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Begin Part 2 of 2
Support and Resistance
Nasdaq: Closed at 1713.70
Resistance: 1743 to 1750 may act as some resistance (10 day MVA is at 1754.22), then 1775 (the 18 day MVA is at 1771.33). 1850 is next (200 day MVA at 1849.91), followed by 1875, the bottom of the November consolidation. 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: 1700 (February low at 1696.55). Then 1613 to 1626.
S&P 500: Closed at 1091.49
Resistance: 1100 is the immediate test. The 10 day MVA (1108.62) and the 18 day MVA (1116.11) may act as resistance in the continuing downtrend. After that is 1125 and the 200 day MVA (1130.80) 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: 1075, the February low that completes the head and shoulders. After that 1050 represents the October lows.
Dow: Closed at 10,035.06
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 10,150, a key point. The 18 day MVA is at 10,196.05 and the 50 day MVA at 10,206.61. 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: The 200 day MVA (9935.92) was undercut on the low, but was able to help bounce the index back up. 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): 421K actual versus 425K expected and 452K prior (revised from 445K).
Employment Cost Index, Q1 (8:30): +0.8% actual versus 0.9% expected and 0.9% prior
Existing Home Sales, March (10:00): 5.4M (-8.3%) actual versus 5.50M expected and 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): 94.5 expected (lowered from 95) versus 94.4 prior
TEAM TRADES
STSA: A savings & loan in a tight ascending wedge pattern on top of the breakout from a cup with handle pattern in March. We loves these ascending wedges on top of cup with handle breakouts. We have been watching STSA on the Daily for a week or so, and Thursday it gave a signal, moving up in the pattern on a volume spike (a 'get ready' spike). Today it was a bit long in coming, but we wanted to make sure it cleared resistance on good volume. We were watching the volume rally all session and were anticipating the breakout. With about 15 minutes left in the session it made that move, breaking over 22.80. The alert was issued and we immediately put a limit order in at the ask which had jumped to 22.94. That was good enough, but then the stock slid lower; could have had a better entry point, but the volume was good and the stock moved up to close at 22.98. We got in near the session high. Oh well, we like the move and love the volume.
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's report:
PLB: Blasting off on strong volume. Pasta. Go figure.
FDC: Never quite made the drop we wanted today, but still so weak with a doji below the 50 day MVA on even lower, below average volume.
STSA: Making the move we wanted on excellent volume.
HUM: See ya'.
OMX: Tested the 18 day MVA on the low for good measure. Very low volume.
OATS: Nowhere today.
Good movers: HUM, STSA, COCO (stock split), DANKY
Continued Plays:
IHI: Made the price move, but volume did not follow yet.
CVGR: Testing on low volume toward the 10 day MVA at 4.98.
CHGO: Not what we want. Broke below the 10 day MVA, testing all the way down past the 18 day MVA on the low. Volume rose. Need a jump up or may have to exit.
BRCM: Was in a freefall, but reversed on much stronger volume to finish positive. Holding puts for now.
OREX: Quick turn on the breakout and down at the 18 day MVA. Volume fell way off, but do not like the action. Won't let it fall below the 18 day MVA on the close.
ZQK: Turned lower on rising, above average volume. Tested the 18 day MVA on the low (24.38). May be a shakeout, but not the right volume.
RPM: Nice test of the 18 day MVA on low volume as it should be.
GMRK: Holding in the tight range on low volume. Not bad action.
CAT: Put. Rallied off the low near 52 on rising volume. Still holding the puts.
SEBL: Put. Hit the target and closed the position.
ATPX: Still in a very nice handle on very low volume.
GYMB: Tried to make the breakout but did not do it. Volume rose as it closed fractionally lower. Will have to reload and try again.
ASBC: Wow. What a drop on rising volume. May have to bail tomorrow if it cannot move over 38.
PMSI: Health services. Tried to give it back today, but held and rallied for a small gain on lower volume.
HARB: Barely measurable volume on this test. Yet another doji.
VWKS: Continued to explode higher.
Best Plays:
1) PLB: Pasta is hot.
2) FDC: Testing the breach of the 50 day MVA.
3) STSA: Making the move.
4) Continuing plays: HUM, OMX, OATS: All ready to move.
New plays:
AKLM (Acclaim Entertainment--$5.47; -0.06; optionable): Multimedia software
http://biz.yahoo.com/p/a/aklm.html
STATUS: 6-month cup with handle. This may be a software stock, but the price/volume action in this base is stellar with accumulation weeks outnumbering distribution weeks by a 5 to 1 margin. Money flow is excellent on top of that. The stock tried to make a move today, but the volume was not there to support it (1.41 million; avg. is 1.4 million). Volume has tailed off the past four sessions as it has moved into the handle phase, and we would actually like to see the stock calm down for another few sessions on even lower volume and then make the breakout move.
BUY POINT: 6.00 on volume of 2.1 million. Target=7.88. Stop=5.45
POSITION: Stock
http://www.investmenthouse.com/cd/aklm.html
GSB (Golden State Bancorp--$32.22; +0.14; optionable): Savings & Loan
http://biz.yahoo.com/p/g/gsb.html
STATUS: Cup w/handle. GSB is in an 8-month cup with handle. It has a lot going for it. First, it is a savings and loan, and despite what we hear on the financial stations, smaller financial institutions are performing fine. Some are winded, but most are fine. GSB is in a great base with 9 accumulation weeks to 3 distribution. That is the key. Money flow is solid while relative strength is awaiting the nod to break out. It is a nice pattern if a bit steep in the handle (it sold down on above average volume four sessions back; avg. is 695K). It is settling down well in the handle now, and we would like to see it move laterally for a few more sessions on continued below average volume. We really like the price/volume action, however, and are going to patiently await the breakout move.
BUY POINT: 34 on volume of 1 million shares. Target=40.80 (initial). Stop=31.62
POSTION: Stock and/or October 30c to buy (GSB JF). We looked at the July 30c (GSB GF, delta 77), but we want more time to let this stock move.
http://www.investmenthouse.com/cd/gsb.html
IBPI (Intrabiotics Pharmaceutical--$4.58; +0.51; no options): Drug manufacturer
http://biz.yahoo.com/p/i/ibpi.html
STATUS: IBPI is well off of its old high over 30, but it is at a 52-week new high after Wednesday's move. The stock has been blasting up out of lateral consolidations as it works its way out of its base. It is getting a lot of help right now with heavy buying and super money flow. Price/volume action shows solid accumulation over the past two months as the stock moved through its flat base/ascending wedge. Today it made a breakout move on very strong volume (1.67 million; avg. is 265K). We are looking for a nice, quick gain here, and if it carries us further, all the better.
BUY POINT: 4.72 on volume of 500K or more. Target=5.96 (initial). Stop=4.25.02
POSITION: Stock.
http://www.investmenthouse.com/cd/ibpi.html
Revisited:
HNT (Healthnet--$28.80; +1.30; optionable): Health care plans
http://biz.yahoo.com/p/h/hnt.html
STATUS: A hot sector, HNT made a strong move on huge volume (1.94 million; avg. is 480K). We are looking to pick up more positions on a move over 29 on continued strong volume.
BUY POINT: 29.05 on volume of 700K+. Target=34.80. Stop=27.
POSITION: Stock and/or October 25c to buy (HNT JE).
http://www.investmenthouse.com/cd/hnt.html
CNMD (Conmed--$25.50; +0.39; optionable): Medical equipment
http://biz.yahoo.com/p/c/cnmd.html
STATUS: In a tight lateral test of the recent breakout, hugging the 10 day MVA (25.17) as it makes the test. Today it showed a big volume spike as it made a fractional move higher (233K; avg. is 148K). This is a 'get ready' spike that often presages a move higher.
BUY POINT: 26.05 on volume of 210K+. Target: 31.25. Stop=24.22
POSITION: Stock and/or August 20c to buy (KQD HD, low OI).
http://www.investmenthouse.com/cd/cnmd.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
DGX (89.25; +0.75): DGX is making things a bit difficult, though it is a nice problem to have after such a nice gain. It is banging around between 85 and 90, making the last rise on declining volume after a high volume reversal Wednesday. It is having problems with 90, and today the move slowed way down as it made its way toward that level (89.99 on the high). Do we take profits here? We are inclined to sell some May 85c ($5 to sell at the close) on any more weakness, and try to make $2 to $3 as the stock falls back toward 85. We don't want to get caught short in them. If we get the gain we will take it and then see how the stock performs at 85.
UP & COMERS PORTFOLIOS: BBBY, SRCL
BBBY (36.95; +0.78): Today it received the volume (3.79 million) as the stock cleared the resistance and moved higher. This was the time to add to positions, but it is still in good shape for more.
SRCL ($66.30; +0.73): The volume came in to SRCL as well today, jumping well above average (461K) as it cleared 65. A good start, but it still has a lot of resistance up to 67 from that big hump in March. It needs to clear that on strong volume to show there is no head and shoulders left in it.
MEMBER PORTFOLIO: CSCO, SEBL, EMLX, BRCM, HDI, BRCD, BUD, AMGN, WMT, ORCL, HB, NOC
The big name techs moved up on stronger volume today as buyers moved in on the successful test of the February intraday low. A good start, but they are in established downtrends and will have to really continue the volume on the move.
BUD ($52.64; +0.94): After reporting good earnings Wednesday and falling, BUD rebounded back over the 18 day MVA Thursday on lower yet still solid, above average volume (2.7 million). This is the recovery we needed to see, but we need to be careful still; as noted last night, BUD could still test the 50 day MVA. Not much of a fall, but we have to watch the volume closely if it does. We want to see it jump up off of the 50 day MVA in a quick move on strong volume.
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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