p/f chart Link is bullish, but will note how it is challenging November and January highs in here. Hmmmm... bullish % were high then too. I'd be cautious of new bullish in BRCM too at current levels. Look for some type of trading bounce on pullback to $18-ish, but I can't say I like it for bullish entry here.

  Jeff Bailey   5/15/200,  11:29:58 AM
11:00 Update posted at this Link

  Jonathan Levinson   5/15/200,  11:21:25 AM
US Bankruptcies rise to record high: Link

  Linda Piazza   5/15/200,  11:20:58 AM
I don't know about everyone else, but I've been cheered lately to see how well standard and expected S/R points have been working, unlike the weeks-long period during the Iraqi confrontation when markets tended to turn around in the middle of nowhere, for no apparent reason. Not everything works as it should, of course: this morning's OEX successful first test of the 50% retracement of the first five-minute range and then move above the high of the day predicted that the 50% level would hold the rest of the day, which it has not. However, there was warning that it might not hold when the second test of that level occurred and the pattern began to look like an incipient H&S pattern. When the OEX did fall, it fell to the top of this morning's gap, another expected level of support, where it bounced. Where did it stop bouncing? Right back at that 50% retracement level. These moves aren't big enough to capitalize upon on the OEX, but do so show a market in which technical analysis might be useful rather than a formerly reliable tool that seduced knowledgeable traders into bad plays. That perhaps gives traders more confidence when they see a bigger move setting up.

  Jonathan Levinson   5/15/200,  11:17:57 AM
That was a bounce from 38.2% fib support, but the market felt considerably heavier than it did at the open. However, the higher low over yesterday's range was certainly not bearish. The breakout in the thirty year bond contnues, with TYX now down 6.5 bps. With the US Dollar Index at 94.82, it looks like domestic short covering (or Ben "Printing Press" Bernanke's fed) doing the buying in that maturity. TNX is now down 1.5 bps and FVX up 3.1 bps, well off its intraday highs. TRINQ .82, QQV +.33 and TICK.NQ -178.

  Linda Piazza   5/15/200,  11:03:11 AM
At 2430.88, the Dow Jones Transportation Index has been approaching the 2425 level that is next support, having until recently been important resistance since last August. A fall through that support will be important, but a fall through 2375-2400 might have more psychological impact. Continued support or a bounce from this level might boost bullish sentiment. Daily oscillators show a possibility for a continued fall, but the daily ADX is at levels that indicate that the oscillators may not be reliable. As shown in my Index Wrap last night, however, the TRAN's weekly chart continues to show it turning down from its challenge of the 50% retracement of the March-to-March move, at about 2490.

  Mark Phillips   5/15/200,  11:00:37 AM
KSS $52.15 (-1.53) All right campers, this really is your last chance! KSS is taking another tumble this morning, now off 2.9% on pretty respectable volume. The stock is now back into the 3/13 gap, and it wouldn't be out of the question to see a dip all the way to the bottom of the gap. But remember we're dealing with a very short fuse on the KSS play right now. The company is set to release earnings tonight after the closing bell and we want to have all open positions closed by then. To protect agains a possible strong rebound later today, stops should be tightened to no higher than $53.50.

  Jonathan Levinson   5/15/200,  10:57:02 AM
Retesting the downsloping QQQ neckline on my chart.

  Linda Piazza   5/15/200,  10:55:42 AM
The OEX just tested the top of this morning's gap, with this morning's opening at 474.69. A drop below that level should send the OEX back down to test the 474 level.

  Linda Piazza   5/15/200,  10:52:47 AM
Volume stands at 333 million on the NYSE and 595 million on the Nasdaq--so far, setting up to be a decent volume day on the Nasdaq. Volume patterns show advancers leading decliners and up volume leading down volume by a generous factor in case. New highs continue to vastly outnumber new lows. These volume patterns urge caution for bearish players, although it's possible that the volume patterns will change, as they've often done of late.

  Jonathan Levinson   5/15/200,  10:51:42 AM
QQQ trying to tick negative, one cent to go.

  Mark Phillips   5/15/200,  10:50:08 AM
ADTN $43.35 (-1.78) Whack! That certainly isn't pleasant. While ADTN had been soaring until a couple days ago, today's sharp selloff has the stock under pressure to the tune of -5%. News broke this morning that the company's Chairman and CEO sold approximately 4 million shares of his stock in the company (approximately 1/3 of his holdings) for the purpose of financial planning. This morning's selloff has ADTN breaking sharply below our $45 stop, which held up all day yesterday. Too bad it couldn't just fractionally stop us out and then crater the next day...

Fortunately for traders that have been following our recommendations, they took advantage of the recent run above the $47 level to harvest gains and have been looking for a fresh entry. With today's breakdown, we'll be dropping ADTN tonight, so clearly there won't be any recommendation for a new entry into the play.

  Jonathan Levinson   5/15/200,  10:48:22 AM
My wish was answered- the put to call ratio printed .55 for the past half hour, as the dippers become chasers, going long just under that QQQ 29 wall. Bears are hoping that they'll keep buying calls all the way down.

  Jonathan Levinson   5/15/200,  10:45:41 AM
You know, Jeff, if this trend continues, eventually we'll be paying them to borrow our money. Like the Mitsubishi buy now, no money down, no interest or payments til 2004, and they lay $1000 on you when you drive it away. How cheap can money become?

  Linda Piazza   5/15/200,  10:45:26 AM
The BIX hangs in there, so far printing yet another small-bodied candle just under resistance, with an upper shadow moving down from that resistance. Currently at 296.43, the BIX remains just under the 296-298 resistance that has kept it from reaching 300 since last September.

  Jeff Bailey   5/15/200,  10:44:12 AM
Per Jonathan's 10:15:37 post 13-week YIELD ($IRX.X) falls to 1.017%. This is the Treasury most money market accounts and savings account interest rates derived from. (Can't wait for my monthly interest income this month!)

  Jonathan Levinson   5/15/200,  10:41:41 AM
On the other hand, it could be a descending wedge, projecting another launch to the day highs.

  Linda Piazza   5/15/200,  10:41:27 AM
Well, we don't have to worry about watching for the H&S on the five-minute OEX chart, as the bounce never carried the OEX far enough up to complete a right shoulder. Sixty-minute oscillators are trying to hinge down or flatten, but this movement is tentative as yet, and they're not doing it from fully overbought levels.

  Jonathan Levinson   5/15/200,  10:40:26 AM
Looks like a head and shoulders on the 3 minute QQQ candles, with the hunchback neckline as drawn: Link

  Jeff Bailey   5/15/200,  10:39:42 AM
Best Buy (BBY) $36.57 -0.54% ... Lehman raising estimates this morning and reiterates its rating to "overweight" saying, independent checks indicate sales have rebounded sharply in March, up an estimated 1-2% in the past 6 weeks. Lehman raises Q1 estimates to $0.19 per share from $0.15 (consensus $0.17) and 2003 estimates to $2.15 from $2.10. Believes that stronger demand for DVDs and video games continues to drive traffic. Firm raises price target to $41 from $32. Link

Will note "bullish triangle" from $30. Current bullish vertical count in play is $54.50 (column of X from $18.50-$30). According to Dorsey/Wright and Assoc., their retail sector bullish % (BPRETA) is "bull confirmed" at 58%. Professor Davis' study of patterns has the bullish triangle being profitable for the bullish trader 71.4% of the time for an average gain of 30.9% in 5.4 months. From $30, this would also give a bullish target of $39.27.

  Jonathan Levinson   5/15/200,  10:35:13 AM
Funny, QQV won't go down, still -.01 at 28.07. TYX has sunk to a 5.4 bp loss, confirming yesterday's breakout in the long bond. TNX is flat and FVX up 4.3 bps, commensurate with the pullback in equities off their day highs. TICK.NQ is -77 and TRINQ is .75. The put to call data from the CBOE is due out any minute, but I really hope it comes in nice and low.

  Jonathan Levinson   5/15/200,  10:32:03 AM
Alan, isn't that one of the signs from the Book of Revelations?

  Linda Piazza   5/15/200,  10:31:46 AM
The daily OEX chart sports new bearish kisses on the 5(3)3 and 21(3)3 stochastics, with daily ADX showing buying pressure decreasing. That overall ADX level still warns that oscillator evidence should be taken with some skepticism, however. Dialing down to the five-minute chart shows the OEX currently testing that 50% retracement of the first five-minute move again and perhaps trying a bounce from this area again. Just a thought: if the OEX does bounce, watch what happens at the 477.50-478 level, a potential right-shoulder area on the five-minute charts, with a left shoulder and head already being completed. A turndown from there should have you watching that first five-minute 50% retracement level at 476.17 more closely next time, as it could be the neckline of H&S formation on the five-minute charts.

  Jonathan Levinson   5/15/200,  10:23:24 AM
Put to call ratio .63 for 1st half hour of the session.

  Jonathan Levinson   5/15/200,  10:20:03 AM
From today's Wall Street Journal, "WHOLESALE PRICES SANK 1.9% last month, the biggest decline in 56 years, as industrial production fell 0.5% to near a 20-year low, highlighting Fed concern about deflation as the economy struggles. Jobless claims fell last week, but the labor market remains weak."

  Jonathan Levinson   5/15/200,  10:15:37 AM
From www.ukcitymedia.co.uk/, US to postpone announcement of weekly short term T-bills until further notice


  Jonathan Levinson   5/15/200,  10:13:06 AM
QQQ 29 does it again. Bonds seem to have stabilized, with FVX +5.6 bps, TNX +1.5 bps and TYX -2.3 bps. The US Dollar Index flunked the 95.00 test, currently 94.83. HUI is up 1.24 and XAU is up .87.

  Linda Piazza   5/15/200,  10:10:36 AM
The OEX did find support at the 50% retracement of the first five-minute range and then did move up to test the previous high, just as theory suggested it would. Now theory suggests an up day. The OEX currently challenges the top of that broadening formation, so here's our next important test of the day, with the next test after that just ahead at 480. Watch SPX 950, too, as a correlation. On the OEX hourly chart, the 5(3)3 stochastics have zoomed up fairly fast, but still have lots of room to go, and so do the 21(3)3's and the RSI, but will today's trading mimic yesterday's, when the highs were reached about this time of day?

  Jonathan Levinson   5/15/200,  10:06:44 AM
Good info: Thought you might like to know I've been attempting to add to my QQQ short this morning and my orders kept being cancelled. My broker called and said they can't find any stock. I guess if they can't find any maybe I don't want to be short. Short interest must be very high.

  Linda Piazza   5/15/200,  10:03:55 AM
As I feared when answering a reader's question in the Monitor yesterday, the Nikkei reacted with disappointment to the release of the Japanese government's emergency economic plan, now called the securities market revitalization plan. Sony plummeted, as I was afraid it might if that announcement was greeted with disappointment. SNE gapped down on today's U.S. opening, so far hinting that the abandoned-baby candlestick formation that I mentioned as a possibility might be in play. The day is young, however, and Sony investors must still digest the possible remaining management problems and beneficial effects of the new handheld. The linked chart shows the possible abandoned-baby reversal signal as well as a possible bear-flag pattern setting up. Link Those in bullish plays should be aware of these possibilities as they manage their positions. Those in bearish plays are doing okay so far, and could also monitor these formations to manage positions. As I mentioned yesterday, there are too many unknowns in this stock for it to be my kind of play, as that seems too much like gambling when so many outside forces could overcome anything seen on the chart, so I'm not suggesting new plays. The P&F sell signal and these bearish formations certainly do look tempting, though, don't they?

  Jonathan Levinson   5/15/200,  10:02:44 AM
7.75B overnight repo announced, which drains 250M, for a 1.75B net addition this morning.

  Jonathan Levinson   5/15/200,  10:00:28 AM
If you imagine the opening gap in QQQ as being a complete candle, then it looks like this current spike could be a breakout from a bullish cup and handle formation. QQQ 29 should be the line in the sand, perhaps allowing an extra 5 or 10 cents for safe measure. Above 29.10, this rally will begin to look like something different on a price basis, though we'll have to throw all of our breadth, sentiment and other charts out the window.

  Jeff Bailey   5/15/200,  9:54:14 AM
Brocade Communications (BRCD) 5.75 -11% ... Link getting hit lower this morning after reporting Q3 EPS of $0.01, which was in line with consensus. Company said it is looking for 0 to 5% quarter-to-quarter revenue growth, which industry analysts believe is quite weak and hints that McData (MCDT) $11.16 +4.2% Link is taking market share in the midrange segment of BRCD's market, which accounts for approximately 50-70% of BRCD revenues.

  Jonathan Levinson   5/15/200,  9:52:41 AM
Capacity utilisation is at its lowest level since 1983.

  Jonathan Levinson   5/15/200,  9:51:20 AM
Hey Alan, sounds like that could take the edge off! Interactive Brokers should send out a promotional sample to all its users this morning :)

  Linda Piazza   5/15/200,  9:49:27 AM
A 50% retracement of the first OEX five-minute range would occur on a move below 476.17. Bulls want the OEX to remain above that level while bears want the OEX to fall below that level, predicting a retest of the opening level. A steadying ahead of the 50% level instead would predict a retest of the day's high. At least that's how the theory goes. As I typed, the OEX hit the 50% retracement level and is so far bouncing from that level, but the story isn't over yet. The five-minute stochs look top-heavy, so we'll just have to see.

  Jonathan Levinson   5/15/200,  9:48:09 AM
We see QQQ ping ponging between the 78.6% and 61.8% retracement levels of 28.83 and 28.73 so far, with bollinger bad support at 28.72. Some big sell volume just crossed as I type.

  Jeff Bailey   5/15/200,  9:47:00 AM
GSTI Software Index (GSO.X) 120.7 +2.29% ... Link leading tech sector gainer this morning and challenging its December high.

Intuit (INTU) $41.94 +7.56% driving sector action Link in the early going after last night's Q3 earnings report of $1.05, which beat estimates by 3-cents.

  Jonathan Levinson   5/15/200,  9:42:40 AM
Doesn't anyone pay attention. Just last week Greenspan said deflation poses a significant problem. This week deflation is corroborated by the PPI. These buyers defy all logic.

Yes. I think that it has to be OPM (other people's money) jamming the tape higher on today's data.

  Jonathan Levinson   5/15/200,  9:41:04 AM
The fed has announced a 6B 28 day repo for 2B net add so far on that timeframe. 8B short term to go, awaiting the announcement at 10AM.

  Jonathan Levinson   5/15/200,  9:38:35 AM
The US Dollar Index is up to 94.92, while FVX and TNX continue to rise as treasuries get sold, FVX +6.6 bps, while the thirty year yield is down 2.6 bps. Buying in thirties, selling in tens and fives.

  Linda Piazza   5/15/200,  9:37:13 AM
There's been a definite breakout in the OEX above the supposed bull-flag pattern seen on the hourly charts, with the OEX now headed toward the 478.50-478.80 horizontal top of the broadening formation. A push through there might or might not fail at 480. A sustained push through 480 might see a further wave of buying initiated with a try for that elusive 487 number. That's going to be massive resistance, but first the OEX has two other levels to surpass. Let's see how it does at those before we form too many opinions.

  Linda Piazza   5/15/200,  9:32:49 AM
Along with the consternation expressed by Jim's reader and Jonathan this morning, I have to add my own. Lately, I've been reading that our markets have been supported by the recent better performances seen in the European bourses, taken as evidence that economies are recovering worldwide. This morning, I hear on CNBC that our futures were up because of the bad economic numbers and bad outlook in Germany. Huh?

  Jonathan Levinson   5/15/200,  9:32:18 AM
TRINQ .63, QQV flat, TICK.NQ +256. QQQ is trading the 78.6% retracement off yesterday's low at 28.83.

  Jonathan Levinson   5/15/200,  9:27:03 AM
Don't know who wrote that one, Jim, but amen.

  Jeff Bailey   5/15/200,  9:26:53 AM
Treasury action this morning has some sharp selling in the shorter-dated 5-year with YIELD ($FVX.X) jumping 5.8 basis points to 2.548%, while the long-end has the 30-year seeing selling with YIELD ($TYX.X) falling 2.7 basis points to 4.493%. This has the yield curve really flattening out this morning and should lend to a bullish session for equities.

  Jeff Bailey   5/15/200,  9:22:51 AM
It's good to be back Linda. I got caught up on hog, cattle and grain futures while I was in Kansas (that's their key markets). Turkey and deer populations look to be doing well, with Pheasant and qual on the mend. Wheat crops in the northwest part of the state look to be "bumper" status and not a farmer in the area was wearing a frown and light rain had been falling in the region for nearly a week.

  Jonathan Levinson   5/15/200,  9:21:50 AM
Welcome back, Jeff, you were missed.

  Linda Piazza   5/15/200,  9:18:55 AM
Thanks, Jonathan, and welcome back, Jeff!

  Jeff Bailey   5/15/200,  9:18:23 AM
09:00 Update posted at this Link

  Jim Brown   5/15/200,  9:06:52 AM
Reloading Market Moniter App - Service will be down for 5 minutes

  Jonathan Levinson   5/15/200,  8:58:11 AM
If anyone missed Linda's Index Wrap last night, it's a must-read for today's session.

  Jonathan Levinson   5/15/200,  8:42:21 AM
Well, the Teflon Market appears impervious to the news. The PPI report is deflationary, but could be good for companies because it unsqueezes their margins, possibly permitting them greater pricing power. Initial claims was down, but is still plenty, plenty high. Inventories rising cannot possibly be bullish, as it points to paucity in demand. Anyway, QQQ 28.67, ES3M +1.75 at 941.75, NQ3M +5 at 1156, FVX +4.6 bps, TNX +1.1 bps, and TYX down, -4.9 bps. USD Index spiked up to 94.79, June gold is up 2.10 to 354.60.

  Jonathan Levinson   5/15/200,  8:36:59 AM
Business inventories rose by a larger-than-expected 0.4 percent in March, the Commerce Department reported. Manufacturers' and trade inventories excluding semiconductors, as the data is formally known, were estimated at $1.172 billion, the highest since August 2001. That's a 4 percent rise year-over-year from March 2002. Inventories rose 0.6 percent in February. A CBS.MarketWatch.com analyst survey of economists produced a consensus forecast for a 0.2 percent March rise.

  Jonathan Levinson   5/15/200,  8:34:24 AM
The average of weekly jobless claims fell 7,500 in the latest period to 439,750. It was the lowest level since the week ended April 12. For just the week ending May 10, first-time requests for jobless benefits fell 13,000 to 417,000, the lowest in more than a month. Still, the number of Americans who continue to collect benefits each week remains elevated. Insured unemployment stood at 3.77 million, up 120,000 and the highest since November 17, 2001.

  Jonathan Levinson   5/15/200,  8:33:07 AM
From CBS Marketwatch:

Wholesale prices fell a record 1.9 percent last month, the Labor Department said Thursday. The previous record was a 1.6 percent drop in October 2001. The closely watch core rate - sans food and energy - fell 0.9 percent, its largest decline since 1.2 percent in August 1993. The results are likely to fuel existing concerns for deflation

  Jonathan Levinson   5/15/200,  8:23:10 AM
Here's a great chart of the US Dollar Index, much clearer than INO's chart I'd been using Link . Take a look, because it's sure to rock n roll when the flood of reports hits at 8:30. Currently, NQ3M is 1155 +4, ES3M 940.75 +.50, QQQ 28.71 +.05, and June gold (YG3M) is 354.20, +1.70.

  Linda Piazza   5/15/200,  7:27:50 AM
Good morning. I apologize in advance for the length of this post, but much happened in foreign markets overnight.

In one version of these early-morning surveys of global markets I write Sony leads the Nikkei down; in the other, I write Sony leads the Nikkei up. In Thursday's trading, Sony led the Nikkei down, with Sony dropping 2.8% by the close. The Nikkei opened down yesterday and dropped quickly into the midday break, trading down almost 2% by that break. As often happens after the midday break, the Nikkei managed to recover some of its losses, and ended the day down 121 points or 1.5%, to 8123.40.

One factor behind the losses was further decline of the dollar against the yen. Another was that the Japanese government finally announced its securities market revitalization plan, previously called the emergency economic plan, to rescue the stock markets. The long-awaited measures apparently disappointed market participants. One intention of the plan was to help financial institutions whose assets have declined as stocks swooned, but financials plummeted after the plan was announced. One measure involved corporate pension funds that manage a portion of public pension assets for the state. That measure will move up the date at which they can begin returning those funds to the state. Another measure included easing the rules under which pension funds could transfer shares to the government, making it less likely that smaller funds would be forced into share sales. Currently, all pension funds wishing to return shares must be composed so that they track 90% of certain listed shares on the Tokyo Stock Exchange, a rule that smaller funds find it difficult or impossible to meet. The requirement was eased to 80%, but that may still be too stringent a rule for many funds. Public postal savings and life insurance funds will be used to help shore up the markets. The government will stop selling NTT and Japan Tobacco for a period, allowing the stocks to stabilize. A Marketwatch.com article attributes the market's reaction to the plan to disappointment that it lacked measures to address deflation and other problems.

In addition to the disappointment in the government's plans, the U.S. retail sales figures impacted stocks, as the Japanese economy depends on U.S. consumers to buy its goods. Sony might have been hit by a double whammy then: the fear that U.S. consumers will not buy the new handheld Sony introduced yesterday and the knowledge that many of those funds dumping shares will be dumping Sony stock.

Other Asian markets were mixed, with China's Shanghai Composite rising 2.12%, Taiwan's Weighted Index falling 0.23%, and South Korea's Kospi rising 1.54%. South Korea's port strike ended. China's government released economic numbers showing an April 8.9% growth in the economy from the year-ago period, down from the previous quarter's 9.9% growth rate. April retail sales grew 7.7%, down from the previous quarter's 9.2% growth rate. Factory production slowed to from 17% to 15%. SARS was blamed for the slowdowns. Some declared that the decreases in growth showed the effect SARS was beginning to have on China's economy and others said the still-high numbers showed that SARS had little effect. Market participants seemed to be reassured, however, with the market rising.

European markets trade mostly flat--either slightly up or slightly down--at the current time. Today, Germany announced that Q1 GDP fell 0.2%. As I've been mentioning in these early-morning updates, many have feared that Germany is slipping into yet-another recession, and this number adds to those fears. Most market pundits had expected at least a minimal gain in GDP, even though they acknowledged that the euro's recent rise would likely hurt Germany, a country that depends heavily on exports. Germany still expects a second-half recovery, a term we've all been hearing for years with respect to our own economy and stock performance. As has been true of our own markets of late, however, Germany's stock market has managed to absorb the news with equanimity, with the DAX currently trading up 17.16 points or 0.59%, to 2943.19. The FTSE is up 23.30 points or 0.59%, to 3998.30; and the CAC is up 12.67 points or 0.43%, to 2974.50. The FTSE did manage a move over the psychologically key 4000 mark today, but could not maintain that level. The CAC has not approached its own psychologically important 3000 level.

  Linda Piazza   5/15/200,  3:39:19 AM
The Index Trader Wrap has been posted: Link

  Jonathan Levinson   5/15/200,  3:39:09 AM
The Futures Trader Wrap has been posted: Link

  James Brown   5/15/200,  3:38:45 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

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