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Support and Resistance

Nasdaq: Closed at 1862.62.
Resistance: Took out the simple 50 day MVA (1852.08), a first step. Now it must deal with 1875, the bottom of the November consolidation stopped the attempt before that and the 200 day MVA (1878.92). 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: Cleared 1850 and we would like to see that and the simple 50 day MVA (1852.08) hold, but there was not a lot of volume on the upside move. 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 1146.54.
Resistance: 1150 (prior tops and bottoms) was unbroken today. After that the December high (1173.62) and the January high (1176.97) are 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 (1140.98) was undercut on the low, but held on the close. The simple 50 day MVA (1127.84) and then 1125 (former price consolidations and the 'hump' in the brief November double bottom) team up for some significant support after that. 1100 has acted as support as well.

Dow: Closed at 10,362.70
Resistance: 10,400 remains the near term obstacle, the barrier to the upper half of the March trading range. The top of the June, July, and August 2001 trading range at 10,600 (10,679 intraday high) marks the top half of the March trading range. 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: The January intraday high at 10,300 and the closing high at 10,259.74 held Monday. Then 10,000 followed up by the 200 day MVA (9977.39).

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

4-1-02
ISM Index, March (10:00): 55.6 actual versus 54. expected and 54.7 prior.
Construction Spending, February (10:00): 1.1% actual versus 0.5% expected and 0.8% prior (revised down from +1.5%).

4-2-02
Factory Orders, February (10:00): 0.5% versus 1.2% prior.
Auto Sales, March (8:30): 5.6M versus 5.6M prior.
Truck Sales, March (8:30): 7.5M versus 7.6M 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

QLGC: A reverse head and shoulders formed subsequent to the double top in December and January. Today it made the move over the neckline at 51.50 at about 1:40CT. Now volume was not huge, so we took just a partial position. We have and initial target at the double tops at 56 to 57 (59.88 longer target), so we were looking at options. The stock was trading just over the pivot at 51.50, so we looked at the July 45 calls, but they were very few trades taking place. We went closer to the money, the July 50 calls. A bit more action. The spread was just 10 cents; again that low volatility narrowing that spread making the need to shave pennies less important. The spread was 8.30 by 8.40, and we were able to get into a few contracts at that point. Some might be squeamish about getting into a stock already up $2 on the session (I used to be that way), but when the stock makes the move, I get in if that is the plan. The volume was light, so I adjusted to less than a full position.

PHM: Homebuilders are reporting good earnings, but after a long run they are breaking key support. PHM tested last Thursday's breach of the 50 day MVA and started to fall again after trying to bounce up from the morning fall. Primed to see again.. We were ready to move in when it did. About 1.5 hours into the session volume was 46% of average, so there was some selling ongoing again. It also hit our entry point for the put play. The stock was at 45.90 and we were looking at July 55 puts trading 9.80 by 10.00. Thought about trying to shave off 5 cents from the spread but decided not to; 20 cents is not bad. We entered at $10. The stock made a modest bounce to the 15 minute MVA and started to roll down. Perfect. An hour later, however, it broke over the 15 minute MVA and started to ride it higher the rest of the afternoon. Closed still well off the 50 day MVA, and we are comfortable with the play for now. That is why we bought some July puts to give it time to work for us.

PLAYS TO LOOK AT:

BONUS PLAYS:

TXT (Textron--$50.29; -0.81; optionable): Conglomerates
http://biz.yahoo.com/p/t/txt.html
STATUS: Revisiting a stock that has set up nicely. Recently moved back over its 200 day MVA (currently 45.79), and after hitting the buy point has now pulled into an ascending wedge handle to its cup that dates back to June (high 60). TXT is using the 18 day MVA (49.66) as support as it moves up, and looks good for a breakout move. Today the stock pulled back on continued light volume (578,600; average 746,500), and we are looking for a hold here and a run back up with breakout volume behind it. Target: 60.
BUY POINT: 51.59 on volume of 1 million. Stop: 47.98 (7%).
POSITION: Stock and/or June $45 calls to buy (TXT FI).

CEY (Certegy--$40.79; +1.09; optionable): Software
http://biz.yahoo.com/p/c/cey.html
STATUS: CEY broke out from a long lateral consolidation early last month, making a nice run that hit up to 41.50 before pulling back. It stopped short of the 50 day MVA (37.54) and pulled back up a bit for a consolidation along its 18 day MVA (39.49), and today made a strong move up out of that pattern. Volume spiked way up to 678,400 (average 218,200), and we are looking for continued strength. Good money flow. Target: 48.
BUY POINT: Breakout: 41.60 on continued strong volume. Stop: 39.
POSITION: Stock and/or July $35 calls to buy (CEY GG).

JDEC (J.D. Edwards--$17.49; -0.55; optionable): Software
http://biz.yahoo.com/p/j/jdec.html
STATUS: Another stock we are revisiting as it has tested its breakout from a saucer dating back to the beginning of the year. It is holding its prior pattern highs at 17 on the test, as well as its 10 day MVA (17.32). Volume has been nice and low on the test, today showing a doji over the 10 day as volume remained below average at 1.06 million (average 1.22 million). Looking for a hold and strong move, and adjusting the target to 21.50. Nice money flow and buying.
BUY POINT: Bounce: Over 18 on above average volume. Stop: 16.83 (7%). Breakout: 18.55 on volume of 1.5 million. Stop: 17.25 (7%). 18.55 15.65 on continued strong volume (minimum 390,000). Stop: 14.55 (7%).
POSITION: Stock and/or August $15 calls to buy (QJD HC).

PRE-ANNOUNCEMENTS: Still in patterns are PNRA, KRB, IRIN, CPS and RUS.

ACDO ($57.36; +0.09): Forecast to announce a split with earnings on 4-29-02. Needed a rest today after a couple of solid runs, Thursday on huge volume. Today ACDO tested 55.80 at its low but closed with a doji on much lower volume of 798,200 (average 713,800). On a move over 58.89 on increased volume, we can add on to stock positions here, and look at new positions with August $50 calls to buy (DZU HJ - under 100 open interest).

CYN ($52.08; -0.53): Forecast to announce a split with earnings 4-16-02 before the open. After a nice bounce from the 50 day MVA (50.55), CYN has tapered back on light volume (117,800 today; average 224,600), but is holding the 10 day MVA (52.01) this time. Looking for a hold and bounce to a new high. The buy point is 53.28 on volume of 300,000, with stock and/or August $50 calls to buy (CYN HJ - under 100 open interest).

EXPD ($60.60; -0.40): Working on a date. Still in the reverse head & shoulders pattern, testing the 18 day MVA today at its low of 59.51 before pulling back up to close. After trying to move toward the breakout but pulling back Thursday, we are watching for EXPD to hold and then make a break. Over 61.50 on volume of 550,000, stock and/or August $55 calls to buy (URP HK - 10 open interest).

MGA ($74.15; +0.65): 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). Has made a steady move up over the last several sessions back up toward the level of its high. Volume has trickled back a bit, today at 252,600 (average 300,000). We will see if the stock comes back to again test the 10 day MVA (72.67), but on a hold of that level, still looking for a breakout. 74.60 on volume of 400,000, stock and/or August $70 calls to buy (MGA HN).

EASI ($48.10; +1.85): Forecast to announce a split 5-21-02 at earnings. Broke out today! Volume was big at 480,100 (average 202,000) as EASI cleared the March high in its cup pattern. Still a buy up to 49 on continued strong volume, with stock and/or August $45 calls to buy (UFE HI - under 100 open interest).

PRE-SPLITS: Another nice move by AMAT!

ADSK ($46.57; -0.12): Splits 2:1 effective 4-19-02. Still in a consolidation that is holdin the 18 day MVA (45.45), today moving back up after tapping 44.88 at its low. The breakout play is over 47.37 on volume of 1 million, with stock and/or July $45 calls to buy (ADQ GI).

CONTINUING CANDIDATES:

BBY ($79.48; +0.28): Still in a nice consolidation over the 10 day MVA (78.43), tapping near its 18 day (77.05) at its intraday lows. Volume has been nice and mellow, at 2.14 million today (average 2.85 million) as it moved back up in the pattern. Looking for a breakout, with the buy point 80.72 on volume of 3.85 million, with stock and/or June $75 calls to buy (BBY FO).

TGIC ($42.66; -0.81): Made a very strong move up last week after a second test of its breakout (and 50 day MVA, at 40.78) from a cup with handle. Today TGIC gently pulled back on much lighter volume (39,600; average 54,400), holding recent highs and well over the 18 day MVA, at 42. Looking for a hold of 42 and a breakout over 43.53 on volume of 80,000, with stock. Target: 50. Stop: 40.58.

LLL ($117.76; +5.76): Has been a great play in 2002, breaking out from a saucer for us in January and recently slowing down to test its 50 day MVA (106.98) and forming a double bottom over the last four weeks. After an initial solid bounce and then a rest on Thursday, LLL blasted to another new high today on big volume (1 million; average 664,000). A lot of strength, and a continued buy on good volume up to 120, targeting 135. Stock and/or July $105 calls to buy (LLL GA - low open interest).

POST-SPLITS:

SONC ($25.00; -0.71): After giving up the 50 day MVA (25.92) Thursday, SONC dove hard today, dropping on volume of 730,100 (average 294,000). It moved off of its low of 24.57 to close, and could test closer to the 50 day, but we will look for that move to fail and for SONC to drop back to a target of 23 (200 day MVA at 22.30). On a drop through 25 after a test up toward 26, May $30 puts to buy (ZSQ QF - low open interest).

MGAM ($34.98; -0.37): Split 3:2 on February 12. Still moving on light volume as it holds the 18 day MVA (33.45) on its continuing trend upward. On a move over 35.70 on volume of 300,000 or better, July $30 calls to buy (QMG GF - low open interest). We can also add to stock positions.

Good Investing!
Jon L. Johnson and the Stock Split Report Staff.

All of the foregoing is commentary for informational purposes only. All statements and expressions are the opinion of Online Investment Services, LP or its paid consultants and are not meant to be a solicitation or recommendation to buy, sell, or hold securities. We are not licensed or registered in the securities industry. The information presented herein and on our related web site has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. The security portfolio of Partners of Online Investment Services, LP or its paid consultants may, in some instances, include securities mentioned herein and on our web site. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future developments may differ materially due to many factors.

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