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Begin part 2 of 2
Support and Resistance
Nasdaq: Closed at 1259.55
Resistance: The 10 day MVA (1277.82). Then the 18 day MVA (1305.78) and price resistance at 1300. The hump in the double bottom pattern at 1354.48 followed by 1357.09, the October 1998 bear market low. Then 1418, the interim test after the September low. The 50 day MVA (1414.89) and the second March down trendline at 1430. That is followed by 1500.
Support: The March down trendline (1240). The bottom of the March downtrend channel (1182), right at price support from 1190 to 1200 (the July low is 1192.42).
S&P 500: Closed at 859.87
Resistance: 850 to 855 represents minor resistance from the October 1997 and Q2 1998 lows and has not been completely cleared by Tuesday's move. The 10 day MVA (868.78). The 18 day MVA (882.32). The lowest channel line in the March downtrend channel (883). The middle of the potential double bottom at 911.64. The predominant bottom channel line from the March downtrend at 910. The 50 day MVA (944.04). The March down trendline at 946.
Support: 830, the recent low would be possible, but 800 is more likely. Then the July low at 775.68. 750 to 760 with an intraday touch to 730.
Dow: Closed at 8274.09
Resistance: The 10 day MVA (8355.77). The 18 day MVA (8456.21). The lowest bottom channel line of the March downtrend at 8590. The late July high that is the potential middle of the double bottom at 8762.14. The May down trendline at 8745. The March down trendline at 8940. Then the 50 day MVA (8934.12). After that price resistance at 9250 and then 9500.
Support: The September closing low at 8235.81 is possible, but 8062, the September 2001 intraday low, has tried to hold on a couple of occasions. The target we look to hold around it the July low (7532.66). The October 1998 lows are at 7400 and 7467. After that is 7000, some 1997 lows and highs.
Economic Calendar
8-05-02
ISM Services, July (10:00): 53.1 actual versus 55.0 expected, 57.2 prior.
8-07-02
Import/Export prices, July (8:30).
Wholesale inventories, June (10:00): 0.2% expected, 0.1% prior.
Consumer credit, June (2:00): $8.0B expected, $9.5B prior.
8-08-02
Initial jobless claims (8:30): 385K expected, 387K prior.
PPI, July (8:30): 0.1% expected, 0.1% prior.
Core PPI (8:30): 0.1% exected, 0.2% prior.
8-09-02
Productivity (preliminary), Q2 (8:30): 1.0% expected, 8.4% prior.
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TEAM TRADES
CLX: As the market moved toward the close we saw some of the bigger names struggling at resistance. Those were likely put candiates as the volume on the move higher was simply not solid. CLX had been fighting to move higher the past week, but was giving up the fight. Tuesday it tried to climb over the 18 day MVA, but then reversed and sold off harder toward the close. Volume was not huge, but it was sharply higher and heading lower as the close neared. It was an aggressive position, but we felt that the Cisco earnings would not particularly impact CLX one way or the other to any great extent. We were looking at the Sept. $40 puts as they had a good delta for the price. They were trading at 3.90 by 4.10. With a fairly narrow spread and not a lot of time we went ahead and put an order in at the ask. That is where the options closed, but with the stock falling below the 10 day MVA after another attempt to clear them and doing so on rising volume, we liked the play. We will see how much we like it as the week unfolds.
THE PLAYS:
Tuesday plays:
BAC: Tried to rally but failed for the most part. We have adjusted the buy point.
SYK: Rallied but on lower volume. We still like it.
INTL: Strong move, close to the breakout.
Best Plays:
1) ACL: Looks ready for an upside breakout.
2) CVTX: Looking really strong.
3) Watchlist: AMGN; VALM; SSD; CB; BLUD (new buy point); IMN (new buy point; see continuing play list)
NEW PLAYS:
Upside:
ACL (Alcon, Inc.--$34.54; +1.39; optionable): Medical supplies (contact lens)
http://biz.yahoo.com/p/a/acl.html
STATUS: Double bottom w/handle. A new issue in March, ACL is moving in its first real correction, forming a double bottom in July at 28, rallying off that level in late July. It has now formed a handle the last week, testing the 50 day MVA on the Monday low (32.80). It jumped off of that level Tuesday on rising, above average volume. Accumulation in the base is solid at 4 rising weeks on rising volume to 2 down weeks on rising volume. Looks ready for the breakout.
Volume: 634.8K Avg Volume: 605.181K
BUY POINT: $35.81 Volume=900K Target=$42.94 Stop=$33.31
POSITION: ACL KF - Nov. $30c (72 delta, low OI) and/or Stock
http://www.investmenthouse.com/cd/acl.html
Downside:
ABC (Amerisourcebergen--$63.64; +1.04; optionable): Wholesale drugs
http://biz.yahoo.com/p/a/abc.html
STATUS: ABC looked to be forming a double bottom with handle and it might still do it, but the handle is way too steep and deep; that is a typical sign of failure. After plunking down at 62.50 Monday it rallied Tuesday on rising, average volume. It stalled at the 10 day MVA on the high (64.94), however, and closed near the session low. The higher volume intraday reversal indicates the stock is ready to sell further. There is some support at 62.50, but if it continues to sell and the market runs into trouble, we will look to open positions at 63.15, then add to them on a move below 62.50.
Volume: 1.452M Avg Volume: 1.326M
BUY POINT: $63.15 Volume=1.5M Target=$57.85 Stop=$65
POSITION: ABC UM - Sept. $55 p (-55 delta)
http://www.investmenthouse.com/cd/abc.html
Revisited:
CVTX (CV Therapeutics--$23.9; +2.10; optionable): Drug manufacturer
http://biz.yahoo.com/p/c/cvtx.html
STATUS: Testing the 50 day MVA. As with many drug and biotech stocks of late, CVTX broke over its 50 day MVA (21.42) in the late July bounce and has come back to test that move on lower, below average volume. Tuesday CVTX started back up off the 50 day MVA on rising, above average volume. Accumulation is solid, and it looks ready to move.
Volume: 993.093K Avg Volume: 834.454K
BUY POINT: $24.05 Volume=1.3M Target=$30 Stop=$21.35
POSITION: UXC JD - Oct. $20 c (78 delta) and/or Stock
http://www.investmenthouse.com/cd/cvtx.html
MEMBER PORTFOLIO: CUB, EBAY, HOTT; LOW, NOC, PG, QLGC, RCII, SRCL, WM
Nothing covered tonight.
CONTINUING/WATCHLIST:
We have made a change to the table. Instead of average volume we have included the target volume.
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
$OEX 08/03 Put 431.17 12.61 431.95 400 8.4M 0 429
Closed out the remaining positions with the trailing stop.
ABC 08/06 Put 63.64 +1.04 63.15 57.85 1.5M 1.5M 65
New.
ACL 08/06 DB hdl 34.54 +1.39 35.81 42.94 635K 900K 33.31
New.
AMGN 08/03 Test 50 44.23 +2.01 44.75 52.65 17M 20M 41.62
Current. Issued an early alert. Still looking for a further breakout.
AMI 07/24 A Wedge 6.14 +0.19 6.77 9.94 126K 173K 6.45
Current. Held at the 50 day MVA, giving a slight bounce.
BAC 08/05 Put 63.73 +1.67 62.73 57.88 6.5M 7.2M 64.55
Buy not hit. Note the new buy point.
BLUD 08/06 Test BO 25.85 +1.8 26.06 30.25 374K 300K 24.24
Looks ready to move again. This is a new buy position.
BLUD 07/24 A Wedge 25.85 +1.8 24.56 29.94 374K 300K 22.55
BLUD 07/15 A Wedge 25.85 +1.8 23.55 28.26 374K 267K 21.55
CB 08/03 Put 59.36 -0.04 60.95 55.15 1.9M 1.6M 61
Current. Ready to fall again as volume rose.
CFCP 07/29 A Wedge 14.21 +0.21 15.55 18.65 10K 55K 14.35
Buy not hit. Not showing much right now.
CFFN 07/31 DB hdl 25.14 +0.17 27.25 32.71 76K 183K 25.72
Buy not hit. Settling in at support at 25. Losing its action.
COLM 08/01 Dbl btm 34.16 +1.22 35 39.95 101K 275K 32.55
COLM 07/27 Dbl btm 34.16 +1.22 34.25 39.95 101K 275K 32.95
Current. Good move up off of the 200 day MVA, but no volume.
CREE 07/15 BO 14.72 +1.82 14.05 17 2.4M 2.2M 13.07
Exited, but it jumped back over the 50 day MVA on rising volume Tuesday. Looks sharp again.
CUB 07/06 Cup 19.74 -0.01 0 0 121K 0 0
CVTX 07/31 BO 23.9 +2.1 24.05 30 993K 1.3M 21.35
Current. Nice.
DELL 07/27 Rv H&S 24.32 +1.21 23.12 26.15 26M 30M 22.55
Current. Stronger volume bounce off support. Hit the 50 day MVA on the high and could not hold it all. Will test it tomorrow on the CSCO earnings.
DOCC 07/25 BO 13.48 +0.22 11.9 14.25 248K 200K 11.07
Current. Moving up again on rising, above average volume.
DORL 07/30 Dbl btm 37.23 -0.08 37.96 45.55 396K 410K 35.3
Buy not hit. Testing the 10 day MVA on, showing a doji on rising, above average volume.
DROOY 05/21 A Wedge 3.35 +0.1 4.85 7 2.6M 4M 4.30
EBAY 07/02 Test 50 55.27 +1.92 57.95 63 8M 600K 58.50
HGSI 07/22 Test 50 15.81 +0.81 15.31 18 1.7M 3.6M 14.50
Current. Good bounce off the 50 day MVA but on low volume.
HOTT 07/06 Test 50 15.55 +0.69 0 0 857K 1M 0
HRBT 07/30 Dbl btm 26.06 +0.12 27.61 31.75 31K 41K 25.68
Buy not hit. Still in the pattern, testing way low but then rallying back on strong volume.
IMN 08/06 cup hdl 30.51 +1.41 31.11 36.45 218K 200K 29.95
New buy point as it blasted higher on stronger volume.
IMN 07/29 Flat 30.51 +1.41 30.26 36.45 218K 200K 29.55
INTL 08/05 Dbl btm 21 +1.07 21.42 24.65 322K 375K 19.92
Buy not hit. Looks ready with a high volume rally.
JBLU 08/01 cup hdl 44.6 +1.85 48.65 54.45 144K 350K 44.85
Buy not hit. Trying.
LOW 07/06 Test 50 35.65 +2.01 0 0 5.3M 0 0
MTXX 07/31 A Wedge 9.7 -0.07 10.05 12 16K 38K 9.35
Buy not hit. Holding the pattern well.
NOC 08/05 Put 106.25 +3.02 102.94 96.35 2.4M 2M 105.55
PG 07/23 Put 87.72 +0.28 81.45 75.75 6.5M 4M 83.50
QLGC 07/06 Test 18 37.99 +3.16 0 0 17M 16M 0
RCII 07/06 Cup 51.34 +3.21 0 0 585K 0 0
ROOM 07/27 Put 39.57 +1.86 39.65 34.24 568K 1M 41
Exited.
SCIO 07/29 cup hdl 27.72 +1.46 32.55 39 2.9M 1.5M 29.95
Current. Trying to hold the 200 day MVA, rallying on rising volume.
SRCL 07/13 Dbl btm 31.93 +0.94 35.25 42.25 649K 558K 32.78
SSD 08/01 PreSplt 58.33 +1.43 58.05 68 46K 25K 53.99
Current. Good move by the pre-split.
SYK 08/05 Put 50.29 +1.52 49.25 44.65 592K 1M 51.15
Buy not hit; new buy point.
TELK 08/03 Test BO 14 -0.21 14.65 17.65 263K 400K 13.05
Buy not hit. Looks ready.
VALM 07/29 BO 21.25 -0.2 22.38 26.85 41K 120K 20.81
Buy alert not issued. A doji on the 10 day MVA. Could be ready.
WHR 08/01 Put 53.76 +2.11 54.97 51.35 748K 800K 54.55
Exited.
WM 08/03 A Wedge 36.09 +1.14 37.55 42.25 4.7M 5.2M 34.92
WTW 05/23 Test BO 41.65 +0.95 43.7 50 303K 250K 40.64
Current. Moving off the 50 day MVA but volume is still below average.
XOM 08/01 Put 33.4 +0.9 33.45 30 13M 18M 35.15
Exited when it popped higher.
Good Investing!
Jon L. Johnson and The Daily Staff
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 of 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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