Misinformation Season Begins
The
indexes pushed yesterday after an afternoon rally. The
early down led to sideways action until about 1:00 p.m. when the up move
started. The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) ended -0.2%, while the NDX 100
(
$NDX.X |
Quote |
Chart |
News |
PowerRating)
finished -1.1%. NYSE volume dropped off to just over one billion, less than its
average volume, a volume ratio neutral at 44, and breadth about even at -63.
The SOX
(
$SOX.X |
Quote |
Chart |
News |
PowerRating)
dropped 4.6%, which still leaves it +6.7% for the past five days. The trading
volume is excellent in the semis, as the last five days have gone -5.9%, +6.7%,
+10.7%, -0.2%, and -4.6% yesterday. There have been opportunities galore on an
intraday basis. The
(
SMH |
Quote |
Chart |
News |
PowerRating)s traded down to the gap yesterday with an intraday
low of 35.24, closing at 36.09. Based on yesterday’s range, they have upside
space above 36.33, as you can see on your five-minute chart. The
(
$OSX.X |
Quote |
Chart |
News |
PowerRating) dropped 3.1%, but nothing of major significance happened in the
other sectors.
The SPX has been churning
around the April low of 1081, closing yesterday at 1090. It is bumping up
against the .618 level at 1094 and the 50-day EMA of 1101. Clearing that zone
can carry it to the .786 level at 1135. The NDX has also been bumping around its
April low of 1349, closing yesterday at 1379 in a very narrow-range day. The
.618 level is 1406, which equates to 35.05 on the
(
QQQ |
Quote |
Chart |
News |
PowerRating)s, and the 50-day EMA
is 1393. The .786 level is up at 1492.
The markets acted well in
light of the news with an extended rally and are saying they might like to
retrace from a higher level. The timing of the recent futures rallies relative
to negative news makes me very skeptical of some of the price action. This is a
rally in a bear market that hasn’t even broken the nearest down trendline, so
position powder should be kept dry until a retracement move develops which will
lay the groundwork for a better decision on any longer-term allocations.
The covered combos I
mentioned previously in
(
CSCO |
Quote |
Chart |
News |
PowerRating) and
(
AMD |
Quote |
Chart |
News |
PowerRating) are doing great, and the next
one is
(
EMC |
Quote |
Chart |
News |
PowerRating) vs. the 17 1/2 2003 LEAP calls and 2003 10 puts. At 12.95 on
the stock yesterday, it picked up 4.80 in premium. If called away, the return
was about 115%. It stays the same, +37%. The worst case is you own it at 9.07
based on premium taken in and having stock put to you at 10. The worst case
means you bought EMC at a 30% discount from 12.95 yesterday. Options strategies
like this are for experienced options students done through a professional
options broker. I point this out as a real-time educational example to make you
aware that there are many different ways to take a position.
The same decision was
made with CSCO and AMD, which was that there will be another semis cycle and
CSCO will survive. Neither company has a debt problem. Technical analysis was a
minimal part of the decision. Because of the sudden movement in AMD, the
position showed a net plus gain of 18% in less than 10 days. I suggest you read
the book by Harrison Roth titled “LEAPS.” I also recommend you look
for the news on the outstanding option education package that will be coming
soon at TradingMarkets. It will be a must do for most of you.
Stocks
Today
Daily chart setups on the
long side are
(
STJ |
Quote |
Chart |
News |
PowerRating),
(
CAH |
Quote |
Chart |
News |
PowerRating),
(
WLP |
Quote |
Chart |
News |
PowerRating),
(
JNJ |
Quote |
Chart |
News |
PowerRating),
(
FRX |
Quote |
Chart |
News |
PowerRating),
(
BDX |
Quote |
Chart |
News |
PowerRating),
(
GDT |
Quote |
Chart |
News |
PowerRating),
(
UNH |
Quote |
Chart |
News |
PowerRating),
(
CELG |
Quote |
Chart |
News |
PowerRating),
(
AMGN |
Quote |
Chart |
News |
PowerRating),
(
ENZN |
Quote |
Chart |
News |
PowerRating). Also,
(
NOC |
Quote |
Chart |
News |
PowerRating) and
(
GD |
Quote |
Chart |
News |
PowerRating). In the retails,
(
TJX |
Quote |
Chart |
News |
PowerRating) and
(
LOW |
Quote |
Chart |
News |
PowerRating).
In the semis, you’ve got
to stay involved. Focus on
(
NVDA |
Quote |
Chart |
News |
PowerRating),
(
BRCM |
Quote |
Chart |
News |
PowerRating),
(
KLAC |
Quote |
Chart |
News |
PowerRating),
(
QLGC |
Quote |
Chart |
News |
PowerRating),
which is bumping up right at the 100-day EMA,
(
ADI |
Quote |
Chart |
News |
PowerRating),
(
MXIM |
Quote |
Chart |
News |
PowerRating) and
(
MU |
Quote |
Chart |
News |
PowerRating). There’s plenty of volume, and also, if you want to stay in the HLDRs,
the SMHs are trading very well. Â
Have a good trading day.
Five-minute chart of
Monday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Monday’s NYSE TICKS
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