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TOMORROW

No big economic news out Thursday other than weekly jobless claims. The after hours Wednesday was dominated by BMY clarifying its earlier earnings warning to reflect a serious loss and DELL affirming its earnings and raising its revenue guidance. After that there was competition among less well-known names with warnings in software and upside guidance and earnings in retail and other areas.

That news had the QQQ up 0.50 from its close and other tech stocks showing modest improvement. Enough to overcome the current general worry about the price of oil and the certainty of economic recovery? Probably not, at least not by itself. As noted earlier, investors want hard numbers, proof so to speak that all the reports of economic recovery are more than reports. They will be disappointed with some and pleasantly surprised with others.

For tomorrow we are going to be patient. The breach of significant support and recovery to those levels has to be resolved. We prefer to play established trends, solid patterns within those trends, and changing trends. This pullback over the past month has not altered a lot of trends that are in place. There are trends showing lots of volatility, a sign of change, but we want to see the clean breakdown, i.e., a test of the break and renewed selling for downside positions.

Remember, there has been almost three weeks of selling that basically tested the breakouts by the Dow and S&P in early March. Volume has only once been above average on the NYSE during that time. This may be all the selling there is. What we want to do is see whether the breakout from early March holds and thus maintains that upside bias or is really broken and fails a test, indicating the trend is now down. Many stocks are still in there patterns and in uptrends though we are seeing more breakouts turn and immediately sell, something that was not happening much over the past 1.5 months. That is a bearish sign, but again, we will want to key off the major trends, and we will get an answer on that in the not too distant future with actual earnings reports coming out.

Support and Resistance

Nasdaq: Closed at 1784.35.
Resistance: 1800. Then a jumble of trouble at 1850 with the simple 50 day MVA (1845.53). Then 1875, the bottom of the November consolidation and the 200 day MVA (1874.93). 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: 1775, the October high, is trying to hold. Then the early November gap up at 1768 and 1745, where it launched from on that gap. After that it is 1700.

S&P 500: Closed at 1125.40.
Resistance: The 200 day MVA (1139.65) has tire tracks all over it, but the further away the index gets, the more significant that level becomes at blocking the recovery. There is some resistance at 1150 as well. 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 simple 50 day MVA (1127.25) and then 1125 (former price consolidations and the 'hump' in the brief November double bottom) are trying to hold. 1100 has acted as support as well. 1075 marks the bottom of the February double bottom pattern.

Dow: Closed at 10,198.29.
Resistance: The January high at 10,300 is now a level to clear along with 10,400, 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 simple 50 day MVA (10,141.43) held on the low today. Then 10,000 followed up by the 200 day MVA (9970.45).

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): -0.1% actual versus 1.0% expected (raised from +0.5%) and 1.1% prior (revised from 1.2%).
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): 57.3 actual versus 57.0 expected and 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.

PLAYS TO LOOK AT: Breakouts by GOSHA and PDCO!

BONUS PLAYS: BSC, SFNT are still in their patterns, as is NCOG, which hit the buy point but did not have volume. IFF fell back a bit but is holding support in the wedge.

HLT (Hilton Holels--$14.18; +0.13; optionable): Lodging
http://biz.yahoo.com/p/h/htl.html
STATUS: Made a nice, steady recovery from its September lows at 6, and then last month made a strong move over its 2001 highs. Following a test of that move, HLT made a nice bounce back up in mid-March, taking out the prior high and then pulling into a handle-type consolidation. It is looking good, having dipped back on light volume, holding the prior high and 18 day MVA (13.89). Volume kicked up today (1.99 million; average 1.64 million), with HLT showing another loose doji. It looks ready to spring. Very good money flow, buying and relative strength. Target: 60.
BUY POINT: 14.79 on volume of 2.2 million. Stop: 13.75 (7%).
POSITION: Stock and/or June $12.50 calls to buy (HLT GV).

ATMI (Atmi Inc--$30.98; -0.01; optionable): Semiconductor equipment
http://biz.yahoo.com/p/a/atmi.html
STATUS: In a 'v'-shaped cup dating back to May. It was in something of a reverse head and shoulders, but has steadily trended up along its 50 day MVA back to the May 2000 highs at 32. Over the past month it has formed a nice handle consolidation. It dipped below the February highs (30) and 18 day MVA (30.5) last week, but bounced back solidly, and is now crouched over that support. Today ATMI showed a second consecutive doji, and volume spiked high at 1.29 million (average 330,600). Looking for a breakout. Target 38
BUY POINT: Breakout: 32.10 on minimum volume of 500,000. Stop: 29.85 (7%).
POSITION: Stock and/or June $30 calls to buy (ASQ FF).

CTSH (Cognizant--$41.73; +0.07; optionable): Software
http://biz.yahoo.com/p/c/ctsh.html
STATUS: After climbing up out of the September 2001 pit, CTSH hit 45, the level of several mid-2001 highs, and pulled back to form a nice cup. The stock has been trending up steadily along its 10 day MVA (41.27), and Monday hit 42.56 before reversing on the day, and dipping back to test the 10 day with a pair of dojis. Volume has been low on the recent trend up, so it could need a bit more time here to form a longer, better handle. We will look for it to hold the 18 day at 40.43, setting up a breakout run. Target: 50.
BUY POINT: 42.66 on volume of 135,000 (average 90,000; today 36,500). Stop: 40.
POSITION: Stock and/or August $15 calls to buy (QJD HC).

PRE-ANNOUNCEMENTS: Great move by PDCO! EXPD and CTAS still looking good.

MGA ($72.95; -0.46): Forecast to announce a split 5-2-02 with earnings or on 5-9-02 in conjunction with its annual shareholder meeting. Continued back, but is holding the 10 day MVA (72.83) and the consolidation in the tip of its former pennant pattern. Still strong, and looking for a breakout, which is 74.60 on volume of 400,000. Stock and/or August $70 calls to buy (MGA HN).

PRE-SPLITS: NDN is setting up in a nice pattern going into tomorrow's split, so we will see how it holds up through that event.

DF ($75.70; -0.07): Splits 2:1 effective 4-24-02. DF has made a nice, steady trend up, and now has shown four consecutive dojis to pull toward an intersection with its 10 day MVA (74.79). We could still see the price meet that level, but we will look for another bounce up. On a move over 76.65, June $70 calls to buy (DF FN). On that move, we are adjusting the target to 82.

CONTINUING CANDIDATES:

TGH ($73.03; -0.19): Showed another doji as TGH continues to hold over the short-term MVA's (10 day at 72.91), and the stock is showing an ascending wedge. Looks good, and we are looking for a buy point of 74.40 on volume of 275,000, with stock and/or July $70 calls to buy (TGH GN - low open interest).

DIAN ($63.43; -0.16): After a solid move back up from 55, DIAN has dipped back, but it has been a healthy dip, coming on light volume (110,800 today; average 250,500). Today DIAN showed a loose doji over the 10 day MVA (62.94), and is setting up for another run if it holds here. Over 65 on volume of 320,000, with tock and/or August $60 calls to buy (UID HL).

GOSHA ($44.85; +2.24): Made the big move! Volume was above average, but not as strong as we were looking for, coming in at 53,300 (average 42,000). Targeting 49, but we need to see more volume from here.

TGIC ($42.40; -0.52): Forming a little handle to a small saucer formed on a pair of tests of its break from a cup with handle. Holding strong over the former pattern high and the 18 day MVA (42.13), and the breakout is 43.63 on volume of 80,000, with stock.

POST-SPLITS:

CHS ($31.27; +0.72): After the drop through the 50 day (32.26) Tuesday, CHS gapped down today but rebounded to test the former support. Volume was up sharply at 1.04 million (average 603,000), and the stock pulled back from an intraday high of 31.88 to close. Carefully watching the action at the 50 day after today's move, but on a drop back through 30.25 on continued strong volume, May $35 puts to buy (CHS QG - 50 open interest).

SONC ($25.71; +0.01): Gapped over the 50 day (25.90) but gave it up to close. SONC made a relief bounce Tuesday on weaker volume, and we are looking for the test and "kiss goodbye" that would lead to a drop down to a target of 23. On a drop through 25, May $30 puts to buy (ZSQ QF - low open interest).

BSG ($34.77; -0.23): Holding nicely on this pullback to support, showing its second consecutive doji today over the 10 day MVA (34.71). Has been trending up nicely, and we are targeting 39. On a bounce over 35.25 with volume of 500,000 or better, June $32.50 calls to buy (BSG FF).

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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