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Begin part 2 of 2
Support and Resistance
Nasdaq: Closed at 1802.43
Resistance: Still not totally free of 1800 where the prior bounce attempt failed. Then there is 1850, followed by 1875, the bottom of the November consolidation and the 200 day MVA (1859.60). 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 again today on the close, but 1775, the next support level, was tested intraday. If the Nasdaq is intent on selling again, 1700 (February low at 1696.55) is the level to be tested once again. Then 1613 to 1626.
S&P 500: Closed at 1124.47
Resistance: Still has not totally cleared resistance at 1125. The 200 day MVA (1133.87). There is some resistance at 1150 as well; any bounce on low volume might find that level trouble. After that the December high (1173.62) and the January high (1176.97) are the real key to any longer term move higher. 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: 1125 is key for any move higher near term. 1100 held on the last round. Then 1075, the February low. After that 1050. The S&P moves in 25 point increments.
Dow: Closed at 10,205.28
Resistance: Back below the down trendline from March (10,245). 10,300 blocked it today as well as the up trendline from the September bottom at 10,310. After that is 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: 10,100 was tested intraday. After that 10,000 represents some support. That is backed up by the 200 day MVA (9946.52). From 9500 to roughly 10,000 - 10,200 is recent support off of the September bottom that for now is holding up.
Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.
4-15-02
Business Inventories, February (8:30): -0.1% actual versus 0.0% expected and -0.1% prior (revised from +0.2%).
4-16-02
CPI, March (8:30): +0.3% actual versus 0.5% expected and 0.2% prior.
Core CPI, March (8:30): +0.1% actual versus 0.2% expected and 0.3% prior.
Housing Starts, March (8:30): -7.8% (1.646M) acutal versus 1.7M expected and 1.785M prior (revised from 1.769M).
Building Permits, March (8:30): -9.9% (1.599M) actual versus 1.685M expected and 1.774M prior.
Industrial Production, March (9:15): +0.7% actual versus 0.5% and 0.3% prior (revised from 0.4%).
Capacity Utilization, March (9:15): 75.4% actual versus 75.1% expected and 74.9% prior (revised from 74.8%).
4-17-02
Trade Balance, February (8:30): -31.5B actual versus -$29.0B expected and -$2.8B prior (revised from -$28.5B).
4-18-02
Initial Claims, 4/13 (8:30): 445K actual versus 415K expected and 444K prior (revised from 438K).
Leading indicators, March (10:00): +0.1% actual versus 0.3% and 0.0% prior.
Philadelphia Fed, April (12:00): 12.3 actual versus 13.0 expected and 11.4 prior.
Treasury Budget, March (14:00): -$64.2B actual versus -$60.0B expected and -$50.7B prior.
SUBSCRIBER QUESTIONS
Q: Please explain more about the ECRI as a forecaster. Do we have access to these figures and their interpretation?
A: The Economic Cycle Research Institute puts out a weekly gauge of leading economic indicators and also calculates a 6-month leading indicator as well as an inflation indicator. There is a website at http://businesscycle.com/. Not all of the information provided is free. You can get historical data free, but not the current data.
The ECRI has turned out to be a very accurate gauge of future economic activity. It takes into account many more elements than the governments LEI, and it is claimed to give a 'faster' view of what is going on because it is more sensitive given the elements it considers. It covers not only the U.S, but economies all over the world. It correctly forecast the slowdown in 2000 and 2001, and it showed there was no inflation on the horizon even as the Fed was making all of the noise about inflation around the corner. Not many look at it, but we sure do. Thus far it is saying that there is a recovery ongoing and will continue, that it won't be a double dip, and there is no threat of inflation at all.
The Plays:
Some new plays to look at:
OEX (S&P 100 559.35; -0.37; optionable): S&P 100 options
STATUS: Put. A hanging man doji on the close as the index sits under the 18 day MVA (563.89). It tested 550.97 on the low, just above the recent lows at 546. This is pretty much the play we made money on last week and early this week, and we are looking to do it again. 559 down to 548 or so.
BUY POINT: 558.95, preferably after another test of 560 to 563. Target: 558. Stop=563.
POSITION: May 560p to buy (OEB QL).
http://www.investmenthouse.com/cd/$oex.html
BRCD (Brocade--$26.28; +0.94; optionable): Telecom
http://biz.yahoo.com/p/b/brcd.html
STATUS: Put. BRCD has made three consecutive lows the last three months, forming a descending wedge as its makes lower highs. The past week it has again pushed off of the lows below 22 (lowest point at 21.61), but at the 50 day MVA (27.28) it encounters strong resistance that pushes it back. Today it again tried to challenge the 50 day, but stopped short, showing a perfect 'star' doji on increased volume (17.3 million; average 16.48 million). Looking for a drop back again, playing it initially to the pattern low, and watching for a breakdown from there.
BUY POINT: A drop through 25.50 (10 day MVA) on 17M+. Target=21.75. Stop=27.75
POSITION: July $30 puts to buy (UBF SF).
http://www.investmenthouse.com/cd/brcd.html
BYBI (Back Yard Burgers--$8.50; +0.20; no options): Restaurants
http://biz.yahoo.com/p/b/bybi.html
STATUS: Cup with handle. Meandered along for ages, and then shot up early this year. Since then it has corrected and formed this 3-month base. Volume zoomed as it climbed up the right side, and has pulled back during the handle (48,900; 46,722). Price/volume action is great and money flow is strong.
BUY POINT: Aggressive: 8.85. Breakout: 9.55 on volume of 100K+. Target=11.50 (initial). Stop=8.15.
POSITION: Stock
Continued plays:
SYMC (Symantec--$37.40; +0.10; optionable): Internet software
http://biz.yahoo.com/p/s/symcl
STATUS: Put. Still in the head and shoulders and showing another tight doji below the 50 day MVA (37.65). Still looks ready to fall as volume picked up slightly (2.83 million; avg. is 4.3 million). We can enter at two points: a fall from here and a break below 35 on rising volume.
BUY POINT: Aggressive: 36.65 on rising volume. Breakdown: Below 35 on above average volume. Target: 30. Stop=38.50.
POSITION: July 45p to buy (SYQ SI)
http://www.investmenthouse.com/ct/symc.html
ROOM (Hotel Reservations Network--$62.84; -0.06; optionable): Lodging
http://biz.yahoo.com/p/r/room.html
STATUS: Tested back to the 18 day MVA on the low just as we wanted (60.15) and rebounded to close. Volume was much lower on the session (378K; avg. is 650K). This was what we were looking for, and on more volume tomorrow we will move in for more positions.
BUY POINT: On a move over 63 on rising volume (650K or better). Target: 68. Stop=57.50.
POSITION: July $55c to buy (URD GK). The $60 calls have a low delta.
http://www.investmenthouse.com/ct/room.html
ASCA (Ameristar Casinos--$30.43; +2.43; no options): Resorts & casinos
http://biz.yahoo.com/p/a/asca.html
STATUS: Saucer w/handle. Breaking out today on excellent volume, it hit 31.74 on the high and then peeled back to close below the 30.90 breakout point. Volume was 730K; avg. is 166,800. Looking for another move up over 30.90 for more positions.
BUY POINT: Breakout is 30.90, needing volume of 250,000. Stop: 28.74. Target: 37.
POSITION: Stock and/or June $25 calls to buy (UWT FE - 9 open interest)
http://www.investmenthouse.com/ct/asca.html
VARI (Varian--$34.90; -0.85; optionable): Scientific & Technical Instruments
http://biz.yahoo.com/p/v/vari.html
STATUS: Put. Heading lower today on rising volume (297K; avg. is 76,700). It stopped right on the simple 50 day MVA. Looks ready for the fall.
BUY POINT: Aggressive: A move below 34.50 on above average volume (271K; today 76,700). Target=32. Stop=35.75.
POSITION: August $40p to buy (IUA TH). Delta is -58 and low open interest.
http://www.investmenthouse.com/ct/vari.html
Good Investing!
Jon L. Johnson and your Technical Traders Report Team
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 in 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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