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us stock market, trend trading stock
Begin Part 2 of 3
Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.
5-7-02
Productivity-Prel., Q1 (8:30): +8.6% actual versus 7.0% expected and 5.5% prior (revised from 5.2%).
Wholesale Inventories, March (10:00): 0.0% actual versus -0.4% expected and -0.7% prior
FOMC Meeting (2:15): Rates held steady
Consumer Credit, March (Consumer Credit): $6.0B versus $7.1B prior
5-9-02
Initial Claims, 5/4 (8:30): 407K versus 418K prior
Export Prices es-ag., April (8:30): NA versus 0.2% prior
Import Prices ex-oil, April (8:30): NA versus 0.0%
FOMC Minutes, 3/19 (2:00)
5-10-02
PPI, April (8:30): 0.4% versus 1.0% prior
Core PPI, April (8:30): 0.1% versus 0.1% priorAuto Sales, April (00:00): 6.0M versus
SUBSCRIBER QUESTIONS
Q: One of the best services I have invested in. I am not only following your suggested plays, but trying to learn better techniques. I have a question regarding the average volume figures you use. What is the moving average that you place on the volume bars? Also, why do you use an 18 bar EMA rather than a 20 bar EMA which is much more common amongst the investment TA group? Thank you for your response.
A: Thanks for the nice comments. Always appreciated. First, for average volume we use the 50 day average. The reason is that matches an important price moving average, the 50 day MVA and it historically provides a very good measure of movement. We look at a lot of history to determine what works because the same patterns are repeated over and over in the market no matter if we are in an old economy, new economy or whatever. Emotions remain the same, and that is what drives the market. The 50 day average works well historically.
As for the exponential 18 day MVA, it has the same basis. We plot the 20 day MVA on our charts, but in 98% of the cases, the 18 day MVA is used as support in uptrends and resistance in downtrends as opposed to the 20 day moving average. We always plot several moving averages to keep up with what works. The market is dynamic and changes in cycles. The 18 day MVA gives a better read on what is going on in most cases.
THE PLAYS: Got an announcement from YUM today! GTK announced Wednesday. YUM joins other restaurants we have been following (PNRA, DRI, PFCB, SONC) and recent splitters RNR, FBC, IFIN, RYL and MI!
BONUS PLAYS: QLGC fell hard today and hit the put buy point, but on good numbers was up over 41 after hours. Not looking to ride our positions up, especially with a possible tech bounce coming. LRCX we are also watching carefully for a bounce. AMG is still struggling under resistance, and could fall if it cannot break over the 10 day.
OEX (S&P 100--$518.22; -1.26; optionable): S&P 100 Index
STATUS: Bounce. After giving a move down to the 519 range on the put play (taking out the initial 525 target), the index slowed the action Tuesday, showing a doji after a steep 2-day drop. Volume rose above average to 1.34 million (average is about 1.3 million) with the doji. We are looking for the index to give a relief bounce up to the range of its 10 day MVA at 532 for the quick play, taking profits there if resistance halts the bounce. On the heels of CSCO's earnings news we may see a gap higher; on that move we will look for a test of the opening price, or today's closing price for entry.
BUY POINT: From here: 520 on continued rising volume. Target=532 initially. Stop=515
POSITION: June 515c to buy (OEB FC; low open interest).
SOX (Phili Semi--$470.14; -3.00; optionable): Semiconductor Index
STATUS: Bounce. After falling from its 200 day MVA the last four days (it broke that support late April and has not recovered), the SOX showed a pretty tight doji at the top of its intraday range (tapped 455.27 on the low). The close near the daily high suggests the index can bounce back here, and if it does we are looking at getting in on a quick run back up to test resistance, in this case the 500 range (below the current level of the 10 day MVA at 515, and at the February low, 500.57). We will look for a possible gap higher because of the CSCO numbers, but after a test of the opening price or today's closing price, will look at getting in quickly for the bounce.
BUY POINT: From here: 474 on rising volume. Target=500. Stop=465
POSITION: June 470c to buy (SXX FN).
FCN (Fti Consulting--$34.49; +0.49; no options): Business services
http://biz.yahoo.com/p/f/fcn.html
STATUS: FCN has trended up nicely along its 50 day MVA, breaking out from an ascending wedge after its last test of that support in late April. The solid breakout took FCN up to 37.20, and it has rested from there, pulling back to test the move on lighter volume. It is holding comfortably over former highs in the 32 range, at the 10 day MVA (34.27). Volume came back in today (271k; avg. 224k) as FCN moved up a bit from support. Looks poised for a bounce, and we can look at a bounce play with options, targeting 39. Good buying.
BUY POINT: Over 35.10 on increased volume. Stop: 33
POSITION: June or September $30 calls to buy (FCN FF - 79 delta, 49 OI; FCN IF - 73 delta, 175 OI).
MAS (Masco Corp--$28.97; +0.27; optionable): Industrial equipment manufacturing
http://biz.yahoo.com/p/m/mas.html
STATUS: Ascending wedge. Since early March MAS has battled resistance at 29, dipping back but making higher lows. It held the 50 day (27.62) on the last dip, running up and gapping up Monday over the pattern highs, but it pulled back to close. Today MAS tapped back to the 18 day MVA at its intraday low of 28.32, but recovered to close with a doji as volume spiked up to 3.56m (avg. 1.99m). Looking for MAS to hold 28.50 and generate a move on continued strong volume to breakout. Good money flow, and relative strength has broken out. Target: 34
BUY POINT: 29.53 on continued strong volume (min. 2.7 million). Stop: 27.50
POSITION: July $25 calls to buy (MAS GE).
RHI (Robert Half--$24.78; -0.76; optionable): Staffing service
http://biz.yahoo.com/p/r/rhi.html
STATUS: Since hitting 31 in March, RHI fell and continued to make lower highs, although holding the 200 day MVA (25.39) at its lows. Last week RHI bounced from the 200 day, but stalled at the 50 day (27 range), and has fallen back. Today it took out the 200 day, and volume on the selling shot up to 997,300 (avg. 608k). Looking for more, although we could get a test of the 200 day and the "kiss goodbye" that we love to play. Targeting 21.
BUY POINT: After a test of the 200 day, a drop back through 24.65 on continued strong volume. Stop: 26.50
POSITION: June $30 puts to buy (RHI RF - 13 OI).
Quick updates prior bonus plays:
MXIM - Hit down near 41, but rebounded on strong volume, so we could get a bounce and will be ready to exit
NTBK - Fell hard back from the breakout
UAG - Great move but has dropped back, tripping trailing stops
AVY - Holding up on the breakout
XTO - The weak breakout did not hold, and it is back in the consolidation
TBCC - Still strong
MTB - Holding up after the move, and we would still get a test of 86
ARW - Continued down on the put
TDY - Still looking good, holding up on the breakout
FCTR - Fell back off of the attempted move, and broke support of the 18 day. Not hanging around
MFC - Testing the breakout and holding
CCL - Failed breakout and back at the 50 day
IRIC - Nice test of the breakout
LEXR - Falling back on low volume toward the 50 day; there is some support at today's close
RF - Creeping up although volume has been big
RTEC - Continued down on the put play
MCY - Holding up after the breakout
HLT - Testing the breakout on low volume and could bounce again
PZB - Testing the 18 day, not bad
ASCA - Weak bounce from the 50 day
SMTC - Continues down on the put
CAT - Finding support on the put at 52
JILL - Still erratic and protecting from a downward move through the 50 day
CF - Care now as fell through support of the 18 day on strong volume
CDIS - Quick drop back after the breakout disappoints; holding the 50 day for now
PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: EXPD tanked today going into the forecast. Looking at ATK and MGA on Thursday.
NEW PRE-ANNOUNCEMENT PLAYS:
PRE-ANNOUNCEMENT BEST PLAYS:
1) CTAS - Finally a strong move
2) EASI - Looking for a breakout
3) ATK - Forecast for Thursday
4) BRL - Selling hard
5) KSS - Another put
6) BER - Holding up
7) MGA - Forecast for Thursday
CTAS (Cintas--$53.25; +2.30; optionable): Researching a date.
http://biz.yahoo.com/p/c/ctas.html
BACKGROUND: Last announced a 3:2 split on 1-18-00 in conjunction with a board meeting. The stock price was $54. The annual shareholder meeting was on 10-25-00 at which time additional shares were authorized.
STATUS: We have been looking for CTAS to finally show some strength. It broke from a reverse head & shoulders in April, moving over its down trendline as well, but it could not muster any volume as it crept up along its 18 day MVA (currently 51.28). Today it finally made a break, running over recent highs and tapping toward the all-time high of 54 (today's high 53.80), as volume spiked up to 1.95m (avg. 993k). Looking for a new high, and with a continued strong move, moving the target to 65.
BUY POINT: Over 54 on continued strong volume. Stop: 51
POSITION: Stock and/or August $50 calls to buy (NQQ HJ).
EASI (Engineered Support--$51.00; +0.86; optionable): Aerospace/Defense. Forecast to announce a split the week of 5-27-02 with earnings. At this time, the company cannot confirm this date.
http://biz.yahoo.com/p/e/easi.html
BACKGROUND: EASI last announced a 5:4 split on 2-1-2001 with a board meeting at a price of $28.50. Before that it announced on 6-12-98 at a price of $26.50. The company has sufficient shares for a 3:2 split.
STATUS: Trying to break from a cup with handle. Last Thursday it made a bit of a move, but although volume was up it was not breakout caliber, and EASI pulled back into the handle. It held the 10 day MVA (50), and today volume came back to the tune of 262,700 (avg. 186k) as EASI pushed back up. Looking for volume to continue to escalate and push a solid breakout. With some strength on a move, targeting 62. The left side high in the pattern is at 58 from October 2001.
BUY POINT: 52.23 on volume of 290k. Stop: 48.57 (7%).
POSITION: Stock and/or August $50 calls to buy (UFE HJ).
ATK (Alliant Techsystems--$107.51; -2.89; optionable): Aerospace/Defense. Forecast to announce a split on 5-9-02 before the open with earnings.
http://biz.yahoo.com/p/a/atk.html
BACKGROUND: Last announced a 3:2 split on 8-8-01 at a stock price of $98.20. The announcement was made a day after the annual shareholder meeting and in conjunction with earnings. The annual shareholder meeting was on 8-7-01 at which time additional shares were authorized. The company has sufficient shares for a 3:2 split.
STATUS: Made a strong breakout last week, but after holding up for a few sessions ATK turned back today. A concerning move, although not catastrophic by any means. Volume was up at 367,300 (avg. 302k), but ATK held the 18 day MVA (107.01; 50 day is at 101.53) to close, although it is just below prior consolidation highs. We are still riding positions, but want to see a hold of the 18 day going into the forecast. Still targeting 125 if we get a resumption of the move.
BUY POINT: Riding current positions, but not wanting to ride down through a breach of the 18 day. If it can hold here, the aggressive can look at a move over 110 with volume of 400k or better. Stop: 102.39
POSITION: August $105 calls to buy (ATK HA).
BRL (Barr Laboratories--$63.08; -2.41; optionable): Generic drugs.
http://biz.yahoo.com/p/b/brl.html
STATUS: BRL has fallen back hard from its down trendline (dating back to October 2001, and now with its 50 day MVA, at 67.66). The stock has been consolidating below the 50 day, challenging that level last wee but falling back in its consolidation Monday, with continued light volume. Today the selling really kicked in, with BRL dropping through the consolidation lows (with July, November and February lows, at 62-63). It hit 61.60 but turned back up to close, as volume on the day hit 1.43m (avg. 483k). We could get a bit of a test up toward 64, but we will look for a drop back through 63 for a put play down to 55.
BUY POINT: After a reach up toward 64, a drop back through 63 on continued strong volume. Stop: 67
POSITION: August $70 puts to buy (BRL TN).
KSS (Kohl's Corp--$71.15; +0.87; optionable): Department Store. Forecast to announce a split on 5-16-02 after the market closes in conjunction with earnings or on 5-21-02 in conjunction with its annual shareholder meeting.
http://biz.yahoo.com/p/k/kss.html
BACKGROUND: Last announced a 2:1 split on 3-16-00 at a stock price of $76. The company has sufficient shares for a 2:1 split.
STATUS: After breaking from a saucer last month, KSS hit trouble at 76 and has falledn steadily on rather light overall volume. It has just been bleeding, Monday giving up the 50 day MVA (71.38) on volume that continued to be below average. Today KSS tried to make a bounce back over the 50 day, hitting 71.90 but pulling back to close, as volume again dropped, coming in at 1.2m (avg. 1.77m). After this weak test, we are looking for KSS to turn back down, and with increased selling volume, we will look at a put down to a target of 64 (200 day MVA at 63.58).
BUY POINT: A fall through 70.20 on average or better volume. Stop: 73.
POSITION: July $80 puts to buy (KSS SP).
BER (W.R. Berkley--$59.65; -0.42; optionable): Property & Casualty Insurance. Forecast to announce a split at the annual shareholder meeting on 5-14-02 at 2:30 ET.
http://biz.yahoo.com/p/b/ber.html
BACKGROUND: Based upon our research it does not appear that BER has ever split its stock. The annual shareholder meeting was on 5-15-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: With earnings last week BER gapped up from a test of its 50 day MVA (57.55). It is holding up very well, today gapping up and dipping back on low volume (105,300; avg. 124k), holding the 10 day MVA (59.55) and in the range of the early April highs. Holding existing positions and looking for BER to hold support here. On a strong move back up we can look at new positions. Targeting 68 with current positions, and we can look at options positions from here.
BUY POINT: On a hold of support here, a move back over 61 on increased volume. Stop: 57.
POSITION: July $55 calls to buy (BER GK).
MGA (Magna--$72.95; -0.05; optionable): Auto Parts. Forecast to announce a split 5-9-02 with earnings.
http://biz.yahoo.com/p/m/mga.html
STATUS: After a promising bounce last week that hit the new buy point with a lot of volume, MGA gapped back Friday on the news of a redemption of convertible debentures. A relief bounce could not do much, and MGA has dropped back to the level of its recent lows just over the 50 day MVA (72.48), where it showed a loose doji today on decreasing volume (405k; avg. 321k). We will see if it can hold the 50 day, but with existing positions are wary of a drop through that support. On a breakout we were targeting 90.
BUY POINT: Riding current positions, cautious of a break of the 50 day. If it can hold here, the aggressive can look at a move back over 75 on increased volume. Stop: 71.80.
POSITION: Stock and/or August $70 calls to buy (MGA HN).
PRE-SPLITS BEST PLAYS: Remember, we try to grab Pre-Splits as they break out of good patterns or as they start a run right before the split. Not looking for home runs, but looking for those $3 to $4 moves running into the split, watching for topping signs and potential resistance. Not huge money, but it can be very steady. We set our initial stops at the 7-8% range below the purchase price (or just below obvious support), and move them up on a move to preserve our profits.
1) LLL - Looking for a bounce
2) IFNY - Trying a pre-split move
3) ANN - Upgraded and moving
4) BBY - A put
LLL (L-3 Communications--$126.95; +0.23; optionable): Splits 2:1 effective 5-21-02.
http://biz.yahoo.com/p/l/lll.html
STATUS: Has pulled back to test its recent run, where it hit a new high of 132.60. A good-looking test, as it has been on lighter, below average volume, and has held prior pattern highs at 126. Today LLL showed a doji on the 10 day MVA. The breakout was on a strong move, and from this doji on support we will look at a bounce and another chance to add to positions with options. Still targeting 145 with our long-term positions, but as with the last move, on options positions we will not ride them back down after a nice bounce gives us a good profit.
PLAY: On a move over 129.50, July $125 calls to buy (LLL GE).
IFNY (Inifinity--$18.10; 0.00; no options): Oil & gas equipment. Splits 2:1 effective 5-14-02.
http://biz.yahoo.com/p/i/ifny.html
STATUS: IFNY was potentially forming a head and shoulders, but the stock held its 50 day MVA (16.41) and made a solid move Monday. Volume spiked way up on that move, and although it could not continue the momentum today, it pulled back slightly, holding in the range of recent highs, with selling volume much lower at 50,800 (avg. 47k). Looking for IFNY to take out its recent highs. Targeting 22.90.
PLAY: On a move over 18.75, stock. Stop: 17.53.
ANN (Ann Taylor--$45.40; +3.10; optionable): Retail apparel. Splits 3:2 effective 5-21-02.
http://biz.yahoo.com/p/a/ann.html
STATUS: Just as ANN gave up its 50 day MVA (42.89) on increasing (but not heavy) volume Monday, it received an upgrade and made a nice gapping move up today. Volume was strong at 1.19m (avg. 659k) as it gapped over the short-term MVA's (44.15) and continued up. This was a rather quick return to the 50 day after its early-April test, but the upgrade looks to be adding some new life. We will look at a continued move, targeting 50.
PLAY: Over 45.75 on continued strong volume, with June $40 calls to buy (ANN FH). Stop: 42.55.
BBY (Best Buy--$73.13; +1.33; optionable): Electronics stores. Splits 3:2 effective 5-13-02.
http://biz.yahoo.com/p/b/bby.html
STATUS: Gave up the 50 day MVA (75.02) last week, and has steadily dropped, finding some support at 72 (gap up point in March). Monday it reached back up near the 50 day intraday before retreating to close, and today it tried again, reaching up to 74.20 and holding some of the gain, but on declining volume (2.34m; avg. 2.74m). We are watching for this weak relief bounce from support to give in to selling, and we can look at a put play down to 67 (200 day MVA at 66.59).
PLAY: A drop through 72 on above average volume, with June $80 puts to buy (BBY RP). Stop: 75
CONTINUING CANDIDATES BEST PLAYS: INVN still set up for a possible put.
1) YUM - Announced the split today!
2) KLAC - Aggressive trading play
YUM (Tricon Global--$63.31; +0.36; optionable): Restaurants. Announced a 2:1 stock split today, effective June 18!
http://biz.yahoo.com/p/y/yum.html
STATUS: YUM has been a solid performer, yet another restaurant stock we have followed as it made its steady way up toward the split announcement. The stock is up 67% since October, and has been on a nice trend up since breaking from a double bottom with handle in January. It broke from an ascending wedge in April, and did not make much headway although it held over the prior pattern highs. It is now in another small ascending wedge, holding support at the 18 day MVA (62.09). Today it showed a third consecutive doji, with volume up at 918k (avg. 732k). With the news we could get a break from the pattern, and we can look at options on a quick move to 69.
BUY POINT: 64.03 on increased volume. Stop: 59.75.
POSITION: July $60 calls to buy (YUM GL).
KLAC (Kla-Tencor--$53.99; +1.33; optionable): Semiconductor equipment.
http://biz.yahoo.com/p/k/klac.html
STATUS: Gave us a great put play, moving through the target and finding support at the 200 day MVA (52.47). Today it reached through that level (low of 51.60), but bounced back up to close, with volume up to 16.6m (avg. 9.24m). Now with the put finished, we can look at an aggressive trading play on a bounce up. KLAC is set up well, holding strong support with strong volume. With CSCO we are expecting a move, and will look to catch KLAC on a run up to 60. Potentially a quick play, and we will not look to ride it down if when the move loses momentum.
BUY POINT: Looking for a move over 54.75; if we get a gap up to open, we will look at the initial test back, and take positions on a move back up from the test. Stop: 51.50
POSITION: June $50 calls to buy (KCQ FJ).
End Part 2 of 3
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us stock market
trend trading stock
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