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us stock market, top stock pick
Begin Part 2 of 2
SUBSCRIBER QUESTIONS
Q: In the weekend report you said mutual funds were in the process of unloading high P/E tech stocks from the prior bull market rally. Who is buying them?
A: There has been selling all the way down punctuated by periods of buying. In each case the selling has overcome the buying ultimately and pushed the stocks lower. There are mutual funds still dumping shares as we saw with WCOM and ORCL on very high volume, and other tech stocks as well as they continue their downtrends. You are correct in pointing out that for every seller to make a sell there has to be a buyer. Mutual funds that want to get rid of these stocks tend to sell into rallies or sell when bad news hits or they break support levels. When the stocks are rallying, hope springs eternal for retail investors and even for the institutional investors. They try to pick some of the stocks up on rallies, looking down the road 5 and 10 years. On the selling they pick up some more shares, averaging in at different levels. While there are as many buyers as sellers, the pressure is down on price because buyers are only willing to pay so much for the shares; the market maker or specialist must lower the bid to get buyers to take on the shares. There is simply less demand for the stock than there is willing supply, and the price thus drops. As long as the willing supply is there to sell even as the stock price falls, the share price will fall and that is the selling or dumping of shares by mutual funds. That it happens on high volume is a certain sign of institutional selling.
THE PLAYS:
Best Plays:
1) TEVA: Setting up again.
2) ERTS: Looks ready.
3) JBHT: Still good in the pattern.
4) Watchlist: ATH; FSS; ITN
NEW PLAYS
Revisited. Forming up a good pattern again.
TEVA (Teva Pharmaceutical--$66.44; -0.41; optionable): Drugs
http://biz/yahoo.com/p/t/teva.html
STATUS: Cup w/handle. TEVA has given us a great move on our existing play and over the past two weeks has moved more or less laterally in a range from 66 to 68. The past 6 sessions have been on steady, below average volume, forming a nice handle to the 9-month cup. Relative strength is excellent, and the stock has enjoyed very good accumulation during the base. Could be a continued winner for us.
Volume: 543.3K Avg Volume: 1.014M
BUY POINT: $68.05 Volume=1.5M Target=$80 Stop=$63.29
POSITION: TVQ LM - Dec. 65c (delta 65) and/or stock
http://www.investmenthouse.com/ct/teva.html
AXP (American Express--$40.09; -1.00; optionable):
http://biz/yahoo.com/p/a/axp.html
STATUS: Put. Financials are having a problem, showing weakness after holding up better than most. AXP has formed a quick head and shoulders from its top at 45 in mid-May. Today it broke below the 50 day MVA on a big volume spike. Now we don't want to just run back and jump in right away. We want to wait for the test of the 50 day MVA (41.49) and then let it roll back over. That is when we make the buy.
Volume: 6.853M Avg Volume: 4.733M
BUY POINT: $40.90 Volume=650K Target=$37.75 Stop=$42.25
POSITION: AXP VI - Oct. 45 put (delta -62)
http://www.investmenthouse.com/ct/axp.html
CONTINUING PLAYS:
Upside:
BL (Blair Corp.-- $22.72; -0.18; no options): Play Date: 05/21/2002
http://biz/yahoo.com/p/b/bl.html
STATUS: Cup w/handle. Holding the 18 day MVA in that tight handle to the 5-month base. It has thrown off some higher volume spikes on up sessions, pulling back today on below average volume. Looks ready for the breakout.
Volume: 12.1K Avg Volume: 14.363K
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-- $46.39; -0.13; optionable): Play Date: 05/23/2002
http://biz/yahoo.com/p/e/ecl.html
STATUS: Cup w/handle. Still holding the handle if a bit wilder. Tuesday it sold back but rebounded and closed with a hammer doji on rising, above average volume. It has held up very well and a rally in the market could spring it.
Volume: 512.5K Avg Volume: 357.227K
BUY POINT $47.80 Volume=500K Target=$57.36 Stop=$44.45
POSITION: Stock and/or ECL JI - Oct. $45c (delta 66)
http://www.investmenthouse.com/ct/ecl.html
ERTS (Electronic Arts-- $64.28; +1.35; optionable): Play Date: 05/30/2002
http://biz/yahoo.com/p/e/erts.html
STATUS: Cup. Riding up the 10 day MVA, recovering well Tuesday on rising, above average volume. It tested the breakout point and fell back. Relative strength is already breaking out on the move, anticipating the breakout.
Volume: 3.686M Avg Volume: 2.884M
BUY POINT: 65.10. New high: $66.12 Volume=4M Target=$79.50 Stop=$61.49
POSITION: EZQ IL - Sept. $60 call, delta 67 and/or stock
http://www.investmenthouse.com/ct/erts.html
JBHT (JB Hunt Transportation-- $26.61; -0.78; optionable): Play Date: 06/01/2002
http://biz/yahoo.com/p/j/jbht.html
STATUS: Ascending wedge. Pulled back to the 50 day MVA on lower volume, a very good test back in anticipation of a breakout. The accumulation weeks outnumber distribution weeks 7 to 2 in the base; excellent accumulation. We want to see that big breakout.
Volume: 417.2K Avg Volume: 440.272K
BUY POINT: $28.72 Volume=545K Target=$36 Stop=$25.40
POSITION: JHQ KX - Nov. $25 calls, delta 74 and/or stock
http://www.investmenthouse.com/ct/jbht.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 22.01 +0.27 22.23 25.75 780K 677K 20.25
Struggling w/the 18 day MVA on above.
ATH 05/16 Test 50 69.3 -0.97 68.5 75 798K 1.2M 63
Tight doji on the 10 day MVA. Looks good.
AXP 06/04 Put 40.09 -1 40.9 37.75 6.9M 4.7M 42.25
BGG 05/11 Put 38.2 -0.96 39.4 35 211K 140K 42
Tanking well on strong volume.
BL 05/21 cup hdl 22.72 -0.18 23.85 27.5 12K 14K 22
BLC 05/25 Flat 23.81 -0.15 24.25 30 332K 289K 22.55
Sold back to the 10 day MVA, looking okay.
BRO 04/22 cup hdl 33.4 -1.42 35.63 42.75 276K 332K 32.95
Tanked below the 50 day MVA on rising, above average volume.
BYBI 05/23 BO 10.5 -0.4 9.7 12.75 53K 45K 9.02
Tested the 10 day MVA on above average volume and rebounded.
CCMP 05/20 Put 47.39 +0.39 51 45 737K 1.4M 53.80
Held 45 and bounced, but low volume.
CDI 05/11 Pennant 27.4 +0.65 30 34.75 61K 59K 27.90
Bouncing off the 50 day MVA but needs more volume.
CERN 05/20 A Wedge 51.8 -0.95 56.1 60 482K 468K 53
Fell to the 50 day MVA and held.
CTX 05/11 Put 50.19 -1.72 53.5 49 1.4M 1.2M 56
Tanked on high volume. Close to target.
CYMI 06/03 Put 40.41 +0.21 39.45 33.8 2.5M 1.4M 44
DVN 05/25 A Wedge 51.5 +0.6 50.95 61 788K 1.1M 47.38
Climbing again on below average volume. Holding up well.
ECL 05/23 cup hdl 46.39 -0.13 47.8 57.36 512K 357K 44.45
ERTS 05/30 Cup 64.28 +1.35 66.12 79.5 3.7M 2.9M 61.49
FRX 05/16 Put 70.8 -0.72 75.9 71 1.5M 1.3M 78.50
Hit target.
FSS 05/22 DB hdl 25.42 +0.16 25.8 31 260K 192K 23.99
Nice recovery off the 18 day MVA and on rising volume.
FTEK 06/01 A Wedge 6 -0.41 6.65 8 141K 60K 5.95
Tanked to the 50 day MVA w/o giving a buy.
HAR 05/13 Test 18 51.95 -2.6 58.55 64 549K 217K 54.45
Tanked on above average volume.
HGR 05/20 Test 50 14 -0.6 12.6 19 73K 110K 11.72
Testing the 10 day MVA on below average volume. Okay.
HI 05/20 Put 50.69 -0.25 53.45 48.5 3.4M 3M 56
A doji at 50 on rising volume.
HLT 05/06 Put 13.52 -0.2 14.3 12 2.6M 2.2M 15.80
Falling harder on rising, above average volume.
HSIC 05/15 BO 48.98 -0.12 49.4 56.9 377K 336K 46.50
Below the 18 day MVA on rising volume but hot bad action.
HYDL 06/01 cup hdl 24.81 -0.64 27.3 32.75 50K 63K 24.40
Tanked to the 50 day MVA on below average volume.
IMDC 05/20 Put 31.51 -0.11 29.9 26 74K 208K 32
A doji below the 50 day MVA on low volume.
IMN 05/25 A Wedge 29.03 +0.04 31.58 38 229K 133K 28.25
A doji right on the 50 day MVA on strong volume.
IRM 05/01 A Wedge 30.65 -0.61 32.6 39.25 557K 194K 30.75
Tanked on high volume.
ITN 05/13 DB hdl 12.98 -0.07 13 16.5 78K 114K 11.75
Doji on the 18 day MVA.
IWM 05/21 Put 94.27 +0.02 97.85 94 2.7M 0 101
Hit the target.
JBHT 06/01 A Wedge 26.61 -0.78 28.72 36 417K 440K 25.40
KROL 06/06 BO 22 -1.1 20.2 24 524K 307K 19.50
To the 10 day MVA on rising, above average volume.
LNCR 05/16 cup hdl 29.17 -0.14 32.7 39 664K 1M 30.41
Tanked.
LRW 06/01 BO 8.85 -0.05 9.25 12 108K 244K 7.90
Holding up well. Awaiting the breakout.
LZB 06/03 Put 26.6 -0.31 26.5 23.5 270K 209K 29.50
Tanked but rebounded. Awaiting a bounce and then move in.
MERQ 05/28 A Wedge 33.81 +1.15 35.35 39 3.9M 4.5M 32.88
Bounced off the 200 day MVA, and anticipate a rally up toward 36.
MMC 05/25 Put 98.44 -0.06 101.95 97.75 930K 922K 105
Hit the target.
NFB 04/13 BO 38.48 -0.54 36.55 43.5 722K 656K 37
Testing the 50 day MVA on rising volume. So far okay.
NX 06/01 Test 50 36.95 -0.8 36.5 43.8 108K 103K 33.94
Tested lower on much lower volume.
OMX 05/28 Test 18 6.9 +0.1 7.65 11 955K 1.4M 6.60
Testing the 50 day MVA, showing a doji.
OSI 05/29 Test BO 38.52 -0.74 39.05 46.94 477K 512K 36.32
Testing the 10 day MVA on average volume. Looks fine.
OSIP 05/25 Put 27.4 -0.98 31 27.25 1.1M 645K 34.25
Hit the target.
PBG 05/30 Test 18 32.74 -0.56 32.75 36 1.3M 1.3M 30.46
Tested the 18 day on average volume and bounced.
PCLE 05/06 cup hdl 10.32 0 10.27 13 499K 560K 9.40
Holding at the 18 day on below average volume.
PETC 06/01 Test BO 24.65 -0.88 25.85 31 303K 272K 24.04
Testing the 18 day MVA on above average volume. Awaiting the move.
RAH 05/08 Test 18 27.11 -0.38 29.1 35 232K 98K 27.06
Broke down on high volume but recovered. 50 day MVA may give exit.
SALM 06/03 cup hdl 28.94 -0.3 30.17 36.2 61K 65K 27.50
Holding tight in the pattern.
SGR 05/11 A Wedge 30.6 -1.15 34.32 40.75 1M 621K 31.92
Fell below the 50 day MVA. Waiting for a bounce up to 32.
SOTR 05/02 cup hdl 25.45 -0.06 27.42 32.96 1.3M 1.1M 25.50
Doji at 25.50 on above average volume.
TEVA 06/04 cup hdl 66.44 -0.41 68.05 80 543K 1M 63.29
TEVA 05/15 BO 66.44 -0.41 62.1 67 543K 1M 60.50
UVN 05/04 Put 39.28 -0.32 39.95 35.5 840K 1.1M 42
Doji under the 18 day MVA again.
WFC 03/28 A Wedge 50.98 -0.52 50.85 60.52 5.2M 3.9M 50
Dove below the 50 day MVA and rallied back.
WYE 05/23 Put 53.74 -0.86 57.5 54 4.2M 4M 59.50
Hit the target.
XRAY 05/25 A Wedge 38.25 -0.93 40.35 48.25 349K 331K 37.53
Tanked to the 50 day MVA on above average volume.
XTO 03/27 A Wedge 20.02 -0.04 20.98 25.98 424K 524K 19.75
Holding right below the 50 day MVA with a doji.
ZMH 05/25 cup hdl 33 -0.55 36.95 45 721K 674K 34.36
Tanked without giving the buy point.
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
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