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TOMORROW

A full economic docket once again with business inventories, capacity and utilization, and Michigan sentiment. Some more reports that are perceived negative (retail sales was not all that negative as noted) could send the market below current support for a much needed deeper test. You know how you are in a meeting and everyone knows what has to be done but no one is saying it? The indexes are trading around potential support, trying to rally but failing each time, and no real negative sentiment. Needs some catalyst, and back to back economic reports that are worse than anticipated could start it.

This is a point the indexes have been at before, however, and they have repeatedly found a way to move up and dissipate the high anxiety. They have not broken down below support but they are tied on a short leash to it as well. There is enough uncertainty out there about the economic future, technology future, the war on terror, the war in the Middle East, the potential war on the Indian subcontinent to have everyone guessing and second guessing themselves. It is a veritable soup of conflicting thoughts on the future, even more so than usual. That is good because it shows in itself the uncertainty in the pros and thus the average investor.

In our view the market is near setting the bottom, it just needs some more pieces to fall into place. It is setting up to do that and what we need to do is be ready. We have downside plays open that are hitting our targets each session. When the selling gets really intense you tend to want to jump onto the selling binge. That can be done for short plays, but the fact that we have put targets getting hit each session shows that there is some sustained selling. When the market rolls down hard we will let the puts run until it smacks hard and bounces. That may be at the prior lows, a bit higher, or a bit lower. At that point we close them out and book the gains. When we see the sentiment indicators saying it looks like a bottom, we act with our heads and not our guts. We close the puts and see what comes of it, i.e., see if a reversal and follow through comes in that disrupts the downtrend. Then we can get serious again, successful reversal or not.

Support and Resistance

Nasdaq: Closed at 1496.86
Resistance: May down trendline at 1515. Then 1550 that held as resistance in recent sessions and is backed by the 10 day MVA (1547.67). The 18 day MVA (1582.05) is next followed by 1600. The second March down trendline at 1610. Then the following March to April trendline now at 1643 and the February low at 1700.
Support: 1500 is fighting to hold.. 1460 is some support. After that is the September low at 1387.06.

S&P 500: Closed at 1009.56
Resistance: The first March down trendline at 1026. Then the 10 day MVA (1032.29). The 18 day MVA at 1046.15 and 1050 are next followed by 1060 that offers minor resistance from previous prices. The second March/April down trendline at 1057. Then the February lows at 1074.
Support: 1008 is the September 2000/May 2001 down trendline. Below that is the bottom of the March downtrend channel at 1000 to 999. The September low is 944.75.

Dow: Closed at 9502.80
Resistance: Back below the March down trendline at 9553. Then the 10 day MVA (9670.38) followed by 9750 that stopped the index twice the last times it tested that level. The 18 day MVA (9780.90) and the April and May lows at 9800 to 9811. The 200 day MVA (9857.05). The September 2000/February 2001 down trendline is at roughly 9942. Then 10,100, followed by 10,250 to 10,300.
Support: 9500 to 9600 in the shelf of support from 9500 to 10,100. It is still on the bottom shelf. Then 9000 to 9100. There is a rest stop at 8500. The September low is 8062.

Economic Calendar

6-12-02
Export Prices ex-ag., May (8:30): 0.3% actual vs. 0.3% prior.
Import Prices ex-oil, May (8:30): -0.1% actual vs. 0.4% prior.
Fed's Beige Book (2:00)

6-13-02
Initial Claims, 06/08 (08:30):390K actual versus 393K expected and 384K prior. (revised from 383K)
PPI, May (08:30):-0.4% actual versus 0.1% expected and -0.2% prior. (revised from -0.2%)
Core PPI, May (08:30):0.0% actual versus 0.1% expected and 0.1% prior. (revised from 0.1%)
Retail Sales, May (08:30):-0.9% actual versus -0.2% expected and 1.2% prior. (revised from 1.2%)
Retail Sales ex-auto, May (08:30):-0.4% actual versus 0.3% expected and 1.1% prior. (revised from 1.0%)

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.

THE PLAYS

Good movers: HSY, PHTN, RE, CTX, LZB, NFB. BGG undercut the 200 day MVA; what a put that has been, as has been UVN!

Continuing plays table: CAND, CMPC, ERTS, FTEK, PBG, SALM.

NEW PLAYS: After today's slow action, not many stocks met our criteria so we are not pushing many new plays tonight, but do like AET:

AET (Aetna--$49.28; -0.48; optionable): Health care plans
http://biz.yahoo.com/p/a/aet.html
STATUS: Saucer with handle. AET broke from a cup with handle in March, making a strong run that tapped a high of 51 before correcting back into the current pattern. Only a six-week base, but showing good action and accumulation. After a strong move up the last week, AET has started to pull back into a handle, dipping with a couple of dojis the last two sessions as volume declines. We could see some more pullback in the handle, looking for light volume and a hold of the 10 day MVA (48.57), but off of that are looking for a breakout. Relative strength is breaking out, and money and buying are solid. Target: 60.
BUY POINT: 50.35 on volume of 1.7m (avg. 1.1m; today down to 849.9k). Stop: 46.83.
POSITION: Stock and/or October $45c to buy (AET JI - 72 delta).
http://www.investmenthouse.com/ct/aet.html

CONTINUING PLAYS:

Play Date: 05/21/2002
BL (Blair Corp.--$22.92; +0.02; no options):
http://biz/yahoo.com/p/b/bl.html
STATUS: Cup w/handle. Still in a very flat, tight trading range on the 18 day MVA with volume building up over the last 2 days. Still looks ready, especially with volume coming on like it is. Money flow and relative strength high.
Volume: 30.7K Avg Volume: 14.9K
BUY POINT: $23.85 Volume=45K Target=$27.5 Stop=$22
POSITION: Stock only (no option chain)
http://www.investmenthouse.com/ct/bl.html

Downside:

Play Date: 06/11/2002
MTB (M&T Bank--$81.91; -1.41; optionable): Regional banks
http://biz/yahoo.com/p/m/mtb.html
STATUS: Put. Tested back up to the 50 day MVA Tuesday but did not hold the position; after a Wednesday doji on low volume MTB headed back down today. Completes the action we anticipated ahead of a solid move down; initial breach, test, now the fall. Volume was slightly higher on the move but the stock just undercut some support at the March highs. Looking for higher volume and a continued move down. 200 day MVA is at 76.39.
Volume: 233K Avg Volume: 246.1K
BUY POINT: $81.75. Volume=300K Target=$77.75 Stop=$85.60
POSITION: MTB VR - Oct. $90 put (-64 delta)
http://www.investmenthouse.com/ct/mtb.html

Play Date: 06/06/2002
MDC (M.D.C. Holdings--$44.25; -1.90; optionable): Residential construction
http://biz/yahoo.com/p/m/mdc.html
STATUS: Put. Has formed the right shoulder to its head and shoulders pattern, moving down from resistance at the 18 dah and 50 day MVAs Thursday on a rise in volume. Neckline is at the 42.50 range, but on this move aggressive positions can be taken on a continued drop with higher volume.
Volume: 156.7K Avg Volume: 184.36K
BUY POINT: A hold for buys at 45.50 (original $44.70). New: 44. Volume=200K Target=$40.35 Stop=$47
POSITION: MDC SJ - July $50 put (-69 delta) MDC UJ - Sept. $50 put (-58
delta)
http://www.investmenthouse.com/ct/mdc.html

WATCHLIST/ CONTINUING:

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.

TTR SUMMARY TABLE

Stock Date Play Close +/- Pivot Tgt Vol AvgV Stop
ABF 05/11 BO 20.76 -0.28 22.23 25.75 368K 657K 20.25
Testing the 50 day MVA on light volume.

ATH 06/08 BO 72.4 -2.2 72.25 86.75 695K 1.3M 67.19
Gave the move up back, but holding the breakout and very low volume.

ATH 05/16 Test 50 72.4 -2.2 68.5 75 695K 1.3M 63

BGG 05/11 Put 37.93 -0.51 39.4 35 106K 142K 42
Starting back down, but not a lot of volume.

BL 05/21 cup hdl 22.92 +0.02 23.85 27.5 31K 15K 22
Still waiting. Nice volume again as it appears to be flexing its muscles.

BLC 05/25 Flat 22.93 -0.27 24.25 30 264K 261K 22.55
Fading after never hitting the buy point.

BYBI 05/23 BO 10.72 +0.06 9.7 12.75 14K 48K 9.02
Nice job in a tough market. No volume, just resting while the market churns.

CAND 06/06 BO 4.75 -0.11 4.98 6.95 61K 286K 4
Another nice session, holding the 10 day MVA on low volume.

CERN 05/20 A Wedge 49.02 -0.95 56.1 60 315K 457K 53
Imploding. May get a test of the 200 day MVA again at 50.50.

CMPC 06/12 Test BO 3.89 -0.05 4.1 5.63 95K 153K 3.55
Tested the 50 day MVA again and recovered. A bit wild, but it was that kind of market.

CTX 05/11 Put 51.61 -2.1 53.5 49 925K 1.2M 56
There we go! Tanking.

CVH 06/05 Test BO 32.15 -0.84 32.6 39 519K 438K 29
Holding up relatively well at the 10 day MVA.

CYMI 06/03 Put 36.6 -0.95 39.45 33.8 1.3M 1.4M 44
Surprising. A doji indicates it may try a bounce.

DVN 05/25 A Wedge 47.34 +0.24 50.95 61 1M 1M 47.38

ECL 05/23 cup hdl 45.24 -0.59 47.8 57.36 311K 353K 44.45
Losing the pattern. If it does not hold here we will sell early.

ERTS 05/30 Cup 62.08 -1.21 66.12 79.5 1.8M 2.9M 61.49
Still a good handle, holding above the 50 day MVA on light volume.

FRX 06/10 Put 71 +0.75 72.45 68 1.1M 1.3M 75
Drugs tried to rally today.

FSS 05/22 DB hdl 25.25 -0.49 25.8 31 123K 189K 23.99
Tough day, but holding the pattern well.

FTEK 06/01 A Wedge 6.69 -0.09 6.65 8 55K 59K 5.95
Nice test still, holding the 10 day MVA.

HGR 05/20 Test 50 14.32 -0.14 12.6 19 141K 118K 11.72
Holding up very well.

HI 05/20 Put 50.3 -2.18 53.45 48.5 2.7M 3M 56
Tanking away.

HLT 05/06 Put 13.24 +0.09 14.3 12 948K 2.1M 15.80

HSIC 05/15 BO 47.63 +0.29 49.4 56.9 169K 296K 46.50
Big doji at the 50 day MVA.

HSY 06/12 Put 64.74 -0.91 65.35 61 407K 508K 67.25
Started the fall we were looking for.

IBC 06/08 BO 27.85 -0.59 28.6 34.96 309K 238K 26.6
Sharp turn on higher volume. Below 27.50 and we sell.

IMDC 05/20 Put 31.2 0 29.9 26 152K 202K 32
Still hanging on.

ITN 05/13 DB hdl 12.81 -0.29 13 16.5 68K 110K 11.75
Not the move we wanted, undercutting the 18 day MVA.

JBHT 06/01 A Wedge 29.07 +0.22 28.72 36 788K 446K 25.40
About the best it could do given the market action.

KROL 06/06 BO 22.05 +0.01 20.2 24 309K 328K 19.50

LZB 06/03 Put 26.45 -1.12 26.5 23.5 158K 201K 29.50
Starting the fall again but needs more volume.

MDC 06/06 Put 44.25 -1.9 44.7 40.35 157K 184K 47
Tanking like a big dog.

MTB 06/11 Put 81.91 -1.41 82.95 77.75 233K 246K 85.60
Heading down as well.

NFB 04/13 BO 37.3 -0.89 36.55 43.5 604K 643K 37
Breakdown, not out. Selling now.

NX 06/01 Test 50 39.88 +0.08 36.5 43.8 179K 100K 33.94
Holding up very, very well.

OSI 05/29 Test BO 37.52 -0.6 39.05 46.94 401K 479K 36.32
Testing the 50 day MVA on light volume. Waiting for a test.

PBG 05/30 Test 18 32.81 -0.06 32.75 36 583K 1.2M 30.46
Holding that tight pattern.

PCLE 06/08 BO 11.5 -0.1 11.5 19.94 1.2M 634K 10.25
Tried to rally but the market pulled it back. Holding up well.

PCLE 05/06 cup hdl 11.5 -0.1 10.27 13 1.2M 634K 9.40

PEGA 06/10 Test 18 10.95 +0.22 11.68 15.45 132K 128K 10.30
Nice little bounce on the 18 day MVA.

PETC 06/01 Test BO 25.65 -0.1 25.85 31 239K 265K 24.04
Low volume pullback. Still okay.

PHTN 06/08 Put 31.62 -1.9 36.25 32.5 916K 523K 39
Hit target.

PNR 06/08 Put 46.21 -0.58 44.7 39.75 190K 304K 47
Holding tough. May crack if market falls; if not, we are closing.

QCOM 06/05 Put 32.39 -0.61 31.5 25 21M 14M 33.50
Tombstone doji after the rise; may be ready to fall again.

RE 06/11 Put 55.94 -1.67 58.55 54 634K 564K 63
Really tanking.

SALM 06/03 cup hdl 28.8 -0.2 30.17 36.2 35K 66K 27.50

TEVA 06/04 cup hdl 63.01 +0.63 68.05 80 507K 919K 63.29
Modest bounce up off the 50 day MVA on no volume.

TEVA 05/15 BO 63.01 +0.63 62.1 67 507K 919K 60.50

XRAY 05/25 A Wedge 36.35 -0.46 40.35 48.25 216K 336K 37.53
Cannot get up off the floor, trying to hold at 36 support on the lows. On a test of 37.50 to 38 we will exit.

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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