us stock market, trade stock

Begin Part 2 of 3

THIS WEEK

The ISM (national purchasing manager's sentiment report) comes out Monday; expectations are still for a slight drop from last month, but if the Chicago PMI proves to be the national barometer it is cracked up to be we could see the national level surpass expectations. That might truly be a piece of news that pushes some of the fund managers back form vacation to put more of that money to work. ISM services is out Wednesday and then the unemployment report Friday.

Economic reports were beating expectations, backed off a bit during the last two weeks of March, and then started surpassing expectations once again last week. Again, maybe that will spur fund managers to buy. What we can say is that the Dow and S&P have made nice breakouts and have consolidated those gains while holding the breakouts. They have dipped further than we wanted on the consolidation, but there has been no share dumping. Many stocks remain in solid patterns. As noted, even some of the semiconductor stocks are showing decent patterns and could help lead higher.

This week we will see where the volume takes stocks. We positioned ourselves in several stocks that are leading and made good moves heading into this week. The overall good price/volume action gave us the confidence to move into the positions ahead of the return of more fund managers and more definitive action. We continue to treat the market as one where we are very pleased with a 20% gain on our stock positions. Until it can clear some of that overhead supply each good move can be thrust back at us. For now we will take the gain.

Support and Resistance

Nasdaq: Closed at 1845.35.
Resistance: 1850 held the index back Thursday on the close. Intraday, the simple 50 day MVA (1853.71) turned the tide. After that, 1875, the bottom of the November consolidation stopped the attempt before that. The 200 day MVA (1880.92) is right behind that. 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: 1800 held more or less twice late last week. Clearer support is 1775, the October high. Then the early November gap up at 1768 and 1745, where it launched from on that gap.

S&P 500: Closed at 1147.39.
Resistance: 1150 (prior tops and bottoms) held on the close Thursday. After that is the December high (1173.62) and the January high (1176.97) will be the real key. Those points also mark 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: The 200 day MVA (1141.58) held Thursday. The simple 50 day MVA (1127.46) and then 1125 (former price consolidations and the 'hump' in the brief November double bottom). 1100 has acted as support as well.

Dow: Closed at 10,403.94
Resistance: 10,400 still has not been cleared totally. 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 is possible, but not totally cleared. The January intraday high at 10,300 and the closing high at 10,259.74. Then 10,000 followed up by the 200 day MVA (9981.03).

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

4-1-02
Auto Sales, March (8:30): 5.6M versus 5.6M prior.
Truck Sales, March (8:30): 7.5M versus 7.6M prior.
ISM Index, March (10:00): 54.3 versus 54.7 prior.
Construction Spending, February (10:00): 0.8% versus 1.5% prior.

4-2-02
Factory Orders, February (10:00): 0.5% versus 1.2% prior.

4-3-02
ISM Services, March (10:00): 57.0 versus 58.7 prior.

4-4-02
Initial Claims, 3/30 (8:30): 394K versus 394K prior

4-5-02
Nonform payrolls, March (8:30): 23K versus 66K prior.
Unemployment Rate, March (8:30): 5.6% versus 5.5% prior.
Hourly earnings, March (8:30): 0.2% versus 0.1% prior.
Average Workweek, March (8:30): 34.2 versus 34.1 prior.
Consumer Credit, February (3:00): $8.5B versus $12.8B prior.

TEAM TRADES

Many good stocks from many sectors were on the move Friday. We wanted to accumulate some more positions ahead of next week. We were not concentrating on sectors, but on the good patterns. Some we got into worked well (ACDO, CSTR, CHK), but others had good moves up only to come back on us. Even those are still in good shape for next week.

WLP: A 50 day MVA bounce underway, we wanted to catch this stock on the move for a nice quick pop. It gapped over our entry point of 63.60, but we just waited, knowing that stocks often do that and then come back to test the move. Sure enough it pulled back to 63.80, but bounced up to 64. All of this in the first half hour, and as usual, we were inclined just to let the early players set the price. Don't want to be the guinea pig in most cases as the specialists and first traders work to set the market price. Well, over the next 20 minutes it worked its way back to 63.80 again, and we saw it was going to hold. It started to bounce again, so we issued the alert and then moved in with July $60 strike calls. We did not try to split the spread; volatility has been low on options and the spreads have been narrow. We have missed some trades trying to shave 5 cents or so. If we believe in the trade we don't worry too much about a few cents. Anyway, the stock then ran up to 64.20 over the next 45 minutes or so and was looking good. It hit the wall there, however, and fell to 62.90 over the next 2.5 hours. It held at 63, right above the tops of mid March, and rallied to the close, finishing about 63.70. Back to flat with a loose doji.

THE PLAYS:

BONUS PLAYS: CF and AOG are still set up on support, while KSS pulled back a bit but still looks good. CECO is still holding up after the breakout. Other good patterns that could move again - JCEC, MDR, TXT, ISLE and UPS.

SCHL (Scholastic Corp--$54.19; -0.16; optionable): Publishing
http://biz.yahoo.com/p/s/schl.html
STATUS: An old favorite of the Stock Split Report that has shown us many fine plays in the past, SCHL looks ready again. After breaking to a new high with a run in December, SCHL pulled into flat base in January-February and then broke out of that this month. The stock hit a new high of 55.10 last week, but has pulled laterally in a flag. Volume has been generally low, although we got an infusion Wednesday on a slight move up, but it was way down again going into the holiday at 90,500 today (average 234,400), as SCHL showed a doji. Setting up for another move. Nice money flow and relative strength. Target: 61.
BUY POINT: 55.15 on volume of 315,000. Stop: 51.29 (7%).
POSITION: Stock and/or June $50 calls to buy (USC FJ).

SBUX (Starbucks--$23.13; -0.34; optionable): Eateries
http://biz.yahoo.com/p/s/sbux.html
STATUS: Another old friend of the report. Broke out from a reverse head & shoulders in January, and after a bit volatility it has settled into something of an ascending wedge after a test of the 50 day MVA in February. The stock has made a series of higher lows, today dipping just below the 18 day MVA (23.27), which the stock has done on the last couple of trips back to that level. Volume has been generally low since the strong move up from the 50 day in late March. Looking for SBUX to hold 23 and then make a run back up to breakout. The recent high is 24.53 on an intraday spike. Good relative strength. Target: 28.25.
BUY POINT: Breakout: 24.17 on volume of 4.5 million. Stop: 22.48 (7%).
POSITION: Stock and/or July $22.50 calls to buy (SQX GX).

HDWR (Headwaters Inc--$15.30; +0.30; optionable): Metals & mining
http://biz.yahoo.com/p/h/hdwr.html
STATUS: HDWR broke out from its January-February range a couple of weeks ago, continuing to move up in the right side of its base dating back to June 2001 (all-time high 16). The latest run hit up to 15.55, and from there HDWR has dropped back on light volume. Very nice action in the handle, with a low volume, gradual pullback toward support. Today the stock came to life, tapping down below its 18 day MVA (14.48), but rebounding nicely on strong volume (way up to 480,900; average 258,500). Looking for a breakout and run to a new high, with a target of 19. Very strong money flow and buying, and excellent relative strength.
BUY POINT: 15.65 on continued strong volume (minimum 390,000). Stop: 14.55 (7%).
POSITION: Stock and/or August $12.50 or $15 calls to buy (HQK HV - 65 open interest, or HQK HC - over 1000 open interest).

Quick updates prior bonus plays:
JDEC - Good move and still a good pattern - could give us another buy point here
MDR - Testing support and holding - could bounce
TXT - Ascending wedge
ISLE - Ditto
UPS - Still a nice pattern
MKSI - Broke out but suspicious volume
MDR - Looking good on the test
TBCC - Holding the 18 day MVA
C - Tried to move but came back on light volume
CMX, BLC and CD are all holding support as we await a move
MER - Could bounce
OO - Nice test

MARKET FAVORITES: MANU made a strong move as expected, and we will see if the momentum can continue as it approaches recent highs. ZRAN is deciding whether to hold up or test back. MCHP and KLAC have held support at their 18 day MVA's.
1) CYMI - Ready to move again

CYMI (Cymer--$49.66; +1.95; optionable): Semiconductor Equipment
http://biz.yahoo.com/p/c/cymi.html
STATUS: CYMI has really been moving nicely up along its short-term MVA's (18 day & 10 day at 46.86 and 47.29). Price/volume action has been excellent, and the stock has recently pulled into another handle consolidation (to a large cup dating back to June 2000). CYMI has been showing some stair-step action, and the pullback this time is holding support and moving gently back on low volume. Today CYMI sprung to life, moving up on sharply higher volume of 1.51 million (average 1.17 million). Looking for a breakout. Excellent money flow and relative strength. Target: 60.
BUY POINT: 50.90 on volume of 1.75 million. Stop: 47.34 (7%).
BUY POINT: Stock and/or August $45 calls to buy (CQG HI).

Updates on recent Market Favorites:
BOBJ - Moving up toward recent highs - no volume but will see if kicks in after holiday
MERQ - Holding the 50 day
MSFT - Put. Still weak at the 10 day MVA
FLEX - Put. Testing the 50 day on weak volume
LRCX - Nice move up from the 18 day!

PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: No announcements forecast for this week, but we have quite a few on the agenda in the weeks following.

NEW PRE-ANNOUNCEMENT PLAY:

PNRA (Panera Bread--$63.71; +0.88; optionable): Working on a date.
http://biz.yahoo.com/p/p/pnra.html
BACKGROUND: Based upon our research it does not appear that PNRA has ever split its stock. The annual shareholder meeting was on 6-12-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: Due for a split after a nice, steady rise over the course of the last couple of years. PNRA recently hit a high of 66.94 but retreated back, giving up the 50 day MVA for a time (dipping under 50 at its low) but fighting back in recent weeks to form a cup with handle. Last week PNRA hit 66.13 but started to pull back into the handle, which has held support at the 10 day MVA (62.48), moving nicely on light volume. Today it moved up a bit on higher volume (361,700; average 381,300). Looking good and looking for a breakout. Target: 76.
BUY POINT: Breakout: 66.23 on volume of 570,000. Stop: 62. Aggressive: Over 65 on volume of 450,000. Stop: 62.
POSITION: Stock and/or August $60 calls to buy (UPA HL).

PRE-ANNOUNCEMENT BEST PLAYS:
1) ACDO - Breakout!
2) CYN - Looking to breakout
3) KRB - Ditto
4) EXPD - Tried to breakout
5) IFIN - Still in its consolidation
6) FITB - Still wanting a bounce
7) MGA - Good rebound

ACDO (Accredo Health--$57.27; +1.37; optionable): Forecast to announce a split with earnings on 4-29-02.
http://biz.yahoo.com/p/a/acdo.html
BACKGROUND: Last announced a 3:2 split on 1-29-01 in conjunction with earnings. The stock price was $45. The annual shareholder meeting was on 11-16-01 at which time no additional shares were authorized. The company has sufficient shares for a 3:2 split.
STATUS: After the big move up Wednesday we were looking for the breakout today, and it happened. Volume picked way up to 1.89 million (average 714,800) as ACDO made a new high at 57.89. Still a buy up to 59, and targeting 64.
BUY POINT: Still a buy up to 59, with continued strong volume. Stop: 53.50-54.87. POSITION: We can add on to stock positions here; for new positions, August $50 calls to buy (DZU HJ - under 100 open interest).

CYN (City National--$52.61; -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 3:2 split.
STATUS: What started as a relatively weak bounce from the 50 day MVA (50.49) Tuesday turned into a very strong move Wednesday, and once again CYN is challenging its highs. It gapped up to hit 53 today (high is 53.18), but slowed down and retreated a bit as volume dropped way back to 181,800 (average 226,300). Good action, and it could contemplate the high a bit before making a run over it. We will watch for that move, targeting 60.
BUY POINT: 53.28 on volume of 300,000. Stop: 50
POSITION: Stock and/or August $50 calls to buy (CYN HJ - under 100 open interest).

KRB (Mbna Corp--$38.57; -0.33; 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: KRB is in a nice consolidation, holding after making a move over its long-term down trendline (now at 36) and past highs in the 37-38 range. It is now setting up for a move on its all-time high of 40.13, from September 2000. Today KRB reached up intraday to 39.40 (consolidation high is 39.45) but dipped back on lower volume (2.17 million; average 3.13 million) to close comfortably over its 10 day MVA (38.35). Looking for a breakout of the pattern that take a new high to a target of 45.
BUY POINT: 39.55 on increased volume of 4 million. Stop: 37.25.
POSITION: Stock and/or June $35 calls to buy (KRB FG).

EXPD (Expeditors--$61.00; +0.29; 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: Tried to move out of the pattern today, but pulled back. 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 (57.87), forming the right 'shoulder.' Today it reached over the buy point (high of 62.34), but could not hold on as volume, though up at 383,800, was not at the 550,000 level we were looking for (average 353,000). Still, not a bad attempt, and we could see a test of 60 again (18 day MVA at 59.17), but we are looking for that to hold and propel a breakout that will hold. All-time high is 65.92. Target: 70.
BUY POINT: From here or after a test that holds the 60 range, over 61.50 on volume of 550,000. Stop: 57.75
POSITION: Stock and/or August $55 calls to buy (URP HK - 10 open interest).

IFIN (Investor's Financial Service--$76.05; -0.10; 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: IFIN has been in a nice consolidation, and has steadily and slowly drifted back to test the former highs in its double bottom, which are with the 18 day MVA (75.12). Today IFIN showed a second consecutive doji over the 18 day, as volume tapered off even more (72,100; average 196,500). Looks poised to move. 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 (Fifth Third Bancorp--$67.48; -0.59; 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: Nice bounce Wednesday on good volume, but FITB gapped back down to the 18 day MVA (67.31) today on news of a downgrade. It ran back up to 68.45 but ducked back to close with a doji, and volume retreated as well to near average levels (1.66 million; average 1.6 million). Even with the downgrade, holding solid at support on what has been a gentle pullback from what was a nice break to a new high early in the month, so we will continue to watch for a good bounce and continuation of the move. Targeting 76.
BUY POINT: Over 68.50 on volume of 2 million. Stop: 64.25
POSITION: Stock and/or August $65 calls to buy (FTQ HM).

MGA (Magna--$73.50; +1.40; 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: After breaking from a large ascending wedge to start the month MGA formed a flag pattern that squeezed very tight with a string of dojis. It fell back down to the lower reaches of the pattern (below its 18 day MVA, at 71.70), but we thought we could be seeing a 'shakeout' of weak holders, a common occurrence in these types of patterns. Sure enough, MGA rebounded abruptly and today tried to breakout, hitting up to 74.45 intraday (high is 74.50), but pulling back to close. Volume was down and back below average at 270,400 (average 303,000). Low pre-holiday volume is not that worrisome, and we are looking for MGA to hold the 18 day and make a breakout move on much bigger volume. On a breakout, targeting: 83. Good relative strength.
BUY POINT: Breakout: 74.60 on volume of 400,000. Stop: 70.
POSITION: Stock and/or August $70 calls to buy (MGA HN).

End Part 2 of 3

us stock market
trade stock