Mergers, Movies, Military Moves
Markets look to open higher, as a combination of factors is creating additional enthusiasm for equities. The $15.2B Phillips-Conoco merger is moving oils higher, as lower crude prices may force additional consolidation. Domestically, "Harry Potter" smashed all manners of box office records, boding well for the entertainment industry. Lastly, the news from Afghanastan continues to be encouraging, as word leaks of the Taliban request for a UN supervised surrender of Kunduz. The offer came after U.S. Aircraft targeted the area with intensive bombing runs over the weekend.

  Expect light Volume for the week -- the Markets are closed Thursday for Thanksgiving, and Wednesday -- the busiest travel day of the year -- might as well be a half day. On Friday the busiest shopping day of the year -- the markets close at 1 pm.

Closing Summary

Index	Last	Change	% Change
Dow Jones Industrial Avg.	9867	-5.40	-0.05%
S&P 500	1138.65	-3.59	-0.31%
Nasdaq Comp	1898.5	-2	0.11%
Russell 2000 Index	451.31	1.92	0.43%

Industrial production drops
Industrial production plunged 1.1%in October, marking the longest string of declines in manufacturing activity since the Depression. Separately, consumer prices fell 0.3% amid a sharp drop in energy prices.

Tokyo stocks gain for third day
Bullish techs, banks boost Nikkei by 1.5%
Tokyo stocks gained for a third straight day Friday as a softer yen added fuel to the tech sector, which is also getting a boost from hopes for a quicker-than-expected recovery in the U.S.

The Nikkei Average ended 159.20 points higher, or 1.5 percent, to 10,649.09 after surging over 3 percent earlier. The key index has gained 4.2 percent this week. The broader TOPIX index shook off earlier weakness to close up 0.8 percent at 1,053.03.

Japanese investors are placing buy orders -- they don't want to be short when Wall Street rallies.

- P, COC
Phillips Petroleum will pay $15.2 billion in stock shares for Conoco Inc., offering no premium, to cut costs and become the No. 1 U.S. refiner amid sliding oil prices, the companies said Sunday. The combination of the second-tier oil companies will form the No. 6 integrated oil company in the world and No. 3 in the United States. Together they will have a market value of about $35 billion, and own about 19,000 gas stations around the world.

- AOL
'Harry Potter' Smashes Industry Records; According to studio estimates issued on Sunday, the film grossed $93.5 million in the United States and Canada in its first three days of release. It surpassed the three-day record of $72.1 million set four years ago by Steven Spielberg's ``The Lost World: Jurassic Park.''

- GX, GS
Global Crossing to sell IPC Trading to Goldman Sachs Capital Partners 2000 for $360 mln in cash as GX seeks to shore up its cash position amid declining revenues.

- TOY, LOW
Toys R Us and Lows Corp report 3Q earnings today; Target Corporation (TGT) reports tomorrow.

Volume contracted to below-average on Friday, the Advancing/Declining (A/D) ratios were flat for both Issues and Volume. The market was held in check by the dynamic tension exerted by Options Expiration, as well as by the proximity of overhead resistance on all the major averages.

Of note: Late in the summer the 20-day moving average for volume on the NYSE dropped to about a billion shares per day. Following September 11, as the market fell to its lows, volume picked up markedly, pulling the 20-dma for volume upward. Subsequently, as the market has rallied, the 20-dma for volume has retraced about half its prior rise. Results are the same for the COMP, only the pullback in volume has been smaller. The September 21 low has the look of a washout or climactic bottom on a volume basis. However the declining volume on the subsequent rally (and the absence of a really climactic day in which the A/D Volume ratios were 10/1 or better) still suggests that there's some technical work to be done at lower levels before we can all put on our "bull horns" again.

Market Stats

Market	NYSE	Nasdaq
Total Volume	1347.39m	1696.38m
Up Volume	728.41m	874.52m
Down Volume	586.17m	791.85m
Advancers	1681	1955
Decliners	1429	1636
New Highs	61	60
New Lows	20	32

JDSU : The move last week breaks the long term down trend, as it broke out over $10; Buy 1/3 here, then use a pullback to add to the position. Use a stop of $9.50

TJX : Retail issue TJX graces our bull list after achieving a new all-time high in Thursday's trading.  This high was significant, with the shares climbing through their 1999 and August 2001 highs.  After scanning wire stories on Dow Jones and Reuters, there was no significant news to account for this increase of nearly four percent.  From a sentiment perspective, we like TJX's upside.  The current put/call open interest ratio stands at 0.45 (in the 70th percentile).  According to data from Schaeffer's Daily Sentiment, the equity has historically excelled following such signals.  More specifically, the stock has rallied 11 percent after such a high put/call open interest ratio 20 days following the signal (six total times in the past).  This is well above the stock's average return of 1.23 percent over any 20-day period.  Finally, TJX's short interest is a healthy 9.8 million shares short.  This puts the equity's short interest ratio at five. (SOURCE: www.SchaeffersResearch.com )

Technimentals (Kevin Lane)
Long: HTCH, ITEL,
Short: AEP, TUP

Things That Warrant Attention On The Charts

Consider the 40-day Rate of Change (ROC (40,%)), which measures the current close as a percentage of the lowest close over the past 40 days. We were surprised by what we found when we looked back over history. In virtually all cases subsequent to the depression of the 1930s a market that has this positive a Rate of Change over 40 days almost NEVER leads to another bear market leg. (In this case the Dow's reading is at 20% for the 40-day ROC. The other indices also show extremely high readings on their charts. E.g., SPX has an 18% reading, which level has been reached only seven times since 1962.) Often there are consolidations as overbought indicators cool down, but there is a high correlation between these readings on the ROC (40,%) and the ends of bear markets.

CAVEAT: The May high gave us a very strong reading, and it looked like the market was headed for a retest of the April lows in early September. That would have been fully consistent with prior high readings on the ROC (40,%) indicator. This indicator did not forecast the September breakdown, as the 9/11 events could not be predicted in the charts. (Source: bullmarket.com)

"I would go long on the Tuesday before Thanksgiving and exit sometime the following Monday." 

Yale Hirsch, STOCK TRADERS ALMANAC, in an article titled:
"Thanksgiving Market - No Turkey! - Sure Way to Win the Turkey Shoot"

I-Bond competitively priced

Meet the I-Bond, a savings bond from the Treasury Department that offsets the eroding effects of inflation. No matter what happens economically, you won't lose a dime on the investment. Such an offer may appeal to the many investors who got burned during the recent market downturn.

But security often comes with a price. In this case, the I-Bond's minimal risk is not likely to turn into large gains. As of Nov. 1, the bond has been paying 4.4%, which beats the current average money market savings account rate of 2.44% but falls slightly short of the 5.4% gain in the S&P 500 during the same period.

Source: TheStreet.com. See below for excerpt

The Name's Bond. I-Bond
By Eric Gillin

EXCERPT: Here's How It Works
The I-Bond's security resides in its double rate system. The bond earns money by combining two separate rates: a fixed rate and an inflation rate. The fixed rate, set by the Treasury Department each May and November, is locked in when a bond is purchased and continues for the life of the bond, which can last up to 30 years. The fluctuating inflation rate is updated semiannually, in line with changes in the consumer price index. The composite rate -- what the bond earns overall -- equals the inflation rate plus the fixed rate.

--Barry Ritholtz
November 19, 2001

If you would like a free subscription to my bi-weekly market comments, please send an email to email to Ritholtz@aol.com, including the word "SUBSCRIBE" in the subject matter line. Previous market comments are archived here.

Copyright © 2001 Barry L. Ritholtz, All Rights Reserved worldwide. May not be copied, stored or redistributed without prior, written permission. Home

---