us stock market, stock split

Begin Part 2 of 3

Nasdaq

Gapped down to the next level of support at 1500, sold a bit more, and then spent the day reclaiming ground. On the high it was 5 points from positive territory, but then it spent the last 1.5 hours drifting lower. The big drop and bounce at potential support was a signal for some shorts to cover, and that was a large part of the move on some hefty volume.

Stats: -19.40 points (-1.25%) to close at 1535.48
Volume: 2.111B (+29.69%). Big volume spike, well above average. This is a normal event we have seen each time the index has moved to or slightly below a potential support level. What has failed to happen with any staying power is continued investment picking up after the short covering session moves the index higher.

Up Volume: 1.003B (+684M)
Down Volume: 1.092B (-202M). Up volume rallied, almost pulling even with down volume as shorts bought shares back to cover.

A/D and Hi/Lo: Decliners led 1.01 to 1
Previous Session: Decliners led 2.57 to 1. The A/D line early was as bad as Thursday, but of course the rally pulled things even.

New Highs: 43 (-1)
New Lows: 259 (+65). Still a large number of new closing lows. An underlying weakness in the Friday action.

The Chart: http://www.investmenthouse.com/cd/$compq.html

The Nasdaq tested 1500 Friday as anticipated. Unfortunately for the near 'long-term', it rallied to recover most of the 59-point loss and returned the sentiment indicators to lower levels before they could really spike higher. That prevented the cascading fall that we were looking for, but the Nasdaq still has major problems. It has sold for three weeks and many are saying it is so oversold it has to bounce. Oversold conditions can get worse and worse, however; there is no magic level of oversold status that accurately indicates a bounce. It did bounce from the potential support we were looking at, doing so on massive volume. From here it has to deal with the May low at 1560 and near term down trendline started in May at 1565. Then the 10 and 18 day MVA at 1595.25 and 1622.49, respectively. There is also the April 2000 low at 1619 adding some resistance. With the sentiment indicators not hitting the levels we wanted, the bounce off of 1500 appears to be another step before a test of the September 2001 low.

Dow/NYSE

Looked like Tuesday and the prior Thursday where the Dow sold sharply and then rallied back sharply on rising, above average volume. It is 210 points lower than that Thursday, but the Dow held up longer than the S&P 500 and the Nasdaq, and it can fall a lot further. We were just disappointed it did not go a head and bank the big losses on the session. That would help out longer term.

Stats: -34.97 points (-0.36%) to close at 9589.67
Volume: 1.8B (+11.75%). Rising volume on the reversal as shorts covered here as well. Two points. First, once again NYSE volume as a percent of Nasdaq volume was impressive, indicating that the techs are getting a bit sold out compared to the stodgier NYSE stocks. That is a positive for a reversal and one of the planets lining up. Second, TYC (200 million; 25 million average) and NT (288 million; average 19 million) accounted for 488 million shares. Without them it was a 1.3 billion share session, just average.

Up Volume: 932M (+685M)
Down Volume: 847M (-495M)

A/D and Hi/Lo: Advancers led 1.31 to 1
Previous Session: Decliners led 2.21 to 1. Dramatic reversal after another 2+ to 1 A/D line early in the session. The small and mid-caps did the leading as the broader market advanced.

New Highs: 43 (-20)
New Lows: 131 (+21). Yet another session of greater than 40 new lows, continuing the string. That indicates further selling.

The Chart: http://www.investmenthouse.com/cd/$indu.html

The Dow performed as did all the major indexes, tanking down to near term support on the low (9472.54; support at 9500). Then it reversed and climbed into positive territory only to fall 47 points in the last hour to close negative. This inability to hold positive territory is a technical negative; short covering helped rally it, but investors in the stocks were unwilling to hold onto them after the recovery off the support at 9500. The Dow has sold 600 points over the past three weeks in a series of lower lows, each time testing the next lower support level. 9100 is the March 2001 low and represents the next support level. We think the Dow will seek that before it makes a meaningful attempt at moving higher. On the upside it is just below the March down trendline and then as the 10, 200 and 18 day MVA all stacked in together (9802.99; 9871.27; and 9901.16, respectively). It may give a modest bounce early this week toward 9750, but we expect it to test nearer to 9000 before it gets back to 10,000 on this leg.

S&P 500:

Tested the bottom of the downtrend channel on the low (1012.49) and just below the September 2000/May 2001 down trendline before rebounding. We anticipated that the lower channel line might hold, preventing the index from making the 1000 level we were looking for. It moved positive 2.50 points before it gave back the gain. NYSE volume was heavy, but again 488 million attributable to TYC and NT. Remember when ENE skewed the NYSE volume? Not much upside came of that either. Resistance at 1035 (first March down trendline), followed by 1050 (May low and 10 day MVA). The 18 day MVA at 1062.06 is next. The S&P has undergone heavy selling and it may try to bounce early in the week to test the 10 day MVA. As with the Dow, however, we think it has more downside testing to do near term.

Stats: -1.62 points (-0.2%) to close at 1027.53
NYSE Volume: 1.8B (+11.75%)

The Chart: http://www.investmenthouse.com/cd/$spx.html

THIS WEEK

The market did tank lower but it staged a recovery. While the easy argument is the market is oversold and is destined to bounce, we are not convinced it is done selling on this leg. The VIX hit near 30 and the put/call ratio has spiked higher in recent weeks and in February that led to a short term rally in March. So there is the possibility that the market has hit a level that will spark a more sustained move up. At this point with the indexes closer to the September low than not, we believe there is more testing to be done. We are not convinced that Monday will continue the reversal Friday. There is a lot of bad news priced into the market right now, but the overall indicators did not signal an important turn.

Moreover, a lot of stocks moved back up Friday but to resistance levels. Volumes were up, but the fact they could not close above resistance just as the fact the indexes sold back the last hour and could not recapture positive territory is important. An intraday move that cannot take out resistance that session starts from scratch. We anticipate a further move up Monday in an early attempt to continue some of the reversal action Friday, but we also anticipate that to dissipate Monday or Tuesday.

Support and Resistance

Nasdaq: Closed at 1535.48
Resistance: 1560 is the May low (October low is there as well). May down trendline at 1565. 1600 is some resistance, and the 10 day MVA (1595.61) is right there. The 18 day MVA after that is (1622.49). Then the second March down trendline at 1635. The next March to April trendline now at 1663 and the February low at 1700.
Support: 1500. After that is the September low at 1387.06.

S&P 500: Closed at 1027.53
Resistance: The first March down trendline at 1035. Then 1050 is some resistance along with the 10 day MVA (1050). 1060 offers minor resistance after that from previous prices. The second March/April down trendline at 1062 along with the 18 day MVA at 1062.01. Then the February lows at 1074.
Support: There is some support at the bottom channel of the first March downtrend at 1011. The possible support at 1000. The September low is 944.75.

Dow: Closed at 9589.67
Resistance: Closed right at the March down trendline (9635). The 10 day MVA is near the May lows at 9811 (9802.99). That is followed by the 200 day MVA (9871.27) and the 18 day MVA (9901.16). 9811, the April and May lows. The 200 day MVA (9875.06). The 18 day MVA at 9937.80. The September 2000/February 2001 down trendline is at roughly 9965. Then 10,100, followed by 10,250 to 10,300.
Support: 9500 to 9600 in the shelf of support from 9500 to 10,100. Then 9000 to 9100. There is a rest top at 8500. The September low is 8062.

Economic Calendar

6-12-02
Export Prices ex-ag., May (8:30): NA vs. 0.3% prior.
Import Prices ex-oil, May (8:30): NA vs. 0.4% prior.
Fed's Beige Book (2:00)

6-13-02
Initial claims, 06/08 (8:30): NA vs. 383K prior.
PPI, May (8:30): 0.1% versus -0.2% prior.
Core PPI, May (8:30): 0.1% versus 0.1% prior.
Retail Sales, May (8:30): 0.0% versus 1.2% priorl
Retail Sales ex-auto, May (8:30): 0.3% versus 1.0% prior.

6-14-02
Business Inventories, April (8:30): -0.2% versus -0.3% prior.
Industrial Production, May (9:15): 0.4% versus 0.4% prior.
Capacity Utilization, May (9:15): 75.7% versus 75.5% prior.
Mich. Sentiment-Prel., June (9:45): 97.0 versus 96.9 prior.

TEAM TRADES

Q: You said "Futures are massively lower on the INTC news". How can we check the index futures after hours? This would be quite valuable on a daily basis.

A: There are a few sites that do this. One good one is http://money.cnn.com/markets/afterhours/.

THE PLAYS: Some solid upside moves from pre-splits PNRA and FOSL, and post-split COCO! Most put plays are still in business after the rebound from the morning gap.

BONUS PLAYS: FTEK exploded! GME is still set up for a move. NEU gapped down through the buy point but rebounded with the market, but we still look for a failure at the 200 day MVA. MDC started down but then exploded back up through resistance.

FSS (Federal Signal--$25.73; +0.44; optionable): Trucks & vehicles
http://biz.yahoo.com/p/f/fss.html
STATUS: Cup with handle. FSS started the pattern in early March off a high of 27, testing the 200 day MVA (then 22) at the pattern low in mid-April. Over the past two weeks FSS has pulled into the handle, holding the 18 day MVA (25.12), moving up a bit Friday as volume remained below the average. Set up for a breakout, with the handle high at 25.98 and the all-time high at 28.25. Excellent money flow, and relative strength has broken out. Target: 31
BUY POINT: 26.08 on volume of 280k (avg. 189k; Friday up to 170k). Stop: 24.25 (7%)
POSITION: Stock and/or August $22.50c to buy (FSS HX).

WHI (W Holding--$19.38; +0.39; optionable): Savings & loan
http://biz.yahoo.com/p/w/whi.html
STATUS: WHI broke from a lateral consolidation in March riding the 18 day MVA with three to four bounces before testing back to the 50 day MVA (then 18, now 18.28). WHI made a nice, high volume bounce from that support to close May, and has for the past week pulled gently back to the short-term MVA's (10 day 18.95, 18 day 18.75). Friday WHI bounced sharply, moving on much stronger volume of 100,900 (avg. 45,300), and closing just short of the consolidation high at 19.49. Target: 23.50
BUY POINT: 19.59 on continued strong volume. Stop: 18.55
POSITION: Stock (no option chain)

FNIS (Fidelity Natl--$28.53; +1.15; optionable): Application software
http://biz.yahoo.com/p/f/fnis.html
STATUS: A strong move up after having to do a reverse stock split last summer. A nice run from the beginning of 2002 at $10, moving on strong volume and recently hitting up to 34.15 before trending back to the 50 day MVA (25.90). FNIS tapped that level twice at intraday lows early in the week, holding and then moving up the last two sessions, Friday taking out the short-term MVA's (28.25) on very strong volume (596k; avg. 179k). Righ at the short-tem down trendline, and looking for a continued run from here. Target: 36
BUY POINT: 29.20 on continued strong volume. Stop: 27.15 (7%)
POSITION: Stock (no option chain)

HET (Harrah's--$46.37; +1.35; optionable): Resorts & casinos
http://biz.yahoo.com/p/h/het.html
STATUS: Put. HET has enjoyed great success since September, riding a steady trend from 23 up over 50. An initial test of the 50 day MVA (46.50) was successful, but Monday HET gapped back through and fell on big volume, hitting a low of 42.62 Tuesday before rebounding. The move back up has come all the way to the 50 day, but volume has been lower, dropping significantly Friday to 898k (avg. 1.08m). The weak test could lead to the 'kiss goodbye,' a great entry point for a put. Target on the drop: 40.
BUY POINT: A drop through 45.50 on above average volume. Stop: 47.25
POSITION: August $50p to buy (HET TJ; 30 OI, -.63 delta).

Quick updates prior bonus plays:

EXPE - Looking for drop back after the gap down and move up with the market
QCOM - A gap down and reversal on strong volume, but a lot of resistance and we look for a failure
ODSY - Still set up well for a move
ACXM - Held over the 50 day after dipping through early
INTU - Held strong with a doji over the 10 day
BJ - Still looking for more downside
THQI - The downtrend still in place
WY -Protecting from a breach of support at the 50 day
LNY - Still battling the 50 day, but the push up has been on low volume
GRMN - Holding up but still cautious that it could turn over
DISH - Typical action today, gapping down and then a strong move up, but not changing the trend yet
CCRD - Continued down toward the put target!
TDY - Nice bounce Thursday, and held on today, so we will see if it can continue
ACV - Could bounce off the doji but not looking for it to break back over consolidation
CHRZ - Still okay after pulling back again from 4.75, but making sure it holds 4.30
EME - Still weak and holding positions for a continued drop toward the target
GLYN - Still strong, breaking over recent highs
HP - Holding for a continued fall
KMI - Continuing downtrend
MFC - Not a bad pullback and bounce from the 50 day
PRU - Pulling up stops to 33.90

PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: KRB announced a split Thursday! No split on tap for this week, but we are researching those meeting dates.

PRE-ANNOUNCEMENT BEST PLAYS: Still keeping an eye on BRL for put play
1) SLM - Could not muster a move up to resistance

SLM (USA Education--$94.57; -0.43; optionable): Looking at a new date.
http://biz.yahoo.com/p/s/slm.html
BACKGROUND: Last announced a 7:2 split on 11-21-97 at a price of $132. The annual shareholder meeting 5-10-01 at which time additional shares were authorized.
STATUS: Put. After crashing through the 50 day MVA (95.91) Monday, SLM reversed Tuesday on a 'hammer' doji on strong volume. We expected a bounce off of that pattern, and got the kind of weak rebound we look for to set up a put - lower, below average volume that could not reach up to the former support. SLM has held on a bit, but unable to muster anything other a couple of loose dojis on low volume (Friday 506k; avg. 680k). Still looking for a fall, from here or after another attempt to move on the 50 day. Targeting 89 on the put play (200 day at 88.43).
BUY POINT: A move below 94 on average or better volume.
POSITION: July or October $100p to buy (SLM ST - 19 OI, -.73 delta, SLM VT - 110 OI, -.58).

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) JILL - A new play!
2) THC - Ascending wedge
3) KSWS - Another weak move up
4) ATK - Hit the put buy point and still a play

JILL (J.Jill Group--$34.18; +2.39; optionable): Retail apparel. Split 3:2 effective July 1.
http://biz.yahoo.com/p/j/jill.html
STATUS: Broke from a cup with handle in March (a bonus play for us then), and after a run that hit 36 JILL has come back to test former pattern highs, and the 50 day MVA (31). Over the last couple of weeks JILL has flirted with the 50 day, but held on and Friday generated a strong bounce (volume sharply up to 244k; avg. 240k). Looking for more and a move to a new high. Target: 41
PLAY: Over 34.50, with July $30c to buy (JUI GF). Stop: 32.18 (7%)

THC (Tenet Healthcare--$74.82; +1.52; optionable): Hospitals. Splits 3:2 effective 7-1-02.
http://biz.yahoo.com/p/t/thc.html
STATUS: THC has been a very steady performer, showing good action as it runs along the short-term MVA's with occasional visits to the 50 day and 200 day MVA's. THC made a solid bounce and move off the 200 day in March, hitting 75.45 before finally dropping back to test the 50 day (then 70, now 70.96). It held and has formed an ascending wedge after challenging the high and testing the short-term MVA's (72.80). Friday THC bounced again, reaching a new high at 75.50 intraday, moving on sharply higher, strong volume of 2.54m (avg. 1.66m). Looking for a break and run going toward the split. Money flow is strong. Target: 86
PLAY: 75.60 on minimum volume of 2.25m, with stock and/or August $70c to buy (THC HN). Stop: 70.50

KSWS (K-Swiss--$44.03; +1.98; optionable): Splits 2:1 effective June 22.
http://biz.yahoo.com/p/k/ksws.html
STATUS: Put. KSWS moved up again Friday, following the market after a slight dip to open. The stock had dropped heavily early in the week, taking out the 50 day MVA (43.84) with high volume selling. A relief bounce was weak, and we were looking for a drop Friday. The move up does not change much about this pattern, although it closed back over the 50 day. Volume continued to be weak on the move up, coming in Friday at 62k (avg. 91k). Still looks primed for failure. Target 37.
PLAY: Adjusting the buy point to a move below 42.75 on average or better volume, with October $50p to buy (SWU VJ - no OI, -.74 delta). Stop: 45

ATK (Alliant Techsystems--$103.26; -1.89; optionable): Aerospace/Defense. Splits 3:2 on or about June 11.
http://biz.yahoo.com/p/a/atk.html
STATUS: Another stock that triggered stops on a hard drop through the 50 day MVA (104.27). Although we got some good moves to the upside with ATK, these stocks dropping through up trendlines and changing character offer a great chance in the opposite direction. ATK made the test of broken support that we expect, moving back up Wednesday-Thursday on lighter volume to close over the 50 day. Friday ATK dropped back through our buy point, although volume was much lower (254k; avg. 347k) and it recovered but closed with a loosed 'hanging man' doji under resistance. Still looks like a move down, and we will look for another drop for new or additional positions. Target: 90 (200 day MVA at 88.49).
PLAY: A drop through 101 average or better volume, with August $110p to buy (ATK TB - 23 OI). Stop: 106

End Part 2 of 3

us stock market
stock split