MONEY FLOW SUMMARY FOR OCTOBER 31, 2002
BROAD MARKET INDICIES
Symbol Close Change % Day % 5 days
Dow INDU 8397.03 -30.38 -.36 -.55
Nasdaq COMP 1239.93 3.20 .24 2.40
Nasdaq 100 NDX 989.63 3.54 .35 2.56
S&P 500 SPX 885.80 -4.91 -.55 .37
S&P 100 OEX 451.23 -1.37 -.30 .74
Russell 2K RUT 373.49 -.68 -.18 2.04
Midcap 400 MID 424.63 -.43 -.10 .65
Smallcap 600 SML 193.74 -.19 -.09 .83
Utilities UTIL 198.25 -.61 -.30 4.17
Transports TRAN 2260.07 -17.18 -.75 -2.30
S&P Growth SGX 459.10 -1.55 -.33 .42
S&P Value SVX 423.51 -3.40 -.79 .30
OEX Vol Index VIX 35.91 -.17 -.47 -10.00
NDX Vol Index VXN 52.99 1.70 3.31 -2.91
Commodities CRB 228.91 1.23 .54 .06
10 Year Yield 3.91 -.05 -.13 -.55
Dollar Index 106.58 -.49 -.45 -1.02
INDUSTRY INDICIES (In percentage terms)
INFLOW Symbol % Day % 5 days
Fiber Optic FOP 2.03 7.54
Wireless YLS 1.77 7.83
Airline XAL 1.46 .21
Comp Services GSV 1.06 1.09
Hardware HWI ..91 7.11
OUTFLOW Symbol % Day % 5 days
Hlth Products RXH -6.10 -10.92
Gold HUI -2.79 1.23
Semi SOX -2.03 5.97
Broker XBD -1.59 .07
Consumer CMR -1.18 -.58
INTERNALS NYSE NASDAQ
Advancers 1811 1717
Decliners 1436 1559
Unchanged 172 9
Up Vol (mil) 647 1028
Down Vol (mil) 868 675
Unchanged Vol (Mil ) 24 23
New Highs 34 46
New Lows 41 47
Volume(in Bil) 1.5 1.7
Another very choppy and uninspired
market finished mixed as the blue
chips drifted lower while the
techs managed a flat finish..
In economic news, GDP came in less
than expected the employment cost
index continued to show very
tame inflation, and
the Chicago Purchasing Manger's
report dipped and missed
expectations. The market
reacted will a big yawn.
Tomorrow's employment
report will show whether
or not the recovery is
gaining momentum or still
moving sideways.
In corporate news, Exxon beat
and Chevron missed. EDS beat
( it was reported that they
missed, but they did indeed
beat), and Albertson's
missed dragging down
the grocery group.
So today, Mr. Market really
had no opinion about the news
either way.
The Dow finished lower by 30,
the Nas higher by 3, and the
S&P lower by 4.
Technically, it was a pretty
blase opening for the Dow
leading to it treading water
above and below break even
until it drifted softly
lower. Again the session
was dominated by very choppy
back and forth action as
no-one really has any
conviction as to the
market's next major move.
But again it had difficulty
in the area of 8500. So
the retest appears to have
failed. Now we should see
another test of support
followed by a move higher
and through resistance if
the breakout is going to
stick. Of course, Mr.
Market may decide on a
new and inventive way
of moving higher or
lower. Anything
and everything is
possible.
The S&P also had
difficulty near
the 900 level and
backed off a bit.
But once again,
tight range, choppy
intraday trading
could indicate a
hreak either way
is pending soon.
The techs actually
managed to hold
in the green but
essentially finished flat
for the session. It may
come back down to 1300
before trying to make
a breakout move or
it may just explode
higher. We all
know about how greedy
Mr. Nastie can get
based on the almost
entire week of gapping
action from two weeks
ago. The consolidation
in a tight range continues.
1350 at the high end
and 1300 at the low
end. Also, the NDX
failed at overtaking
1000.
Volatility was mixed.
Internals were mixed with
a slight bearish tone.
Volume increased which
you would think would
be good. Well, maybe.
When markets trade
essentially sideways
with no real price gain
on increasing volume,
that indicates churning
action could indicate
that a down move is
pending. We'll
see.
Tomorrow brings the
unemployment report
and we could get a
strong reaction either
way or the market may
just continue sideways
until the Fed meets
on the 15th. Normally
you will first see a
fake out move or two
before the actual
reaction is realized.
We are definitely sitting
tight on the sidelines
and not trying to gamble
by deciding how the market
is going to react to the
news. We'll let the market
tell us which way, if
any.
SHORT-TERM SUPPORT/RESISTANCE
Support Resistance
DOW 8300 8500
NAS 1300 1350
S&P500 880 900
____________________________________________________
Today's Trading Plays
Please go to: http://www.investorsalley.com/traderstribune/members/philosophy.html
to see our philosophy on trading.
A choppy intraday market like we currently
have does not represent the ideal trading
environment for position swing trading and
position risk is high.
We are going to initiate entry positions
either short or long after waiting the first hour
to trigger the trade entry.
If the price during the first hour trades higher than
our entry for shorts and lower than our entry
for longs and then trades down through the entry
for shorts or up through the entry for longs
the trade set-up is triggered.
If after one hour the price is .05 max below
entry for shorts and above entry for longs,
the trade entry is initiated.
If not, we will not take a position until it does.
If a stock gaps down or up, then the 1st hour
gap rule will be followed.
(see http://www.investorsalley.com/traderstribune/members/gaps.html)
We will, however, exit positions during the first
hour to try and take advantage of sharp
emotional crowd reactions.
ALSO UNTIL FURTHER NOTICE, WE WILL BE MOVING
THE STOCK TO BREAK-EVEN AFTER A 1:1
REWARD/RISK RELATIONSHIP. THEREFORE,
IF WE RISK .85, THEN AS SOON AS THE STOCK
MOVES .85, WE WILL SELL 1/2.
NORMALLY THIS RELATIONSHIP IS 1.5/1
Also effective today, we no longer
initiate any positions in
the last hour. So, we will
not initiate positions in the first and
last hour.
* Alaska Air Group(NYSE:ALK)
Trade Type::Long
Risk Rating: Moderate
Industry: Airline
Current Price $21.64
Entry Price: Long Trigger $21.50 Entry $22.67
Stop Price: $21.99
Target: Long $24.80
Average Daily Volume: 328,651
Yesterday's Volume: 212,900
Reward/Risk 3.13
Trading Strategy:
This is a illiquid stock but
appears to have a strong
technical position.
Along with XAL which has formed
a small consolidation pattern
right below the 50 EMA, ALK
has formed a consolidation
under the 100 SMA.
This appears to be a bull
flag from a prior very
powerful move higher.
We would trade this either
way, but the short interest
is high and the float
is small which means
ripe short squeezing.
* Peoplesoft(AS:PSFT)
Trade Type::Long
Risk Rating: Moderate
Industry: Software
Current Price $18.10
Entry Price: Trigger $18.00 Entry $18.67
Stop Price: $18.10
Target: $20.50
Average Daily Volume: 7,262,990
Yesterday's Volume: 6,549,400
Reward/Risk 3.15
Like many tech stocks, PSFT has moved
sideways from a very strong move higher
over the last two weeks.
If the stock can break out higher than
the next price resistance should be
in the area of $21.00
Looking at volume since the
beginning of October, it
appears that the balance
of power has shifted to the
buyers who are buying with
conviction as witnessed
by the five large
up volume spikes.
__________________________________________________________________________
Update of Current Positions
Key: Sym- Symbol, D- Date, L/S - Long/Short, $Ent- Entry Price,
$Tar- Exit Price Target, #Sh - Number of Shares
S- Stop, O- Open, H- High. L- Low, C- Close
Please go to: http://www.investorsalley.com/traderstribune/members/sellstops.html
to see our philosophy on the placement of sell/buy stops.
In effort to do a more efficient job of letting profits run,
we will hold a stock for as long as we feel that the reward
justifies the risk in holding the position over night.
Our goal is 1 to 7 days, but if a position still looks
good after 7 days, we may continue to hold it.
Sym D L/S $Ent $Tar #Sh S O H L C
___________________________________________________________________________
ADRX 10/31 L $14.45
Stock gapped lower and then put in massive gap and trap as
the shorts were sent scrambling for cover.
Stock exploded higher to the tune of over 16%
at it's high. We sold and locked in 8% as
we have no idea if the broad market
is going to move higher or lower in
it's tight trading range.
We sold the entire position at $15.75 for a profit
of 9.01%
That is the whole reason behind using triggers.
.
Sym D L/S $Ent $Tar #Sh S O H L C
___________________________________________________________________________
TXN 10/30 L $15.98
We entered this yesterday but did not document.
Anyway, we got stopped out at $15.50 for a loss of (3.10%)
_________________________________________________________________________
FISHING HOLE
Please note:
The watch list contains picks that we like but were early on the timing,
Therefore, no trade has been made yet. Although, they are not
specific trade recommendations, given the right set-up, we would
consider trade entry. This does not. however, mean that we
will initiate each and every watch position at the specified
prices. Many entry prices will change based on chart
conditions.
If a decision is made to enter, either long or short,
an intraday e-mail will notify you.
The nature of these picks might entail a smaller holding period than
the recommendations and therefore should only be traded by those
who are actively available to manage positions.
If we are looking for a price lower than the current price,
remember, price must first cross down through that price
for the set-up and then trade up through the entry price
to initiate the position.
If we are looking for a higher price than current, then price
must first trade above that price for the set-up and then
trade back down through it for the entry.
Depending on price strength, we are
going to buy strength on some and weakness on others
FISH FINDER
LONG POSITIONS
RIMM Trigger $12.40 Entry $13.05
HI Trigger $23.50 Entry $24.36
BMET Trigger $29.10 Entry $30.69
RIG Trigger $21.80 Entry $22.72
LONG OR SHORT POSITIONS
SHORT POSITIONS
TDW Trigger $28.50 Entry $27.50
SPLS Trigger $15.60 Entry $15.10
RTN Trigger $29.70 Entry $29.08
___________________________________________________________________________
Trading Tips
The act of making mistakes is one of
the most valuable tools to achieving
trading success. Unfortunately we
tend to repeat behavior until we
receive so much pain that we
can't take it anymore and go
about changing that exact behavior.
Last weekend, I was talking to a friend
and he said to me that he thinks LU
is a bargain under $2 because it
can't go any lower. Well, I said,
I don't have a crystal ball, but
what I can tell you is that there
is more risk in LU at $2, then
at $5 or $10.
Now he gave me a puzzled look and
said how can that be? It's the
same stock. If the same stock
is priced at $2, I can buy
a whole lot more and therefore
receive a lot more reward.
When we talk about belief system,
this is exactly what we are talking
about.
When I first started out, you could catch me
in the chat rooms talking up why a stock
was going to go higher ( since I didn't
know how to short) and throwing barbs
at the people arguing their bearish
position.
One of my fondest trades was trading
Metrocall or MCLL. This was a wireless
company that was going to change the
world with a voice application. So
I spent my days in the chat room
with other suckers arguing why
MCLL was a good bet at $5, Every
day we would talk about all the
great things MCLL was doing
Well I'm sure you can guess the outcome
as MCLL traded down to .50. $5000 gone
just like that. But it get's better
as I then thought that MCLL was a great
buy at .50. It couldn't possibly
go lower, could it?
So I plunged in again, this time
with 10,000 shares and sure enough
I was lucky only to lose 80%
this time. Two trades, $9000
vanished into thin air.
But wait you're probably saying you
can't compare LU with MCLL. LU is
a bellwether that will never go
under.
I'm going to let you in on a little
secret. When the market prices a stock
under $5, it is placing strong odds against
the company surviving. regardless of
what company it is. The market
may get some right, and get some wrong, but
since the market is always right, price
is what it is. You don't argue with
Mr. Market.
Can Lucent survive and provide my
friend with a nice return? Absolutely.
Consider at $2, all he needs is .50 to
make 25%, not bad, eh. Unfortunately,
too many traders think like my
friend.
Price is what it is.
So I then asked him, If I could guarantee
a 50% chance at $100 or a 10% chance
at $100, what would you take?
He thought about it for a second.
That's what making a bet on LU at $2
is.
Now if LU can climb a bit higher, say
to $6, the market is saying that
the odds of survival are much
better and thus the risk of
making a bet of survival is lower than it
would have been at $2. Maybe
the odds are now 75%.
Would you rather have a 10% chance
or a 75% chance of making $100?
____________________________________________________________________________
After Hours
The QMI is higher
___________________________________________________________________________
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