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yahoo stock, us stock market
Begin Part 2 of 2
THIS WEEK
Another full week of earnings and a very full week of economic data. Earnings have been disappointing for investors, and economic reports have not provided a sufficient salve. Indeed, unless economic reports turned, very, very favorable it is unlikely they could provide any upward impetus of lasting consequence in the near term. Why? Because companies are saying right now they don't see things that great for the future, and the economic reports are mostly considered behind the times. It would take many companies this week saying things were getting a lot better.
That is something not to count on obviously. So the question is will the indexes hold on their own? Fear indicators are not at extremes (put/call ratio, VIX, bulls/bears), the indexes have been distributing over the past three weeks, they are breaking through support levels in the near term, and they are in steep short-term downtrends. While we anticipate an oversold bounce to test the levels being broken, at this point there is not much to make such a move stick. Again, a key will be how the small and mid-cap indexes hold up this week. If they can continue to rally off of support that is a positive sign for the market overall; if they fold that pretty much speaks for itself.
The economic recovery is continuing and we anticipate that it will continue to do so. The market is overshooting to the downside with its reaction to earnings in spite of a steadily improving economy. We believe it will overshoot to the downside some more, perhaps after that test to the upside this week. It has to rally some to set up better positions for downside action as many stocks have sold hard and are extended to the downside. A bounce up to resistance (former support) would give that 'kiss goodbye' entry point on downside action.
As for upside action, we will keep a close eye on the mid and small caps as well. We did see selling in these stocks Friday that went a little broader and further this time. While we still see very solid patterns under accumulation, we also want to see the indexes hold the line and the stocks make solid breakouts on strong volume. The big cyclicals did not look bad Friday at all despite the sharp selling on the major indexes. That is another slight positive mostly overlooked.
Support and Resistance
Nasdaq: Closed at 1663.89
Resistance: The March down trendline at 1700 (February low at 1696). 1743 to 1750 may act as some resistance (the 18 day MVA is at 1760.02), then 1775. 1850 is next (200 day MVA at 1847.83), followed by 1875, the bottom of the November consolidation.
Support: Right at the lower channel line from the March downtrend (1660). Then not much until 1613 to 1626 (April 2001 low at 1619 intraday).
S&P 500: Closed at 1076.32
Resistance: 1100 represents former price consolidations as well as the March down trendline. The 18 day MVA (1111.92), and the 18 day acts as resistance in continuing downtrends. After that is 1125 and the 200 day MVA (1130.09) is sitting right above that level. There is some resistance at 1150 as well. After that there is a lot more, but w will take one step at a time.
Support: Fighting to hold 1075, the February low as well as the March 2001 intraday low. This point marks the completion of the 3-month head and shoulders. After that 1050 represents the October lows and the last price consolidation level before the September low.
Dow: Closed at 9910.72
Resistance: 10,100 held for many tests before breaking. The March down trendline at 10,130, a key point on any relief bounce. The 18 day MVA is at 10,166.02, another point of resistance in downtrends. 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.
Support: The 200 day MVA (9933.08) was undercut, but it still has not been definitively broken. 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.
4-29-02
Personal Income, March (8:30): 0.5% versus 0.6% prior
Personal Spending, March (8:30): 0.4% versus 0.6% prior
4-30-02
Chicago PMI, April (10:00): 55.50 versus 55.7 prior
Consumer Confidence, April (10:00): 108.0 versus 110.2 prior
5-1-02
Auto Sales, April (00:00): 6.0M versus 6.0M prior
Truck Sales, April (00:00): 7.3M versus 7.3M prior
ISM Index, April (10:00): 54.6 versus 55.6
Construction Spending, March (10:00): -0.1% versus 1.1% prior
5-2-02
Initial Claims, 4/27 (8:30): NA versus 421K prior
Factory Orders, March (10:00): 0.7% versus 0.3% prior
5-3-02
Nonfarm Payrolls, April (8:30): 60K versus 58K prior
Unemployment Rate, April (8:30): 5.8% versus 5.7% prior
Hourly Earnings, April (8:30): 0.3% versus 0.3% prior
Average Workweek, April (8:30): 34.3 versus 34.2 prior
ISM Services, April (10:00): 57.5 versus 57.3 prior
SUBSCRIBER QUESTIONS
Q: In the current environment stops of 7% seem quite wide and it would seem if the entry is close to the pivot point these could be much tighter. Myself I use much tighter stops and although whipsawed occasionally, losses are kept to a minimum. Of course, I have the luxury of watching the market all day.
A: In this market we agree that keeping loss cutting points tight is wise. When breakouts fail or moves reverse, preserving as much capital as possible is important. That is why we are keeping tight trailing stop losses following moves higher. Not too tight; we often use the 18 day or 10 day MVA on breakouts because stocks tend to use these as support on uptrends after breakouts. Stocks can undercut them intraday, however, so we put our stop points below the exact levels if we feel it is going to give normal pullbacks and want to allow the stock to continue bouncing higher. If it gets closer to our target and shows topping signs and we want to preserve the gain, we will move them up further or just go ahead and take the gain. Still, when we take a position we want to give it a chance to work for us without an immediate undercut of our stop. After it makes that initial move we then have latitude to raise the stop level up tighter, again usually using the 18 or 10 day MVA. These points usually keep us well less than 7% stops, and if the stock continues to run of course, we are looking then at preserving gains and not simply cutting losses short.
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 Thursday's report:
AKLM: Tanked like a boat with a hole in it, never hitting the buy point.
GSB: Held the handle nicely with a doji on higher volume.
IBPI: Continued the nice move on strong volume.
HNT: Tried to make a go of it, but the market was not ready. Held steady.
CNMD: Held steady on lower volume.
Good movers: STSA still moving well. DANKY still blasting higher. FDC on the put.
Continued Plays:
ATPX: Never made the breakout and dumped like a dump truck.
BRCM: Resumed its fall toward 30 in the put play.
CAT: Put. Cyclicals did better Friday. Rallied again showing a hanging man doji, however on rising volume. Could resume the selling this week on our put play. 50 day MVA is our stop.
CVGR: Still testing on low volume, holding on the close at the 10 day MVA once again at 5.
CHGO: Closed below the 18 day MVA on higher volume forcing us to close the play.
FDC: Started the fall Friday with a strong, above average volume drop.
GMRK: Continued the move up on rising volume. Not perfect but not bad at all.
GYMB: Holding at the short term moving averages on below average volume. Tried to make the break on Wednesday, but no legs.
HARB: Very interesting. Very tight doji's pattern after the pullback to the 18 day MVA. Friday volume rose to average. Maybe ready to bounce.
HUM: Doji on lower though continued above average volume. We still think it has more on this leg before it pulls back.
IHI: Thursday it made the price move but no volume, Friday it got the massive volume but sold back with a doji. Being very careful right here and won't let it go below 30.
OATS: Broke up out of the range on strong, above average volume (451K), but showed indecision with a doji on the move. A caution sign in this market and we need to watch out for a turn on us.
OMX: At the 18 day MVA again on lower, below average volume. This is where it should hold.
OREX: Holding at the 18 day MVA with a large trading range on below average volume. Again, we don't want it to close below the 18 day MVA.
PLB: After two great sessions it took a rest Friday on lower volume showing a doji. Could come back to test 48 to 47.50
PMSI: Health services. Took a pause, falling fractionally on very low volume. Given the market Friday, very good action.
RPM: Bouncing well off of the test of the 18 day MVA with rising, above average volume.
STSA: Continued the solid move higher on lower though still above average volume. Not showing much weakness, but it will run out of steam and need a rest early this week.
VWKS: After two big moves up it had a big move down Friday though on lower volume. We are going to hang with current positions for now.
ZQK: Just not following through. Could be a shakeout on the low volume, but we are not going to let it fall below 24.
Best Plays:
1) AMI: Nice cup with handle.
2) ROIL: Ready for a new high.
3) NUE: Testing the 50 day MVA before the fall.
4) Watchlist: ASL and JNC
New plays:
AMI (Alaris Medical--$3.58; -0.03; no options): Medical equipment
http://biz.yahoo.com/p/a/ami.html
STATUS: Cup w/handle. In a 5-month pattern and looks ready to breakout to a new 52-week high. Price in the 7-session handle has been somewhat volatile, but volume has dropped dramatically after showing a good surge as the right side of the base was built in early April. Friday the stock showed a hammer doji just above the 18 day MVA (3.51) as volume rose (33,700; avg. is 33,500). Money flow is excellent, and there has been buying in the stock the past two months. Accumulation weeks top distribution weeks better than 3 to 2.
BUY POINT: 4.00 on volume of 75,000+. Target=5.96. Stop=3.72 after the breakout.
POSITION: Stock (no option chain)
http://www.investmenthouse.com/cd/ami.html
ROIL (Remington Oil & Gas--$21.08; +0.57; optionable): Independent oil & gas
http://biz.yahoo.com/p/r/roil.html
STATUS: Flat base. Broke out of a 10-month cup with handle in March, and has now formed a lateral flat base from 19.50 to 21, holding along the 18 day MVA (20.30) as it moves laterally. The price/volume action has been good with higher volume occurring on up sessions. Friday volume moved up sharply on the gain (175K; avg. is 195K). Money flow is excellent and relative strength has already broken out as ROIL looks ready to make an all-time high. We really like combination bases such as this where a cup w/handle breakout is followed by an ascending wedge or a flat base. Those can lead to very good returns.
BUY POINT: 21.51 on volume of 295K+. Target=25.75 (initial). Stop=20.
POSITION: Stock and/or August 17.50c to buy (RQF HW; delta 77).
http://www.investmenthouse.com/cd/roil.html
Puts:
NUE (Nucor--$59.41; +1.03; optionable): Steel and iron mining
http://biz.yahoo.com/p/n/nue.html
STATUS: Breach of 50 day MVA. After a strong run from September, NUE double topped in early April, a common malady in the market of late. After a lower volume try to break the March high NUE dropped hard to the 50 day MVA on rising volume, breaking below that level Thursday on above average volume. Friday it made the bounce attempt, coming close to the average on the high (59.99 is the 50 day), but falling short. Volume dropped back below average on the move up after selling on above average volume (557K; avg. is 900K). This has the look of the 'kiss goodbye' to the 50 day MVA, our favorite entry point on a put play. There has been out and out selling in this stock the past month, and money flow has dropped sharply.
BUY POINT: On a fall through 58.75 on volume of 900K or more. Target=54. Stop=61.
POSITION: July 65p to buy (NUE SM; low OI; 62 delta).
http://www.investmenthouse.com/cd/nue.html
NTBK (NetBank--$15.00; -1.10; optionable): Savings & Loan
http://biz.yahoo.com/p/n/ntbk.html
STATUS: Breach of 50 day MVA. Another nice run, this one from November, that has run into trouble. This from a stock in one of the better sectors. NTBK broke its up trendline in late march, rallied off the 50 day MVA (15.44) but could not bring in any volume, failing to even make the prior high just over 17. Friday it gave up the 50 day MVA on rising but still below average volume (608K; avg. is 695K). We would have liked to see volume spike higher on that move. There is also some support at 15 from the February interim top and some March lows. Thus, we want to see the stock breakdown below 15 on above average volume to give us the real signal it is going to sell here.
BUY POINT: 14.85 on volume of 750K or better. Target=12. Stop=16.25
POSITION: July 20p to buy (NAA SD; low OI; delta 80).
http://www.investmenthouse.com/cd/ntbk.html
Revisited:
JNC (57.91; +0.04): A very nice pullback to the 10 day MVA (57.85) on very low, below average volume (28,300; avg. is 71,000). We are looking for a bounce up on above average volume.
http://www.investmenthouse.com/cd/jnc.html
ASL (5.37; +0.17; gold mining): Powered higher Friday on huge volume (749K; avg. is 250K), nearing a breakout to another 52-week high as it continues up its 50 day MVA. Lookinv for a move over 5.45 on continued above average volume for a move up to 7.
http://www.investmenthouse.com/cd/asl.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 (78.33; -0.83): The great earnings rallied the stock for two sessions, but it gapped higher to the simple 50 day MVA Friday and then sold back from there on lower, average volume. This looks like all that FRX is able to muster on this move, and a point where remaining positions can be close until the stock recovers and calms down.
UP & COMERS PORTFOLIOS: BBBY, SRCL
Nothing exciting on Friday with these stocks. Held steady on low volume.
MEMBER PORTFOLIO: CSCO, SEBL, EMLX, BRCM, HDI, BRCD, BUD, AMGN, WMT, ORCL, HB, NOC
After a move up on Thursday, the big techs ran into resistance at the near term moving averages, stalled, and reversed. Such is the life of a former leader with declining earnings and a still clouding outlook. The big techs continue to be in trouble, and it may be worse before it gets better. It most likely will never be as good as it was. ORCL is already at its September lows while the other big names try to hang onto the October consolidation ranges.
Meanwhile WMT has really turned ugly as we thought it would after the breach of the 50 day MVA and low volume rise back to test it. Friday it tanked to the 200 day MVA on rising, above average volume. We were concerned about WMT back in March, and it warranted concern.
Biotechs are getting crushed, and AMGN is leading the way. It is below its September low, but it was lower in March and April of 2001. Little consolation as the stock continues to sell on strong volume. Another stock that will have a very hard time recovering.
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
us stock market
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