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yahoo stock, us stock market
Begin Part 2 of 2
Thus, we are looking at more downside plays this week. Again, the breakdown has not occurred but we do not like the distribution nor some of the action we saw late in the week. That makes us very cautious both to the upside and the downside. We may be overreacting, but some of the weakness we saw at the end of the week is worth caution. The indexes have been doing a good job of recovering, and as noted, the Nasdaq could give us follow through of a fall down. The economic recovery continues and ultimately the market will move higher on that recovery. In the interim there is some weakness beyond just profit taking appearing, and we want to be ready to take advantage of it.
Support and Resistance
Nasdaq: Closed at 1796.83
Resistance: Still fighting with 1800 and the 50 day MVA (1825.47). Then there is 1850, followed by 1875, the bottom of the November consolidation and the 200 day MVA (1858.21). 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 is the next support level, and it was tested intraday Thursday. After that is 1700 (February low at 1696.55). Then 1613 to 1626.
S&P 500: Closed at 1125.17
Resistance: 1125 is acting as a holding point for the index. The 200 day MVA (1133.44) is sitting right on top of that level, acting as another layer of ice. 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: Again, 1125 is key for any move higher near term. 1100 held on the last round of selling. Then 1075, the February low. After that 1050.
Dow: Closed at 10,257.11
Resistance: Just above the down trendline from March (10,235), but below the up trendline off of the September low (10,330). 10,300 blocked the move the last time it made to that level. 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 has been holding on the lows the past two weeks. After that 10,000 represents some support. That is backed up by the 200 day MVA (9945.64). 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.
4-24-02
Durable Orders, March (8:30): 0.5% versus 1.8% prior
New Home Sales, March (10:00): 880K versus 875K prior
Fed's Beige Book (14:00)
4-25-02
Initial Claims, 4/20 (8:30): 425K versus 445K
Employment Cost Index, Q1 (8:30): 0.9% versus 0.9% prior
Help-Wanted Index, March (10:00): NA versus 51
Existing Home Sales, March (10:00): 5.60M versus 5.88M prior
4-26-02
GDP-Adv., Q1 (8:30): 5.0% verus 1.7%
Chain Deflator-Adv., Q1 (8:30): 1.5% versus -0.1% prior
Mich. Sentiment-Rev., April (9:45): 95.0 versus 94.4 prior
SUBSCRIBER QUESTIONS
Q: We day traders are essentially very bearish and expect a crash to 9.11 if the market does not hold up for the next few days. The reason is essentially the high tech recovery is not there. Any thought?
A: As you can tell from this weekend's market summary, we are seeing signs of problems in some of the sectors that were leading higher based on an economic recovery scenario. The economic recovery is still on, but many of these sectors have enjoyed strong runs. That in and of itself is not something that necessarily means a selloff. When a sector is strong, it can continue to move higher and shake of valuation downgrades. Indeed, perhaps this is just a respite, a pit stop for a few weeks before these stocks continue higher on the back of the economic recovery story. In any event, we also agree with your assessment that the tech recovery is not happening as fast as investors had factored. The distribution is an indication that there is money moving, and the lack of positive reinforcement from earnings may just be the catalyst to move even more money out of tech and some of the sectors that have performed above the overall market.
Down to the post 9-11 lows? What got the market there in the first place? Right before the attack it looked to us as if the market was just beginning to factor in the positive economic gains that were starting to show up. The attack nipped that in the bud and sent to its lows. Since then the economy has improved from where it was before the attack. Tech stocks may have rallied too fast and far off of that low and now the lack of earnings may cause them to fall further toward 1700 and even lower. There is improvement in many tech sectors; not great increases, but improvement. Unless tech stocks were substantially overvalued right before the attacks, the improvement or slowing in the drop in tech business would indicate they should not fall that far. The market tends to overshoot, however, so that is never out of the question if the Nasdaq breaks down.
We also need to keep in mind that the market looks ahead at a minimum 6 months and as far as 18 months down the road. Thus unless there is a view that substantial recovery is not viable by the fall 2003 there should not be a total collapse. Something serious could trigger a sharp selloff, e.g., another terror attack, but a recovery is underway for most of the economy. The Fed is going to let it grow. As we said before, however, it may take most tech sectors into 2003 to start seeing appreciable recovery. Techs could suffer and we could see some short term selling on other sectors as well. As for non-techs, however, we do not see it as severe because while we do not see a roaring economy, we see a steady recovery. The non-tech stocks should not tank to the lows given that background even if the techs make a run for it.
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:
OEX: Hit the buy point on the FBI warning and moved up from there. Still think it will fall to test 548 once more.
BELM: Tried to make the move but then reversed to finish down fractionally on rising, above average volume. Will see if it can reload and take out 13 on that strong volume.
ATPX: Gapped higher but was unable to hold the gain. Did not hit the buy point, so we will let it continue to consolidate.
COCO: The hammer doji gave way and the stock closed below the 18 day MVA on continued above average volume. That is not what we wanted from this pullback.
Continued Plays:
AGAM: Still looking great in a tight handle. Volume moved up Friday, May be getting ready to make the break.
BBX: Again, a nice looking consolidation that is turning into an ascending wedge, building upside pressure.
STSA: Tight range, low volume Friday. Looks as if it wants to blast out of here soon.
GYMB: Blasted off 9 sessions back on good news and has since pulled back laterally, holding above the 10 day MVA on low volume. It looks close to finishing the consolidation of that gap higher.
OATS: Good recovery, but very low volume for a rise. We will see if volume kicks in now for a breakout.
HNT: Gapped up again, but on a bit lighter volume. This is a good sector for an edgy market. May get a chance to enter around 27.50 early this week.
KEY: Edging higher on below average volume. Needs a real shot of volume.
ASX: Tougher day for semiconductors, and ASX pulled back and showed a tight doji on much higher volume. Maybe the breakout will hold.
SNIC: Tight doji at the 10 day MVA on lower volume. Looking much better now.
ASBC: This bank looks ready to move out of its short double bottom with handle.
HUM: Good sector for this market. Continued the breakout on continued above average volume. Losing a bit of steam, but we are not too worried about this one given the market.
CRFT: A rest on very low volume.
PMSI: Health services. Moving slightly higher Friday on above average volume. May take a few more days of lateral movement for the next jump.
MYK: Test continues on very low volume. Expect it to hold at the 10 day MVA at 16.
CCRN: Held intraday above the 50 day MVA, and still easily in the handle. A bit more ragged action, but Friday helped shore it up better.
PEGS: Sold back on light volume. Getting ragged.
OMX: Tight doji Friday on much lower, below average volume. May need a rest here and a pullback toward 6.50. We may take a little money off the table, but it still looks solid.
HARB: Holding the breakout, stopping above the 18 day MVA on very light volume. that is what it needed to do after such a strong breakout.
CHGO: Very good. Tight doji tapping the 10 day MVA on the low on much lower volume. This looks more like a good test.
SNS: Doji Friday that tested the 50 day MVA intraday. Volume still a bit high, but it has a recent history of testing the 50 day MVA and running off of it.
SUBSCRIBERS CHOICE
IKN (Ikon Office Solutions--$12.80; -0.20; optionable): office equipment
http://biz.yahoo.com/p/i/ikn.html
STATUS: The request asked if this was a put or short once again after the double top in February and March. After that top, the stock turned and sold hard through the 50 day MVA (12.50) on strong volume. It came to rest just above the 200 day MVA down near10 before rebounding back over the 50 day MVA to 12.50. The past three sessions it has faded back to the simple 50 day MVA (12.75) on below average volume (291K; avg. is 652K). Since January 2001 the stock has had a run: $2 to 14. After such a run a stock tends to correct and form a new base. IKN broke its trendline from the low in February, and the second top was a test of that breach that did not have a lot of volume. Classic trouble signs. With the volume tapering off late in the week as it faded back, it may try to bounce from the simple 50 day MVA. If it does but does not pick up volume, we could see it roll over at 13.50 for another drop. We see some buying picking up and some better volume action. We would want to see the weak rally and then volume again jump up on selling.
http://www.investmenthouse.com/cd/ikn.html
Best Plays:
1) RPM: Making a nice move in a solid pattern.
2) BELM: Looks ready for a nice move.
3) CAT: In trouble.
New plays:
RPM (RPM, Inc.--$16.70; +0.45; optionable): General Building Materials
http://biz.yahoo.com/p/r/rpm.html
STATUS: RPM has had quite a run itself, from $8 after the market reopened. After such a strong move it needed to regroup as well. It has done so rather nicely with a 11-week cup base. Friday the stock made a solid move higher on rising, average volume (609K Friday, dead on average volume). Buying has been solid as had been money flow. Price/volume action shows positive accumulation during this short base. It may want to form a handle between here and 17, but sometimes stocks just move on up without a handle. They usually come back to test the move, but we will be looking at some positions on a strong breakout handle or no. We can get a nice initial move and may get some money in the bank before any test.
BUY POINT: 17.10 on volume of 900K or better. Target=20.52. Stop=15.75.
POSITION: Stock and/or August 12.50c to buy (RPM HV; low OI but 94 delta) or August 15c to buy (RPM HC; plenty OI, delta 76).
http://www.investmenthouse.com/cd/rpm.html
GMRK (Gulfmark Offshore--$39.19; -0.18; no options): Oil and gas equipment
http://biz.yahoo.com/p/g/gmrk.html
STATUS: 11-month cup with handle. This pattern is a big cup with a handle that looks like another cup at the end. Indeed, the handle (about 6 weeks) has its own handle. The price/volume action in the base is positive; it shows 11 weeks of accumulation to 8 weeks of distribution. That is a win as the scales of the market tip in favor of buyers. The past three sessions the intraday range has been tiny and volume below average (33,000; avg. is 41,000). Money flow is very good and relative strength is ready to breakout. We will watch for the breakout.
BUY POINT: 40.10 on volume of 100,000 or more. Target=48.10. Stop=37.25.
POSITION: Stock (no option chain).
http://www.investmenthouse.com/cd/gmrk.html
Puts:
CAT (Caterpillar--$55.04; +0.12; optionable): Heavy Machinery
http://biz.yahoo.com/p/c/cat.html
STATUS: Broke out of a cup in February, but CAT has run into trouble. It pulled off the breakout to test the 50 day MVA (55.71), bouncing up but failing to make the previous high, showing a double top, the second top on low volume, and then selling off hard the past week on rising volume. CAT gave up the 50 day Thursday with a gap, and held on with low volume Friday just under that level (1.33 million; average 2.06 million). It could try again to tap up or over the 50 day, but we are looking for that move to fail and for CAT to drop hard. We will watch the 200 day initially at 51.30, with our eyes on a potential drop to 48.
BUY POINT: From here or after a test of the 50 day, a drop through 54.50 on above average volume. Target=52 (initial) with a potential fall to 48. Stop=56.50.
POSITION: August $60 puts to buy (CAT TL).
http://www.investmenthouse.com/cd/cat.html
SEBL (Siebel Systens--$27.11; +0.35; optionable): Enterprise software
http://biz.yahoo.com/p/s/sebl.html
STATUS: SEBL has had a rough go of it as have many software companies. It broke through the 200 day MVA in early April, a point where institutions tend to sell off more. It has since rallied to test that level (28.18), failing the first attempt, selling on stronger volume, and then rising to test it again Friday, but volume failed it (12.6 million; avg. is 17.5 million). There is resistance at 27.50 from lows hit in February, not to mention the 200 day MVA. We are looking for the stock to fall from here for another test toward 23.
BUY POINT: On a move through 26.70 on rising volume, preferably 17 million or better. Target: 23. Stop=28.50.
POSITION: August 35p to buy (SGW TG). These are a bit pricey (8.90 by 9.10), but to get the delta we had to go this high.
http://www.investmenthouse.com/cd/sebl.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 (75.30; +0.30): After the break below the 200 day MVA it could be setting up to test it for the kiss goodbye. We will use that as a chance to buy puts on it for a move down to 70.
MIK (38.28; +0.33): MIK is holding up nicely, and looks to be forming a bit of a wedge here. Not bad, with a really tight range the past week. That is good. We may see an upside breakout over 39 soon. We are wary of retail, however, and we are going to pay very close attention to price/volume action.
ICUI (37.95; -0.25): Looks to be catching support a the breakout point with a low volume, tight star doji Friday. Great company; now if the price action would match.
UP & COMERS PORTFOLIOS: BBBY, SRCL
Nothing new to say this weekend
MEMBER PORTFOLIO: CSCO, SEBL, EMLX, BRCM, HDI, BRCD, BUD, AMGN, WMT, ORCL, HB, NOC
BRCD (25.30; -0.98): We entered puts on BRCD Friday even without a volume surge. It tested the 50 day MVA, it hit the down trendline, and it started to fall. We will see if the volume comes in stronger.
NOC (112.24; -1.66): Testing the 50 day MVA on declining, below average volume. It tapped the 50 day on the low (111.30) and bounced. No strong volume on the bounce; usually we like to see volume rise as a sign institutions are buying. With the TRW acquisition attempt, the action is a bit volatile.
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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yahoo stock
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