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stock trading course, stock trading
Begin Part 2 of 3
Economic Calendar
6-18-02
CPI, May (8:30): 0.0 actual versus +0.1% expected and 0.5% prior.
CPI, core (8:30): +0.2% actual and +0.2% expected and 0.3% prior.
Housing starts, May (8:30): +11.6% to 1.733M actual versus 1.600M expected and 1.53M prior.
Building permits, May (8:30): 1.674M actual versus 1.620M expected and 1.631 prior.
6-20-02
Current account, Q1 (8:30): $-107.5B expected versus -$98.8B prior.
Trade balance, April (8:30): -$32.1B expected versus -$31.6B prior.
Intial jobless claims (8:30): 38kK expected versus 390K prior.
Leading Economic Indicators, May (10:00): 0.2% expected versus -0.4% prior.
Philadelphia Fed, June (12:00): 10.6 expected versus 9.1 prior.
Treasury Budget, May (2:00): -$60,0B expected versus -$27.9B prior.
TEAM TRADES
THC: A pre-split play splitting 7/01 that just moved to a high and was back at the 18 day MVA testing that move. Now we don't usually care too much about volume on these plays, but we always look for volume cues. Monday THC pulled back to the 18 day MVA in the fifth day of the pullback. It tapped that level and then moved up off that support on rising, above average volume. That is an indication that some buying support came in at the 18 day MVA, a level that should act as a bounce point when the stock has just recently tested the 50 day MVA and successfully bounced from there.
At about 9:40CT THC was bouncing back up after pulling back to 75.50. We were looking for the first bounce after the initial pullback, and this was it. These are momentum plays and the stock had pulled back just the way we like. We were looking for a $5 to $6 run, a very nice move on a pre-split run; we like to catch these moving off support and bank a $5 or so move. Using options we can consistently make good money on these plays in almost any market. It is icing on the cake that this is in a good sector; indeed, pre-splits are often in good sectors because leading stocks that are having good price performance are the stocks that announce splits. We saw the move up and looked at the August $70 calls to best leverage our way into a position to give us the best gain over a $5 move. The options were trading 7.30 by 7.60. We put in a limit order at 7.50 to see what happened. The stock ran up away from us and stalled at 76.20 where it started down. We debated pulling the order and waiting to see if it fell back again, but we decided the move looked good so we left it in. The fill came on the way down at the limit price. The stock held up at the 75.80 level that was acting as some intraday support. The stock flattened out into a tight range for the next 2 hours and then jumped higher to over 77 on the high. It tailed off to close near 76.50, the options at 7.80 by 8.10. Not a bad start, and now it needs to give us another 3 to 4 poitns to make our play.
THE PLAYS
BONUS PLAYS:
Downside:
FISV (Fiserv--$38.70; -1.01; optionable): Business software
http://biz/yahoo.com/p/f/fisv.html
STATUS: Put. Broke the 200 day MVA (40.81) 6 sessions back on heavy volume, reversed off of 36, and made a low volume assent to test the 200 day. Tuesday the stock ran up to 40.40 on the high and turned back over on rising, above average volume. Looks ready to continue the move on down tomorrow.
Volume: 2.642M Avg Volume: 1.73M
BUY POINT: $38.45 Volume=2.6M Target=$34.50 Stop=$41.25
POSITION: FQV UI - Sept. $45 put (-55 delta)
http://www.investmenthouse.com/cs/fisv.html
MHP (McGraw-Hill--$59.74; +0.77; optionable): Book publishing
http://biz/yahoo.com/p/m/mhp.html
STATUS: Put. Similar to FISV, MHP broke below the 200 day MVA (60.88) 7 sessions back, plunged to near 56, and has moved back up to test. The past two sessions it has risen on lighter and lighter volume. Today it tapped 60.11 on the high and closed at the 10 day MVA. There has been some serious selling going on, and money flow is in the tank.
Volume: 516.6K Avg Volume: 559.318K
BUY POINT: $59.55 Volume=600K Target=$56 Stop=$61.25
POSITION: MHP TM - Aug. $65 put (-61 delta) MHP TN - Aug. $70 put (-74 delta)
http://www.investmenthouse.com/cs/mhp.html
Upside:
NMHC (National Med Health Card--$12.27; +0.22; no options): Health services
http://biz/yahoo.com/p/n/nmhc.html
STATUS: Cup w/handle. NMHC is in a 5-month cup with handle, and after a strong move up late last week it is easing back on below average volume the past three sessions toward the 10 day MVA (11.75). Accumulation weeks in the pattern outnumber distribution weeks 6 to 2; excellent accumulation. Money flow is out ahead of the price, a positive divergence that we really like to see.
Volume: 7.5K Avg Volume: 29.454K
BUY POINT: $13 Volume=100K Target=$15.6 Stop=$11.90
POSITION: Stock (no option chain)
http://www.investmenthouse.com/cs/nmhc.html
PRE-ANNOUNCEMENT BEST PLAYS
HUG (Hughes Supply--$42.25; +1.05; optionable): Working on another date for this one.
BACKGROUND: Based upon our research it does not appear that HUG has ever split its stock. The annual shareholder meeting is scheduled for 5-21-02 at 10:00 ET at which time no additional shares will be authorized. The company has sufficient shares for a 2 for 1 split.
http://biz/yahoo.com/p/h/hug.html
STATUS: Cup. After hitting a high at 42.99 in May, HUG has pulled back into a ragged cup, rallying over the 50 day MVA (39) and trading laterally for the past three weeks. Volume picked up last week, and Tuesday HUG gapped up close to a breakout and a new high on rising, above average volume. Now it might form a handle here at the prior high; that would be the best action. Still, the accumulation in the short base is good with accumulation weeks ahead of distribution weeks 4 to 1. If it makes the breakout we will take some positions at that point.
Volume: 214.3K Avg Volume: 166.772K
BUY POINT: $43.09 Volume=250K Target=$52 Stop=$39.50
POSITION: Stock and/or HUG JG - Oct. $35 call (82 delta) or HUG JH - Oct. $30 call (66 delta)
http://www.investmenthouse.com/cs/hug.html
PHM (Pulte Homes--$54.29; +1.73; optionable): Forecast to announce a split on 7-24-02 in conjunction with earnings. The company has not confirmed a time for the announcement.
BACKGROUND: Based upon our research it does not appear that PHM has ever split its stock. The annual shareholder meeting was on 5-15-02 at which time additional shares were authorized.
http://biz/yahoo.com/p/p/phm.html
STATUS: Flat base. PHM traded below the 50 day MVA (52.21) but held support at 50 and continued to move in a flat trading range between 50 and 55. It had formed a cup and then that morphed into this trading range as it tries to build up pressure for the breakout. Accumulation weeks lead 3 to 2 during the pattern and relative strength is of course excellent. PHM got a bump on strong, above average volume on the housing start news. Now this sector may be getting extended, but this base is just what the stock needed. Now if it can give us the breakout on some really strong volume, that will be good to take positions on this play.
Volume: 815.3K Avg Volume: 686.363K
BUY POINT: $55.95 Volume=1M Target=$67.45 Stop=$52.03
POSITION: Stock and/or PHM JJ - Oct. 50 call (69 delta)
http://www.investmenthouse.com/cs/phm.html
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.
New:
ERES (Eresearch Tech--$22.84; +1.04; no options): Medical labs; Splits 3:2 on 7-17-02
http://biz/yahoo.com/p/e/eres.html
STATUS: Test of breakout. ERES hit a new high just 7 sessions ago, pulled back to test the 10 day MVA (21.65), and started back up Tuesday on strong, above average volume. This stock has the momentum right now, and we are looking to get aboard for the move.
Volume: 342.2K Avg Volume: 91K
BUY POINT: $23.06 Volume=150K Target=$26 Stop=$21.20
POSITION: Stock (no option chain)
http://www.investmenthouse.com/cs/eres.html
KSWS (K-Swiss--$48.04; +2.03; optionable): Splits 2:1 on 6-24-02
http://biz/yahoo.com/p/k/ksws.html
STATUS: Breakout. Bolted up Tuesday after showing a volume spike Monday right on the 10 day MVA. We would like to see more volume on this, but it is a pre-split and KSWS took off for us with just three sessions before the split. That is what we like.
Volume: 64.9K Avg Volume: 85.181K
BUY POINT: $48.25 Volume=125K Target=$52.5 Stop=$44.50
POSITION: SWU JH - Oct. $40 call (77 delta) SWU JI - Oct. $45 call (67 delta)
http://www.investmenthouse.com/cs/ksws.html
PNRA (Panera Bread--$70.01; +0.81; optionable): splits 6-25
http://biz/yahoo.com/p/p/pnra.html
STATUS: Hit the Monday report breakout point intraday but pulled back to close near some pesking near term resistance at 70. Volume was excellent, however, so we have a feeling this stock is revving up some momentum just before the split next Tuesday. We will let it break over 70.75 as that will clear that recent top that has pushed it back the past week.
Volume: 602.6K Avg Volume: 434.181K
BUY POINT: $70.75 Volume=450K Target=$76.75 Stop=$65.24
POSITION: UPA HM - Aug. $65 call (72 delta)
http://www.investmenthouse.com/cs/pnra.html
CONTINUING CANDIDATES BEST PLAYS
AZO (Autozone--$80.83; -0.77; optionable): Auto parts
http://biz/yahoo.com/p/a/azo.html
STATUS: Testing the breakout. After a long run AZO has spent the past 6.5 months forming a cup with handle base. It broke out of the base in the last half of May, but after making its way to 84.50, it has formed a small wedge on top of the 18 day MVA (80.54) on some very low volume. It is resting right on the pre0correction high at 80. Accumulation weeks are ahead of distribution weeks in the patter 6 to 3; very good accumulation. It has been so quiet it has been ignored of late. We are looking for a strong volume breakout to take some positions and get another good move from this stock.
Volume: 852.2K Avg Volume: 1.016M
BUY POINT: $83.50 Volume=1.5M Target=$99.50 Stop=$77.66
POSITION: AZO IO - Sept. 75 call (71 delta) and/or stock
http://www.investmenthouse.com/cs/azo.html
KLAC (KLA Tencor--$49.9; -0.52; optionable):
http://biz/yahoo.com/p/k/klac.html
STATUS: Put. Even better action with a doji today with the high at the 18 day MVA (51.89) and turned back down to close at the 10 day MVA with a tombstone doji. The AMD and AAPL news is not going to help tomorrow. It may gap lower, but it can give us a good move down.
Volume: 12.2M Avg Volume: 12.042M
BUY POINT: $50.95 after a failed test of 52. Volume=1.4M Target=$45.45 Stop=$54
POSITION: KCQ UL - Sept. $60 puts (-66 delta)
http://www.investmenthouse.com/cs/klac.html
End Part 2 of 3
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