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  Jeff Bailey   7/3/2003,  1:27:11 PM
S&P futures (sp03u) .... traded between the 974.95 and 994.87 level today and today's e-mail has several traders asking about this retracement technique. I'm going to disuss it in the "Ask the Analyst" column this weekend.

I agree that today's "sell program" action is suspicious with what we saw after the futures "couldn't" trade the 994.87 level, and may indeed hint that after trade the 50% level of 962.65 on Monday, that a sell bias is stronger at 994.87.

Again... will try and address the multiple questions received about this technique and future interpretation, which really has me looking forward to next week's trade!

  Jonathan Levinson   7/3/2003,  1:19:47 PM
Here's a relatively live traffic cam of the Long Island Expressway: Link

  Linda Piazza   7/3/2003,  12:57:06 PM
Happy 4th of July to U.S. readers and fellow writers. To everyone else, enjoy the three-day holiday away from the markets. Do something fun. If you're so overleveraged that you don't think that's possible, perhaps consider closing some of those trades ahead of the weekend?

  Linda Piazza   7/3/2003,  12:53:40 PM
Although it's still too early to be certain, of course, it appears that the OEX will close below its 21-dma, a somewhat bearish development. Although today's candle isn't technically a harami and today isn't technically an inside day, both came close. Today's real body is totally inside yesterday's real body, although the shadows extend beyond yesterday's real body. Because the real bodies are roughly of similar size, that may not signify much. Daily oscillators are giving mixed messages, too. The weekly candle looks somewhat more bullish, springing up from this week's low, but this week's trading achieved a lower low and a lower high than last week's. Studying the weekly chart, though, we must at least consider the possibility that the formation we're seeing is a bull flag forming off the June high.

  Linda Piazza   7/3/2003,  12:47:06 PM
Volume patterns have stayed relatively stable and slightly bearish. Adv/dec ratios now are at .72 for the NYSE and .80 for the Nasdaq, roughly equal to the earlier numbers. Down volume is now 2.8 times up volume on the NYSE and 1.5 times up volume on the Nasdaq. Total volume as of a few minutes ago was 595 million on the NYSE and 781 million on the Nasdaq.

  Linda Piazza   7/3/2003,  12:43:13 PM
The FTSE 100 and CAC 40 closed as follows: The FTSE 100 closed up 17.90 points or 0.45%, at 4024.80; and the CAC 40 closed up 13.02 points or 0.42%, at 3092.09. Currently, the DAX trades down 21.11 points or 0.65%, at 3219.93.

  Linda Piazza   7/3/2003,  12:28:09 PM
Hmm. I was busy typing my last post while Jeff was posting the information that the order may not have been an error. That reinforces my impression that perhaps the OEX is vulnerable down to that level we saw this morning, and perhaps even lower.

  Linda Piazza   7/3/2003,  12:25:49 PM
The OEX is plunging after the arching rise, but where will it stop this time? Whenever there's an error, as there was this morning, I always begin wondering if perhaps the market is vulnerable to that area. That colors my response to the markets and perhaps it does other traders' responses, too. This morning, I tempered that response a bit since the OEX bounced right back up. There were at least some dip buyers lurking if the OEX went low enough.

  Jim Brown   7/3/2003,  12:24:50 PM
Need a short candidate? EXTR got bashed in Forbes today. Link

  Jeff Bailey   7/3/2003,  12:20:44 PM
Early Market Close ... Reminder. The equity markets close early today. Markets close at 01:00 PM EST in honor of Independence Day.

  Jonathan Levinson   7/3/2003,  12:18:13 PM
Good catch, Jeff. Thank you.

  Jeff Bailey   7/3/2003,  12:15:26 PM
CNBC now reporting that it is NOT CLEAR that the sell program seen earlier was an error.

This is worthy of note, and I will remember some time back, where Bear Stearns trading desk did errantly enter a huge sell order. The firm was very quick to report their error to market participants.

With that observation, and not having seen any news from a broker that they entered an "errant" order, the plot begins to thicken..... "Is there a big seller at SPX 990?

  Jonathan Levinson   7/3/2003,  12:15:10 PM
Gold is continuing to recover, last trade at 352 for a 40 cent gain. XAU is down .66, HUI is up .29. The TRIN.NQ is up to 1.15, showing neutral breadth. TICK.NQ +149, moderate buying. QQV is up .33, VXN +1.15, VIX +.63.

  Linda Piazza   7/3/2003,  12:10:54 PM
I'm glad I made that decision not to enter index trades today unless there was a great setup. Thirty-minute OEX stochs--5(3)3 and 21(3)3--curve up again, while RSI turns down. MACD flattens. CCI sort of does, too, right along the flatline area. ADX slopes down with both +DI and -DI doing so, too. Sixty-minute indicators are nearly as mixed up, but in the other direction. Here stochs turn down while RSI flattens and perhaps has the slightest hint of a curve up. There's no help to be found examining these indictors as yet. I don't see divergence in the latest 60-minute highs, either, since both indicators and the OEX made a higher 60-minute high.

  Jeff Bailey   7/3/2003,  12:08:55 PM
Intra-day trend can really see a nice upward intra-day trend since post "sell program" trade in Dow. Take a trend from the 10:45 AM EST low of 9,071.20 (1-minute interval) and attach it to the 11:03 low of 9,076.94. This trend has been tested at 11:36 at 9,087 and being tested here again, but starting to fail.

Analysis here is that errant sell program has now been corrected (what shouldn't have been sold has now been bought back)

  Linda Piazza   7/3/2003,  12:05:19 PM
That 21-dma continues to be problematic for the OEX today, with the five-minute chart showing how the 498.70 level is proving to be resistance. It's about time for another of those plunges after the arching rise, but it's also possible to draw a bullish right triangle on that five-minute chart, with a horizontal top at about 498.70 and an ascending trendline as the bottom side of the triangle.

  Linda Piazza   7/3/2003,  11:54:54 AM
Volume patterns show a negative cast today, with more decliners than advancers and bigger down volume than up volume. Adv/dec ratios are .77 for the NYSE and .84 for the Nasdaq--mildly bearish numbers. Down volume is twice up volume on the NYSE and 1.5 times up volume on the Nasdaq. Those new highs are up near 300 again, at 295 for the NYSE and Nasdaq combined with only 5 new lows for those exchanges. Total volume is 470 million for the NYSE and 643 million for the Nasdaq.

  Jeff Bailey   7/3/2003,  11:54:33 AM
General Motors (GM) $35.82 -0.3% ... observation of bullishness here when compared to SPX/QQQ sell program benchmarking.

GM was trading $35.60 when sell program hit, fell to $35.35, but now trades higher than pre-sell program levels. If benchmarking GM against sell program, and major indexes against sell program, the current trade begins to hint that GM is NOT weighted on the sell side.

Individual stock traders may want to look at stocks they are long/short that are components of the major indexes (INDU, SPX, NDX) to see how they reacted with the sell program. Might be able to get an idea of stock is weighted for selling more than others or not.

  Jeff Bailey   7/3/2003,  11:51:39 AM
QQQ $30.83 -0.45% ... it was right about here that the sell program was seen in the QQQ too. Program took the QQQ from $30.86 to $30.47 in about 3 minutes.

  Jeff Bailey   7/3/2003,  11:43:32 AM
S&P 500 Index (SPX.X) 989.95 -0.38% ... here's an intra-day chart of SPX, which show errant sell program and keypunch error. Link

I now view SPX as back to equilibrium, and will view the trade from 990 to 983.34 as "never having happened" as it was an error. While stock actually traded hands at levels to 983.34 and it "did happen," for analysis purposes, I think it should be discounted.

If a trader (you) had a sell/buy order that was triggered (say just below/above WEEKLY 38.2% of 987.06), then stick with your original trading plan and honor stop/target.

While not certain, I think what happened is trader may have been given an order to sell 10,000 shares/futures contracts and accidently typed in 1,000,000 or something of this nature.

  Jonathan Levinson   7/3/2003,  11:39:24 AM
Put to call ratio drops to 1.06.

  Linda Piazza   7/3/2003,  11:36:08 AM
I still show mixed-up indicators. On the OEX five-minute chart, I see formations that I don't know how to describe other than as a series of arching rises punctuated by steep falls.

  Jonathan Levinson   7/3/2003,  11:14:39 AM
The put to call ratio is down to 1.14 so far, still reflecting very heavy put volume. The volatility indices are all lightly green, except for the VXN +1.41. August gold is down 1.30, XAU- .60 and HUI +.09.

  Linda Piazza   7/3/2003,  11:08:08 AM
As Jane mentioned, it's going to be difficult to trust our indicators now, but the ones on the daily chart would be difficult to decipher just yet anyway. RSI, which I usually trust more than the others, hooks down now. The 21(3)3 stochastics turn up. MACD has a gentle upward slope but may be flattening. CCI had been turning green, but appears to be turning down again. The 30 and 60-minute indicators are now more bearish, but I would conclude that these intraday indicators would be even less trustworthy until we've got a little more time away from that drop, whatever caused it.

  Linda Piazza   7/3/2003,  10:59:57 AM
It was the Tokyo Stock Exchange that reported price delays due to an information distribution system that was overloaded by too many trade orders.

  Linda Piazza   7/3/2003,  10:53:43 AM
The notations about IB reminded me that last night, volume was so big on the Japanese markets that there were reportedly 15-minute delays either in reporting data or in processing orders. Some theorized that started the big decline from the Nikkei's high, but the exchange denied that was a factor.

  Linda Piazza   7/3/2003,  10:51:36 AM
I couldn't find any news, either, but here's what happened on the OEX 30-minute chart. The move drove the OEX down to the 30-minute 100-pma, but the rebound moved it back above the 30-minute 130-pma, currently at 497.10. There has not yet been a 30-minute close above that level, of course. When I noticed Jim watching these averages on a 30-minute chart with respect to the ES, I thought I'd watch on the OEX, too, and see what happened. The idea now would be too go long the OEX. I'm not doing that today for several reasons: my decision not to enter new trades on a holiday-shortened day and the fact that I haven't adequately tested this way of trading. I'm watching for information only.

  Jonathan Levinson   7/3/2003,  10:42:21 AM
My data feeds just crashed. What happened?

  Jeff Bailey   7/3/2003,  10:39:37 AM
Sell Program really hitting things lower here. SPX = 985.48, OEX = 496, INDU = 9,049, NDX = 1,229, QQQ = $30.59.

  Jonathan Levinson   7/3/2003,  10:38:29 AM
What happened? Something just happened.

  Linda Piazza   7/3/2003,  10:37:55 AM
That OEX 21-dma at 498.71 and the 20-dma (central average of the Bollinger bands) near that appear to be playing an important part in trading since June 23rd. The OEX has tended to either open or close or trade near those averages since the 23rd, with the exception of one day. After falling beneath it, the OEX did reach down and touch the lower Bollinger band on July 1, and then popped back up toward the 20 and 21-dma's. A strong index will move above that midline average and toward the upper BB, as the OEX did in late May after clinging to the BB only two days, but the OEX has not yet been able to do so this time.

  Jonathan Levinson   7/3/2003,  10:34:15 AM
The put to call ratio has climbed to 1.24 for this past half hour, which looks bullish to me. Yields are off their highs, FVX now up 6.3 bps, TNX +8.6 and TYX +8 bps.

  Jonathan Levinson   7/3/2003,  10:18:56 AM
The opening put to call ratio, covering 9:30AM to 10AM EST, was 1.02. Bears are their own worst enemy.

  Linda Piazza   7/3/2003,  10:18:49 AM
The OEX has now exceeded yesterday's high. The daily 21(3)3 stochastics have hinged up and CCI is turning green, but curiously enough RSI has flattened in midrise. Hmmm. Turning to intraday charts, I see that the five-minute chart shows the OEX once again rising toward the underside of yesterday's violated channel. All through the rally since March, the OEX has tended to rise along the underside of any violated channel or wedge rather than fall away from it, but let's see what happens as the day progresses. Thirty and sixty-minute charts show stochastics demonstrating overbought conditions and RSI flattened just beneath levels showing overbought conditions, but none of the rolling down as yet. Those that appeared to be yesterday have since curved up again. Thirty and sixty-minute ADX show the upward trend and buying pressure both losing strength. That shows me some vulnerability, but these intraday patterns seem to be fighting against the daily trend, with the exception of the RSI.

  Linda Piazza   7/3/2003,  10:04:53 AM
Be careful this morning as the market tries to digest conflicting information: poor employment numbers and positive ISM numbers.

  Jonathan Levinson   7/3/2003,  10:04:42 AM
ISM at 60.6

  Linda Piazza   7/3/2003,  10:03:43 AM
On the back of the 10:00 ET numbers, the OEX rises toward yesterday's high of 500.86. That might be the next benchmark to watch.

  Jonathan Levinson   7/3/2003,  10:03:34 AM
4.25B 7-day repo announced, awaiting the overnight repo announcement. There's 7B in overnights expiring today plus the 28 day already covered, leaving 2.75B so far unrefunded.

  Jeff Bailey   7/3/2003,  10:00:14 AM
I'll be back in the monitor in a little while, but busy trying to resolve and e-mail server problem with IT.

  Jeff Bailey   7/3/2003,  9:53:20 AM
OEX MONTHLY Pivot .... Thanks to subscriber that found error in my MONTHLY High/Low/Close for OEX. Yes! It should be 483.20 and would have...

S2= 466.0 S1= 478.20, P= 495.40, R1= 507.60, R2= 524.90.

(NOTE: I am now checking other indexes for error)

This change of new low does give WEEKLY Pivot 494.84 and MONTHLY Pivot 495.40 correlative support right now.

  Linda Piazza   7/3/2003,  9:50:53 AM
That $30 loss I took yesterday afternoon on the single OEX call, paying for the spread, looks better and better this morning. However, the OEX is finding support, however fragile it might be, at 498. Today the 21-dma is at 498.67, so bulls want to get the OEX back over that level.

  Jeff Bailey   7/3/2003,  9:48:40 AM
Dow Industrials (INDU) 9,080 -0.67% .... first level in the matrix I will look for some support is yesterday morning's "double kiss" of MONTHLY Pivot.

Will stick with yesterday's thoughts that weakness would be found with 10-point violation of WEEKLY Pivot of 9,053, so 9,043.

  Linda Piazza   7/3/2003,  9:48:04 AM
Here's what IB reports about early closings today: Link

  Jonathan Levinson   7/3/2003,  9:47:00 AM
5B 28-day repo from the Fed, as usual for Thursday. Awaiting the 10AM announcement.

  Jeff Bailey   7/3/2003,  9:46:06 AM
General Motors (GM) $35.59 -0.97% .... per alst night's Index Trader Wrap, GM lower from 200-day SMA and 50-day SMA.

I would not be looking bullish the major indexes, and like them short/put here.

Will continue to hold previously profiled bearish SPX trade from 980. SPX 988.75 -0.5% here.

  Linda Piazza   7/3/2003,  9:44:45 AM
The OEX currently tests that 498.48 midpoint of the first five-minute range. However, no matter what happens now, the 10:00 ET numbers will likely skew the normal morning trading patterns.

  Linda Piazza   7/3/2003,  9:38:47 AM
The OEX first five-minute candle was much larger than normal and so does give us that midpoint benchmark to watch. The 50% retracement of the first five-minute range lies at 498.48. Bears do not want to see the OEX sustain a move above that level.

  Jonathan Levinson   7/3/2003,  9:31:55 AM
TRIN.NQ 2.48, TICK.NQ -58, QQV +.67, FVX -2.1 bps, TNX +1.5 and TYX +2.4.

  Jim Brown   7/3/2003,  9:29:34 AM
Editors Play - Sell calls? I had several emails this morning asking if we should sell the calls at the open. I would suggest keeping the calls. I still expect higher numbers on the Dow next week. Remember, the first ten days of July rally is due to massive inflows f retirement cash that has to go into the market regardless of the economic conditions. While we may go either way today I still think next week could be higher. I still have puts to buy at 9200 and 9250 so I am keeping my calls until next week. I am glad I cheated on the 9150 trigger by three points yesterday at the close to enter the third round of puts. If the market does die I am fully protected.

  Jeff Bailey   7/3/2003,  9:29:01 AM
09:00 Update posted at this Link

  Linda Piazza   7/3/2003,  9:22:42 AM
My natural inclination on a holiday-shortened trading session is to abstain from trading since thin volume is likely to lead to market swings not necessarily predictable by technical analysis. Watching the Nikkei's trading overnight reinforced that conviction. Of course, the Nikkei wasn't trading in relationship to a holiday, but the volatility there points to the vulnerability among all the global bourses just now. Today, I would have to see a surefire setup to convince me to wade in with an index trade. I do have other trades working--a conservative covered call (been selling calls against it for several months now, so I have a low basis and feel fairly protected), a long position in stock, and a put position on a stock. Today won't be wasted for me, however, as I'll spend the day paper trading futures. Before the day begins, ask if you feel comfortable weathering the kind of trading that might occur today and if you feel comfortable carrying a trade over the long weekend.

  Jonathan Levinson   7/3/2003,  8:56:05 AM
That payroll revision from -17,000 to -70,000 gives a whole new meaning to the term "pro forma". Perhaps it was read by telephone and the recipient mis-heard "seventeen" for "seventy".

  Jonathan Levinson   7/3/2003,  8:51:31 AM
US jobless rate at 6.4%.

  Jonathan Levinson   7/3/2003,  8:36:09 AM
Futures down ES -8, NQ -13, FVX -1 bp, TNX +1.3 and TYX +1.6.

  Jonathan Levinson   7/3/2003,  8:32:55 AM
U.S. unemployment rate surges to fresh 9-year high Reuters - Link

  Jonathan Levinson   7/3/2003,  8:32:29 AM
8:30am US JOBLESS CLAIMS WEEK END 6/28 +21,000 TO 430,000

  Jonathan Levinson   7/3/2003,  8:31:58 AM

  Jonathan Levinson   7/3/2003,  8:30:09 AM
8:30am U.S. MAY PAYROLLS REVISED TO -70,000 FROM -17,000

  Jonathan Levinson   7/3/2003,  8:29:34 AM

  Jonathan Levinson   7/3/2003,  7:46:11 AM
The US Dollar Index is showing our old fave, the Corynthian Geyser Formation, as Europe decided at 3AM that it was a very compelling buy, with the index currently trading 94.65. Futures are lower, with ES offered at 989.50 and NQ at 1243, August gold down 60 cents to 351.

  Linda Piazza   7/3/2003,  7:26:32 AM
Good morning. Dumbfounding: that's how I'd describe the Nikkei's trading on Thursday. In early trading, the Nikkei charged up to a seemingly impossible high of 9896.64, up more than 300 points, and that high did prove impossible to maintain. By the close, the Nikkei eked out only a 32.56 gain, closing at 9624.80. First, it had fallen all the way into negative territory before moving up 120 points in the last half hour of trading. Now that's volatile trading!

Consider that it was only May 22 when the Nikkei was last trading below 8000 on an intraday basis and May 2 when it last had a close below 8000, with a close that day of 7907.19. From its April 28 intraday low of 7603.76 to today's intraday high of 9896.64, the Nikkei gained just over 25% in a little over two months. Whew! Time for a breather, don't you think? Apparently, that's what investors thought, too. While equities were gaining, bonds were dropping.

Banking concern Resona Holdings, Nippon Steel, and NEC were the most active stocks in the early trading, all gaining. By the end of trading, Resona, Nippon, and Sumitomo Met Ind were the most active, with only Resona positive. Decliners today included industrials, retailers, and trading companies, according to a marketwatch.com article. Companies that export to the U.S. saw their stocks gaining. Computer-related stocks gained. A Bloomberg article attributes the gains to a Merrill Lynch recommendation for investors to buy Microsoft due to increased demand for PC's, but Merrill Lynch isn't the only entity noting higher demand for PC's. A CIO Magazine survey, as reported by CNN Money, determined that 47.4 percent of chief IT officers responding to the magazine's survey were either in the process of replacing a significant number of PC's in their companies or had just done so.

Other Asian bourses gained, too. Taiwan's Weighted and South Korea's Kospi each gained 0.15%. Singapore's Straits Times climbed 0.39%, and Hong Kong's Hang Seng climbed 0.45%. China's Shanghai Composite climbed 0.32%.

Most European bourses currently trade down, however. Eurozone and UK Service Sector PMI numbers were released today, with the Eurozone 48.2 number showing a rise from May's number but still indicating a continued contraction, and the UK number showing an expansion, according to CNBC Europe. ECB President Wim Duisenberg may have dampened enthusiasm when he said that interest rate reductions already made should be a sufficient catalyst for economic growth and that governments should now act to reduce deficits. That dimmed hopes that the ECB would further reduce rates. Some also attribute today's pullbacks to worries over soon-to-be released U.S. economic numbers. Telecoms declined after Deutsche Bank downgraded France Telecom to hold. Pharmaceutical and chemical company Bayer received a downgrade to underweight by Morgan Stanley.

As of this writing, the FTSE 100 trades down 12.70 points or 0.32%, to 3994.20, again having fallen beneath 4000. The CAC 40 trades down 3.24 points or 0.11%, to 3075.83. The DAX trades down 10.73 points or 0.33%, to 3230.31.

  Jeff Bailey   7/2/2003,  9:48:52 PM
S&P futures (sp03u) settled at 992.90. Current trade is 993.40.

Here's an updated chart of the sp03u, which I showed back on June 25th, when the futures closed below 974.00, which was a level some futures traders thought would be BEARISH.Link

Pattern recognition from PAST is nearly identical today and 994.87 and 19.1% retracement (red retracement) may be as important as it was in PAST (blue retracement). We can now look for SIMILARITY to past where break above 19.1% retracement saw new relative highs, or DIVERGENCE from the past, where a break back below 38.2% retracement (didn't happen in the past) takes place in coming sessioins.

  Jeff Bailey   7/2/2003,  9:42:14 PM
Pivot Analysis Matrix for tomorrow at this Link

  James Brown   7/2/2003,  4:44:28 PM
The Market Monitor has been archived. You may view it and any previous days here: Link

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