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Support and Resistance

Nasdaq: Closed at 1615.73
Resistance: Near down trendline at roughly 1660. The 18 day MVA is at 1666.46. The next March to April trendline now at 1685 and the February low at 1700. The 50 day MVA (1716.79) and the January/March 2002 down trendline is at 1758.
Support: 1619 (April 2001 low) down to 1600 is the next level, but it is not solid. 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 1067.14
Resistance: The March/April down trendline at 1073, right at the February lows at 1074. The 18 day MVA backs that up at 1080.91 and turned the index back on Friday. After that 1100 and the 50 day MVA at 1096.13. The 200 day MVA at 1115.30, and price consolidations at 1125. September 2000/March 2002 down trendline at roughly 1123.
Support: The October lows at 1050 are the last price consolidation level before the September low and they held intraday last Thursday. There is possible support at 1000, but it is not much. The September low is 944.75.

Dow: Closed at 9925.25
Resistance: The September 2000/February 2001 down trendline is at roughly 9985. The 18 day MVA (10,069.65) is next, and it is backed up at 10,100 (50 day MVA at 10,117.68. Then 10,250 to 10,300. 10,400 is 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: The 200 day MVA (9888.68). Then 9811 to 9800. Then 9500 to 9600 in the shelf of support from 9500 to 10,100.

Economic Calendar

6-03-02
Auto Sales, May (8:00): 6.3M vs 6.3M prior.
Truck Sales, May (8:00): 7.5M vs 7.5M prior.
ISM Index, May (10:00): 55.0 vs 53.9 prior.
Construction Spending, April (10:00): -0.1% vs -0.9% prior.

6-05-02
ISM Services, May (10:00): 56.0 vs 55.3 prior.

6-06-02
Initial Claims, 06-01 (8:30): 410K vs 410K prior.

6-07-02
Nonfarm Payrolls, May (8:30): 70K vs 43K prior.
Unemployment Rate, May (8:30): 6.1% vs 6.0% prior.
Hourly Earnings, May (8:30): 0.3% vs 0.1% prior.
Average Workweek, May (8:30): 34.2 vs 34.1 prior.
Wholesale Inventories, April (10:00): 0.1% vs 0.0% prior.
Consumer Credit, April (15:00): $6.0 B vs $4.6B prior.

TEAM TRADES

SNIC: A small business software company with good accumulation and relative strength in its 5-month ascending wedge pattern. It had been riding up the 50 day MVA with a firm top at just over 8. Thursday gave a strong volume jump in volume, raising a flag as to a potential upcoming breakout. Friday the stock hit the buy point just under two hours into the session on some massive volume. The stock had been running all session and we were picking it off at the high, but we decided to make the buy anyway as volume was running 157% of average. The price was 8.15 by 8.20 and we entered a limit order at the ask. Almost immediately the ask jumped to 8.24 and bounced around from 8.23 to 8.25, but there were trades still coming through at 8.20 and we received a partial fill on the order (no all or none order as we did not anticipate any trouble getting filled). We left the rest of the order in for 10 minutes or so, but saw it continue higher so we killed the remainder. We did this just as a matter of housekeeping so we knew what we had outstanding.

The stock moved to 8.25, pulled back, rallied again. It looked good with the strong volume, but then over the course of the next two hours fell back to 7.80. Looked like another breakout turning sour. It found the bottom there, however, and rallied to close at 8.15, just below the buy point. Volume was again strong, rising even over Thursday. Not bad action, but as with all breakouts we will watch it closely though we will give is some room down to the 50 day MVA.

THE PLAYS: EXPD announced its split Friday!

BONUS PLAYS: Strong move back ACXM, although we will watch carefully at its action from here as it pulled back a bit with the market. INTU gapped up and initially surged through the buy point, but reversed on strong volume, indicating a further drop.

PZB (Pittston Brinks--$27.01; +0.24; optionable): Security & protection services
http://biz.yahoo.com/p/p/pzb.html
STATUS: A bonus play from last month that made a nice run to 28.92, PZB has made a gentle pullback off of that high to the 50 day MVA (26.35), tapping that level on intraday lows over the past week. Friday PZB reached over the short-term MVA's (27.16) pulling back to close as volume remained tame (up to 194k; avg. 250k). PZB shows excellent money flow and buying, and has behaved well with four solid bounces from its 18 day MVA before pulling back, as strong stocks do from time to time, to test its 50 day. Looking for a strong move back up and a continued trend upward. Revising target to 32.50.
BUY POINT: Over 27.40 on above average volume. Stop: 25.95
POSITION: Stock and/or September $25p to buy (PZB IE).

FTEK (Fuel Tech--$6.37; +0.22; no options): Industrial Electrical Equipment
http://biz.yahoo.com/p/f/ftek.html
STATUS: A small issue that made a great run in the last quarter of 2001, and since has battled 6.50 as it tests back, making higher lows to form an ascending wedge. This week FTEK made a move back to the 50 day MVA (6.01), and Friday it made a solid bounce on increased, above average volume of 71,300 (avg. 59,500). The high is 6.82, with 6.55 being the recent highs. We will use that level for a breakout. Shows great money flow, buying and relative strength. Target: 8
BUY POINT: 6.62 on volume of 80,000. Stop: 6.16 (7%).
POSITION: Stock (no option chain)

POT (Potash--$67.02; +0.47; optionable): Nonmetallic mineral mining
http://biz.yahoo.com/p/p/pot.html
STATUS: Building the right side of a large base dating back to early 2001, POT has formed a smaller pattern, a cup with handle, over the last seven weeks. Both the big and small base show good overall accumulation, and there is good action in the handle as POT has pulled back slightly on below average volume (Friday 112,900 on a slight move up; avg. 120,400). The handle is holding support at the 10 day MVA (66.54), and the handle high is 67.50. Relative strength has broken out ahead of price, which is a bullish indicator. Target: 79
BUY POINT: 67.60 on volume of 180k. Stop: 64
POSITION: Stock and/or September $65c to buy (POT IM).

HP (Helmerich & Payne--$38.20; +1.23; optionable): Oil & gas
http://biz.yahoo.com/p/h/hp.html
STATUS: Put. HP dropped through its 50 day MVA (39.50) last week, not dropping immediately or recovering, but hanging around in a consolidation under that level. Wednesday HP started to drop, and Thursday hit down to 37.16 before Friday's relief bounce. The bounce was weak, coming on lighter volume of 213k (avg. 358k), and stopped at the prior lows in the little consolidation. Off of this weak move, looking for a renewed drop on a put play, targeting 33 (200 day MVA at 32.72).
BUY POINT: A drop through 37.55 on increased volume near the average. Stop: 39.80
POSITION: July $45p to buy (HP SI - no OI).

FOE (Ferro Corp--$29.39; +0.24; optionable): Specialty chemicals
http://biz.yahoo.com/p/f/foe.html
STATUS: A solid, steady move up since November, using the steady support of its 50 day MVA along the way for periodic bounces. FOE hit up just beyond 30 on its last two bounces from the 50 day, but on the most recent dip back caught support at its short-term MVA's (29). After a lateral string of dojis over the 18 day, FOE bounced up Friday on increased volume (246k; avg. 165k), pulling back from its intraday high of 29.61. We can play a continued move from here, looking ahead to a breakout over the recent highs (30.24). FOE shows excellent money flow, buying and relative strength. Target: 35
BUY POINT: Aggressive: Over 29.70 on increased volume. Stop: 27.71 (7%). Breakout: 30.34 on minimum volume of 225k. Stop: 28.50
POSITION: Stock and/or September $25c to buy (FOE IE - no OI).

Quick updates prior bonus plays:

WFMI - Continued up with a solid move, and now a pre-announcement!
MKSI - The move failed as anticipated, but could still bounce again from the shooting star doji
TKR - Bleeding slowly, but still could get a bounce off of consecutive dojis
BJ - Bounced but on very low volume, closing below the 10 day, so we will look for a drop back down
PSUN - Made the test of the 200 day again, and with very low volume we are looking for the test to fail
THQI - Tombstone doji under resistance points to a drop back - we will see how it fares with recent lows at 32
FNF - Trying to consolidate, holding onto gains
EME - Strong relief bounce, but holding as we gauge any continued strength
WY - Dropping back off of the double top, could be in for a test of the 50 day
ATVI - Holding the 18 day, which has been strong recent support
IGEN - Hanging on, being stubborn in a consolidation under resistance
LNY - Watching carefully - if it holds here and makes a move back over the 50 day it will be showing an ascending wedge - trouble to the upside
CCRN - Another good move!
GRMN - Still in the consolidation over the short-term MVA's, looking for another move
DISH - Has eased upward steadily, now over the short-term MVA's; not a strong move up, but trouble if it holds support
CCRD - Moved through the recent resistance of the 10 day Friday, with volume continuing low. Not the move we were looking for, but at some resistance where it closed
WM - Holding on the pennant pattern
TDY - A volatile day, but holding support in the upward trend

PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: None for this week.

NEW PRE-ANNOUNCEMENT PLAYS:

HUG (Hughes Supply--$39.75; +0.15; optionable): Building materials wholesale. Working on a new announcement date.
http://biz.yahoo.com/p/h/hug.html
BACKGROUND: Last announced a split in July 1997 at a price of 39, and before that it announced in June 1988 at $27. The annual shareholder meeting was 5-21-02 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: A solid break from a lateral range in March produced a run to a new high at 42.99 in early May. An abrupt drop produced a small double bottom, and last week HUG surged back over its 50 day (38.27), hitting up to 41.68 on the run before dipping back this week. The pullback has been orderly, showing the lighter volume we like to see in a handle, and holding support of the pattern center and short-term MVA's (18 day at 39.22). Friday HUG showed a tight doji over support, with volume picking up to 183,600 (avg. 179k). Looking primed for a bounce. Showing good buying. Target: 49
BUY POINT: Bounce: Over 40.55 on increased volume. Stop: 37.90.
POSITION: Stock and/or October $35c to buy (HUG JG - No OI as yet).

WFMI (Whole Foods Market--$51.17; +1.61; optionable): Grocery stores. Working on a new announcement date.
http://biz.yahoo.com/p/w/wfmi.html
BACKGROUND: Last announced a 2:1 split on 5-10-01 at a price of $50.38. The company has sufficient shares for a 3:2 split.
STATUS: A solid performer since its split a year ago, and we have been following WFMI as a bonus play. After a visit to its 50 day MVA (then 44, now 47.76) in early April, WFMI has trended up nicely along its 18 day (49.50). From a nice, low volume consolidation that pulled back to that support, Friday saw a solid bounce up to a new high on excellent volume (1m; avg. 571k). Still a buy on this move, and we are adjusting the target to 62.
BUY POINT: Still a buy up to 52.50 on continued strong volume. Stop: 47.60-48.80
POSITION: Stock and/or August $45 or $50c to buy (FMQ HJ).

PRE-ANNOUNCEMENT BEST PLAYS:
1) NYT - Strong move
2) HSIC - Looking to break from the consolidation
3) JCI - Aggressive put

NYT (New York Times--$50.27; +1.26; optionable): Newspapers. Forecast to announce a split the week of June 17 in conjunction with a board meeting or on 7-16-02 before the market opens with earnings.
http://biz.yahoo.com/p/n/nyt.html
BACKGROUND: Last announced a 2:1 split on 6-17-98 in conjunction with a board meeting. The stock price was $73.50. Before that it announced in 1986 at a similar price. The annual shareholder meeting was on 4-16-02 at which time no additional shares were authorized. The company has sufficient shares for a 2 for1 split.
STATUS: Strong bounced and run Friday. NYT tested its breakout from a two-month lateral consolidation, showing a shakeout Thursday as it dropped to close below the 18 day MVA (49.23), although it held prior consolidation highs. The sellers gone, NYT gapped up Friday and continued up intraday, moving on sharply higher, solid volume of 708,600; avg. 474k). Looking for a continued move and breakout. Good buying and relative strength has broken out. Target 61.
BUY POINT: Over 51 on continued strong volume. Stop: 47.80
POSITION: Stock and/or October $45c to buy (NYT JI - 89 OI).

HSIC (Henry Schein--$49.58; -0.37; optionable): Medical equipment wholesale. Researching a new date.
http://biz.yahoo.com/p/h/hsic.html
BACKGROUND: Based upon our research it does not appear that HSIC has ever split its stock. The annual shareholder meeting was 6-5-02 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: Still in the tight consolidation. HSIC broke out of a trading range in January (highs 40), and after testing that move (and its 50 day MVA) in March, has made a nice run up along the short-term MVA's. It has pulled into a lateral consolidation over the past two weeks, and looks ready to move, showing another doji Friday. We are looking for a hold of the 18 day (49.20), and then a blast up out of the consolidation. Target: 60
BUY POINT: 50.69 on minimum volume of 450k (down to 275k Friday; avg. 333k). Stop: 47.14 (7%)
POSITION: Stock and/or October $45c to buy (HQE JI).

JCI (Johnson Controls--$88.06; +0.57; optionable): Working on a new announcement date.
http://biz.yahoo.com/p/j/jci.html
STATUS: JCI fell out of its promising pattern, gapping back through the 50 day MVA (68.61) Thursday on big volume. The stock has dipped back through the 50 day in March and April, finding support both times at 84 (leading to the double bottom with handle from which JCI fell this week). Friday JCI did not make a bold recovery, instead touching up to 88.82 but pulling back to again close below the 50 day, moving on lighter volume. The aggressive can play this 'kiss goodbye' with a put play, but 84 is support we need to watch and is the initial target. On strong selling we can look for a bigger move this time down to the 200 day MVA (80.67).
BUY POINT: Aggressive: Back through 87 on above average volume (399k; Friday down to 307k). Stop: 90
POSITION: July $95p to buy (JCI SS - no OI, -.67 delta).

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) YUM - Test of support and a strong rebound
2) CPS - Back again and in an ascending wedge
3) GMRK - Looking for a move off the 50 day
4) FOSL - Still waiting for the move
5) ATK - Trying to move
6) IFIN - Ready for another try

YUM (Yum! Brands--$63.90; +0.30; optionable): Restaurants. Splits 2:1 effective 6-18-02.
http://biz.yahoo.com/p/y/yum.html
STATUS: Like many of the restaurants, YUM has been on a solid run. After the typical three to four runs off of the 18 day MVA that you see in a strong trending stock, YUM gapped back toward the 50 day (62) Friday, but bounced back hard. Volume spiked sharply up to 971k (avg. 766k), and YUM closed right at its 18 day. Looking for a continued bounce and run along the support of the 18 day. Adjusting the target to 72.
PLAY: Over 64.50, with July $60c to buy (YUM GL). Stop: 61.

CPS (Choicepoint--$59.61; +0.33; optionable): Business services. Splits 4:3 effective 6-7-02.
http://biz.yahoo.com/p/c/cps.html
STATUS: After falling from its small cup with handle recently, CPS caught support at its 50 day MVA (57.28) and has worked its way back up toward former pattern highs. The higher low and recovery creates an ascending wedge. Today CPS hit up to 60.05 before retreating a bit to close, with strong volume kicking in (297k; avg. 222,500). Going into the split, looking for a breakout. Target: 66 on a breakout move.
PLAY: 60.50, with July $35c to buy (CPS GK).

GMRK (Gulfmark Offshore--$42.34; +0.24; no options): Oil & gas equipment. Splits 2:1 effective 6-29-02.
http://biz.yahoo.com/p/g/gmrk.html
STATUS: GMRK broke out of a small cup with handle in April, a pattern that served as a handle to a much larger cup pattern dating back to May. The move took GMRK to a new high (49.25), but it has pulled back over the last month to test prior highs and its 50 day MVA (40.96). Today GMRT showed yet another in a string of dojis, held down by the short-term MVA's (18 day at 42.77). Holding firm on support, so looking for a strong move on the heels of the split announcement. Target: 52.
PLAY: Over 43, with stock. Stop: 40.60

FOSL (Fossil--$30.96; -0.22; optionable): Recreational goods. Splits 3:2 effective 6-10-02.
http://biz.yahoo.com/p/f/fosl.html
STATUS: FOSL has pulled back again, but continues to hold the support of the 18 day MVA (30.86), today with a doji. FOSL made a great move in early May off of its 50 day (then 27, now 29.10), hitting 33.61 before its recent pullback to test the move. Still looking good as holding the 18 day and prior highs (30). Still targeting 36 on a pre-split run. Excellent money flow and buying.
PLAY: Over 32.29, with September $30c to buy (QFS IF - 60 OI). Stop: 30

End Part 2 of 3

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