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us stock market, understanding the stock market
Begin Part 2 of 2
Support and Resistance
Nasdaq: Closed at 1221.09
Resistance: 1230 and 1250 are price resistance points. 1270 is more price resistance from the September lows. The August down trendline at 1255. The 10 day MVA (1262.43). The 18 day MVA (1281.89) and price resistance at 1300 are also in play. 1316, an early August interim high. The March/May downtrend line at 1315. The 50 day MVA (1333.71). The late July high (1354.48) and 1357.09, the October 1998 bear market low. There is another downtrend line from the March and May highs at 1390. 1418, the interim test after the September low. That is followed by price resistance at 1500.
Support: Price support from 1190 to 1200 (the July intraday low is 1192.42). After that it gets really fuzzy. You have prices at 1080 to 1100. That takes you back to 1996 levels.
S&P 500: Closed at 845.39
Resistance: 850 to 855 (the October 1997 and Q2 1998 lows). 875 is price resistance of some significance. The March downtrend line at 876. The 10 day MVA (874.68). The 18 day MVA (886.51). July and August interim highs at 911.64. The 50 day MVA (911.88). The September 2000/May 2001 downtrend line at 926. The downtrend lines from the March and April highs (939) along with price resistance at 950. 965, the September 2001 closing low. Then 1000 is psychological resistance.
Support: The first bottom channel line in the March downtrend (839). The lowest channel line in the March downtrend channel (800) along with price support at that level. Then the July low at 775.68 and marks the culmination of the short head and shoulders pattern. 750 to 760 with an intraday touch to 730.
Dow: Closed at 7986.02
Resistance: The August lows (8043) and the September 2001 intraday low (8062). The September closing low at 8235.81. 8250 acted as resistance and sent the Dow lower in the last hour. The 10 day MVA (8239.95). The 18 day MVA (8362.30). The March down trendline at 8365. Some price resistance at 8500. The 50 day MVA (8619.13). The late July interim high at 8762.14 (8745 closing). A range of resistance from 9000 on up to 9050. Then 9250 and then 9500.
Support: The lowest bottom channel line of the March downtrend (7935). Then 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
9-23-02
Leading Economic Indicators, August (10:00): -0.1% expected, -0.4% prior.
9-24-02
Consumer Confidence, September (10:00): 95.0 expected, 93.5 prior.
FOMC meeting results, 2:15
9-25-02
Existing home sales, August (10:00): 5.35M expected, 5.33M prior.
9-26-02
Durable goods orders, August (8:30): -1.8% expected, 9.2% prior.
Initial jobless claims (8:30): 420K expected, 424K prior.
New home sales (10:00), August: 990K expected, 1.017M prior.
FOMC minutes, 8-13 meeting (2:00)
9-27-02
GDP Q2 final (8:30): 1.2% expected, 1.1% prior.
Michigan Sentiment revised (9:45): 86.2 expected, 86.2 prior.
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THE PLAYS:
Friday plays:
AEM: Looks very ready with another doji in the handle.
TT: Started to move higher; just needs more volume to breakout.
SY: Hesitating at support before falling.
Best Plays:
1) ADLR: Good volume move in the pattern.
2) KKD: Looks ready to sell again.
3) Continuing: AEM looks solid. CCCG again.
NEW PLAYS:
Upside:
SCSS (Select Comfort--$5.55; +0.19; no options): Home furnishings (fancy beds)
http://biz.yahoo.com/p/s/scss.html
STATUS: Cup w/handle. The housing market may be peaking, but there are still a lot of homes being built and renovated. New homes and renovations mean new stuff to go in them. Been there, done that as we all have. The base is 4 months long with the handle just now forming after a strong move up to complete the right side of the base. Remember, the handle comes after that strong move up as it 'shakes out' the short term profit seekers who rode it up from the 200 day MVA. A solid breakout will send it to a new multi-year high, over and above near term resistance. That is where it can really make some serious moves; all it takes is a better market. In any event, the breakout can deliver a very solid percentage return for us. If it goes further from there, we will let it. Accumulation is positive with 4 up weeks on rising volume to 3 down weeks on rising volume; all it takes is a simple majority. Relative strength is ready to breakout, another plus for a solid base.
Volume: 315.5K Avg Volume: 130.136K
BUY POINT: $6.02 Volume=200K Target=$7.25 Stop=$5.61
POSITION: Stock (no option chain)
http://www.investmenthouse.com/cd/scss.html
ADLR (Adolor--$14.41; +0.65; optionable): Drug manufacturer
http://biz.yahoo.com/p/a/adlr.html
STATUS: Cup w/handle. Unlike SCSS that is trying to break to a new high, ADLR is still coming off the bottom of its 15 month base. It has, however, rallied and now formed a 5-month base with the handle (the lateral consolidation after a move up from the bottom of the pattern to near the pre-correction high) above the 200 day MVA (13.34). A breakout here puts it over near term resistance and gives it room to run up to the next resistance level and still give us a 20% return on stock positions. In a bear market that is one great upside play. If it turns to bull market and it keeps running, great. Friday it was up off of the 18 day MVA on rising, above average volume. It looks ready to make the move and make us money. I will take 15% to 20% any day on an upside play in a bear market. Accumulation is positive at 5 accumulation weeks to 4 distribution weeks. As we have said, it only takes a simple majority to tip the balance in favor of upside.
Volume: 200.368K Avg Volume: 107.454K
BUY POINT: $14.74 Volume=161K Target=$17.74 Stop=$13.65
POSITION: UAH AV - Jan. $12.50c (72 delta, low OI) and/or Stock
http://www.investmenthouse.com/cd/adlr.html
Downside:
KKD (Krispy Kreme--$32.5; -0.15; optionable): Delectable doughnuts
http://biz.yahoo.com/p/k/kkd.html
STATUS: Put. Every time I see the film footage of those doughnuts rolling down the line getting glazed I want to run out and scarff down a dozen. The thing is, being a bit health conscious, I don't do it. Right now KKD is in a downtrend from right at the turn of the year. It peaked in August right at the down trendline and fell. Now it has clawed back up to the short term moving averages (10 day MVA at 32.96). Thursday it tested that level and closed well off the high. Friday it was up again on the open, but closed lower on the session. Volume has been weak and getting weaker as it tests the 10 day MVA after the move up. That is a classic sign that there are a few bottom fishers, but not enough. We will look for KKD to roll over on some rising volume and get in on the downside again.
Volume: 427.2K Avg Volume: 803.454K
BUY POINT: $32.4 Volume=875K Target=$29.65 Stop=$33.75
POSITION: KKD WG - Nov. $35p (-62 delta)
http://www.investmenthouse.com/cd/kkd.html
MEMBER PORTFOLIO: CUB, EBAY, HOTT; LOW, NOC, PG, QLGC, RCII, SRCL, WM
These are the stocks that our subscribers vote to put in a 'portfolio' to track their progress and comment upon when they reach buy points, sell points, or levels to write some covered calls on. They are not covered every report, but when something interesting is developing we take note.
PG 09/21 Test 18 91.09 -0.03 91.55 103 6.3M 5.5M 89.45
PG (Procter & Gamble--$91.09; -0.03; optionable):
http://biz.yahoo.com/p/p/pg.html
STATUS: A huge volume spike Friday and tight doji 'with tail' on the 18 day MVA indicates that PG, one of the leaders in the Dow, is ready to move up from here. Is it going to make it to a new high over 94? It certainly has the strength and accumulation to do it. Until then we will gladly play an option play up to the recent high at 94.75 as well as stock plays looking for that longer, more sustained move.
Volume: 6.317M Avg Volume: 4.61M
BUY POINT: $91.55 Volume=5.5M Target=$103 Stop=$89.45
POSITION: PG AR - Jan. $90c (70 delta) and/or Stock
http://www.investmenthouse.com/cd/pg.html
CONTINUING/WATCHLIST: These are stocks that are current plays (the buy point hit), waiting for the buy point to be hit (buy not hit), or buy not made for various reasons (buy alert not issued). The date references the date the play first appeared on the report. Pivot is the buy point.
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
ABK 08/27 Put 51.08 -2.72 57.94 53.15 1.3M 850K 58.05
Hit the target! A nice $3.76 gain on the options (approx. 85%). The power of options and playing the trend.
ADLR 09/21 cup hdl 14.41 +0.65 14.74 17.74 200K 161K 13.65
New.
AEM 09/19 cup hdl 16.5 -0.11 17.05 20.55 481K 1.2M 15.75
Buy not hit. Still looks very solid in the handle.
ALLY 09/07 cup hdl 14.8 -0.04 15.86 18.25 879K 675K 14.55
Current. Tested the 50 day MVA on the low and rebounded on sharp volume. Good sign that buyers stepped back in at that level to support it.
AMGP 08/28 cup hdl 30.15 -0.51 30.32 34.94 329K 350K 28.65
Current. Sold back but on much lighter volume. Holding right at the pivot point.
AMMD 09/05 cup hdl 21.65 +0.31 23.57 27 298K 420K 21.92
Buy not hit. Doji right on the 50 and 200 day MVA.
ANN 09/03 Put 25.32 -0.22 24.96 21.25 666K 1.6M 26.45
Current. Trying to fall, closing lower on rising volume. That is keeping us in it for now, but needs to break down below 24 early this week.
BEN 09/04 Put 32.15 +0.37 34.35 30.75 1.1M 950K 34
Current. Managed to hold its ground at 32 after Thursday's promising return to selling. May try to test the short term MVA again at 33.16.
C 09/11 Put 26.83 -0.82 29.96 26 44M 20M 28.75
Current. Tanking again on high volume. Getting close so be ready.
CARS 08/30 cup hdl 24.82 +0.21 25.18 28.95 160K 400K 23.42
Buy not issued. Rising volume Friday on a better move up in the very tight, lateral pattern.
CCCG 09/12 Cup 13.01 +0.07 13.45 16.15 69K 51K 12.41
Buy not hit. Still looks ready with a nice volume surge Friday as it held the 10 day MVA.
COH 08/22 cup hdl 28.14 -0.39 27.55 33 544K 1.4M 28
Buy not issued. Looks very ready to make its move as it continues its handle above the 18 day MVA.
COH 08/13 BO 28.14 -0.39 25.55 30 544K 1.4M 28
Current.
COLM 08/13 BO 36.47 -0.11 36.85 42.38 273K 275K 36
COLM 07/27 Dbl btm 36.47 -0.11 34.25 39.95 273K 275K 35.45
Shook us out Friday with a high volume selling, but then it reversed to close just above the 50 day MVA. The double top look had us jumpy. May need to be ready to get back in, but the pattern needs to improve.
CRAY 09/17 cup hdl 3.67 -0.08 4.22 5.75 474K 575K 3.85
Buy not hit. Not doing it, falling below the 50 day MVA with a sharp spike in volume.
CUB 09/18 Put 19.22 +0.55 18.98 16 109K 85K 21
CYBX 08/20 Flat 17.89 +0.46 17.65 21.25 196K 280K 16.41
Buy not issued. Hanging on but needs a definitive, volume breakout higher.
EBAY 08/27 Put 56.96 -0.16 56.95 53.25 6.5M 13M 56.25
Current. Still below the 50 day MVA on rising volume, but not giving up the ghost. If it does not fall early this week we are out.
FTN 09/14 Put 34.7 +0.28 36.59 32.85 555K 500K 36.35
Current. Held 34 and bounced on above average volume. If we get another downward push on the stock to 34ish again, will have over $1 profit in the options and may just go ahead and take it off the table. Still in a very steep downtrend, however, and we are inclined to let the play continue to run.
GLG 09/18 cup hdl 10.1 -0.13 10.59 12.75 706K 1.3M 9.45
Buy not hit. Still a solid pattern with a doji Friday right on the 10 day MVA.
HOTT 07/06 Test 50 19.52 +0.07 0 0 680K 1M 0
JOSB 09/10 cup hdl 19.25 -0.1 20.76 24 35K 158K 19.31
Current. Tested the 10 day MVA on the high and fell back to a flat close. No volume. Not good action. Ready to bail Monday if does not move up sharply.
JP 08/30 Put 40.06 +0.23 41.72 38.55 967K 700K 41.35
Current. Some strong volume Friday after testing to 39.46 and recovering. Still deep in the downtrend but may test higher again. Inclined to let it run but have tightened the stop.
KKD 09/21 Put 32.5 -0.15 32.4 29.65 427K 875K 33.75
New.
KMG 09/12 Put 41.36 -0.01 43.74 40 982K 700K 43.45
Current. Closed flat Friday on continued strong volume. Still in the downtrend. Another push down could put it close to the target and worthy of taking the gain.
LOW 07/06 Test 50 42.39 -0.91 0 0 4.9M 0 0
MCK 09/07 Put 29.44 +0.05 31.65 28 1.9M 1.9M 31.55
Current. Doji Friday as again it could not take out 29. Another push lower to 29 that does not breach it and we will take the nice gain.
MEDI 08/31 Put 22.44 +0.02 25.35 22 4.5M 8.2M 25.25
Target hit! Nice gain.
NCC 09/17 Put 28.3 +0.18 28.96 25.95 2.4M 14M 29.75
Current. Doji Friday on big volume as it held 28 on the low. Still in the downtrend, still in trouble. Tightened stop but going to let it run.
NOC 07/06 Test 50 124.54 +1.5 0 0 1.3M 1.7M 0
PEP 09/11 Put 37.5 +0.35 39.35 36 9M 7M 39.05
Current. Some more volume Friday, but stuck below 38. Tightened up the stop.
PETM 08/26 cup hdl 18.3 -0.22 17.04 20.45 1.4M 2.8M 17.25
Current. Took a breather after failing again at 19. It has not had a lot of volume on the move. Pulled up the stop, but unless it crashes on volume we are inclined to let it continue to work for us.
PG 09/21 Test 18 91.09 -0.03 91.55 103 6.3M 5.5M 89.45
QLGC 08/17 CCall 28.54 -0.44 36.48 0 17M 12M 33.55
Current. Was tanking but recovered. Long term play, and we are continuing to let it work for us now.
RCII 08/24 Test 18 51.96 +1.05 58.02 66.45 573K 701K 53.96
RFMD 09/05 Rolling 5.87 +0.37 6.08 9 6.4M 9.5M 5.65
Buy not hit. Holding very tough at 6. Note the new buy point to take advantage of a potential roll back up.
SCSS 09/21 cup hdl 5.55 +0.19 6.02 7.25 316K 200K 5.61
New.
SKO 08/27 Put 14.8 +0.59 14.59 12.25 267K 300K 14.75
Current. Was down to 13.84 on the low but rallied on stronger volume. Right at the 10 day MVA, and if it does not roll over here we will take the money off the table.
STE 08/21 Cup 21.93 -0.07 23.28 26.78 286K 711K 21.85
Buy not issued. STE has left us at the altar so many times we feel like Frazier when Dianne stood him up on Cheers. Testing the 50 day MVA and bouncing.
SY 09/19 Put 12 -0.05 12.75 10 783K 680K 13.55
Buy not hit. May bounce first and then tank.
TT 09/19 cup hdl 13.57 +0.12 13.71 16.55 14K 50K 12.71
Buy not hit. Starting the move up. Needs some more volume.
UPC 09/17 Put 27.59 +0.16 28.32 26 874K 615K 28.95
Current. Held its ground Friday on a slight move up. Volume higher. It may give a bounce up in the downtrend toward 28 before resuming the downtrend.
VMI 08/30 BO 22.17 -0.63 22.38 26.85 40K 120K 23
Current. Holding the 50 day MVA on higher volume, but this is all the rope it gets.
VRTS 08/19 CCall 14.48 -0.68 19.76 20 25M 8.5M 17.45
Current. Was getting the wood put to it Friday but reversed and recovered a big chunk of the loss. Still letting this longer term play work for us.
VWKS 08/30 cup hdl 8.05 +0.29 8.45 10.25 291K 890K 7.86
Buy not hit. Showing some solid signs of life in the pattern.
WEDC 08/30 BO 7.18 -0.87 8.55 12 322K 105K 7.95
Very ugly selling. Out, out, out.
WEDC 08/07 A Wedge 7.18 -0.87 7.63 9.85 322K 105K 7.88
Ditto.
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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us stock market
understanding the stock market
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