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us stock market, trade stock
Begin Part 2 of 2
SEBL: SEBL has been getting hammered of late, and we some shares we just picked up last Friday when it touched near 45. We were taking for long term positions, but when the downgrade came out today we were concerned. As we said over the weekend, we had no desire to ride these positions down on another downleg. So, we thought about selling early, but the stock was holding at 46 to 47, so we were not too worried. We thought we could get some weakness, but as the stock was holding we decided to sell some calls and then buy them back if the stock pulled back a bit. We sold the March $50 calls for $2.62 when the stock was right at 46. It sold to 44 and we got fidgety. The market was looking weaker, but then SEBL started back up, hitting 45.50. The options were down, but not by much. It reversed immediately and then broke over its 15 minute moving average at 45.
At point we did something different: we sold the stock. Cut and run. Why? We looked at it and it was just below where we bought it and volume was racing ahead. That left us naked on the calls, but as we felt the stock was going to fall, we knew we could close them out before the end of the day and we would be just fine. Why was that a worry? Because the trade was in an IRA and we cannot go naked in that account. As long as we closed the trade before the market closed, however, it would all be a wash. SEBL tanked down to 41-42. The options fell to 1.5 by 1.68. We put in a limit order at 1.625 and the fill was made in about a minute. We did not get the gain on the stock, but we were able to used it to make $1 on the options we sold. Not a big score, but it turned a sow's ear into a gain.
For a review of frequently asked questions, please use the link below:
http://www.investmenthouse.com/1questions.htm
THE PLAYS:
A note on options: The symbol in the parenthesis represents the option prefix for a particular stock. It usually does not change. The last two letters indicate the month and the strike price. We are striving to make sure they are accurate, but please be sure to double check them when you place any order to make sure you are buying the right option.
Please note that when we reference the 10, 18, and 50 day moving averages (MVA), those are exponential moving averages (EMA). The 200 day moving average is always simple (SMA). We will note when we reference a particular MVA differently, e.g., a simple 50 day MVA.
Best Plays: We like all the plays we put on the Daily, but these we are really focusing on for the next session. USON still looks good from last night's report.
1) ROP: A volume spike thrown today in this ascending wedge.
2) PVH: Testing its breakout.
3) SBUX: In a saucer with handle; moving up on better volume.
4) RBNC: Showing a perfect doji on a pullback in the ascending wedge.
5) ACS: Trying to find some strength.
6) NATI: Looking for a bounce.
7) Puts: Take your pick, because they all look good if we don't get a rate cut.
New Stocks:
Looking for retail stocks to make some strong moves on a rate cut:
http://www.investmenthouse.com/cd/bbby.html
(Click to view the chart)
http://biz.yahoo.com/p/b/bbby.html
ROP (Roper Industries Inc--$38.29; +0.32; no options): Manufacturing: Diversified Machinery
STATUS: In an ascending wedge pattern that threw a volume spike Tuesday as the stock pulled off the high of 39.95, this despite a strong earnings announcement this morning. The spike can be an indicator of an imminent breakout move, so we will look for that over the pattern high of 38.50. Volume was huge at 509,000 (avg. 96,000). Relative strength has moved out ahead of price, another bullish sign. The stock also shows excellent buying and money flow. Support is at the 10 or 18 day MVAs (37.55, 37.28 respectively).
BUY POINT: 38.63, on volume of 130,000 or better.
POSITION: Stock.
http://www.investmenthouse.com/cd/rop.html
(Click to view the chart)
http://biz.yahoo.com/p/r/rop.html
PVH (Phillips-Van Heusen Corp--$14.95; -0.30; no options): Consumer Non-durables: Apparel Clothing
STATUS: Testing its recent breakout as price pulled back to and is consolidating above support of its 10 day MVA, at 15 (the stock slipped just below that level Tuesday). The low tested support at the 18 day MVA (14.75) as volume rose to 69,900 (avg. 102,272). The stock can pull back to that lower support before making another breakout move over the February high (15.84), suggested by the break of support on stronger volume. The stock shows strong buying and money flow, and a high relative strength.
BUY POINT: Over 15.97, volume of 95,000 or better.
POSITION: Stock.
http://www.investmenthouse.com/cd/pvh.html
(Click to view the chart)
http://biz.yahoo.com/p/p/pvh.html
Updates:
SBUX (Starbucks Corp--$48.25; +0.44; optionable (SQX)): Leisure: Specialty Eateries
STATUS: The stock remains in the volatile handle of is saucer base of 13 weeks, and moved up from below its short term moving averages (10 day MVA, 48.13) on stronger volume (2 million; avg. 2.15 million). The stock dropped below that support February 21 to test the 50 day MVA (46.63). Upper resistance in the handle is 50.81. Look for a breakout over that level on above average volume. Relative strength has broken out ahead of price, a bullish sign.
BUY POINT: Breakout: 50.94, volume of 3.2 million or better.
POSITION: Stock and/or July $50 calls to buy (SQX GJ).
http://www.investmenthouse.com/cd/sbux.html
(Click to view the chart)
http://biz.yahoo.com/p/s/sbux.html
RBNC (Republic Bancorp Inc--$12.56; -0.19; no options): Regional Banks
STATUS: Covered February 17. Remains in the ascending wedge pattern, pulling back Tuesday on continued below average but slightly higher volume (93,900; avg. 203,409). The stock is now under its 10 day MVA for the first time in eight days, but the low tested support at the 18 day MVA (12.45), and the star doji is one of the strongest indicators of a change in direction. After the pullback, that means up. Continuing to look for a breakout over the pattern high of 12.88. Outstanding money flow and buying, and high relative strength.
BUY POINT: 13.01, on volume of 275,000 or better.
POSITION: Stock.
http://www.investmenthouse.com/cd/rbnc.html
(Click to view the chart)
http://biz.yahoo.com/p/r/rbnc.html
THE PORTFOLIOS: Each report, we look at these to see which is in a buy position. We don't cover them all each time, just the ones that are looking as if they are ready to pick up a few shares.
THE LEADERS: We are not changing our strategy on the current stocks in the leaders portfolio. Stocks such as JNPR, AMCC, CIEN, GLW, SEBL, VRSN and EXTR continue to exhibit superior earnings power and will rebound when the market rebounds. Indeed we still have investments in those stocks. What we are doing is looking to those leaders in the current market, those stocks that are asserting good patterns on top of strength in earnings while the other stocks we have been following work through their bases. This provides additional stocks that are showing more near-term potential in the current market. We focus on the stocks that are performing best in a down market as they tend to help lead when the market turns back up.
New Leaders: ACS, CPN, SGR, ESRX, NATI, LLL
Previous Leaders: ADBE, AMCC, ARBA, BEAS, BRCD, CIEN, EMC, EXTR, GLW, JNPR, NEWP, NTAP, PMCS, SCMR, SEBL, VRSN, VRTS,
New Leaders:
ACS (Affiliated Computer Svc--$62.28; +1.12; optionable (ACS)): Computer Software & Services: Information Technology
STATUS: Trying to stage a recovery from last Thursday's selling that thrust the stock below its 50 day MVA (61.29), and resisted today's software selling. After hitting a low at 55 the next day, the stock is moving up, Tuesday on slightly stronger, average volume (435,100), a move that broke it back over the moving average. The high tapped resistance at the 10 day MVA (62.50). ACS moved through some resistance just under 62, which is encouraging, and we are looking for stronger volume to take it through the rest (over the 18 day MVA at 62.88). From there, resistance can emerge at 64-66, in addition to the February high of 68.59. May see more consolidation at this level as the stock settles down from last week's wild ride, so look for support at the 50 day MVA ahead of a move up.
BUY POINT: Over the 18 day MVA (over 63) on average or better volume.
POSITION: Stock and/or July $60 calls to buy (ACS GL).
http://www.investmenthouse.com/cd/acs.html
(Click to view the chart)
CPN (Calpine Corp--$46.78; +0.41; optionable (CPN)): Electric Utilities
STATUS: Inched up from Monday's nice move (reached on the gap up on strong volume that day), showing a loose doji as volume dropped back to 2.1 million (avg. 4.3 million). The low (45.60) tested near that of Monday as well, so the stock can hold here ahead of another move up 45.70 was hit three times recently. Otherwise, support looks good at the low, or the 10 day MVA (45.18). CPN has remained above its down trendline. The February high is 48.80.
BUY POINT: Aggressive: On a move up from here on stronger volume. Pullback: Up from 45.60 or higher on volume in the range of 2.7 million.
POSITION: Aggressive: Stock and/or July $45 calls to buy (CPN GI).
http://www.investmenthouse.com/cd/cpn.html
(Click to view the chart)
NATI (National Instruments Cp--$49.94; -2.31; optionable (SJQ)): Computer Peripherals
STATUS: Dropped to an up trendline (connecting October and February lows) on very low volume (59,500; avg. 275,000). The stock was holding for two days above its short term moving averages (51.85) but lost its grip today on the drop below its 50 day MVA (50.19). We are looking for a bounce back up, due to the low volume which dropped back for the third day. High money flow and good buying.
BUY POINT: On a bounce back over 52 on stronger volume.
POSITION: Stock and/or June $50 calls to buy (SJQ FJ). These options have only 57 open interests.
http://www.investmenthouse.com/cd/nati.html
(Click to view the chart)
SGR (The Shaw Group Inc--$54.01; -0.90; optionable (SGR)): Manufacturing: Industrial Equipment & Components
STATUS: Pulling back from Monday's nice breakout move, as volume dropped back below average (400,200; avg. 379,363). Look for support at 52.35 (hit 3 times recently) or the 10 day MVA (51.33) before the stock moves back up over Monday's high of 55.39. Strong buying, high money flow, and relative strength.
BUY POINT: Aggressive: Up from the 52 level on stronger volume.
POSITION: Stock and/or July $50 or calls to buy (SGR GJ).
http://www.investmenthouse.com/cd/sgr.html
(Click to view the chart)
Previous Leaders:
Covered Call or Put Play:
BEAS (Bea Systems Inc--$40.19; -5.56; optionable (BUC)): Computer Software & Services: Business Software & Services
STATUS: Sold down on strong volume (17.9 million; avg. 12.2 million). The stock hit 40.06 on the low, so we will look at positions with covered calls (on long term stockholdings) and/or puts on a move below 40, a price hit several times in the stock's earlier base (from which BEAS broke out last October, though price has been in a downtrend since).
BUY POINT: On a move below 40 on continued rising volume. Watch 35.50 (February low).
POSITION: March $35 calls to sell (BUC CG), and/or June $45 or $40 puts to buy (BUC RI or RH).
http://www.investmenthouse.com/cd/beas.html
(Click to view the chart)
UP & COMERS PORTFOLIOS:
EXDS, TQNT, BVSN, SANM, PKI and GMST for now.
No reports on stocks in this portfolio tonight.
MEMBER PORTFOLIO: BRCM, CHKP, CSCO, EMLX, IDTI, INTC, JDSU, MVSN, NT, PWER, SUNW, VTSS
No reports on this portfolio tonight.
PUT PLAYS: We are looking at stocks that are poised for moves down if this market cannot turn itself around. They are grouped separately:
Continued Put:
MERQ (Mercury Interactive Corp--$63.94; -8.44): Software
STATUS: Moved down as expected, and MERQ still has room to fall, to the November and January lows (58-60) in its recent rolling range. Volume was stronger at 4.7 million (avg. 3.4 million) as the stock sold down.
BUY POINT: On a continued move down from here on the strong volume.
POSITION: March $60 calls to sell (RQB CL), and/or March $65 or July $65 puts to buy (RQB OM and RQB SM, respectively).
http://www.investmenthouse.com/cd/merq.html
(Click to view the chart)
Stocks that have hit new lows Tuesday on high volume. This could lead to the next downturn if the market heads lower:
JNPR (Juniper Networks--$62.84; -9.29; optionable (JUX)): Computer Hardware: Networking & Communication Devices
STATUS: A new low on volume of 34.3 million (avg. 19.1 million). The stock turned down from its 10 day MVA (76.44) Monday, strong resistance since late January.
PLAY: On a move down from here on continued strong volume as the market heads lower, March or July $65 puts to buy (JUX OM or JUX SM).
GLW (Corning Inc--$28.65; -3.82; optionable (GLW)): Telecom
STATUS: A new low on strong volume (17.8 million; avg. 12.5 million). Looking for a continued move down; the stock turned down from its 10 day MVA (34.46) Monday, resistance since late January.
PLAY: On a move below 28.50 (intraday low) on continued strong volume, March or May $30 puts to buy (GLW OF or QF).
SEBL (Siebel Systems Inc--$41.50; -7.06; optionable (SGW)): Computer Software & Services: Application Software
STATUS: Hit a new low as well on above average volume (22 million). Looking for a continued move down if the market continues to bleed.
PLAY: On a continued move down on the strong volume, March or May $45 puts to buy (SGW OI or SGW QI).
JDSU (Jds Uniphase Corp--$27.81; -4.82; optionable (UQD)): Electronics: Diversified Electronics
STATUS: Hit a new low as volume crested average levels (45.9 million). We are looking for a continued move down if the market does not reverse direction with a rate cut.
PLAY: On a move down from here on continued rising volume, March or June $30 puts to buy (UQD OF or UQD RF).
BRCM (Broadcom Corp--$53.63; -9.37; optionable (RDZ)): Electronics: Semiconductor, Integrated Circuits
STATUS: Another tech that can't break over its own 10 day MVA (68.94), BRCM headed down for the second day after hitting that resistance, on stronger, above average volume (18.3 million). Looking for a continued downslide if the market does the same.
PLAY: On a move down from here on continued strong and rising volume, March or May $55 puts to buy (RDZ OK or RDZ PK).
PMCS (Pmc-Sierra Inc--$37.94; -6.62; optionable (SQL)): Electronics: Semiconductor, Integrated Circuits
STATUS: Another new low on volume that continues to move higher above average (15.2 million Tuesday). The stock dropped for the second day from its 10 day MVA (48.97) and can head lower if the market cannot turn around.
PLAY: On a move down from here on continued strong volume, March or May $40 puts to buy (SQL OH or QH).
These financial stocks are set up to fall if the Fed doesn't deliver a rate cut:
JPM (Jp Morgan Chase & Co--$47.60; -0.95; optionable (JPM)):
STATUS: Closed below its 200 day MVA (51.57) on stronger, above average volume (11.7 million) after moving up to tap its 50 day MVA on the high (49.78). The stock's low was 46.85, a level tested within the previous four days as well.
PLAY: On a move below 46.85 on continued strong and rising volume, June $50 or $45 puts to buy (JPM RJ or RI).
http://www.investmenthouse.com/cd/jpm.html
(Click to view the chart)
MER (Merrill Lynch & Co--$62.70; -0.80; optionable (MER)):
STATUS: Tried to stick on a move back over its 200 day MVA (64.63) on the high of 65.30, but pulled back to show a perfect doji on stronger, well above average volume (7.4 million). The stock can move back up to the moving average, but the doji says it could fall from here. If the Fed doesn't move to cut rates, we are looking for a hard move back down (February is 56.50).
PLAY: On a move back down from the 200 day MVA (65 level) after the stock heads back up to test that resistance, or down from here with April or July $65 puts to buy (MER PM or MER SM).
http://www.investmenthouse.com/cd/mer.html
(Click to view the chart)
MWD (Morgan Stanley Dean Witter--$69.66; +0.46; optionable (MFZ)):
STATUS: Trying to mount a move back up after selling down to the 65 range, the stock is ranging upward on above average volume and showing a higher doji Tuesday. Volume was slightly up at 6.9 million as the high tapped the 10 day MVA at 71.34. Looking for a turn back down as the doji suggests, especially if the rate cut doesn't materialize. MWD is well below its 200 day MVA (83).
PLAY: On a move down from here on continued strong and rising volume, July $70 puts to buy (MFZ SN).
http://www.investmenthouse.com/cd/mwd.html
(Click to view the chart)
C (Citigroup--$49.80; -0.50; optionable (C)):
STATUS: Another financial stock that is below its 200 day MVA (51.74) and trying to pull back up. The stock ran up to that resistance Tuesday on stronger, above average volume (16.3 million) but pulled back down to a doji. Can run back up (10 day MVA is at 50.93), but without a rate cut, a negative market can take it back down. February low if 45.50.
PLAY: On a move back down from here or the 51 range, on continued strong volume, June $50 or $55 puts to buy (C RJ or C RK).
http://www.investmenthouse.com/cd/c.html
(Click to view the chart)
These stocks ran up over the last week, but are now at resistance:
HGSI (Human Genome Sciences--$51.44; -4.37; optionable (HHA)): Drugs
STATUS: Ran to the 50 day MVA (57.60) Monday, then tried to break over it Tuesday on the high of 57.13, but couldn't do it, selling back to the 18 day MVA on stronger, well above average volume (6.95 million). If the market remains negative, the strong volume and close near the low points to a break of support (18 day MVA, 50.41). 10 day MVA is below (48.94).
PLAY: On a break of support (50.41), see if the stock tries to test the break, then take positions on the way down with July $55 or $50 puts to buy (HHA SK or SJ).
http://www.investmenthouse.com/cd/hgsi.html
(Click to view the chart)
PDLI (Protein Design Labs Inc--$59.63; -2.03; optionable (PQI)):
STATUS: Made a nice move up Friday and tried to move higher Monday and Tuesday, but remains stalled between its short term moving averages (10 day MVA below, 59.77, and the 18 day MVA above, 61.53). The stock dropped back a bit as did volume, which remains strong and above average, however (2.15 million). We are looking for a harder turn back down below support as the market heads lower.
PLAY: On a move below the 10 day MVA (59.77) on rising volume, May $60 puts to buy (PQI QL).
http://www.investmenthouse.com/cd/pdli.html
(Click to view the chart)
Good Investing!
Jon 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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