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Begin Part 2 of 3

Support and Resistance

Nasdaq: Closed at 1851.39.
Resistance: 1875, the bottom of the November consolidation, stopped the move higher Thursday and the intraday high Friday. The simple 50 day MVA (1868.77) and then the 200 day MVA (1888.16) is next and what stopped the recent rally attempt. The top of the November consolidation at 1934 to 1941. After that is 1980 (the December gap up point) and some minor resistance at 2000. Then the January top at 2098.88.
Support: 1850 was broken Wednesday, but the index jumped right back over it and it held again Friday. 1840, the early November gap up point, has provided little help. After that, it is pretty sparse down to 1800 to 1775.

S&P 500: Closed at 1148.70.
Resistance: The December high (1173.62) and the January high (1176.97). That point also marks roughly the lows of summer 2001 consolidation that runs up to 1240. Before that point there is some resistance at 1183 from March 2000.
Support: 1150 down to the 200 day MVA (1144.18). After that, 1125 is the hump in the double bottom, and the simple 50 day MVA (1127.95) and exponential 50 day MVA (1136.04) are converging. 1100 has acted as support as well.

Dow: Closed at 10,427.67
Resistance: The top of the June, July, and August 2001 trading range at 10,600 (10,679 intraday high), is still holding it back. 10,800 represents some resistance. That is followed by resistance at 11,000 on its way to the May 2001 high at 11,345.72.
Support: 10,400 held on the close once again, though it was again violated intraday. That is followed by the January high at 10,300. Then the 200 day MVA (9995.19) and 10,000 teaming up together.

Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.

3-25-02
Existing Home Sales, February (10:00): 5.50M versus 6.04M prior.

3-26-02
Durable Orders, February (8:30): 1.0% versus 2.6% prior.
Consumer Confidence, March (10:00): 98.0 versus 94.1 prior.

3-27-02
New Home Sales, February (10:00): 880K versus 823K prior.

3-28-02
Initial Claims, 3/23 (8:30): 375K versus 371K prior.
GDP-Final, Q4 (8:30): 1.4% versus 1.4% prior.
Chain Deflator-Final, Q4 (8:30): -0.2% versus -0.2% prior.
Mich Sentiment-Rev., March (9:45): 95.0 versus 95.0 prior.
Chicago PMI, March (10:00): 54.0 versus 53.1 prior.
Help-Wanted Index, February (10:00): 47 versus 47 prior.
Personal Income, February (8:30): 0.2% versus 0.4% prior.
Personal Spending, February (8:30): 0.4% versus 0.4% prior.

TEAM TRADES

LOOK: As we have been doing for the past few months, we have been trolling for smaller cap stocks in patterns that can give us good moves higher. LOOK is way off of its former high, but it has received a surge of buying over the past two months and formed a beautiful ascending wedge above the 50 day MVA. Its trading range was narrowing as volume fell well below average. The only time it jumped up was on slight up sessions with big volume spikes. Really good signs. Friday LOOK opened flat, but an hour into the session it zoomed up right to the breakout point on a huge volume spike. Then it moved laterally for two hours in a very tight range just below the 2.94 pivot point. Then it made the move and we sent off the alert. We were able to catch the play right over $3. The stock then banged around in a range from $3 to $3.10 for the next two hours before its next leg up carried it over 3.40. Huge volume on the break.

THE PLAYS: Splits are coming now all over the board, with AMAT coming in with a surprising split, along with report plays DRI and DCOM.

BONUS PLAYS: RCII hit the buy point Friday but volume was weak, so we will watch carefully. NEOF dipped back but is still in the pattern.

C (Citigroup--$49.84; +0.24; optionable): Banking
http://biz.yahoo.com/p/c/c.html
STATUS: After failing to hold a move through its long-term down trendline (from August 2000) at the beginning of the year, C dipped back and formed a double bottom. It came back to the trendline and found resistance, forming a handle there and trying to breakout, and although it made it over the trendline (currently 49), it could not push a move and has dipped back again in a new handle. Volume has been nice and low on the dip, and Friday C closed with a doji after having touched 48.82 at its intraday low. Set up nicely and looks good for a move. Target: 57.
BUY POINT: 50.55 on volume of 19 million (Friday 9.94 million; average 13 million). Stop: 47.50.
POSITION: Stock and/or June $47.50 calls to buy (C FW).

CMX (Caremark--$19.09; -0.16; optionable): Health Services
http://biz.yahoo.com/p/c/cmx.html
STATUS: Recently surged to breakout from a cup with handle and a new high, and we caught that move as CMX was featured as a bonus play. On the move CMX bolted up to 19.98 but this week has pulled back to digest some gains. Good price/volume action as the dip back has been on below average volume, and CMX showed a doji Friday over the 10 day MVA (18.99) on steady volume of 1.4 million (average 1.64 million). A nice pullback to set up again, and CMX is well over the last breakout point at 18. Looking for new or additional positions on a bounce and continued move from here, moving the target out to 22.
BUY POINT: Bounce: Over 19.50 on above average volume. Stop: 18.50.
POSITION: Stock and/or June $17.50 calls to buy (CMX FW).

CD (Cendant--$19.85; +0.33; optionable): Business Services
http://biz.yahoo.com/p/c/cd.html
STATUS: CD recently broke out of a double bottom with handle, and is now forming another handle at the level of the left side pattern highs. The breakout surge was on good volume, and the current test of that move in the handle is showing light volume, Friday at 6.18 million (average 7.64 million) as it pushed back up a bit. We are looking for CD to make another surge that will take it over 20 and on a run. The July high is at 21.53. Target: 23.50
BUY POINT: 20.25 on volume of 10 million. Stop: 18.83 (7%).
POSITION: Stock and/or August $17.50 calls to buy (CD HW).

BLC (Belo Corp--$23.57; -0.14; optionable): Newspapers
http://biz.yahoo.com/p/b/blc.html
STATUS: BLC broke out of its rather lengthy trading range at 15-20 in February, surging, consolidating at 22, and then surging again. It has now pulled laterally, making a higher low on its last dip, and holding the 10 day MVA (23.42) on light volume. Friday BLC showed a doji as volume continued to be light at 186,000 (average 299,500). A nice little consolidation pattern and BLC looks to be readying for another surge. Target: 28.
BUY POINT: 24.10 on volume of 400,000. Stop: 22.85
POSITION: Stock and/or July $20 calls to buy (BLC GD).

Quick updates prior bonus plays:
SOV - Another good move!
JDEC - Nice breakout move!
MDR - Great breakout this week
MER - Looking good
SIE - Hit the target and could be ready to test back down
UPS - Could be ready to make another move
PTV - Falling back and protecting positions
IR - Also protecting any remaining positions
CSC - Fell back to the 50 day on heavy volume
OO - Still holding up in a nice little consolidation; looks ready.
FNM - Holding over the 50 day
DCLK - Holding support after the drop
VIA - Possible double top but will see if it can hold
CSL - Pulled back with a doji after the move
ACF - Dipping back but well over support after the low volume move up
UVN - Gave up support at the short-term MVA's, but low volume
BAX - Trying to run to a new high
KCIN - Holding up well
LECO - Topping sign Friday after a steady move up
EAT - Still looks ready to drop some more
SDS - Fall puts it back under the 18 day MVA
DD - Pulled back to test support on its trend run up the short-term MVA's
CUM -Held the 18 day MVA on the drop. Will sell if drops below 18 day MVA by close.
APA - Testing the 18 day as it trends up toward the target

MARKET FAVORITES: AMAT and KLAC gapped up and reversed but are holding their patterns.
1) MCHP - A familiar chip pattern

MCHP (Microchip Tecnology--$42.50; +0.03; optionable): Semiconductor
http://biz.yahoo.com/p/m/mchp.html
STATUS: After bottoming in February at its 200 day MVA (then 33), MCHP surged back to challenge its January highs (intraday high at 43.87). Like some of the other chip stocks we have looked at recently, MCHP has shown good action as it makes its way up along the 10 day MVA (41.77). The stock has formed an ascending wedge over the last few weeks, Friday gapping up and reaching toward the pattern high but pulling back from 43.51 to close. Volume was down at 1.47 million (average 2 million). Looking for MCHP to again hold the 10 day and make a surge back up in a strong Nasdaq. Target: 50.
BUY POINT: 44 on volume of 2.7 million. Stop: 40.92 (7%).
POSITION: Stock and/or July $40 calls to buy (QMT GH).

Updates on recent Market Favorites:
BOBJ - Testing recent highs
ZRAN - Still in the handle
MERQ - Still hanging around the 50 day
MSFT - Put. Dropped back and we will see about possible support at 60
PRGS - Holding in the handle
FLEX - Put. Still holding over the short-term MVA's
NTAP - Tried a move Friday but pulled back from highs in its recent range
LRCX - Holding up but watching after the higher volume move off the high Friday
XLNX - Testing the 50 day MVA
MANU - Also testing the 50 day
BRKS - Gave up the 50 day but on very low volume

PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: No announcements forecast for this week.

NEW PRE-ANNOUNCEMENT PLAYS:

EASI (Engineered Support Systems--$44.82; +1.08; optionable): Forecast to announce a split 5-21-02 at earnings.
http://biz.yahoo.com/p/e/easi.html
BACKGROUND: Last announced a 5:4 split on 2-1-01 with a board meeting. The stock price was $27. The company has sufficient shares for a 3 for 2 split.
STATUS: EASI was on the report last year as it made its run to its high of 58 (last October). It has now corrected and formed a cup, pulling back into a pennant-shaped handle over the last couple of weeks. The recent high before pulling back was 46.90, and it held the 18 day MVA (51.68) on the pullback, moving on nice, low volume (67,700 Friday; average 200,400). Poised for a good move. Target: 54.
BUY POINT: Breakout: 47 on volume of 300,000. Stop: 43.71 (7%). Aggressive: Over 45.72 on volume of 250,000. Stop: 42.52 (7%).
POSITION: Stock and/or August $40 calls to buy (UFE HH).

STI (Suntrusts Banks--$67.06; +0.06; optionable): Forecast to announce a split on 4-15-02 in conjunction with earnings or on 4-16-02 in conjunction with annual shareholder meeting to be held at 9:30 a.m. ET.
http://biz.yahoo.com/p/s/sti.html
BACKGOUND: Last announced a 2:1 split on 2-1-96 at a stock price of $75. The company has sufficient shares for a 2 for 1 split.
STATUS: STI is in a large double bottom dating back to August 2001 (high 72.35). It has made a solid move up from the right side low at 59, taking out the pattern center at 65.50, and now resting after hitting up to its October high. STI pulled back this week, dipping on lower, below average volume. It tapped down near the support of its 18 day MVA (66), Friday moving back up and hitting 67.65 before pulling back, moving on volume of (673,700; average 726,600). Setting up well for a breakout move. Target: 78.
BUY POINT: 68.57 on volume of 1.1 million. Stop: 65.
POSITION: Stock and/or July $65 calls to buy (STI GM - July $65).

PRE-ANNOUNCEMENT BEST PLAYS:
1) MGA - Tight consolidation
2) KRB - Nice pattern and could spring
3) IFIN - Good handle
4) FITB - Testing and looking for a bounce
5) CYN - Still looking to bounce
6) EXPD - Reverse head and shoulders
7) ATK - Still could bounce back in the pattern

MGA (Magna--$72.88; +0.12; optionable): Auto Parts. Forecast to announce a split 5-2-02 with earnings or on 5-9-02 in conjunction with its annual shareholder meeting (time to be determined this week).
http://biz.yahoo.com/p/m/mga.html
STATUS: A seventh consecutive doji. Broke out from a double bottom to start this month, hitting a new high on the run at 74.50. MGA has held up strong, pulling into a pennant and holding the 10 day MVA (72.40). It has now has shown the string of dojis, with volume finally spiking up Friday to 384,200 (average 290,000). Patiently waiting for another move. Target: 83. Good relative strength.
BUY POINT: 74.18 on volume of 390,000. Stop: 70.
POSITION: Stock and/or August $70 calls to buy (MGA HN).

KRB (Mbna Corp--$38.75; +0.48; optionable): Regional Bank. Forecast to announce a split on 4-11-02 in conjunction with earnings. The company will not release the date for earnings, but based upon our research this should be the date.
http://biz.yahoo.com/p/k/krb.html
BACKGROUND: Last announced a 3:2 split on 7-14-98 at a stock price of $40. The announcement was in conjunction with earnings. The annual shareholder meeting was on 4-30-01 at which time no additional shares were authorized. The company has sufficient shares for a 3:2 split.
STATUS: Tried a move Friday but did not have volume. KRB broke from a small double bottom to start this month, solidly breaking the gentle downtrend of 18 months. A nice move that took out its August-January highs near 38, and hit a high of 39.45 before pulling back to test the move. KRB has held its prior highs and 10 day MVA (38.20) on the test, forming something of an ascending wedge and trying to make a move Friday. It hit up to 39.40 but backed off, as volume was down to 2.33 million (average 3.07 million). Watching for a continued move over the recent and all-time high (40.13). Target 46.
BUY POINT: 39.55 on increased volume of 4 million. Stop: 36.36.
POSITION: Stock and/or June $35 calls to buy (KRB FG).

IFIN (Investor's Financial Service--$76.75; +0.55; optionable): Looking at an announcement on 4-16 with earnings or with the 4-23 shareholder meeting.
http://biz.yahoo.com/p/i/ifin.html
BACKGROUND: Last announced a 2:1 split on 5-15-00 with a board meeting. The stock price was $82. The annual shareholder meeting was on 4-17-01 at which time authorized shares were increased.
STATUS: Little change in the pattern. After its nice breakout from a small double bottom, IFIN tested the move and is holding over the prior pattern highs (75-75.50). It has settled into a low volume consolidation over the 10 day MVA (75.97), moving on low volume, which is what we like in a consolidation like this one. Volume was up Friday (today 186,100; average 194,900) as IFIN moved up slightly. Looking for a move up with some power behind it. Target: 87.
BUY POINT: 77.61 on volume of 240,000. Stop: 72.50.
POSITION: Stock and/or July $70 calls to buy (FLQ GN - low open interest).

FITB (Alliant Techsystems--$68.06; +0.01; optionable): Regional bank. Forecast to announce a split on 4-16-02 before the market in conjunction with earnings.
http://biz.yahoo.com/p/f/fitb.html
BACKGROUND: Last announced a 3:2 split on 6-20-00 at a stock price of $61. The annual shareholder meeting was on 3-19-02 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: Is testing its recent move. FITB made a nice run from 61 in recent weeks, and after having some trouble with 68 the stock broke through that level last week. It reached 69.69 but has dipped back, holding onto the former resistance (and 10 day MVA) with a tight doji Friday on light volume (1.07 million; average 1.6 million). Looks good for a bounce, still targeting 76.
BUY POINT: Over 68.76 on above average volume. Stop: 63.95.
POSITION: Stock and/or August $65 calls to buy (FTQ HM).

CYN (City National--$51.45; -0.15; optionable): Regional bank. Forecast to announce a split with earnings 4-16-02 before the open.
http://biz.yahoo.com/p/c/cyn.html
BACKGROUND: Based upon our research it appears that CYN split its stock in 1990 in the $40 range. The company has sufficient shares for a 3 for 2 split.
STATUS: Has climbed steadily up along its 18 day MVA (51.68), and this week dipped back to that level. We were looking for a move off of a high volume doji Thursday, but CYN held its ground just under the 18 day, showing another doji with volume down but still strong at 276,400 (212,500). Still looking for that bounce, but if it cannot, with existing positions we need to be prepared for the stock turning over and visiting the 50 day (50.24). CYN broke from a cup in January, and was in an ascending wedge but never gave a definitive breakout move, instead just steadily moving up with decent price/volume action. Target: With a strong move we could still see 60, but we will look at 58 more seriously.
BUY POINT: Over 52.10 on continued strong volume. Stop: 49.90.
POSITION: Stock and/or August $50 calls to buy (CYN HJ).

EXPD (Expeditors Int--$59.89; -0.14; optionable): Air delivery & freight. Working on a date.
http://biz.yahoo.com/p/e/expd.html
BACKGROUND: Last announced a 2:1 split on 5-6-99 at a stock price of $62.50. The company has sufficient shares for a 2:1 split.
STATUS: EXPD has formed a reverse head & shoulders since the beginning of 2002, having caught support on its most recent drop at the 50 day MVA (57.50), forming the right 'shoulder.' Friday EXPD showed a doji on lighter volume (323,100; average 359,300), holding nicely and still set up to make a breakout move. Target: 70 (watching high from last June at 65.92).
BUY POINT: 61.31 on volume of 550,000. Stop: 57.02 (7%).
POSITION: Stock and/or August $55 calls to buy (URP HK - 10 open interest).

ATK (Alliant Techsystems--$95.12; -0.83; optionable): Aerospace/Defense. Forecast to announce a split on 5-9-02 before the open with earnings.
http://biz.yahoo.com/p/a/atk.html
BACKGROUND: Last announced a 3 for 2 split on 8-8-01 at a stock price of $98. The announcement was made a day after the annual shareholder meeting and in conjunction with earnings. The annual shareholder meeting was on 8-7-01 at which time additional shares were authorized. The company has sufficient shares for a 3:2 split.
STATUS: Dropped Thursday on higher volume, and we were watching for that move to be a possible 'shakeout' of weak holders in the pennant. It gapped down Friday and reached down to 93.25 intraday, but rebounded to close with a 'hammer' doji on higher volume (340,600; average 285,300). A bit more of a drop than we were looking for, but we are watching for a rebound from the doji and will see if the move did the shakeout. Not a buy on an immediate rebound, but looking for a strong move after a bounce back. Target: 110.
BUY POINT: Aggressive: Over 97.50 on volume of 350,000 or better. Stop: 94.50. Breakout: Over 100.25 on volume of 375,000. Stop: 94.
POSITION: Stock and/or May or August $95 calls to buy (ATK ES or ATK HS).

End Part 2 of 3

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