By L3_Aka_L3 on Wednesday, April 11, 2001 - 01:28 pm: Edit
I have a couple minutes home to post so I will post what I am seeing.
I have little faith in this rally due to fundamentals but as Don said, I spotted an inverse H&S developing this morning. A fib retrace of the gains thus far would finish out the right shoulder and the completed pattern if it does in fact complete would measure to my yellow 2200 NDX resistance line. This coupled with the weekly buy signals is a hint that this rally could last longer than the bears expect. I do still think it is a bear rally though and the 2200 NDX will not be breached. If we do get that high, it will be time to short in size.
There is also a potential bullish play that allows for a retest of the lows via the three gap play. Those gaps would have to be closed in the next few sessions and then a powerful rally would follow. However I feel if we dropped that low that fast, we would likely just continue down and make new lows so I am not real condusive to this possibility but we do have to keep it in mind just in case.
Since the H&S is a possibility, I am about to sell calls against my longs just in case all teh news tonight and tomorrow AM is bad. It won't protect me all the way but it will buy me some time to get out.
Good Luck,
Lee
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By L3_Aka_L3 on Wednesday, April 11, 2001 - 07:11 pm: Edit
NTAP warned and will only earn 1-3 cents versus the 10 expected. Down 2 in after hours. Darn, it had a nice 5 waves down too.
CREE misses and YHOO earns a penny but the street was just hoping for even. They are also laying off 400 of their 1500 employees and will begin having their own porn to boost sales. No I am not making this up.
RIMM met earnings and is up after hours. coke ( or Pepsi, forgot which) bottling did well also.
Thus far, not much reaction in after market. GLOBEX triggers are neutral and NDX futures are up slightly. Of course it all boils down to tomorrow.
We have PPI, Retail sales, Michigan sentiment, JNPR and GE earnings. If we survive tomorrow, we might actually have a decent week or two.
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FED TALK: The Fed Fund futures market has priced out virtually any chance of an intermeeting rate cut. The April contract is trading at a rate of 4.98%, indicating the market sees little or no chance the effective Fed Funds rate will average less than the current 5% target this month. And the May contract is now trading at 4.76%, above the 4.74% rate that is implied by a 50 basis point rate cut at the May 15 meeting. In other words, the market has gone from pricing in some chance of an intermeeting rate cut (and 75 bps in cuts by the May 15 meeting), to pricing in some small possibility that the Fed only goes 25 basis points at the May 15 meeting. The July contract has gone from pricing in a 4.18% rate at Monday's close (or 100% probability of 75 basis points in easing between now and the June 26/27 meeting) to pricing in a 4.40% rate currently. That level indicates the market continues to expect at least 50 basis points of easing between now and the June meeting but are no longer convinced of the likelihood of 75 bps in easing.
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I have seen a lot of talk about selling to pay taxes etc but no mention of people rushing to get their IRA money in before the 16 April deadline. This may prove to be a source of the bounce just as much as the other silly reasons we have all been reading. If so, I would expect this up wave to mellow out some by Tuesday. Just a thought.
I sold Sept QQQ calls short this afternoon to hedge my longs. I will close those out if the premarket news is bad and exit all my other positions as well. If the news is good, I may hold onto the short and just close it out later down the road since I think we will dip eventually and doubt we will get to my strike. Either way I will be scaling back my longs since I think we are nearing the short term top.
Why couldn't NTAP have waited until next week to warn. I am also short calls on them but don't want to pay the broker fees to close them out since they will expire next week worthless anyway. Problem is I have longer term offsetting longs hedged against them. Timing timing timing. -gggg-
Getting ready to run the charts now.
Good Luck,
Lee
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Weekly charts look great, wave shape looks OK but we have a sell signal on our indicator and my high low charts are still saying get out. The DOW dropped in the ones I expected as posted last night. The ignoring of bad news in tech land thus far though has to be reason for pause against shorting the techs too early. With the way the tech charts are looking, the inverted H&S could still pan out and shoot us up to 2200 before the wave 5 down kicks in. Believe me, I am in no way fundamentally bullish here but the charts are hinting at a decent run up before reality sets back in.
The premarket news tomorrow will decide things short term but regardless I am taking profits in some stuff and will look to re-enter after the smoke clears and we retrace some of this run. If the news is bad, then I might add a few shorts but they will be nervously held ones. -ggg-
Good Luck,
Lee |
