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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:

Reading the Plays: Please note that when we reference the 10, 18, and 50 day moving averages (MVA), those are exponential moving averages (EMA). The 200 day moving average is always simple (SMA). We will note when we reference a particular MVA differently, e.g., a simple 50 day MVA. Please click on the Yahoo and chart links for company and charting information. A "prior high" refers to the high at the start of a base.
For conserving space on listings of stop losses, the symbol (7%) indicates that the stop is 7% below the buy point.

Stocks from Wednesday report:
OATS: Plunged to 10 intraday and recovered. Volatile for handle action, but volume remained below average.
BBX: Still working through the test, testing the 18 day MVA on rising, average volume and then rebounding.
HNT: Continued the move up on strong volume, but gapped up to show a doji. Hard to play that move, but this should be a safer sector if the market stays edgy.
STSA: Undercut the 18 day MVA on the Milan news, but then recovered to hold the pattern. This was typical action today given the potential gravity of the news.

Continued Plays: Most stocks had a tough day, but they did not fall out of their patterns. Understandable given the potentially world-shaking event of the plane crash. Not too worked up about most of the action we saw.

KEY: Another nowhere day after the breakout. Banks took a pause on the world events.
ASX: Testing Wednesday's breakout gap. Volume was higher. Do not like that.
SNIC: Continued lower on lower volume after the breakout reversed Wednesday. Won't let it fall below 7.
RMHT: Hanging in there nicely on low volume.
ASBC: A bit higher volume as it pulls back a hair. Banks had more action given the world events, so we are still looking forward to the breakout.
HUM: Really moving on a high volume breakout.
AGAM: Looks super in the handle, but the issue is how are techs going to be treated tomorrow.
STSA: Nice recovery after selling down below the 18 day MVA. Still in the wedge.
CRFT: Volume picked up today on the continued rise. Good.
PRU: Really troubling. Never hit the buy point, so will see what the handle does.
PMSI: Nice breakout and now testing it for the second session.
MYK: Getting a test on low volume. More than we want, but the market was that way today.
CCRN: Still in the handle, but got a bit ragged on today's action.
PEGS: Testing the move higher on very low volume.
OMX: Still rising, but volume edging just a bit lower.
HARB: Held the line at 20.50 and started up a bit. Good breakout so we like the slowed selling on the test.
CHGO: Higher volume down to the 10 day MVA near 7, but recovered well. This may be all of the test.

Best Plays:
1) OEX: Trying the same play again.
2) BELM: Looks ready for a nice move.
3) ATPX: Like the test of the breakout.
4) COCO: Nice hammer doji reversal (continued play).

New plays:

BELM (Bell Microproducts--$12.37; +0.60; optionable): Wholesale electronics.
http://biz.yahoo.com/p/b/belm.html
STATUS: Has corrected well off of its previous highs in 2000 (32), but rallied well and has now corrected in a double bottom pattern that used the 200 day MVA (10.90) as support. It is now in the handle with some impressive money flow and buying. We are not married to it long term, but it can give us a good run from here. Volume today was lower and below average (87K; avg. is 165K).
BUY POINT: Breakout: 13 on volume of 250K+. Target=15.60. Stop=12.05.
POSITION: Stock.

http://www.investmenthouse.com/cd/belm.html

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).

ATPX (Advanced Technical Products--$33.75; +0.99; no options): rubber & plastics
http://biz.yahoo.com/p/a/atpx.html
STATUS: Plastics. Even with its feedstock rising in price (oil), plastics and chemicals are doing fine. ATPX recently broke out of a cup with handle, ran to 35, and is now testing that move. It pulled back to the 10 day MVA (32) the prior three sessions, and then rallied today on above average volume (150,300; avg. is 85,000). Good buying, great money flow, and relative strength ready to breakout. After the test of the breakout it can give us a good run; that is one of our favorite times to pick up stocks.
BUY POINT: Two choices. From here which is more aggressive, or at a new post breakout high at 35.75. Good volume today makes us inclined to take some positions on a further rise and more on the break to the new high. Aggressive: 34. Breakout: 35.75 on volume of 175K+. Target=42.90. Stop=33.25
POSITION: Stock (no option chain).

http://www.investmenthouse.com/cd/atpx.html

COCO (Corinthian College--$51.70; -0.09; optionable): Education and Training.
http://biz.yahoo.com/p/c/coco.html
STATUS: 7.5 month cup with handle. Just covered recently, but we really liked today's action in the handle. The stock sold off down to 49.75 on the low, but then rallied to close above the 18 day MVA. Volume jumped above average on the move, something we like to see on a reversal (451K; avg. is 300K). We have some positions, and will pick up more on the breakout over the recent high.
BUY POINT: 55.10 on volume of 500K+. Target: 66, but want it to run for us. Stop=51.15.
POSITION: Stock and/or August 50c to buy (UCS HJ).

http://www.investmenthouse.com/cd/coco.html
PORTFOLIOS: Each report, we look at these to see which is in a buy position. We don't cover them all each time, just the ones that look ready to pick up a few shares.

THE LEADERS: DGX, FRX, LLL, MIK. New: ICUI; RMCI

FRX (75.00; -1.17): No touch back up to the 200 day MVA, selling on strong volume. Out of the stock and waiting to see if it can recover.

LLL (123.79; +2.34): Up on the scare regarding Milan, but showing very mixed action, unable to make headway after breaking to a new high. But for two sessions, volume has been below average the past two weeks as it moves to a new high. One of those sessions was on selling. Beware of stocks hitting new highs on low volume. No double top yet, so nothing to get too broken up over, but deserves attention on further heavy volume selling.

UP & COMERS PORTFOLIOS: BBBY, SRCL

BBBY (35.83; +0.76): Stuck between 34 and 36, rising today but on once again below average volume (2.59 million). This is the fifth month in this flat base, but now it is tightening the range from 32 to 36 to 34 to 36. We may get that breakout after all, and that is where we will look at adding positions.

MEMBER PORTFOLIO: CSCO, SEBL, EMLX, BRCM, HDI, BRCD, BUD, AMGN, WMT, ORCL, HB, NOC

EMLX (29.91; +1.10): Beat earnings and said things were getting even better. It was down after hours on the news to 28.70. That is the kind of market we are in. May not tank to 25, however, as it was giving good guidance.

BRCM (38.16; -0.60): Moved below the 200 day MVA on lower volume and was down after hours but not bad (37.90). Volume was decent on the recent move up, and that keeps us from getting too excited about shorting this stock.

BRCD (26.28; +0.94): A doji right below the 50 day MVA (26.95) on rising, average volume. Down to 25 after hours, we are looking to play BRCD down to 22.50 with some puts if it can give another rally to the 50 day MVA that fails.

ORCL (11.65; -0.13): MSFT won't help ORCL as it dances under the 18 day MVA and may be heading back to 11 or 10. Not much room to sell for a put play, and ORCL may be getting sold out. The bad news was in the stock from its earlier warnings.

Good Investing!
Jon L. Johnson and The Daily 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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