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us stock market, trend trading stock
Begin Part 2 of 2
S&P 500:
Turned right back down from 1100 once more, again giving back more than it gained Thursday. It has some support at 1080 and 1074 from its February closing and intraday lows, and with the overall decent price/volume action on the move off of the May lows it has a shot at holding those for another attempt at 1100 and then 1125. In short, it is at a point it could continue the small rally up from 1050 even with the selling Friday as it has had follow through and positive price/volume action. Even the selling Friday was on lower volume. Could. It still has 1100, the 50 day MVA (1100.95), the 200 day MVA (1117.95), and the September 2000/March 2002 down trendline at 1126 (price consolidations at 1125 as well). The big caps cannot put together a lot of rally force.
Stats: -13.26 points (-1.21%) to close at 1083.82
NYSE Volume: 881.011M (-24.64%)
The Chart: http://www.investmenthouse.com/cd/$spx.html
THIS WEEK
Huge economic week ahead with personal income and spending, existing home sales (80% of sales), and consumer confidence all out on Tuesday. Thursday is Chicago PMI, and Friday is productivity, Michigan sentiment, and factory orders. All of these will get a critical review from investors. If we escape the holiday without incident, some strong numbers Tuesday could pump more life into the nascent rally off of the May lows, a rally that has given a follow through signal. At this point while we like the fact that the market has given follow through (it has preceded every strong rally and is thus considered a prerequisite), it does not change how we are going about this market.
We are looking at stocks to both the upside and the downside, basing the play on the pattern as a breakout, trading play, or upside play. While the market direction is always critical, there are still at least two markets now: small caps and their kin and large caps; tech stocks and old economy stocks; growth stocks and value stocks. Small and mid-caps are under some pressure, but they are consistently turning up the best patterns and breakouts. The fact that there was some follow through in the large cap indexes gives us more confidence in upside plays from these stronger patterns.
As for the downside, there are many continuing downtrends and there are continued breakdowns. A lot of the market is still not feeling well, and stocks are breaking lower every session regardless of follow through on the indexes. Moreover, the trend is still down on the big indexes despite this recent move off the low and follow through. To help fight off the inevitable rally attempts we are looking at those stocks with sharp breakdowns and continuing downtrends. They are doing their own thing more or less oblivious to the market overall.
As noted, 14 of the last 18 Memorial Day weeks have been positive. In a bear market, however, we have seen many post-holiday sell offs. Who will win? The market is in position to move higher this week. That is about all you can say: it is in position. Upside catalysts could be solid economic data or as simple as not having any terrorist incident over the holiday. Given this kind of environment, this is why we look at specific stocks at this juncture.
Support and Resistance
Nasdaq: Closed at 1697.64
Resistance: The short March to April trendline at 1704 that turned the index back last week, and 1700 (February low). 1750 and the 50 day MVA (1734.62) are next. The January/March 2002 down trendline is at 1772 and the 200 day MVA at 1814.20.
Support: 1652, the gap up point, has been filled and held twice. Some support from 1600 to 1620 from the October consolidation. 1550 to 1560 are the October lows and could try to hold. Then 1500. After that is the September low at 1387.06.
S&P 500: Closed at 1097.08
Resistance: 1100 and the 50 day MVA at 1101.65. The 200 day MVA at 1118.63The March down trendline is at 1082 and has not been totally cleared. Then 1100 is a point to beat. The 200 day MVA is next at 1119.23. Then price consolidations at 1125. September 2000/March 2002 down trendline at roughly 1126.
Support: February lows at 1074 continue to hold. The October lows at 1050 are the last price consolidation level before the September low. There is possible support at 1000, but it is not much. The September low is 944.75.
Dow: Closed at 10,216.08
Resistance: 10,250 to 10,300. Then there is 10,400, the level that has acted as 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: 10,100 has held twice this week on the close. Then the 200 day MVA (9900.53). After that two lows at 9811. Then 9500 to 9600 in the shelf of support from 9500 to 10,100.
THE PLAYS:
Good movers: BYBI continues to fly; WYE moving to the downside;
Best Plays:
1) XRAY: Nice rest.
2) BLC: Started strong.
3) IMN: Another good wedge.
4) OSIP: Ready to fall again.
5) ECL: Still like the base.
6) FNFG: Looks ready with a big volume session.
NEW PLAYS
Upside
XRAY (Dentsply--$39.93; +0.83; optionable): Medical instruments
http://biz/yahoo.com/p/x/xray.html
STATUS: Ascending wedge. XRAY has enjoyed a very nice 2 years. When a stock is running well or coming off the bottom of its base we often see wedges form. After breaking out of a flat base in March and running to 40, XRAY has started forming the wedge with overall rising lows and a flat top at 40. Money flow has continued strong as the wedge has formed, and is starting to spike higher. In addition, there have been some good upside volume spikes on strong price gains. Friday was another such session as the stock pushed up to 40 on above average volume. Looks ready to make a break for another run higher.
Volume: 444.3K Avg Volume: 318K
BUY POINT: $40.35 Volume=465K Target=$48.25 Stop=$37.53
POSITION: Stock and/or XEQ JG - Oct. 35c (delta 83)
http://www.investmenthouse.com/ct/xray.html
DVN (Devon Energy--$50.42; +0.02; optionable): Oil & Gas
http://biz/yahoo.com/p/d/dvn.html
STATUS: Wedge. Worked its way off the bottom of its base down at 35 with a nice move in February and March, and has now moved into the next stage of the base, a flat base/ascending wedge with consistent tops right at 50. The wedge looks great and it can give us a nice move up: wedges during the formation of larger bases can give us nice explosive moves. This is not necessarily one we are looking to own long term, but the wedge can give us a strong trade that can turn into something bigger. We are looking primarily at options with this one as our first target is the next resistance at 55. After that, however, it could move up to 61 if it gets a good volume breakout over 55.
Volume: 460.2K Avg Volume: 1.095M
BUY POINT: $50.95 Volume=1.4M Target=$61 Stop=$47.38
POSITION: DVN JI - Oct. 45c (71 delta) to buy or stock.
http://www.investmenthouse.com/ct/dvn.html
IMN (Imation--$30.22; 0; optionable): Business software
http://biz/yahoo.com/p/i/imn.html
STATUS: Wedge. IMN is in a big 2-year cup base, but we are looking at the last six weeks with interest. It has traded up the 18 day MVA, showing some good price/volume action as it does. There is a pretty flat top at 31; it is getting squeezed up toward that level from below. Friday volume spiked to almost 3 times average as the stock traded in a tight range. This can be a 'get ready' spike ahead of a breakout, particularly as the price/volume action has been good in the wedge.
Volume: 363.5K Avg Volume: 128.045K
BUY POINT: $31.58 Volume=200K Target=$38 Stop=$28.25
POSITION: Stock and/or IMN JE - Oct. 25c (delta 82) to buy.
http://www.investmenthouse.com/ct/imn.html
ZMH (Zimmer Holdings--$35.65; +0.22; optionable): Medical Appliances
http://biz/yahoo.com/p/z/zmh.html
STATUS: Cup w/handle. ZMH is a new issue since August 2001, and is in its first real base, a 12-week cup with handle. The past two weeks it has rallied back up to the left side of its base, and last week it pulled back to the 18 day MVA on low, below average volume. At the same time money flow has remained strong. Accumulation weeks in the base outnumber distribution weeks 4 to 2. This indicates that there has been accumulation of the stock during the base and gives it a better chance of a solid breakout.
Volume: 358.8K Avg Volume: 728.181K
BUY POINT: $36.95 Volume=1.1M Target=$45 Stop=$34.36
POSITION: Stock and/or ZMH LF - Sept. 30c (delta 87)
http://www.investmenthouse.com/ct/zmh.html
BLC (Belo--$24.04; +0.57; optionable): Newspapers
http://biz/yahoo.com/p/b/blc.html
STATUS: Flat base. After banging around in a trading range in 2000 and 2001, BLC blasted off in February up to 24. After that run it needed some rest, and it has spent the last 11 weeks moving laterally between 23 and 24. As it has done so it occasionally throws off a volume spike. In early May it pulled down below 23 but then made a quick recovery into the range; something of a shakeout. Friday it started higher, gapping up and moving just over 24 on very strong volume. Looks ready to continue the move with relative strength that is already breaking out.
Volume: 658K Avg Volume: 302.772K
BUY POINT: $24.25 Volume=342K Target=$30 Stop=$22.55
POSITION: Stock and/or BLC JD - Oct. 20c (delta 91)
http://www.investmenthouse.com/ct/blc.html
KLAC (KLA Tencor--$54.43; -2.66; no option):
http://biz/yahoo.com/p/k/klac.html
STATUS: With a chip equipment downgrade by Goldman, KLAC gapped down, tapping its 200 day MVA at its low of 52.93 but recovering for a doji. With the news volume was up at 14.7m (avg. 11.8m), but the effect of this sort of news often does not linger. The 200 day has been support for KLAC on two prior visits to that level, and the gap down to the doji over support typically spells a bounce back. On a bounce we can look at a quick trading play with options, targeting 59.
Volume: 14.67M Avg Volume: 12.047M
BUY POINT $55.25 Volume=15M Target=$59 Stop=$52
POSITION: July $50c to buy (KCQ GJ - 20 OI)
http://www.investmenthouse.com/ct/klac.html
Downside:
MMC (March & McLennan--$103.08; -0.91; optionable): Insurance broker
http://biz/yahoo.com/p/m/mmc.html
STATUS: Put. MMC suffered a nasty drop in late April from 112 to 98, undercutting the 200 day MVA (103) on the way down. It recovered, moving to 104 where it appears to have double topped, climbing up to that point on very low volume. Friday it tried once again to clear 104 but reversed and closed right at the 200 day MVA. The double bottom indicates it could have some more downside ahead and we want to be ready for that action.
Volume: 511.2K Avg Volume: 941.772K
BUY POINT: $101.95 Volume=1M Target=$97.75 Stop=$105
POSITION: Puts: MMC SB - July 110p (delta -74)
http://www.investmenthouse.com/ct/mmc.html
OSIP (OSI Pharmaceuticals--$31.73; -1.52; optionable): Medical labs
http://biz/yahoo.com/p/o/osip.html
STATUS: Put. OSIP has been moving in a down trendline since November. For the past two months it has been using the 50 day MVA as resistance as well. Friday it slammed into the 50 day MVA on the high (33.50) and reversed on rising, above average volume. It looks as if the 50 day MVA is going to stop the move again.
Volume: 947K Avg Volume: 616.681K
BUY POINT: $31 Volume=925K Target=$27.25 Stop=$34.25
POSITION: (GHU SH - July 40p (-77 delta))
http://www.investmenthouse.com/ct/osip.html
CONTINUING PLAYS
Upside: There are still several plays from last week that look great. Those not appearing below are on the continuing plays table.
FNFG (First Niagara Financial--$25.68; +0.28; no options):
http://biz/yahoo.com/p/f/fnfg.html
STATUS: Flag. That flat little base started to move higher Friday on above average volume. It looks very close to making the breakout move and throwing up the next flag pole. Remember, the key is catching it on the move early as the run up is usually ballistic.
Volume: 53K Avg Volume: 41.636K
BUY POINT $25.95 Volume=50K Target=$31 Stop=$24.13
POSITION: Stock (no options)
http://www.investmenthouse.com/ct/fnfg.html
BL (Blair Corp.--$22.85; -0.08; no options): Mail order
http://biz/yahoo.com/p/b/bl.html
STATUS: Cup w/handle. Still looking good in the 5-month base with a very low volume session Friday. Excellent accumulation in the base with money flow leading the way up and relative strength ready to breakout as well.
Volume: 2.6K Avg Volume: 13.636K
BUY POINT $23.85 Volume=45K Target=$27.5 Stop=$22
POSITION: Stock (no option chain)
http://www.investmenthouse.com/ct/bl.html
ECL (Ecolab--$47.34; -0.21; optionable): Cleaning products
http://biz/yahoo.com/p/e/ecl.html
STATUS: Cup w/handle. About as low tech as you can get, but a very nice 3-month base. Thursday it looked ready to make the break, and Friday it started up but there was no follow through on the early move. It hit our buy point but closed fractionally lower on the session. Still looks very good in this base where it has enjoyed strong money flow and good accumulation.
Volume: 339.1K Avg Volume: 369.136K
BUY POINT $47.80 Volume=500K Target=$57.36 Stop=$44.45
POSITION: Stock and/or ECL JI - Oct. $45c (delta 74)
http://www.investmenthouse.com/ct/ecl.html
Puts:
Downside:
IWM (Ishares Russell 2000--$98.37; -1.58; optionable):
http://biz/yahoo.com/p/i/iwm.html
STATUS: Put. The 50 day MVA stalled the index out again on Friday after rallying to that level Thursday. The fall was on lower volume and most of the damage came late in the session when it looked as if investors were clearing out for the weekend. In any event, it is still in its downtrend, and a break below 98 could open the door for more downside.
Volume: 804.2K Avg Volume: 950K
BUY POINT $97.85 Volume=1.2M Target=$94 Stop=$101
POSITION: IWM TA - Aug. $105p
http://www.investmenthouse.com/ct/iwm.html
UVN (Univision Communications--$40.25; +0.06; optionable): Broadcast TV
http://biz/yahoo.com/p/u/uvn.html
STATUS: Kiss goodbye. UVN tried to rally Thursday back toward the 50 day MVA (41), but then Friday showed another doji on low volume. It is having a hard time moving higher, but it also is not collapsing lower. It is still holding the downtrend from March, however, and the 50 day MVA adds another layer of ice on top of it. We are looking for a continued fall, and positions can be taken on a drop below 40 on rising volume.
Volume: 524.5K Avg Volume: 1.053M
BUY POINT $39.95 Volume=1M Target=$35.5 Stop=$42
POSITION: UVN RI - June$45p
http://www.investmenthouse.com/ct/uvn.html
Continuing plays:
We have put all plays in a summary table that contains the date the stock was put on the report (so you can go back and check out the details of the play) and the other pertinent information. This provides more information than the watchlist summaries and still contains comments when appropriate. VIEW THIS IN COURIER NEW, 12 FOR BEST RESULTS. You can also easily print the table from the website (www.investmenthouse.com) from the 'current reports' section. If you just want to print the table you can cut and paste it to a word document setting the font to Courier New size 12. Just left click on the beginning of the table and drag to the table end. After selecting, right click and select 'copy.' Paste into your word processor. Select it all and choose Courier New, font size 12.
Stock Date Play Close +/- Pivot Tgt Vol AvgV Stop
ABF 05/11 BO 22.98 +0.01 22.23 25.75 716K 693K 20.67
AMHC 05/22 A Wedge 27.25 +0.35 28.05 36 271K 241K 26.09
ATH 05/16 Test 50 67.16 +1.29 68.5 75 774K 1.2M 63
BGG 05/11 Put 41.81 +0.41 39.4 35 163K 142K 42
BL 05/21 cup hdl 22.85 -0.08 23.85 27.5 2.6K 14K 22
BLC 05/25 Flat 24.04 +0.57 24.25 30 658K 303K 22.55
BRO 04/22 cup hdl 34.69 +0.17 35.63 42.75 203K 336K 32.95
BYBI 05/23 BO 10.93 +1.43 9.7 12.75 369K 41K 9.02
CACI 05/08 Put 31.16 +0.04 31 27.5 271K 718K 32.50
CCMP 05/20 Put 48.66 -1.46 51 45 1.2M 1.5M 53.80
CDI 05/11 Pennant 28.05 -0.05 30 34.75 29K 56K 27.90
CERN 05/20 A Wedge 51.65 -0.98 56.1 60 521K 472K 53
CTX 05/11 Put 55.15 +1.14 53.5 49 1M 1.3M 56
DVN 05/25 A Wedge 50.42 +0.02 50.95 61 460K 1.1M 47.38
ECL 05/23 cup hdl 47.34 -0.21 47.8 57.36 339K 369K 44.45
ELBO 05/11 Put 26.9 +0.5 30.2 26 647K 420K 32.50
FNFG 05/22 Pennant 25.68 +0.28 25.95 31 53K 42K 24.13
FRX 05/16 Put 75.53 -0.97 75.9 71 906K 1.3M 78.50
FSS 05/22 DB hdl 25.71 +0.39 25.8 31 140K 194K 23.99
Making the move, but needs some volume.
GMP 04/25 cup hdl 18.65 +0.04 18.85 22.62 12K 7.5K 17.75
GMRK 04/20 Test 50 41.88 -0.84 44.63 55 28K 64K 41.75
GNSS 05/15 BO 26.4 -0.54 28.1 34 4.3M 3.9M 26.90
GNTA 05/04 Put 9.22 -1.2 11.75 9 1.1M 1.5M 12
GRTS 05/16 Test 50 31.65 -0.9 34.9 44.5 365K 149K 32.46
HAR 05/13 Test 18 58.1 +0.61 58.55 64 185K 210K 54.45
HGR 05/20 Test 50 13.7 -0.05 12.6 19 87K 104K 11.72
HI 05/20 Put 53.07 -0.2 53.45 48.5 2M 3M 56
HLT 05/06 Put 13.99 +0.05 14.3 12 2M 2.3M 15.80
HSIC 05/15 BO 50.06 +0.05 49.4 56.9 245K 336K 46.50
HZO 05/04 A Wedge 13.81 0 14.5 17.4 4K 79K 13.75
IMDC 05/20 Put 32.07 -0.8 29.9 26 34K 205K 32
IMN 05/25 A Wedge 30.22 30.22 31.58 38 364K 128K 28.25
IRM 05/01 A Wedge 32.41 +0.06 32.6 39.25 41K 200K 30.75
ITN 05/13 DB hdl 13.2 -0.3 13 16.5 192K 111K 11.75
Tried the big move Friday on above average volume, but reversed. Danger.
IWM 05/21 Put 98.37 -1.58 97.85 94 804K 1M 101
KLAC 05/25 BO 54.43 -2.66 55.25 60 15M 12M 51.38
KROL 06/06 BO 21.95 +0.35 20.2 24 766K 258K 19.50
Hit 22 and started to pull back. Lighter volume on the move.
LNCR 05/16 cup hdl 29.47 +0.07 32.7 39 432K 1000 30.41
MMC 05/25 Put 103.08 -0.91 101.95 97.75 511K 942K 105
NFB 04/13 BO 39.47 -0.26 36.55 43.5 649K 663K 37
OSIP 05/25 Put 31.73 -1.52 31 27.25 947K 617K 34.25
PCLE 05/06 cup hdl 10.42 -0.88 10.27 13 693K 514K 9.40
Took a breather Friday on lower volume, but a bit more than we wanted.
RAH 05/08 Test 18 28.8 -0.15 29.1 35 57K 98K 27.06
SGR 05/11 A Wedge 35.26 +0.37 34.32 40.75 446K 638K 31.92
SLVN 03/27 cup hdl 27.59 -0.26 27.05 32 133K 340K 26.55
Very tight in the handle over the 50 day MVA.
SOTR 05/02 cup hdl 25.91 -0.36 27.42 32.96 1.1M 1.1M 25.50
TEVA 05/15 BO 66.8 -0.23 62.1 67 1.9M 1M 60.50
Reversed off the high on rising volume. Covered call time.
UVN 05/04 Put 40.25 +0.06 39.95 35.5 524K 1.1M 42
VMC 05/11 Put 47.06 -0.82 45.9 41.5 172K 179K 47.50
WFC 03/28 A Wedge 52.89 -0.32 50.85 60.52 2.0M 0 50
WL 04/25 Put 63.44 +0.28 65.6 62.50 55K 79K 67
Raised the target a bit.
WYE 05/23 Put 56.44 -1.95 57.5 54 2.4M 3.9M 59.50
XRAY 05/25 A Wedge 39.93 +0.83 40.35 48.25 444K 318K 37.53
XTO 03/27 A Wedge 20.98 +0.02 20.98 25.98 289K 0 19.75
ZMH 05/25 cup hdl 35.65 +0.22 36.95 45 359K 728K 34.36
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
trend trading stock
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