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us stock market, understanding the stock market
Begin Part 2 of 2
S&P 500: Closed at 1093.14
Resistance: 1125. The 200 day MVA (1131.51) is sitting right above that level. 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: 1100 was broken today. Next is 1075, the February low that completes the head and shoulders. After that 1050 represents the October lows.
Dow: Closed at 10,030.43
Resistance: 10,100 could present some problems on the way back up as it held for so many tests before breaking. The March down trendline at 10,170. 10,300 blocked the move the last time it made to that level, and the up trendline from September is right there at 10,350. 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: 10,000 represents some support, but the 200 day MVA (9938.60) is the key master. After that it could drop to 9500 as it has entered into that shelf of support from 9500 to 10,100.
Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.
4-24-02
Durable Orders, March (8:30): -0.6% actual versus 0.5% expected and +2.7% prior (revised from 1.8%)
New Home Sales, March (10:00): -3.1% (878K) actual versus 890K expected and 906K prior (revised from 875K)
Fed's Beige Book (14:00): More of the same; economic recovery stable if uninspiring and still subject to risk.
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: When you list a stock in your newsletter, and a buy point, and it doesn't meet it in the first week, do you continue to watch it, and if it hits that buy point say a month later, then do you still buy it?
A: We always continue to watch stocks that have been in the reports even if they do not hit the buy points. Many times a stock will be in a base and looks close to breaking out, but needs more time. As long as the pattern holds, we will continue to look at the same buy point. Now if the pattern is disrupted and changes character, that changes the view on the play. It may or may not still be a buy at the same price, volume, etc., but it may still be a buy at a different point. What sometimes happens is a stock tries a move, fails, and then continues with a new base. We let the stock rebuild, make the new base, and then establish the buy point for that base.
THE PLAYS:
Good movers:
Best Plays: Many of our stocks have made good moves!
1) FDS: Good looking put.
2) CUM: Another one.
3) DVA: Very nice test.
4) GWW: Looks ready.
5) AMMD: Took a rest.
6) WL: Testing the breach and now looks down.
7) OEX: Keep an eye on the bounce higher to test the breakdown.
8) Watchlist plays: AM, PHTN, SMSC, WOOF
NEW PLAYS:
FDS (Factset Research--$36.85; -0.17; optionable): Information services
http://biz.yahoo.com/p/f/fds.html
STATUS: Put. A double top in March and April led to a break below the 50 day MVA (37.62) 5 sessions back on strong volume. It has since crept back up to that level, kissing it on the high today on below average volume (90K; avg. is 145K) and then falling on the session. Volume was low, but it was rising on the selling. We never like double tops unless we are looking at the downside, and as this stock is in computer software sector, not a plus. Looking for the test to fail and then a move to 32 with some support at 34.
BUY POINT: 36.50 on volume of 150K+. Target=32. Stop=38.
POSITION: September 45p to buy (FDS UP; no OI at this point, but we like the time). June 45p (FDS RI) have no OI either.
http://www.investmenthouse.com/cd/fds.html
CUM (Cummins--$43.40; +0.04; optionable): Big engines
http://biz.yahoo.com/p/c/cum.html
STATUS: Put. Broke below the 50 day MVA (44.73) Monday after peaking at 50 2 weeks back. It is currently testing the breach, rising Tuesday and Wednesday, tapping at the 50 day on the high. Volume was still strong but backed off as the stock tested the 50 day MVA and closed with a fractional gain (932K; avg. is 550K). Selling has moved in on this stock and money flow is plunging. We think it has set up for an additional fall after this kiss goodbye. Looking for a drop to 40 (prior top) to 39 (200 day MVA).
BUY POINT: 43.20 on volume of 900K+. Target=39 to 40. Stop=45.50.
POSITION: September 50p to buy (CUM UJ; 100 OI)
http://www.investmenthouse.com/cd/cum.html
PLCE (Children's Place--$36.48; +0.25; optionable): Children's apparel
http://biz.yahoo.com/p/p/plce.html
STATUS: Some are doing well, others not. PLCE is moving over long-term resistance at 35, doing so on strong volume (2.75 million; avg. is 230K). The pattern resembles an ascending wedge and the stock gapped up to the top of the range Tuesday and held more or less steady today. We want to see it make the continued break on continued strong volume. This could kick off a move that lets it work toward its old highs of 50 to 55.
BUY POINT: 37.45 on volume of 1 million or better. Target=49. Stop=34.83.
POSITION: Stock and/or September 30c to buy (TUY IF; 53 OI).
http://www.investmenthouse.com/cd/plce.html
New Plays from Tuesday's Update:
WL (Wilmington Trust--$65.67; -0.33; optionable): Regional bank
http://biz.yahoo.com/p/w/wl.html
STATUS: Put. Double topped, broke the 50 day MVA, and now testing it. Gapped higher but then sold lower as volume backed off (86.5K; avg. is 76K). It came close but did not hit the buy point today. We are looking for the break through 65.50 and want some volume when it does. Tomorrow we anticipate that it will test the 50 day MVA (66.60) again on the high before it makes its move.
BUY POINT: 65.50 on volume of 175K or more. Target=62 (200 day MVA); 60 if that breaks. Stop=67.
POSITION: August 75p to buy (WL TO; no OI now, but 76 delta).
http://www.investmenthouse.com/cd/wl.html
MAR (Marriott--$46.34; +0.85; optionable): Lodging
http://biz.yahoo.com/p/m/mar.html
STATUS: Ascending wedge. One of the bright spots in the market. Today MAR gapped higher and then ran up to hit the buy point. Volume was stronger, coming in just below average (1.03 million; avg. 1.15 million). Still a buy, but we are not chasing it past 46.75.
BUY POINT: 46.05 on volume of 1.5 million+. Target=55.25. Stop=42.80
POSITION: Stock and/or October 40c to buy (MAR JH).
http://www.investmenthouse.com/cd/mar.html
WDC (Western Digital--$6.50; -0.56; optionable): PC data storage.
http://biz.yahoo.com/p/w/wdc.html
STATUS: Cup w/handle. Okay, I will not be able to live this one down. The pattern looked good, but old tech stocks are not the leaders. At least it did us the courtesy of not hitting the buy point before it tanked. Pattern not what we wanted. Will see if it can regroup.
http://www.investmenthouse.com/cd/wdc.html
New Plays from the Weekend Report:
AMMD (American Medical--$24.41; -0.15; optionable): Medical appliances
http://biz.yahoo.com/p/a/ammd.html
STATUS: Double bottom with handle. Gave the breakout Tuesday on huge volume, then took a rest today as the market sold off. Volume dropped back below average on the pause as it should (224K; avg. is 360K; breakout was 986K). We very much like the move, and will now look for the move to continue tomorrow on once again rising volume. Still well within the buy range but we would like to see it clear 25.30 on strong volume for additional buys.
BUY POINT: New positions: 25.30 on volume of 540,000 (original buy point 23.98). Target=28.75. Stop=21.90.
POSITION: Stock and/or September 20c to buy (TQI ID).
http://www.investmenthouse.com/cd/ammd.html
BRO (Brown & Brown--$33.53; -1.04; optionable): Surety and title insurance
http://biz.yahoo.com/p/b/bro.html
STATUS: Cup w/handle. Looked very good Tuesday with another tight doji, but then broke below the 18 day MVA today on rising though still below average volume (273K; avg. is 390K). Disappointing move in the handle where we want that pattern good and tight, not wild and loose. We will see if it can hold above the 50 day MVA (32.97). If it does we could see a reverse head and shoulders form as well, another bullish pattern. We are not giving up on this stock; a good stock in a good sector.
BUY POINT: 35.63 on volume of 585K+. Target=42.75 (new high territory). Stop=32.95.
POSITION: Stock and/or September 30c to buy (BRO IF; low OI for now, but delta of 80).
http://www.investmenthouse.com/cd/bro.html
GWW (W.W. Grainger--$53.99; -0.62; optionable): Wholesale Electronics
http://biz.yahoo.com/p/g/gww.html
STATUS: Put: Breach of 50 day MVA. After the double top and the breach of the 50 day MVA, GWW gave us the kiss goodbye Tuesday and then started selling harder today (462K; avg. is 457K). It made the buy point intraday; we are looking for more when it continues the fall. Again, the test (kiss goodbye) is always our favorite point to take positions on a put play.
BUY POINT: 53.95 after a test of the 50 day MVA (55.71) on volume of 500K or better. Target=50. Stop=56.
POSITION: July 60p to buy (GWW SL; low OI, Delta 76)
http://www.investmenthouse.com/cd/gww.html
CONTINUED PLAYS:
New from Weekend Report:
DVA (Davita $25.80; -0.09; optionable): Specialized health services
http://biz.yahoo.com/p/d/dva.html
STATUS: Flying plateau. Edging back still after Friday's gap higher. On the low it came near the 10 day MVA (25.67; 25.55= 10 day) and bounced back up with a tight doji. Those mean it is a tight range and could be ready to move back up. Volume was higher but still below average (397K; avg. is 650K).
BUY POINT: 26.05 on volume of 800K. Target=31.25 (initial). Stop=24.25.
POSITION: Stock and/or October 22.50c to buy (DVA JX).
http://www.investmenthouse.com/cd/dva.html
ESI (ITT Educational--$51.51; +1.31; optionable): Education and Training
http://biz.yahoo.com/p/e/esi.html
STATUS: Successful test of breakout. Continued the move up after the test of the 9-month cup with handle breakout. Very good volume on the last two sessions (260K; avg. is 134K). Very nice. Tests of breakouts, successful tests, are our favorite buy points. Solid price/volume action wins out.
BUY POINT: Riding current positions.
http://www.investmenthouse.com/cd/esi.html
MANH (Manhattan Assoc.--$34.29; +0.19; optionable): System software
http://biz.yahoo.com/p/m/manh.html
STATUS: CSFB downgraded MANH to a hold Monday. Since then it made a quick drop to the 50 day MVA, holding there today with a doji. Volume was lower and slightly above average (591K; avg. is 558K). Still not ready to get in, but a good sign to see it hold at the 50 day MVA.
BUY POINT: We are not going to get in on this one for now. Buy point was 40.25 on volume of 750K+. Target=38.44. Stop=37.25
POSITION: Stock and/or July 35c to buy (MQR GG).
http://www.investmenthouse.com/cd/manh.html
MVL (Marvel Enterprises--$9.15; +0.05; no options): Toys and Games
http://biz.yahoo.com/p/m/mvl.html
STATUS: Made the breakout Monday, added some Tuesday on higher volume, and showed a tombstone doji today on even higher volume (966K; avg. is 344K). Over the past two weeks that is $1.60, so the stock may be ready to test the breakout. The doji shows the buyers were caught by the sellers, and we will most likely see a test of the breakout near 8.50. If we get the successful test at that level, we will look at new positions to add to the position.
BUY POINT: After a test of 8.50 and the start of a move back up, we will add to positions. Target=10.05 (initial). Stop=8.15-8.40.
POSITION: Stock.
http://www.investmenthouse.com/cd/mvl.html
PUTS:
NAV (Navistar--$40.22; -1.12; optionable): Trucks
http://biz.yahoo.com/p/n/nav.html
STATUS: One of the sectors showing signs of breaking down, and NAV has given up its 50 day MVA (42.48) of double tops and dipped down on a put play. It continued down today on volume that remained below average at 577,400 (avg. 626k). Riding positions toward the target of 37.75.
http://www.investmenthouse.com/cd/nav.html
MER (Merrill Lynch--$44.65; -2.49; optionable): Investment brokerage
http://biz.yahoo.com/p/m/mer.html
STATUS: Hit the initial target today on the put, but we could get some more out of this one. Volume was way up at 11m (avg. 6.8m) as MER tanked back, and we were looking at this play with the possibility of getting a breakdown from the head & shoulders if selling stayed strong. We will see if MER gives a bit of a test back here (from support of February lows) toward 46, but on continued selling down we can look at new positions. Target: 40.
BUY POINT: After a test of the 45-46 range, new positions on a drop through 44.50. Target=40. Stop=47.50.
POSITION: July 50p to buy (MER SJ).
http://www.investmenthouse.com/cd/mer.html
Super thin volume, but a nice pattern. We put this in with the understanding that we do not own this stock. The analysis is purely on a technical basis; we like the pattern. The very thin trade makes it subject to price swings based on fairly small levels of buying and selling activity.
GMP (Green Mountain Power--$18.74; +0.25; no options): Electric utility
http://biz.yahoo.com/p/g/gmp.html
STATUS: Cup with handle, and made a move up today in the handle. Volume was light at 3800 (avg. 6350) and we need to see more on the breakout. GMP is in a 3.5 month pattern, showing solid price/volume action in the base, along with money flow and relative strength. This is one of those sectors we are seeing activity in given the increase in defensive bias in the market at the end of last week.
BUY POINT: 18.85 on volume of 15,000 or more. Target=22.62. Stop=17.75
http://www.investmenthouse.com/cd/gmp.html
PUTS:
OEX (S&P 100 541.86; -3.94; optionable): S&P 100 options
STATUS: Put. Hit the target on the aggressive play, and now has broken down, taking out the neckline of the head & shoulders pattern. We could see a bounce tomorrow to test the breakdown, and if so we can look at new or additional positions on a drop back, still targeting 525.
BUY POINT: On a test of 546, a drop through 542. Target: 525 initial. Stop= 549.
POSITION: May 550p to buy (OEB QJ).
http://www.investmenthouse.com/cd/$oex.html
BRCD (Brocade--$23.70; -0.38; optionable): Telecom
http://biz.yahoo.com/p/b/brcd.html
STATUS: Put. Continued the low volume dip, gapping up with the market but falling intraday from the resistance of the 10 day MVA (36.41). Volume rose only slightly to 9.85m (avg. 16.6m), and we are riding positions down to the target of 21.75.
http://www.investmenthouse.com/cd/brcd.html
SYMC (Symantec--$34.65; -0.58; optionable): Internet software
http://biz.yahoo.com/p/s/symcl
STATUS: Put. Finally got the move, as Tuesday SYMC tanked back out of its series of lateral dojis, taking out the aggressive buy point. Today it bounced up to 36.30 but dropped back hard (volume up to 5.9m; avg. 3.77m), taking out the breakdown point in the pattern (a head & shoulders). Great. Then it blew out earnings and was up $1.70 after hours. We will see if the 50 day MVA stops it and if the overall gloom in the market takes hold again. Targeting 30 on the play, and we can still take new or additional positions on a drop through 34.
BUY POINT: For new or additional positions, a drop through 34 on continued strong volume. Target: 30. Stop=36.25.
POSITION: July 40 or 42.50p to buy (SYQ SH or SYQ SV - 4 open interest currently for the 42.50's).
http://www.investmenthouse.com/ct/symc.html
VARI (Varian--$32.60; -1.14; optionable): Scientific & Technical Instruments
http://biz.yahoo.com/p/v/vari.html
STATUS: Head and shoulders. Made a little relief bounce Monday after the breakdown move Monday, and then today tested all the way back up to the 50 day MVA at its high of 34.95, but ducked back to close lower on the session. Volume was lower as well, at 129,400 (avg. 280k). A wild day going into earnings, so we will see the reaction, still targeting 31.50.
http://www.investmenthouse.com/ct/vari.html
BASING/TRADING RANGES:
BYBI (Back Yard Burgers--$8.40; -0.12; no options): Restaurants
http://biz.yahoo.com/p/b/bybi.html
STATUS: Cup with handle. Hit the aggressive buy point Tuesday with earnings on a move that took it up to 9.40 (handle high is 9.48), but it retreated almost all the way back to the support of the 10 day MVA (8.33). It held that support again today with volume dipping way back to 25,300 (avg. 43k). Waiting for the breakout move. The price/volume action in this pattern shows heavy accumulation, and the money flow is excellent.
BUY POINT: Breakout: 9.55 on volume of 100K+. Target=11.50 (initial). Stop=8.15.
POSITION: Stock
http://www.investmenthouse.com/cd/bybi.html
ULAB (Unilab--$28.68; +0.88; optionable): Healthcare software & services
http://biz.yahoo.com/p/u/ulab.html
STATUS: Double bottom. In the right sector (health), even if software. Tried to breakout last week, hitting the buy point, but reversing. Not severe selling, and it rebounded after tapping its 18 day MVA (27.25) Tuesday. Volume was weak on today's jump (224,400; avg. 466k), so it might need some more time to set up in the handle. Great buying and money flow, and price/volume action shows positive accumulation over the base.
BUY POINT: Breakout: 29.25 on volume of 690,000. Target: 35. Stop: 26.97 (7%)
POSITION: Stock and/or August $25 calls to buy (HQZ HE)
http://www.investmenthouse.com/ct/ulab.html
Run to 100:
XL (XL Capital--$94.06; -0.85; optionable): P&C insurance
http://biz.yahoo.com/p/x/xl.html
STATUS: Run to $100. Looked like it was ready to move after the high volume 'shooting star' doji (finished well off the intraday high), but XL turned south and tested intraday below its 50 day MVA (93.85). Volume was down but strong at 1.1m (avg. 849k), so we will see if XL can hold the 50 day and set up the anticipated bounce to 100 or better.
BUY POINT: We will need to see it hold, then we can still look at 95.55 on volume of 1m or better. Target: 102. Stop=94
POSITION: We are looking at options on this one as it is high priced and the move is limited. July 90c to buy (XL GR).
http://www.investmenthouse.com/ct/xl.html
WEDGES, PENNANTS, FLYING PLATEAUS
UPS (United Parcel Service--$59.93; -0.48; optionable): Delivery
http://biz.yahoo.com/p/u/ups.html
STATUS: After the attempted move up last week that could not generate any strength, UPS has faded, today tapping back near the 50 day MVA (59.60). Volume has not picked up on the selling, still below average at 1.2m today (avg. 1.5m). It is back in the lower range of the consolidation, so we will see if it can hold and set up again.
BUY POINT: Needs to set up again. If it can, over 61.50, but need volume of 2 million. Target: 66.44 represents a former high and is the initial target. Stop Advisory: 59
POSITION: Stock and/or July 55c to buy (UPS GK).
http://www.investmenthouse.com/ct/ups.html
Watchlist stocks: Still looking strong but removed to make way for new plays as well.
AM: Bounced off the 18 day MVA today on above average volume. Looks ready to move over 18; when it does we are jumping in.
PHTN: May be in semiconductor equipment, but those stocks had a good day. The stock touched the 50 day MVA Tuesday and jumped today on rising, above average volume (618K). Aggressive over 50.
PRGX: Tight, lateral consolidation the past 7 sessions, the last 4 on below average volume. Holding above the 10 day MVA. We like that action.
SMSC: Holding the 50 day MVA after a low volume pullback the past 6 sessions. Solid buying; looks ready to jump.
WOOF: Tight doji on above average volume (229K). Close to that breakout.
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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us stock market
understanding the stock market
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