Option Investor
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  Jeff Bailey   7/7/2003,  3:49:53 PM
Earnings begin tomorrow with Dow component Alcoa (NYSE:AA) $26.67 +1.46% the first of Dow components to report. Consensus is for $0.25 per share, which compares to year-ago $0.27. Link

  Jonathan Levinson   7/7/2003,  3:46:06 PM
Put to call ratio .69, QQV +1.67, VIX +.53, VXN +1.1. It still appears that the options market doesn't believe the current rally, with a neutral put to call ratio and climbing volatility.

  Linda Piazza   7/7/2003,  3:38:20 PM
Jonathan, if you and I are both going to start making bullish comments, the markets are certainly going to crater.

Absent a big dip in the last thirty minutes of trading, the OEX appears ready to close above its 21-dma, which does give a bullish cast to the day's trading. Absent that dip, the day's candle will also be a bullish engulfing one. Volume doesn't appear big enough to signal that this could be a last engulfing candle, which would have had a bearish connotation. Still, I'm watching that upper Bollinger band on the daily chart at 511.58 and the previous high at 512.67 and thinking "upper limit" for the short-term, at least until the hourly stochastics cycle down again. It's not that I have evidence that daily oscillators will top out by then, although they might, but just that it's difficult at this point in the seasonal trading pattern to justify further gains. There I go, though, trying to think rather than see. If the OEX should approach those levels, I'll watch what's happening, but until then, I consider the OEX trading in a DMZ.

  James Brown   7/7/2003,  3:27:53 PM
HAR - recently added to the call list, Harman Intl. is also enjoying a strong session. There has been no let up in the intraday trend today as shares add more than three percent. While its strength suggest another positive day for tomorrow, more patient traders might want to consider waiting for a pull back before considering an entry.

  James Brown   7/7/2003,  3:22:50 PM
EBAY - and the rally continues for shares of EBAY. The stock, like many others, gapped open higher today (about $1.25) and has since added another $2.00 for a $3.58 gain. Volume has been light. Traders who are bullish can be re-evaluating stop losses and profit targets. There are just over two weeks left before EBAY's earnings announcement on the 22nd.

One reader recently emailed me and said he'd bought a ton of July 105 calls at $1.00 and has already sold a third of them for $4.90 (the email was last week). My thoughts for anyone in a winning position is to closely monitor your stops to protect a decent gain. How you define "decent gain" and how far you let EBAY run before closing the play is up to you. Just don't let a winning play turn into a loser. We'll be raising our stop loss on the stock in tonight's newsletter.

P.S. don't forget that there are less than two weeks left before July options expire.

  Linda Piazza   7/7/2003,  3:21:05 PM
Unless you jumped into the market on the opening, there hasn't been an OEX trade today. If you did jump in long on the opening, you may have been sitting on those profits all day, miserably waiting for the markets to move one way or another. It will soon be time to decide whether to hold overnight. That's a tough decision here in the DMZ. I'd be feeling a little vulnerable to a downdraft down to 501-503 due to the hourly oscillators, but then I'm always nervous when sitting on profits. (I'm not, as I didn't jump in this morning.)

  Linda Piazza   7/7/2003,  3:08:22 PM
As examples of what's happening with individual stocks, here are three stocks I happened to call up this morning: Link Link Link (Note: I'm not suggesting plays in these stocks, nor using them as proof that the OEX has to continue rising, but only showing what I'm seeing as I scan a lot of charts.)

  Linda Piazza   7/7/2003,  2:56:13 PM
I'm just playing devil's advocate today with the potentially bullish OEX charts. I figure I'm doing the bears a service. The more bullish I become, the more contrarian sentiment there is for going short. I'm still skeptical of what I'm seeing, but just seeing it over and over, in individual stocks as well as in the indices. I'm cautious still, though, and not quite sure what to believe.

  Linda Piazza   7/7/2003,  2:45:21 PM
I have that same healthy skepticism that Jim is mentioning about any further potential for the markets to rise, but I can't help looking at that OEX 30-minute chart and seeing a potential bull flag. If it's a bull flag, it formed all day as the OEX consolidated and moved down from the day's high and the thirty-minute 5(3)3 stochastics cycled all the way to oversold and turned up again. The OEX is now testing the top of that potential bull flag. As I mentioned earlier today, a sustained movement over 506 should see the OEX move up to test June highs, with the OEX perhaps being stopped at the layered resistance overhead or the upper Bollinger band on the daily chart, now at 511.75 but curving up again, or at that previous high. Or perhaps not being stopped there at any of those levels, incredible as that seems. Daily oscillators remain bullish. There's a part of my brain that doesn't believe it for a second, but if I'm honest, there are plenty of bullish signs on the charts, too. Like many others, I'm suspicious that the bullishness may be tamed soon, but what if it's not? I'm trying to be neither bullish nor bearish, but just see what's on the chart.

  Linda Piazza   7/7/2003,  2:34:53 PM
I'm reading about the 1970-1974 period in the markets, scanning along and absorbing the mentions of the market rising "from 880 right back to the 1000 level" in seven weeks, feeling right at home with the numbers, until I realized with a shock that those were Dow numbers, not SPX numbers.

  Linda Piazza   7/7/2003,  2:13:22 PM
For reference in case the OEX should fall this afternoon, the 21-dma is at 499.01. In case the OEX should continue to rise and especially if it closes over the 21-dma today, theory says that it should test the top Bollinger band (not necessarily today, though), currently at 511.62 but beginning to turn up again.

  Linda Piazza   7/7/2003,  2:09:02 PM
We have more information now, but perhaps not a lot more. Bears were not able to push the OEX below 504.50, but so far bulls have not been able to drive it over 506, either. The thirty-minute 5(3)3 stochastics have cycled all the way down to oversold levels now and have made a bullish kiss, however.

  Linda Piazza   7/7/2003,  1:50:12 PM
The 1:45 ET push appears to be toward testing the downside support. We'll soon be in a better position to gauge strength or weakness and to predict what happens next.

  Linda Piazza   7/7/2003,  1:45:37 PM
Here's what I'm seeing on the OEX daily chart: Link

  Jeff Bailey   7/7/2003,  1:43:02 PM
Coca Cola (KO) $45.52 -1.53% ... lows of session here after fractional gains earlier. May be seeing weakness after last week saying it is still interested in Australian-based Berri Ltd. and that C-C Amatil, which is 35%-controlled by KO approached the Australian Competition and Consumer Commission late last week to conduct market inquiries to assist in potential acquisition.

  Linda Piazza   7/7/2003,  1:35:19 PM
Ever since the morning's first surge topped out, the OEX 30-minute 5(3)3 stochastics have been declining, with the fast line now measuring 24.28 and the slow line now measuring in the high 20's. MACD, 21(3)3 stochastics, and RSI have flattened, while CCI also declined. Still, while that stochastics line has been declining, the OEX action can best be described as consolidation. What happens when the short-term stochastics travel all the way to oversold levels and turn up again if the OEX has maintained that consolidation while they does so? The most likely event in that case might be an upside breakout or attempted upside breakout of the consolidation range. Sixty-minute indicators are a little more difficult to interpret, since MACD remains strongly bullish, but RSI is trying to turn down and stochastics are deep in territory indicating overbought conditions, with the stochastics having made tentative bearish kisses. The bearish signs are tentative as yet, though, and can be turned right back up again. Daily oscillators remain bullish. At this time, then, I would expect consolidation or a shallow pullback only. It's hard to push down all those bearish interpretations from recent years, the ones that kept some money in my trading account, and not expect a cratering instead, but that expectation isn't yet showing up on the charts.

  Jeff Bailey   7/7/2003,  1:31:57 PM
01:00 Update posted at this Link

  Linda Piazza   7/7/2003,  12:55:24 PM
The OEX may be testing that 5-minute H&S neckline any moment now, with a fall below 504.50. The downside target appears to be near 502.75, but targets from formations on five-minute charts are not always reliable. This test of the neckline and subsequent actions will tell us about the market strength or weakness, however, and may take us out of the DMZ.

  Jeff Bailey   7/7/2003,  12:43:58 PM
Taiwan Semiconductor (TSM) $11.01 +1.66% .... Link edges above $11 here with Prudential reiterating their "buy" rating and target of $13. Believes that continued positive business momentum and increasing wafer starts could bode well for TSM's stock price, with modest continued improvment in wafer starts. Prudential says TSM could see September quarter utilization rates close to 90%, which would have positive implications on gross margings.

  Jonathan Levinson   7/7/2003,  12:40:42 PM
Treasury yields are at their highs of the day, FVX +9.1 bps, TNX +7.3 and TYX up 5.1 bps. August gold is at its low of the day, -3.50 to 347.80, with XAU -1.57 and HUI -2.12.

  Linda Piazza   7/7/2003,  12:37:38 PM
So far, the OEX is resisting that 506 level again. On the OEX five-minute chart, it's been climbing the bottom of Wednesday's regression channel, with that channel depicted in my 11:15 post this morning.

  Linda Piazza   7/7/2003,  12:31:06 PM
As of a few minutes ago, total volume was 619 million on the NYSE and 870 million on the Nasdaq. Some of those late risers after a holiday weekend must have gotten to their trading stations quickly after the first hour of trading this morning. Volume has picked up higher than I would have expected for the Monday after a summer holiday weekend. Adv/dec ratios are still bullish, but not as strong as they were earlier. Adv/dec ratios are 2.1 for the NYSE and 2.5 for the Nasdaq. Up volume is 4.3 times up volume on the NYSE and 7.4 times down volume on the Nasdaq. While bulls can be cheered by these volume patterns, they don't want to see a downward trajectory in the numbers.

  Jeff Bailey   7/7/2003,  12:30:40 PM
CBOE Internet (INX.X) 145 +3.09% ... new 52-week high on move above June relative high of 143.27. eBay (EBAY) $112.64 +2.38% Link , Amazon.com (AMZN) $38.27 +0.92% Link and Yahoo! (YHOO) $35.50 +2.30% Link trading new 52-week highs.

  Jeff Bailey   7/7/2003,  12:21:02 PM
Frontier Airlines (FRNT) $10.60 +8.46% ... stock moves quickly to new session highs after company just now saying that estimated Q1 EPS will be between $0.00 and $0.05 (excluding government aid during the quarter as a result of Emergency Wartime Supplemental Appropriations Act and unusual and non-recurring items), which is well above consensus of loss of $0.14.

  Jeff Bailey   7/7/2003,  12:16:53 PM
bebe stores (BEBE) $22.26 +8% ... Link gaps to another 52-week high after women's apparel retailer upgraded to "buy" from "neutral" at First Albany.

Vertical count bullish to $28.

  Jonathan Levinson   7/7/2003,  12:16:34 PM
The total put to call ratio has dropped to .71 now, while the volatility indices continue to hold their gains. This matches my own gut feeling, which is feeling increasingly bullish and nervous. As a bull, however, I'd want to see the put to call ratio growing increasingly bearish, because I've often guessed that put to call bearishness often fuels bullish moves higher. It's all a step above guesswork with the put to call ratio, but that's what I see.

  Linda Piazza   7/7/2003,  12:06:46 PM
Just as Jane mentions a potential H&S forming on the NQ, there's a potential one on the OEX, too, with the same time frames Jane mentions: left shoulder forming with a high at 10:25, head forming with a high 11:15-11:40, and the OEX currently rising again. The trouble is that the downside targets aren't getting met on the OEX downside formations, particularly the five-minute ones, and this bearish possibility must be balanced against the OEX dipping briefly back into the bull flag from which it broke out earlier and is now moving back above again. With that said, however, watch for signs of failure if the OEX approaches 506 again. We're still in that DMZ, and it's hard to guess next direction.

  Linda Piazza   7/7/2003,  11:59:02 AM
The OEX now falls back inside the bull flag formation, so on its retest of the flag, it failed to maintain breakout levels. It's also broken just below the bottom of Wednesday morning's regression channel. On the very short term, this is bearish, but the OEX is so far maintaining levels above next 504.50 support. We're in another DMZ here, with bullish enthusiasm as depicted by volume patterns running strong enough to send markets higher again but a lot of gains still left to be digested, too.

  Jim Brown   7/7/2003,  11:52:04 AM
Editors Play - Exited my DJX calls at Dow 9225 for $1.85. I cancelled the additional order to buy more puts at Dow 9300. I am now naked on the 30 AUG-DJX 88 puts with a total cost of $2130 according the June-29th plan. Link

  Linda Piazza   7/7/2003,  11:42:40 AM
It didn't take long for the OEX to move down and test that bull flag, did it? Let's watch as the 505-505.25 level is approached. If that fails to provide support, next light support lies near 504.50, then at 503.80 and 502.25, but next real support is down near 501.

  Jonathan Levinson   7/7/2003,  11:42:29 AM
The put to call ratio is down to .77, but the volatility indices are holding their gains. Treasury yields continue to inch higher. Equity indices are still holding their narrow ranges at the top of the flagpole, pulling back fromt their highs of the day.

  Linda Piazza   7/7/2003,  11:34:51 AM
What happens next on the OEX? The OEX did break above the bull flag depicted in my 11:15 post. What may happen in the very short term is for the OEX to come back and retest the bull flag, doing that by moving down toward 505.25, where it would then find support from the intersection of the rising regression channel and descending bull flag channel. The outcome of that test or a failure to retest may tell us a lot about future direction. If the OEX maintains 506, for example, as it so far appears to be doing, then I would expect a try for June's highs. It will face resistance levels layered overhead.

  Jeff Bailey   7/7/2003,  11:26:56 AM
Frontier Airline (FRNT) $10.18 +3.97% ... notable 52-week high for airliner and looks to be breaking free of $10 resistance from last couple of weeks. I still think this one has some upside to the $13.50 level near-term after triple-top buy signal of $8.50 on June 16th on BIG volume spike of 1.4 million shares. Link

  Jonathan Levinson   7/7/2003,  11:26:40 AM
Yields are returning to their best levels of the day, as selling in bonds surges anew. The TRIN.NQ is down to .35, TICK.NQ +167 as the COMPX holds its highs. Gold has recovered some ground off its low, down 1.60 at 349.70.

  Jeff Bailey   7/7/2003,  11:22:46 AM
Apple Computer (AAPL) $20.05 +4.8% ... notable new 52-week high today. Link

  Jeff Bailey   7/7/2003,  11:18:29 AM
11:00 Update posted at this Link

  Linda Piazza   7/7/2003,  11:15:10 AM
Here are the formations I mentioned in my 11:01 post: Link

  Jonathan Levinson   7/7/2003,  11:10:57 AM
Volatility-wise, QQV is leading to the upside, +1.93, VXN +.90 and VIX climbing to .82. Put to call ratio is up to .89 now. It looks like the market is willing to pay for an increasing number of puts.

  Jim Brown   7/7/2003,  11:02:35 AM
Editors Play - Raising the stop loss on my calls to Dow 9225. (DJX 92.25) The bloom is fading.

  Linda Piazza   7/7/2003,  11:01:13 AM
The OEX five-minute chart shows the OEX pulling back in what might be a bull flag. Curiously enough, it's pulling back in that bull flag within the extended lines of a regression channel from Wednesday morning, from before Thursday's strange trading. I'd left the regression channel on my chart because Thursday morning the OEX had been rising to test its underside again before the strong drop hit the markets, but it's almost as if the OEX temporarily wandered off its intended path and has now found it again.

  Linda Piazza   7/7/2003,  10:57:36 AM
The 4060 level appears to be a magnet for the FTSE 100 today, with the FTSE currently returning to that level again after bumping up after our U.S. open. The FTSE currently trades up 41.10 points or 1.02%, at 4062.60. The CAC 40 and DAX have added to their gains, with the CAC trading up 93.94 points or 3.06%, at 3166.34; and the DAX trading up 100.19 points or 3.09%, at 3339.80. The DAX currently trades just above S/R near 3325, and will see next strong resistance at 3500.

  Linda Piazza   7/7/2003,  10:48:40 AM
On the OEX 30-minute and 60-minute charts, all oscillators are either near or in levels indicating overbought conditions, of course, but only RSI shows any propensity to turn down. I'm watching that closely since I tend to trust RSI more than other oscillators. However, even with RSI, it's a more reliable practice to watch trendlines or formations than the empirical RSI number itself, and I don't see any real trends on the RSI--no inverse H&S of its own, to match the inverse OEX H&S, for example--so I'm not sure how reliable that first hinge over might be. That OEX first-hour candle was much larger than normal, so I'm also watching the midpoint retracement level of the first hour's range: 501.15. That's near the 501 level that I would be watching at any rate, but does provide further confirmation of the importance of this level on any pullbacks.

  Jonathan Levinson   7/7/2003,  10:40:11 AM
Volatility as measured by the QQV, VXN and VIX have continued to rise, which is a clear divergence here, QQV up 1.81, VXN up 1.34 and VIX up .62.

  Jonathan Levinson   7/7/2003,  10:38:46 AM
The put to call ratio has risen to .80 for this half hour just passed.

  Jeff Bailey   7/7/2003,  10:38:27 AM
Curbs In... Program trading curbs for index-arbitrage in place after Dow Industrials (INDU) 9,241 +1.88% traded 180 points (9,250.21) above Thursday's close. For curbs to come off today, Dow must return to within 90 points (9,160.21) of Thursday's close.

  Mark Phillips   7/7/2003,  10:37:53 AM
ABC $72.16 (+0.97) Going along with the strong ramp in the rest of the market, ABC is breaking out again today, clearing the $72 level and well on its way to achieving our $74-75 target. Traders that took advantage of the mild dip last week appear to have gotten a solid entry and should be looking to harvest gains if that target is achieved over the next couple days. This morning's break above $71.60 at the open could have been used for a momentum entry and so far would be working nicely. More conservative traders still looking for an entry will want to keep an eye out for a pullback to confirm support above $70 (old resistance) as the next high-odds opportunity.

  Jim Brown   7/7/2003,  10:31:40 AM
Editors Play - Using a 2, 4, 6, 8, 10 contract increment beginning at Dow 9050 (DJX 90.50) and buying puts at every 50 Dow points I have now accumulated 30 Aug-88 DJX puts for $3,280. I have 10 contracts of the July-DJX 91 calls bought for 75 cents at Dow 8950 now worth $2.10 each. These trades were placed according to the plan in the Editors Play article on June 29th. Link

I plan on trying for one more increment at 93.00 with 10 more puts and I will sell the calls then. We are very close to the previous highs and my target for this week at 9300-9350. I am setting the stop loss on the calls at DJX 91.75

  Jeff Bailey   7/7/2003,  10:29:48 AM
Hanover Compressor (HC) $12.05 +2.99% ... company is natural gas service provider and manufactures/leases natural gas compression units. Stock looks to challenge 52-week high of $12.33 after recent "low pole warning" and double-top buy signal at $12.00. Seeing some option activity in the December $12.5 calls (HCLV) early this morning with 110 contracts traded on 1,075 open interest. Link

I keep hearing about natural gas production shortages and this may be stock that looks to benefit from increase in production activity from service end.

  Linda Piazza   7/7/2003,  10:29:25 AM
Due to the character of the trading, I suspected that volume patterns would be strong but that volume would be light, and both suppositions were correct. As of a few minutes ago, adv/dec ratios stood at 2.9 for the NYSE and 3.1 for the Nasdaq. Up volume was 5.7 times down volume on the NYSE and 8.4 on the Nasdaq. There were only 6 new lows across all the exchanges. Total volume was a dangerously low 196 million on the NYSE and 341 million on the Nasdaq. That's dangerous because a minor buy or sell program can swing the indices widely. Be careful.

  Jim Brown   7/7/2003,  10:23:25 AM
Editors Play - I filled on the Aug-88 DJX puts at the 92.50 trigger for $0.90

  Jonathan Levinson   7/7/2003,  10:19:21 AM
Yields are not really climbing, considering the rally in equities- it looks like the fed's money today is going straight into treasuries so far.

  Linda Piazza   7/7/2003,  10:19:09 AM
An OEX move over 506 will bring the June 17 high of 512.67 into the sights of the OEX bulls.

  Mark Phillips   7/7/2003,  10:18:47 AM
PGR $75.66 (+1.53) Leveraging off of its bull flag breakout of last week, shares of PGR are returning to their pattern of relative strength. The next test of resistance will come just over $76 as the stock tests its mid-June highs. A breakout there will put PGR in blue sky territory, leaving us to watch for round-number resistance at $80.

  Jeff Bailey   7/7/2003,  10:16:56 AM
NASDAQ Composite (COMPX) 1,704 +2.45% .... broad gains among 4 and 5-lettered stocks has COMPX breaking to new highs and out of June consolidation. Link

MACD gives a bullish crossover above Signal today.

  Mark Phillips   7/7/2003,  10:12:58 AM
AGN $80.00 (+1.64) Any doubts about future price direction in AGN after last week's mild swoon are being answered with authority this morning as the stock tries to move above $80 and looks destined for another assault on the $81-82 area. That would be a good point for more conservative traders to harvest some partial gains. We're looking for an eventual move into the $84-85 area as an ideal exit point in the play.

  Jeff Bailey   7/7/2003,  10:10:18 AM
Sector Strength Semiconductor (SOX.X) 382.46 +3.65%, Networking (NWX.X) 190.78 +2.87% and Broker/Dealer (XBD.X) 550 +2.45% lead gains.

Sector Weakness has Oil Service (OSX.X) 89.14 -2.36% and Gold/Silver Index (XAU.X) 78.40 -1.76% only two sectors I show in red.

  Jonathan Levinson   7/7/2003,  10:09:15 AM
Opening put to call ratio .61, neutral and a good sign for the bulls.

  Jonathan Levinson   7/7/2003,  10:08:40 AM
August gold is currently down 3.20 to 348.10. HUI -2.39 to 152.26, XAU -1.39 to 78.42.

  Linda Piazza   7/7/2003,  10:08:01 AM
The difficulty lies in determining ahead of time whether those upside targets are going to be met, isn't it, Jonathan? Lately, though, more upside than downside targets have been met.

  Jonathan Levinson   7/7/2003,  10:06:38 AM
If this inverse h&s you've identified plays out, Linda, it could be good for roughly 30 SPX points above SPX 995 cash.

  Jeff Bailey   7/7/2003,  10:06:11 AM
BMC Software (BMC) $15.55 -5.6% Link lower after warning on Q1 saying it now sees Q1 EPS of $0.01-$0.04, which is below consensus of $0.08 and prior guidance of $0.05-$0.10 on revenues of $305-$312 million (prior guidance of $320-$335 million). Company attributes weaker Q1 results to unanticipated delays in customer purchasing decisions.

  Mark Phillips   7/7/2003,  10:05:33 AM
AMGN $67.69 (+1.31) Now that's something we like to see to start out the week! AMGN finally cracking to new highs for the year and looking strong. Next target to the upside is $70, although if AMGN's recent trading pattern continues, we shouldn't expect it to be a straight-line move. More likely it will be a rather volatile path to get there, meaning we want to continue using the dips for entry, not the breakouts.

  Linda Piazza   7/7/2003,  10:04:05 AM
Formations can be found across different time frames. Moving out from the 15-minute view of the OEX, it's possible to see a different, and perhaps better-formed inverse H&S formation than the 15-minute one I showed earlier. Here it is as seen on the 60-minute chart: Link

  Jeff Bailey   7/7/2003,  10:02:00 AM
FileNet (FILE) $15.51 -9% Link .... stock gaps lower after company lowered guidance saying it now sees Q2 GAAP ESP of $0.01-$0.03 versus consensus of $0.05 and prior guidance of $0.04-$0.06, and revenue of $85 million versus estimate of $90.6 million and previous guidance of $90 million. FILE attributes shortfall in EPS and revenues to delays or deferrals of several large transactions.

  Jonathan Levinson   7/7/2003,  10:01:47 AM
The fed announces a 6.5B overnight repo, which is a net amount with no expiries.

  Linda Piazza   7/7/2003,  9:57:55 AM
Here's something I'm watching on the OEX fifteen-minute chart: Link

  Jim Brown   7/7/2003,  9:55:57 AM
Editors Play - I filled on the Aug-88 DJX puts at the 92.00 trigger for $1.00

  Jeff Bailey   7/7/2003,  9:55:48 AM
Micron Technology (MU) $13.43 +4.83% .... Needham out with bullish comments on DRAM pricing citing recent trend of firming market prices being driven by the emergence of the new high-speed 400MHz DDR interface offering. Needham notes that Micron's (MU) Link earnings are highly leveraged to DRAM market prices, and believes this trend will continue given supplier pressures, continuing migration to faster devices, and DRAM prices on a per megabit basis that will take nearly 2 years at current levels to return to very long term trend line.

  Jonathan Levinson   7/7/2003,  9:52:01 AM
The fed has no expiries today, and so any open market ops announced at 10AM will be net amounts.

  Jonathan Levinson   7/7/2003,  9:49:32 AM
Breadth is bullish with TRIN.NQ at .36 and TICK.NQ at +17, but the volatility indices are too high, QQV +1.66 at 29.24, VXN +.46 and VIX +.43. Volatility should be lower on such a green day.

  Jeff Bailey   7/7/2003,  9:47:15 AM
S&P futures (sp03u) I'm 15-minute delay on futures, but getting upside alert here (994.87) per this weekend's "Ask the Analyst" column and move obviously bullish here. Looks to have recent highs now in play. Same for cash markets.

Cash, SPX.X, WEEKLY/MONTHLY "zone of resitance" just ahead at WEEKLY R1 999.77 and WEEKLY 19.1% retracement of 1,002.27.

  Jeff Bailey   7/7/2003,  9:45:26 AM
UTStarcom (UTSI) $37.99 +3.6% ... Link Awarded contract with China Telecom to deploy more than 200,000 lines of its AN-2000 IB solution in 8 provinces throughout China. This is the third and largest IP-DSLAM contract announcement with China Telecom to date.

  Linda Piazza   7/7/2003,  9:42:55 AM
The first retracement of the morning typically begins sometime around 9:50 ET. Now that the OEX has surged up to the 502.80 historical resistance, OEX bulls ideally want the retracement, if it occurs, to stop between 500.80-501.

  Linda Piazza   7/7/2003,  9:36:56 AM
The OEX first five-minute candle was much larger than normal, so gives us that 50% retracement level to watch. The midpoint of that first five-minute range is 498.49. Bulls want the OEX to sustain numbers above 498.49 in early trading, then, while bears want to drive the OEX below that level and keep it there. That may be difficult in early trading, given the bullish tenor of the Asian and European markets, but I'm trying not to draw too many conclusions too soon.

  Jeff Bailey   7/7/2003,  9:35:03 AM
Beazer Homes (BZH) $83.45 ... not open for traded yet. Company reporting 12% preliminary increase in June quarter home orders.

  Linda Piazza   7/7/2003,  9:34:29 AM
Thursday's OEX 501.16 high is just ahead.

  Jeff Bailey   7/7/2003,  9:30:41 AM
Wendys Intl. (WEN) $29.49 .... revises Q2 and 2003 guidance lower based on new tax rate. Company saying increase in effective corporate tax rate from 36% to 39.25% is additional tax expense of approximately $3.2 million (or $0.03 per share) for second quarter. Company now sees Q2 EPS of $0.53 (consensus $0.56) and 2003 EPS of $1.97-$2.03, versus estimate of $2.02 and prior guidance of $2.02-$2.08.

  Jonathan Levinson   7/7/2003,  9:21:43 AM
Selling in bonds has just jumped, FVX +6.1 bps, TYX +4.5 and TYX +2.1 bps. Futures are back to near their early morning highs, and gold is getting sold, down to 348.80 on the August contract.

  Jeff Bailey   7/7/2003,  9:05:52 AM
09:00 Update posted at this Link

  Linda Piazza   7/7/2003,  9:02:47 AM
Although I reported that the Nikkei closed at a nine-month high, as I had read in a market report, further research shows it was actually late August when the Nikkei last traded at its current levels. On August 28, the Nikkei last traded higher than today's closing high of 9795.16, while it was August 27 when the Nikkei last closed higher.

  Jonathan Levinson   7/7/2003,  8:38:00 AM
Treasuries are seeing modest selling, with FVX up 3 bps, TNX up 1.5 and TYX up 1. Equity futures pulled back slightly, but appear to be headed back up.

  Jeff Bailey   7/7/2003,  8:18:38 AM
Pivot Analysis Matrix posted at this Link

  Jonathan Levinson   7/7/2003,  7:38:59 AM
"Surged" applies to the US Dollar Index and futures, with the USD Index up to 95.23 currently, ES +10 to 992.50, NQ +18.50 to 1247.50. August gold is down 50 cents to 350.80.

  Linda Piazza   7/7/2003,  7:20:05 AM
Good morning. The words "surged" and "soared" are being used to discuss foreign bourses today, but before covering today's action, we ought to look briefly at Friday's. Although our markets were closed Friday for Independence Day, Asian and European markets traded, of course. Friday, the Nikkei opened down 94.23 points at 9530.57. It traded as high as 9637.66, almost 13 point in the green, and as low as 9483.01, 141.79 points in the red, and closed down 77.07 points at 9547.73. Some news reports during the Nikkei's trading day mentioned smoke issuing from Japan's Tsuruga nuclear plant, but the Prime Minister spoke, saying there was no radiation leak, perhaps calming fears.

Most European markets traded flat on Friday. The FTSE 100 traded in a 30-point range, closing near the low of the day, down 3.30 points at 4012.50. The CAC 40 traded in an even narrower 19-point range, closing at the low of the day, down 19.69 points at 3072.40. The DAX traded in a 30-point range, managing a close near the day's high, closing down 2.31 points at 3239.61. On Friday, Germany's May factory orders showed a worse-than-expected drop of 2.2% from April's number, against expectations of no change in the number.

Sentiment appears different today with the Nikkei and many other Asian bourses closing sharply higher. The Nikkei gained 247.43 points or 2.59%, to close at 9795.16, a nine-month high. One sign of recovery is the reentry into the market by individual investors as well as continued net-buying by foreign investors. The gains proved broad. Buried in one news report was the information that a need to conserve energy would prod Honda into closing 16 offices, research centers and factories for two days. With only two of Japan's biggest electricity provider's 17 nuclear reactors operational, some speculate on the possibility of blackouts this summer, just as Japan is beginning to recover.

Although China's Shanghai Composite closed down, many other Asian bourses gained sharply, too. Taiwan's Weighted gained 3.31%, South Korea's Kospi climbed 1.59%, and Singapore's Straits Times gained 2.01%. Hong Kong's Hang Seng gained 2.65%.

The CAC 40 and DAX also currently trade up more than 2%, although the current percentage gain on the FTSE is nearer 1%. Companies that export to the U.S. gained as the dollar improved against the euro in early trading. Some market pundits also pointed to increased M&A activity as proof of increasing optimism by companies, which in turn engenders optimism among investors. In Europe, metal company Alcan made a bid for competitor Pechiney, and articles were rife with rumors about other possible bids and acquisitions. As of this writing, the FTSE 100 is up 40.20 points or 1%, at 4061.70; the CAC 40 is up 75.79 points or 2.47%, at 3148.19; and the DAX is up 72.64 points or 2.24%, at 3312.25.

  Jim Brown   7/7/2003,  2:21:53 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

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