Option Investor
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  Jeff Bailey   6/2/2003,  6:23:01 PM
IBM released for trade closed $87.33 trades $84.70 over New York ECN.

  Jeff Bailey   6/2/2003,  6:19:47 PM
Pivot Analysis Matrix for tomorrow posted at this Link

  Jonathan Levinson   6/2/2003,  4:41:04 PM

Q's just traded at 29.35 (it's 4:34 p.m.) Any idea what has caused the drop?

From CBS Marketwatch:

IBM discloses accounting probe by SEC By Alexander Davis

The Securities and Exchange Commission is investigating IBM's accounting practices, focusing on how the technology giant reported revenue in 2000 and 2001, the company said. IBM (IBM: news, chart, profile) said it believes the probe arises from a separate SEC review of the company's retail store solutions unit.

  Jim Brown   6/2/2003,  4:40:39 PM
Greenspan speaks one hour before the open on Tuesday

  Jim Brown   6/2/2003,  4:31:48 PM
IBM news SEC investigation on revenue recognition timing.

  Jim Brown   6/2/2003,  4:28:50 PM
IBM halted for trading

  Jeff Bailey   6/2/2003,  4:00:46 PM
QQQ $29.42 -1.24% ... almost a "round-tripper" in the DAILY Pivot levels with trade above DAILY R2 of $30.12 with trade at $30.20 and now session low of $29.31 coming just above $29.28.

  Linda Piazza   6/2/2003,  3:57:53 PM
On the OEX, daily RSI has not yet turned down and CCI remains green and headed up. Both the 5(3)3 and 21(3)3 stochastics setting I like to watch show the potential for a downturn, with the 5(3)3's beginning to roll and the 21(3)3's flattening. As a reader pointed out, ADX did not participate in the earlier gains. There's mixed evidence here, and no strong prediction of tomorrow's direction.

  Jane Fox   6/2/2003,  3:56:40 PM
Thank you all and I hope I contribute as much as you all have.

  Jonathan Levinson   6/2/2003,  3:54:53 PM
Welcome, Jane!

  Linda Piazza   6/2/2003,  3:54:21 PM
Jane, your research into the various parameters of H&S formations and other articles have proven your abilities. Readers will be lucky to have your input each day. I know, because I'm sometimes the lucky recipient of compliments intended for you, when readers remember that a female author wrote the article and assume it's me!

  Jim Brown   6/2/2003,  3:53:19 PM
Welcome to the club, Jane

  Jane Fox   6/2/2003,  3:52:18 PM
Thanks Linda - this a huge jump for me because the contributors in the Market Monitor are so good.

  Linda Piazza   6/2/2003,  3:50:52 PM
Hey, Jane, welcome. I've been reading your articles over the last months in the newsletter.

  Jeff Bailey   6/2/2003,  3:50:23 PM
NASDAQ-100 Volatility Index (VXN.X) 33.92 +7.13% ... pretty big move in the VXN.X today, especially when we consider the earlier bullish gains. I've still got an alert on this one at the 35.00 level, which is the relative high reading of 35.04 from May 15th. A move above the 35.04 level may then hint that a greater degree of "hedging" from bulls is taking place (selling of calls and buying of puts.)

Market Volatility Index (VIX.X) 22.68 +4.51% above its 21-day SMA again, but at 5-session relative high reading. Still.... I haver "first upside alert" set at 25.66. Lower level of 21.22 was once again achieved today and found a rebound in this indicator.

  Jane Fox   6/2/2003,  3:48:38 PM
This just a test for I may be joining you all tomorrow morning.

  Linda Piazza   6/2/2003,  3:45:36 PM
I wouldn't be surprised to see anything happen these last few minutes before the close, including a last-gasp effort to regain important levels. For the OEX, that would be a close above 487.94. If that does not happen, however, and the OEX closes at current or lower levels, it's printed yet another bearish candle with a shadow penetrating the upper Bollinger band and a body dropping below it. While we've seen a demonstration over the last few days that the OEX can continue to move higher after printing a bearish-looking daily candle and can continue to follow the upper Bollinger band up, it can't do it indefinitely. These candles provide warnings to bullish traders to assess their positions, but don't preclude yet-another attempt at those important levels tomorrow.

  Linda Piazza   6/2/2003,  3:39:06 PM
For reference, European markets all closed solidly in the green, with the FTSE 100 up 81.20 points or 2.01%, at 4129.30; the CAC 40 up 56.57 points or 1.89%, at 3048.32; and the DAX up 81.88 points or 2.75%, at 3064.56. As I've mentioned before, the DAX trades longer than the other two, and so has more time to gain along with our markets (as they were doing through the DAX close) or plummet with them, if that's what they happen to be doing on a particular day.

  Jonathan Levinson   6/2/2003,  3:36:15 PM
The put to call ratio hung tough at .74 on that pullback, showing a bearish level of disbelief for the prospect of lower prices. QQV is now up 3.02 to 29.70.

  Jeff Bailey   6/2/2003,  3:34:09 PM
03:15 Update posted at this Link

  Linda Piazza   6/2/2003,  3:33:41 PM
The VIX has just moved above its 21-dma and now measures 22.74, the high of the day.

  Jonathan Levinson   6/2/2003,  3:32:20 PM
Good entry, Alan- the area formerly known as resistance should provide support.

  Linda Piazza   6/2/2003,  3:31:53 PM
Observant reader D.M. points out that the neckline of a potential reverse H&S on the DJI (and DJX) may be coming into play today. I've linked a chart of the DJX. It's possible to draw two necklines for that formation, one including shadows and one not. Link It's dangerous to make too many assumptions ahead of a confirmation of such a formation, as I'm sure this reader would warn, too. Necklines are sometimes rejected, with prices falling to form another right shoulder. Sometimes they're rejected and market participants react to their disappointment by driving the market down further. Sometimes they're confirmed. We don't know which is going to happen here yet.

  Jonathan Levinson   6/2/2003,  3:29:39 PM
Maybe Ben "Dr. Defration" Bernanke dropped his SPX Etch-a-Sketch pad!

  Jonathan Levinson   6/2/2003,  3:28:32 PM
I just heard Osama & Saddam hijacked a nuclear sub are parked off New York and are demanding Mets tickets


  Jim Brown   6/2/2003,  3:28:19 PM
Probably Greenspan trying to slow the rally to something realistic.

  Jonathan Levinson   6/2/2003,  3:22:58 PM
Wasn't me, Jim, I swear.

  Jonathan Levinson   6/2/2003,  3:19:24 PM
The put to call ratio dipped lower to .73, which suits me just fine. QQQ is trading 29.55, QQV up 2.52, TICK.NQ -299. INTC is getting smoked, currently 20.41, MSFT 24.64. HUI and XAU are still near their highs, which bodes well for goldbugs. In July and October, they got sold along with the broader markets, and it's good to see them holding up.

  Linda Piazza   6/2/2003,  3:15:58 PM
The OEX 60-minute RSI shows bearish divergence with the price, with the 60-minute RSI reaching a lower low, while prices spiked to a higher high. This is not definitive proof of a big downward move in the making, but it does serve to confirm the short-term weakness we've just seen. If you haven't seen many predictions about direction out of me today, that's because I don't have any as yet. As I mentioned last week, sustained moves over the important resistance levels that have been tested today across the indices could mean a new leg up, no matter what bearish signs might be showing up or how overextended the markets might be. If indices fail significantly at those tests of overhead support, however, it might be time for the natural and predicted 38.2%-50% pullbacks, even if a new bull market were being established.

  Jonathan Levinson   6/2/2003,  3:03:00 PM
QQV is up 2.58 now, having shown us the way since the opening bell. TICK.NQ is -615, a reading I haven't seen in quite some time. QQQ down .27 at 29.53, well off its highs, FVX closed at a 7 bp gain. HUI and XAU are actually higher as equities decline, now +1.14 and +.86 respectively.

  Linda Piazza   6/2/2003,  3:01:16 PM
The OEX is now below its December '02 high of 487.94 and approaching its August '02 high of 487.42. I would consider an hourly close below these levels a meaningful sign of short-term weakness and a daily close below them significant.

  Jeff Bailey   6/2/2003,  3:00:16 PM
OEX 488.00 ... getting "downside alert" here. Set this to reflect level at the December high of 487.94. Sidelines for now.

  Jeff Bailey   6/2/2003,  2:59:01 PM
Semiconductor Index (SOX.X) 376.28 -1.57% ... "notable" weakness intra-day developing as it relates to other sectors and major market indexes.

  Jeff Bailey   6/2/2003,  2:57:39 PM
OEX 488.58 +1.08% ... breaking below the 489 level here and I wanted to protect gains from 481 just under 489. With NASDAQ-100 showing some weakness, would look to protect gains in OEX here.

  Jonathan Levinson   6/2/2003,  2:57:39 PM
QQQ should now find resistance at 29.88 on a bounce. FVX now up just 7.1 bps. TICK.NQ -347, QQV up 2.07. HUI and XAU held their gains on that pullback, which is a good sign for us goldbugs.

  Linda Piazza   6/2/2003,  2:54:26 PM
The OEX took out its previous afternoon low. Next light support appears to be 488.50-.60 and then 488.00-.20 and 485.85-486.40. Of course, the OEX could turn around at any point. It doesn't have to wait until it hits one of these possible light support areas! OEX 487.97-488 would not be considered a light area of support, however. It's more significant, since it marks a significant former high.

  Jeff Bailey   6/2/2003,  2:54:21 PM
NASDAQ-100 Index (NDX.X) 1,198.56 +0.05% ... just back after turning negative for session.

Quick review of WEEKLY pivot levels shows NASDAQ-100 Index only equity index not to trade its WEEKLY R1. For now, mental note of this after Friday's bullish % reading of 84% and more extremee "ovebought" reading than other major index bullish %. Link

No technical weakness, but as noted in last couple of weeks, VERY high risk for bulls. BEARS can play short/put, but I would again advise partial positions only!

  Jonathan Levinson   6/2/2003,  2:50:31 PM

  Jonathan Levinson   6/2/2003,  2:47:19 PM
SOX low of the day.

  Jonathan Levinson   6/2/2003,  2:45:25 PM
QQQ took out the low, now headed for the low of the day at 29.88.

  Linda Piazza   6/2/2003,  2:45:09 PM
The SMH has just gone negative, down 0.14, at 29.81.

  Jeff Bailey   6/2/2003,  2:44:37 PM
Semiconductor Index (SOX.X) 380.4 -0.48% ... session low here.

  Jonathan Levinson   6/2/2003,  2:40:48 PM
The good news (for bears) is that 30.04 QQQ is now acting as resistance (a rare occurrence, that).

  Linda Piazza   6/2/2003,  2:39:13 PM
The $SOX is up only .10% today, and the Dow Jones US Semiconductor Index is up .31%. These underform the NDX, currently up .80%, and the COMPX, up 1.22%. The semis are definitely not tech leaders today.

  Jonathan Levinson   6/2/2003,  2:35:29 PM
Most recent put to call reading .74, up from .68 on the first hint of a pullback.

  Jonathan Levinson   6/2/2003,  2:32:38 PM
Hopefully that wasn't all the pullback we're going to get for today- it was the lowest low we've had this afternoon, but didn't come close to the low of the day for the indices. Not to sound like Millhouse, but light pullbacks, "backing and filling", are quite bullish, particularly this close to the top. Meanwhile, QQV is still up 1.8, VXN +.80, and FVX up 9.5 bps, up about 1 bp off its low for the hour.

  Jeff Bailey   6/2/2003,  2:25:33 PM
OEX 490.27 +1.47% ... intra-day chart (5-minute bars) with MONTHLY (red) and WEEKLY (blue) retracement. Link

  Linda Piazza   6/2/2003,  2:23:06 PM
OEX 489.80-.85 keeps supporting the OEX on pullbacks, so those appear to be numbers to watch on these pullbacks, if another should occur. OEX 490.20-.30 appeared to have served as light S/R at times during the day, so those are numbers to watch, too. These are light S/R, however, and not major zones, but still give some idea of strength or weakness.

  Jonathan Levinson   6/2/2003,  2:17:15 PM
29.95 is the next intraday fib support on QQQ.

  Jonathan Levinson   6/2/2003,  2:08:05 PM
Put to call ratio .68 for the past half hour.

  Jonathan Levinson   6/2/2003,  2:04:49 PM
QQQ at 30.04 is right on fib support. QQV is up 1.67, FVX 10.5 bps. If the move up in yield is to impact equities, I'd guess for the Qubes to bounce at the 30 level, or slightly below.

  Jeff Bailey   6/2/2003,  1:56:10 PM
01:00 Update posted at this Link

  Linda Piazza   6/2/2003,  1:41:22 PM
This is one of those times of day when S/R levels are tested. There might be a probe up to next resistance, to test how many sellers might be lurking there, as we appear to be having now, or a probe down to next support, to see how many buyers might be lurking there. If, every time the DJI hits 9000, sellers knock it down, market participants will know what to expect. If sellers don't, they'll know something different.

  Jonathan Levinson   6/2/2003,  1:38:54 PM
The put to call ratio is now .69 for the half hour just ended, and FVX has climbed to a 9.6 bp gain. QQV is up 1.94, but QQQ is trading steady above 30.10.

  Jonathan Levinson   6/2/2003,  1:24:23 PM
Good stuff, Linda! The results of Bulkowski's study are very clear on wedges- he considers them to be 75% reliable. As well, I've seen outtakes from Edwards & Magee also noting the relatively high reliability of wedges. Well, if we could just get these wedges to complete with a nice plunge, the story would be complete. Bull or bear, the idea that price becomes increasingly unstable as it rises in a narrowing range on declining volume is not that difficult to follow. The recent high volume sessions should indicate either a peak forming at or slightly above resistance, or a decisive breakout/failure of the bear wedges.

  Andy Aronson   6/2/2003,  1:20:12 PM
If the DOW can break this 9000 level resistance, we could see the market push higher to the 1176 level on the SPX. This is a very large move and it could take a few months to reach these levels.

  Linda Piazza   6/2/2003,  1:16:36 PM
This weekend, I was reviewing a study about the reliability of chart patterns, particularly interested because of Jonathan's comment that one of his mentors eschewed chart patterns. The study comprised a review of one market from 1983 through early 1998. One caution by the writers was that an index was being studied and that all indices tend to rise over time. They theorized that the bullish formations would tend to be more reliable. That turned out to be the case. During that time, they identified fewer bearish right triangles than bullish right triangles, for example, and the bearish right triangles tended to fail to predict direction correctly more frequently than did the bullish ones.

I was remembering this when thinking about the failures we've seen in some of the usually bearish formations that have set up as late, but then failed to predict ultimate market direction, such as the orthodox broadening formation that set up on the OEX 60-minute chart late last week.

Even with these results, however, the study found that bearish rising wedges, which they noted should be more unreliable in an index (because they tend to rise over time), failed only 3 of the 16 times the formation was identified. On my daily charts, I show the OEX having fallen out of the bottom of its bearish rising wedge, and now rising up to test that bottom trendline. It's possible that the OEX could now fall away from that steeply-rising trendline and that this most recent rise could have merely been a retest of a violated formation, but a violation of those formations usually results in a precipitous fall. This isn't typical behavior.

One interesting correlation to the study was that it refuted the generally accepted dogma that the closer price moved into the apex, the weaker the resulting breakout would be. The study's authors did not find that to be necessarily true.

  Jeff Bailey   6/2/2003,  1:06:17 PM
Lamar Advertising (LAMR) $36.94 +4.76% .... NASDAQ-100 component holding 4th biggest gain in NASDAQ. I'm thinking stock up on FCC decision. Link

PnF chart looks bullish. Vertical count bullish to $54, with first sign of trouble at $33. Favorable risk/reward trade for bulls.

  Jonathan Levinson   6/2/2003,  12:58:51 PM
The CRB is up 1.76 to 237.31, led by crude (30.63), heating oil (77.25), Cocoa, Natural Gas and coffee.

  Linda Piazza   6/2/2003,  12:57:32 PM
Adv/dec ratios are 2.7 for the NYSE-traded issues and 1.9 for Nasdaq-traded issues. Up volume is 5.9 times down volume on the NYSE and 7 times down volume on the Nasdaq. Total volume is 807 million for the NYSE and 1.3 billion for the Nasdaq. New highs continue to vastly outnumber new lows, as they have for quite some time now.

  Jeff Bailey   6/2/2003,  12:53:34 PM
Almost forgot Jim's 05:03:26 PM post from Friday evening regarding "Wave" targets for today Link . SPX was 971-977. I made note at 05:44:37 PM EST that our DAILY R2 of 975.28 and WEEKLY R1 of 976.9 might just correlate.

SPX high has been 978.21, and trading 976.10 here.

Link to Friday evening's market monitor.

  Linda Piazza   6/2/2003,  12:52:25 PM
That OEX 490.20-490.30 area of light support appears to be holding for now, but is currently being tested again.

  Jonathan Levinson   6/2/2003,  12:47:12 PM
The put to call ratio edged up to .65, still neutral.

  Jeff Bailey   6/2/2003,  12:44:54 PM
HMO Index (HMO.X) 666.30 +0.5% .... today's trade above 664.43 at 669.15 has the HMO.X setting new all-time highs set back on June 19, 2002 of 664.43.

Oxford Health (OHP) $37.74 +1.91% edging above last week's high and still some room to its June 2002 high of $51.94. Still... a lot of near-term overhead supply to eat through for OHP from $40-45, but looking for sector action to have selling bulls backing away from offers. Link

  Jonathan Levinson   6/2/2003,  12:41:51 PM
For what it's worth, the divergences seem linked to the dollar, which is falling today, and which leads me to guess that the President's comments are covering the broader inflationary operations being carried out by the fed. The fed prints more money, which must be absorbed by the market- supply exceeding demand diminishes price. All that money chases the tape in commodities, stocks, and bonds. Strange that bonds are down today. I don't expect the recent trend of higher yields to persist too long, because it's those higher yields that the fed has told us it intends to fight.

  Linda Piazza   6/2/2003,  12:36:51 PM
OEX 490.20 is next light support on a pullback, then 489.50.

  Jonathan Levinson   6/2/2003,  12:33:38 PM
The strength in gold and other commodities such as oil (as noted by Andy) and natural gas, along with the weakness in the US Dollar Index, are all divergent from the move higher in equities and selling in treasuries. Speaking of divergences, QQV is now up 2.07. It looks like there's some pretty anxious buying hitting the QQQ options market, as buyers bid up the price of contracts, raising the premium.

  Jeff Bailey   6/2/2003,  12:31:37 PM
Dow Industrials (INDU) 8,997.8 +1.65% .... session highs here. December high at 8,043.37. Dow is only major market index yet to break above its December highs (9,043), but may be a "destiny calls" trade here, with bulls holding out for the 9,043 trade.

  Jeff Bailey   6/2/2003,  12:28:36 PM
12:00 Internals

NYSE = VOL : 626m A/D 23:8 NH/NL 401:3

NASDAQ = VOL : 1.08b A/D 20:10 NH/NL 299:4

Notable that NH on both NYSE and NASDAQ are most likely new level highs for 2003. NYSE did see 417 on 05/27/03, but early in the sessiion at this point. NASDAQ 299 NH is above the 285 on 05/28/03.

  Ray Cummins   6/2/2003,  12:27:04 PM
Spreads/Combos & Premium-Selling -- New Positions

Today's upside activity in the major equity averages has limited our ability to initiate some of the new (bullish) positions in the Spreads portfolio. Among the rally leaders, Pixar (NASDAQ:PIXR) was a standout on news of the box office success of their underwater tale "Finding Nemo," which sold about $70 million in tickets in its first three days. The issue gapped higher at the open and there is little indication the momentum will subside in the near future. Other difficult plays include the "bull-call" debit spread in PNC Financial Services (NYSE:PNC), which traded as high as $50, and the speculative calendar spread in McData (NASDAQ:MCDT), which is currently up $0.50 at $14. Both of these issues will be monitored closely for potential entry opportunities throughout the session.

  Jeff Bailey   6/2/2003,  12:26:46 PM
OEX 491.08 +1.63% .... with OEX now above WEEKLY R1 of 489.9, will want to raise stop to just under this level at 489. Those wanting to give a little more room might be a little less aggressive and chose a stop just under the December high of 487.9.

  Linda Piazza   6/2/2003,  12:23:37 PM
We would need 30-second candles to see appreciable movement in the OEX over the last few minutes. Even the one-minute candles are mostly flat.

  Linda Piazza   6/2/2003,  12:15:18 PM
8996.30: That's how close the DJI has come to trading 9000.

  Jonathan Levinson   6/2/2003,  12:14:23 PM
Another CBOE put to call reading of .64. QQV now up 1.81 to 28.49, which is verging on a breakout for the QQV.

  Jonathan Levinson   6/2/2003,  12:08:22 PM
The US Dollar Index lost the battle at 94 and is currently trading the 93.50 level.

  Ray Cummins   6/2/2003,  12:06:39 PM
Spreads/Combos & Premium-Selling -- Portfolio Activity

In addition to the successes in the bullish portion of the portfolio, a number of bearish plays remain comfortably profitable including Alliant Technologies (NYSE:ATK), Dupont Photomasks (NASDAQ:DPMI), Barr Labs (NYSE:BRL), Forest Labs (NYSE:FRX), General Motors (NYSE:GM), 3M Corp. (NYSE:MMM), Proctor & Gamble (NYSE:PG) and Wal-Mart (NYSE:WMT). At the same time, it's important to note the character of the most critical positions on the "watch" list. Those issues are: Abercrombie & Fitch (NYSE:ANF), DaimlerChysler (NYSE:DCX), Federal National Mortgage (NYSE:FNM), Harley Davidson (NYSE:HDI), International Paper (NYSE:IP), Illinois Tool Works (NYSE:ITW), Johnson Controls (NYSE:JCI), Krispy Kreme Donuts (NYSE:KKD), and Kohl's (NYSE:KSS).

Among other strategy categories, one play worth noting is the conservative debit straddle in Sony Corporation (NYSE:SNE). The position achieved profitability (on a simultaneous order basis) today, rewarding traders who "went the distance" on the chance that a recovery would occur prior to the June expiration. That play is a great example of why the comments in the weekly summary should always be regarded as "opinions" and not guidance -- in no way do they negate your duty to diligently monitor and manage the positions in your portfolio.

  Jonathan Levinson   6/2/2003,  12:04:35 PM
Following on Alan H.'s comments on NQ, the QQV continues to diverge from QQQ, with the NDX volatility index up 1.5 and the NDX tracking stock up .35. If NQ can pop, the QQV is telling us that it will have plenty of room to run, but for the moment, it seems to be saying the NDX has an appointment with gravity instead. Yet again, it will come down to whether bulls or bears blink first.

Alan K., I agree. Fundamentals aren't very helpful on a trading basis without technicals to refine them.

  Linda Piazza   6/2/2003,  12:03:56 PM
At 9349.02 as I type, the Wilshire 5000 approaches next resistance in the 9380-9400 area. This may not be strong resistance, however. Above that, there's clear sailing up to next light resistance at 9750 and then to stronger resistance at 10,000.

  Mark Wnetrzak   6/2/2003,  11:53:21 AM
Covered-Call Update - ABGX

It appears that covered-call candidate Abgenix (NASDAQ:ABGX) didn't meet expectations this weekend at the at the annual meeting of the American Society of Clinical Oncology. The company also received a downgrade this morning from Adams Harkness. A pullback towards the 150-day MA around $8.75 seems probable and an early exit or adjustment might be wise. We will show the position closed.

  Jonathan Levinson   6/2/2003,  11:52:50 AM
New highs on ES and YM at 976.75 and 8979 respectively.

  Linda Piazza   6/2/2003,  11:48:01 AM
Volume patterns remain strong just ahead of the lunchtime lull. Total volume is now 581 million on the NYSE and 1 billion on the Nasdaq. Adv/dec and up/down ratios have remained fairly steady so far, near this morning's high ratios.

  Jonathan Levinson   6/2/2003,  11:43:53 AM
Welcome Alan and Andy!

  Jonathan Levinson   6/2/2003,  11:42:05 AM
The put to call ratio is down to .64 after breaking above .70. It looks like neutral bullishness to me. Current readings: QQQ 30.06, TICK.NQ -110, TRINQ offline, QQV +1.45 at 28.13, FVX +8.5 bps.

  Ray Cummins   6/2/2003,  11:31:44 AM
Spreads/Combos & Premium-Selling -- Portfolio Activity

Stocks are in "rally mode" today and a number of our portfolio positions are participating in the extreme upside activity. The best performing issue in early trading is ImClone (NASDAQ:IMCLE), which is up over $6 after the company's European pharmaceutical partner, Merck KGaA, said that Erbitux produced positive results, both on its own and in combination with chemotherapy, in testing on patients with advanced colon cancer. ImClone commented that it is encouraged with the latest results and plans to discuss approval for Erbitux with Food and Drug Administration officials. Another big mover is Genetech (NYSE:DNA), which is up over 10% on news that data from a Phase II study of Herceptin in combination with Navelbine in early-stage breast cancer showed initial promising results. The company said that patients with human epidermal growth factor receptor2-positive metastatic breast cancer respond to treatment with Herceptin and chemotherapy regardless of their estrogen receptor status. Other strong stocks in the portfolio include American Pharmaceutical Partners (NASDAQ:APPX), Avid Technologies (NASDAQ:AVID), Celgene (NASDAQ:CELG), Cree Inc. (NASDAQ:CREE), Chiron (NASDAQ:CHIR), Safenet (NASDAQ:SFNT), and Viacom (NYSE:VIA)

  Jonathan Levinson   6/2/2003,  11:26:43 AM
After reading the info on DNA and IMCLE over the weekend... I figured the Naz would be up. This is great news for cancer research and treatment so I can't fault the market for bidding up biotechs. ISM came in okay which was a bit of a surprise to me... however the biggest surprise is the continued 100+ point gains in the DOW and 20 point gains on the Naz. This market is getting dangerous for bears and bulls. At some point valuations need to be brought back in line with the economy and earnings. Do I see a bubble really filling up like a big hot air balloon? Gravity has to take it toll at some point on this continued buying spree. Am I just a wishful thinking bear?

This is THE question, in my opinion. Those of us who follow the markets closely see the increased risk to bulls and bears alike due to the extreme readings in breadth, sentiment, and even price. To my mind, we're either building toward a massive move down, possibly up though I doubt it without some kind of pullback first, or an extended sideways move. Looking at charts of the Nikkei over the weekend, a similar rally occurred in Spring 1993, followed by a sideways trading range that lasted until October 1993, when it dumped. The idea for us is to reduce our risk, either by limiting size or range exposure- scalping with stops is a good way to protect yourself by limiting your exposure time and price-wise.

  Linda Piazza   6/2/2003,  11:25:20 AM
Welcome, Alan and Andrew, to the Futures Monitor.

  Linda Piazza   6/2/2003,  11:23:55 AM
With a sustained move over 490, the OEX would next approach resistance at 492-494.

  Jim Brown   6/2/2003,  11:20:47 AM
Don't miss out on the $1000 of options of your choice I am giving away. Check out the Editors Plays from Sunday for details. Link

  Jeff Bailey   6/2/2003,  11:18:20 AM
11:00 Update posted at this Link

  Mark Phillips   6/2/2003,  11:18:06 AM
AMGN $64.60 (-0.12) Interesting divergence in AMGN this morning, with the stock backing off into fractionally negative territory, while the BTK index sports a 3.8% gain so far. Apparently the good news from IMCLE isn't carrying over to the "Big Dog" in the group. AMGN had its own news this morning, with the company and its development partner (ABGX) announcing interim results from a phase 2 study of ABX-EGF in advanced colorectal cancer. While the results are positive so far, it appears they may not be as positive as initially hoped for by the market.

In the big picture though, AMGN is still looking like a solid play, as it has tagged a new yearly high this morning at $65.70, continuing its long-term uptrend. Recall that this is typical of the way the stock trades -- surge to a new high and then fall back to consolidate. That is precisely the reason why we have advocated buying on the dips back to support, rather than the breakouts. Along those lines, it will now be interesting to see if a dip back to the $64 area (old resistancew) finds eager buyers, highlighting that level as new support.

  Linda Piazza   6/2/2003,  11:14:11 AM
Total volume is now 456 million shares on the NYSE and 851 million on the Nasdaq. Other volume patterns remain similar to those seen earlier.

  Jonathan Levinson   6/2/2003,  11:04:42 AM
The Qubes have found support at the 50% intraday retracement off the high of the day. I was about to get excited at the prospect of a lower high, but that run just now matched the early morning high without actually exceeding it by more than a penny. FVX has pulled back to a 7.5 bp gain here.

  Jonathan Levinson   6/2/2003,  10:55:00 AM
I'm still unable to get a TRINQ quote from quote.com, but the rest seems fine. QQV is still up .93, despite a 33 cent gain in QQQ, still looking like a bearish divergence. TICK.NQ is +596, showing a buying frenzy. Despite this, the session highs have yet to be challenged. FVX is up 9 bps now, but again, still no followthrough on equities. HUI and XAU are adding to their gains, up slightly on the day.

  Linda Piazza   6/2/2003,  10:54:28 AM
So far, bullish players can be cheered by the volume patterns, with adv/dec ratios of 2.8 on the NYSE and 2.14 on the Nasdaq. Up volume is 6.4 times down volume on the NYSE and 8.2 times down volume on the Nasdaq. Total volume is 351 million on the NYSE and 696 million on the Nasdaq. Watch for shifts in the volume pattern as a sign that selling is increasing as markets test next serious resistance. So far, pullbacks have been shallow, but the higher the markets go, the more risk to bullish positions. I'm always cautious, so perhaps I'm seeing a need for caution where none exists. However, if you've accrued bullish profits, keep stops at appropriate levels for your style of account management.

  Jonathan Levinson   6/2/2003,  10:45:42 AM
Put 'er there, Alan. It's a Reactine morning (mordig) for me too.

  Linda Piazza   6/2/2003,  10:39:10 AM
The OEX is back, testing its 489.41 high of the day.

  Linda Piazza   6/2/2003,  10:36:24 AM
The VIX has moved up from the day's low and currently measures 21.86, but it remains below the 21-dma.

  Jonathan Levinson   6/2/2003,  10:35:37 AM
Yet another surprise as June gold finds bidders, currently 364.50 x 366.40, with HUI now up .37 and XAU +.31. FVX is up 8.5 bps, no lack of sellers in treasuries. Equities are below their highs, so far trading above their higher low but so far failing to the challenge the premarket highs.

  Jonathan Levinson   6/2/2003,  10:28:30 AM
QQQ has traded 29.6M shares so far against an average daily volume of 71M shares.

  Jonathan Levinson   6/2/2003,  10:25:48 AM
The fed has announced an overnight repo of 3B, for a net drain of 500M.

  Jeff Bailey   6/2/2003,  10:21:37 AM
OEX 488.98 +1.17% .... breaks above its December high of 487.94 here. Also just above mid-point of our upward regression channel.

  Jonathan Levinson   6/2/2003,  10:20:58 AM
We have QQQ returning to its premarket high while the futures are near their highs, ES 973.25 and NQ 1212.50. FVX +8.6 bps is at its high of the day. TICK.NQ +260, while QQV is up just .64 now. The session has just become considerably more bullish.

  Jeff Bailey   6/2/2003,  10:19:19 AM
Genentech (DNA) $69.07 .... second "gap" higher from $40.00 and this now presents the "running gap." Bulls still holding partials can now raise top from $57 to just under our 80.9% "fitted retracement" of $65.89. I'm thinking just under $65.00 to give some room and see if we don't get an "exhuastion" gap, which can be 3rd gap in bull run. Link

  Linda Piazza   6/2/2003,  10:13:12 AM
The OEX moves above the 487.94 number that was the December 2 high.

  Linda Piazza   6/2/2003,  10:08:44 AM
I'm waiting until the volatility settles before making too many assumptions based on volume patterns, but they've been strongly positive this morning so far.

  Jeff Bailey   6/2/2003,  10:08:40 AM
Semiconductor Index (SOX.X) 381.74 -0.14% .... session high of 387.80 came short of December "spike high" of 393.80 and fractional red here for tech-related sector. May have some limiting effect on QQQ $29.94 with session high of $30.16.

  Jonathan Levinson   6/2/2003,  10:06:59 AM
Yields are near their highs of the day following the 10AM data, FVX +7.4 bps. Equities haven't launched on the data, but nor have they tanked, just moving sideways above the s/r lines. VXN is coming down to unchanged, while QQV is back up to a 1.61 gain. I expect to see selling in tech stocks as month end window dressing gets unwound, but this is just speculation on my part. The CBOE put to call ratio has opened at .66, which is pretty much neutral for the moment.

  Jeff Bailey   6/2/2003,  10:05:11 AM
May ISM Index comes in at 49.4, slightly abov ethe 48.5 forecast of economists, but reading below 50 still contraction.

Benchmarking ... INDU 8,905, SPX 968.6, OEX 486.3, NDX 1,205, QQQ $30.00, BIX 303.3, TNX.X 3.411%

  Jeff Bailey   6/2/2003,  10:01:26 AM
April Construction Spending -0.3%, which was slightly better than forecast of -0.5%.

  Linda Piazza   6/2/2003,  9:58:05 AM
Congratulations, Jeff and the readers in Jeff's OEX play. I took a small long profit Thursday and then entered a 1/4 bearish play Friday morning when the OEX hit the top of the orthodox broadening formation on Friday and rolled down. I was ready to take the heat up to 487-490. It's a good thing I was ready and in with a small position. I may be exiting soon with a small loss to match my small gain on Thursday. Here's the chart with the broadening formation: Link I do note that the OEX is currently falling back inside that formation as market participants await the ISM.

  Jonathan Levinson   6/2/2003,  9:56:59 AM
HUI and XAU are both down despite the strength in June gold, pointing me to possible hedge fund activity going long the metal and hedging with the miners. Bond yields are pretty much level here, FVX +6.6 bps, while the TRINQ appears stuck on my screen, still .84- must be bad data (again) from Quote.com. TICK.NQ is +90, QQV now +1.62 at 28.3, VXN +.14 to 31.80. Note that QQQ is up 21 cents and QQV is up 1.62- a big bearish divergence, and it's been getting bigger as the session progresses.

  Jeff Bailey   6/2/2003,  9:52:20 AM
S&P Banks Index (BIX.X) 303.84 +0.35% .... getting closer to its 308 reverse head/shoulder objective. OEX/SPX bulls may look for an index trader profit taking target if BIX.X eventually hits that target level. This would be crisscrossing upper end of our regression channel and the 308.84 level from 100% retracement.

  Jeff Bailey   6/2/2003,  9:47:02 AM
OEX ... per Linda's 09:44:33 ... will note DAILY R1 is 486.31

  Jonathan Levinson   6/2/2003,  9:44:59 AM
This could well be a gap n crap setup, but the ISM data at 10 is going to be a market mover, and frontrunning it would be a gamble.

  Linda Piazza   6/2/2003,  9:44:33 AM
Today's first OEX five-minute candle spanned a larger-than-normal range, so we can look at the 50% retracement as a point that should hold as support if bullish sentiment is to continue. That 50% level lies at 485.85. Volatility surrounding the release of the ISM number might skew the normal reactions, however, so I offer with number with some skepticism, as a penetration might be due to that volatility.

  Jeff Bailey   6/2/2003,  9:43:33 AM
OEX Here's my 60-minute interval chart of OEX with new WEEKLY (blue) and MONTHLY (red) retracment. Link

  Jonathan Levinson   6/2/2003,  9:41:54 AM
QQV is up .79 to 27.47. This looks like a bearish divergence to me, though it's common to see high QQV readings at the beginning of the session. It's risen to .97 as I typed that- keeping an eye on it.

  Linda Piazza   6/2/2003,  9:35:35 AM
Alerts are going off so fast this morning that it's been almost impossible to catch them all. With the OEX over 487 and headed toward those 487.90 level that has defined the tops of the range since last July and with the COMPX over 1600, the NDX over 1200, and the DJI over 8900, it's hard to imagine that sentiment won't power the indices over the next levels. Still, caution might be appropriate ahead of the ISM numbers.

  Jonathan Levinson   6/2/2003,  9:34:52 AM
Opening levels are pretty tame, with the TRINQ just .84 and TICK.NQ +288. The fed has 3.5B in expiring weekend repos today. We await the 10AM announcement.

  Jeff Bailey   6/2/2003,  9:33:04 AM
OEX 486.9 +0.7% .... looking for sharp move higher today and good correlative target from pivot matrix looks to be 490. Will raise stop from break-even 481 to slight profitable of 484 here.

  Jeff Bailey   6/2/2003,  9:15:27 AM
09:00 Update posted at this Link

  Jonathan Levinson   6/2/2003,  9:10:01 AM
June gold is pulling up, 363.40 x 364.80 currently. Yields are down a bit, FVX up 5.8 bps.

  Jonathan Levinson   6/2/2003,  8:52:12 AM
10:00 am: ISM Index for May, prior 45.4, consensus 47.0

  Jonathan Levinson   6/2/2003,  8:41:02 AM
The US Dollar Index is trying to take 94, while June gold is struggling to hold 360. Bonds have opened very weak, with FVX +8 bps, TNX +7.4 and TYX +4.2 bps. QQQ is holding 30, ES is 968 and NQ 1208.50.

Anyone who hasn't read any of the weekend articles should do so, as today is a critical day. The indices are trading a breakout levels. If we do not see a sharp decline immediately from current levels, the two remaining alternatives are either a rocket ride north, or sideways chop. The sideways chop scenario seems more likely than the rocket ride, because the degree of optimism amongst bulls and fear amongst bears has reached extreme levels. I'd vote for the sharp decline, except that sharp downside moves have been quite rare since October, and if one is going to bet on sharp moves, it's been more profitable this year to buy dips than to short tops. Some of the down moves last week had a stronger feel to them, and this could be hinting of something larger to come, but for the moment, we must respect the tape. 1200 NQ, 965 ES and 29.80 QQQ will provide first support on a pullback.

  Linda Piazza   6/2/2003,  8:40:18 AM
The CAC 40 is back above 3000, at 3009. The FTSE 100 has climbed above 4100. If my search of historical prices is accurate, the FTSE 100 last saw an intraday high above 4100 on December 5. That day, the FTSE closed at 4032.40. The last close above 4100 was on December 2.

  Jim Brown   6/2/2003,  7:36:31 AM
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  Linda Piazza   6/2/2003,  7:32:31 AM
Although I'm not well-versed in currencies, Jonathan, my reading of the reports confirmed your impression. President Bush said he believed in the strong dollar, but his support of the strong dollar appeared limited to the belief that improved economic conditions in the U.S. would carry the dollar higher. Some European commentators mentioned that we're seeing a slowing in the decline of the dollar rather than a strengthening of the dollar, and those commentators felt more declines would be seen.

  Jonathan Levinson   6/2/2003,  7:23:58 AM
President Bush's comments about the dollar were indeed shocking, unless he meant "strong dollar" in the context given by John Snow a few weeks ago, which was, if memory serves, "well respected and resistant to counterfeiting." This is not a glib statement, as that's pretty much what Mr. Snow said. Add to that the fed's steady stream of "printing press" comments, and it appears that there's some disagreement on the part of US authorities as to what to do with the dollar, unless they wish to keep it at current levels.

June gold is down 3 to 361.50. QQQ has just traded 30.01. NQ3M is 1207.50, ES3M 968 and YM 8886.

  Linda Piazza   6/2/2003,  7:18:31 AM
Good morning. The firming dollar and last week's gains in U.S. tech stocks sent Japanese exporters and tech stocks higher in Monday's trading. At the G-8 leaders' summit this weekend, President Bush reiterated his support of a strong dollar. While most agree that his administration's strong-dollar policy precludes taking extraordinary actions to strengthen the dollar and some feel that further declines are possible, investors in the Japanese market felt optimistic.

Although the dollar lost ground against the yen in the afternoon, it remained above recent lows, and the dollar's recent performance is to be discussed today at the G-8 conference. Tokyo Electron, Sony, Samsung, and Matsushita Electric--all dependent on exports--gained. The Nikkei opened up almost 66 points and hit a morning high of 8602.22, only cents below its 200-dma, an average the Nikkei has not touched since July, 2002. That would turn out to be the high of the day, as the Nikkei spent the rest of the day trying to push over 8600 and its 200-dma without success. Still, the Nikkei ended up 122.66 points or 1.46%, at 8547.17. The close over 8500 brought the Nikkei up through the neckline of a reverse H&S formation on its daily chart, but with the close proximity of that 200-dma, it might be wiser to wait for at least one close above the average before considering the reverse H&S confirmed.

Other Asian bourses gained, too, despite news that the South Korean navy fired warning shots at three North Korean fishing boats and that SARS' impact on Hong Kong caused the economy to contract 0.3%. Perhaps investors looked instead to the declining rates of new cases and deaths across the region. The WHO removed Singapore from its list of SARS-affected regions. South Korea's Kospi climbed 2.4%, Hong Kong's Hang Seng gained 1.58%, and Singapore's Straits Times gained 2.35%.

Earlier today, the CAC 40 and DAX also achieved key levels, moving above 3000. The CAC has slipped below that number as of this writing, but still retains most of the day's gains. In one sign of the optimism spreading through European investors, Infineon and Deutsche Bank rose on upgrades, but their competitors STMicroelectronics and UBS also gained after being downgraded. Bourses climbed even though German manufacturing workers went on strike and a report noted that European manufacturing contracted this quarter. Insurer Munich Re climbed after reporting a loss lower than in the previous quarter, although it wrote off 880 million euros in investments and declined to give a full-year outlook.

Insurers and tech stocks, particularly those with exposure to the U.S., led the gains. As of this writing, the FTSE 100 was up 37.80 points or 0.93%, to 4085.90; the CAC 40 was up 6.48 points or 0.22%, to 2998.23; and the DAX was up 41.59 points or 1.39%, to 3024.27.

  Jim Brown   5/30/200,  12:32:21 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

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