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us stock market, understanding the stock market
Begin Part 2 of 2
SUBSCRIBER QUESTIONS
Q: I bought 100 September 35 C puts at $1.25 back when C hit $36.01. Even though you indicated a put buy on C around $30, I sold my position at $2.15. Do you know these options actually hit a high of $11.00 at one point after that! I would like to know from an obvious expert, you, how do you hold onto the bloody end? I took a $10,000 profit but missed another $90,000! Am I a chicken, normal or just too emotional to play this game? Do you ever "get nervous" and sell out too soon? You held your C position I see, but what happened to me?
A: Everyone, regardless of who they are and years of experience, gets some nerves every once in awhile on a play. The key is sticking with the trend in place or the move you are investing in and looking at the signals from the market as it moves up and down and the stock as it does the same to see if the trend is changing. If you have confidence in your understanding of the market by reading the signposts then you have confidence to stay in the play and reap the big profits. It takes discipline, becoming that machine to act when it is necessary to act but not to have 'happy feet' and jump out of positions too fast. It is definitely a learned trait; you have to force yourself to stick by your plan as long as an honest evaluation of the conditions tells you the trend is still in place. Try this: ask yourself 'are all the attributes I looked for when I entered this play still in place?' If so, there is no real reason to get out. With options you have the time consideration as well; as long as your time on your options is still good you can stick with the play.
THE PLAYS:
Best Plays:
1) ACS: Stalling at the 10 day MVA.
2) UBS: Stalling at the 18 day MVA.
3) ITMN: Solid move over the 200 day MVA.
4) COCO: Nice looking.
5) CENT: Market selling not phasing it.
6) AMGN: Turned over on volume.
7) GDW: 200 day MVA test failed.
8) STJ: Failed attempt over the 50 day MVA.
NEW PLAYS
Downside:
$OEX (S&P 100 options 413.22; =15.29; optionable)
http://biz.yahoo.com/p/$/$oex.html
STATUS: Put. The 10 day MVA proved much to much for the large caps and turned it Friday. Volume was not horrid, but these rollovers from resistance in a downtrend don't need a lot of volume to start. The selling was steady, and without some really positive news the next leg down in this downtrend is underway. We are looking at a conservative target first as we want to see how the OEX handles the July closing low (396.75). The intraday low was all the way down to 385, so if stocks are tumbling at the target we will let it continue lower.
Volume: 8.793M
BUY POINT: $411 Target=$395 Stop=$415
POSITION: OXB WC - Nov. $415p (-46 delta) or OXB JC - Oct. $415p (-48 delta)
http://www.investmenthouse.com/ct/$oex.html
ACS (Affiliated Computer--$42.6; +0.02; optionable): ITS
http://biz.yahoo.com/p/a/acs.html
STATUS: Testing 18 day MVA. ACS has been a strong performer, but after peaking in June it has entered a downtrend. Last week ACS rallied up after some severe selling on the EDS news, but volume was tailing off. Friday it showed a very tight doji on very low volume that tested close to the 18 day MVA on the high (43.40). That would indicate the move has run out of momentum after a $4 move up.
Volume: 1.151M Avg Volume: 1.604M
BUY POINT: $41.96 Volume=1.8M Target=$38 Stop=$43.35
POSITION: ACS WI - Nov. $45p (-56 delta)
http://www.investmenthouse.com/ct/acs.html
UBS (UBS Warburg--$41.5; -0.62; optionable): Bank
http://biz.yahoo.com/p/u/ubs.html
STATUS: Put. UBS is also testing the 18 day MVA (42.47) on the high, failing for the second straight session to hold a move over that level. Volume picked up and the stock turned over, barely able to hold onto the 10 day MVA as volume rose. It too is continuing its steeper downtrend from August after peaking in June. Plenty of downside room here.
Volume: 246.7K Avg Volume: 183.767K
BUY POINT: $41.15 Volume=225K Target=$37.75 Stop=$43.15
POSITION: UBS WI - Nov. $45p (-65 delta)
http://www.investmenthouse.com/ct/ubs.html
Upside:
DIAN (Dianon Systems--$46.09; +2.73; optionable): Medical labs
http://biz.yahoo.com/p/d/dian.html
STATUS: After the major breakdown in July DIAN has formed a shallow cup w/handle pattern the past 1.5 months and Friday made a solid breakout move on excellent volume. As it has been crushed down pretty hard, we are playing this as a trade, looking for a move up to first resistance at 50 to start and 52.50 as the next resistance level.
Volume: 614.873K Avg Volume: 439.885K
BUY POINT: $46.28 Volume=425K Target=$50 Stop=$43.04
POSITION: UID KI - Nov. $45c (60 delta) or UID BI - Feb. $45c (62 delta)
http://www.investmenthouse.com/ct/dian.html
ITMN (Intermune--$19.35; -2.13; optionable): Drug Manufacturer
http://biz.yahoo.com/p/i/itmn.html
STATUS: Breakout over the 200 day MVA (30.87). Drugs and healthcare sectors are being used as safe havens in s weak overall market. ITMN surged in early September to the 200 day, and has since moved laterally on lower volume until Friday when it made its breakout over the 200 day MVA on above average volume. We are looking at this as another trade, but will let it run if it has momentum at the target. Nice accumulation since late May at 3 up weeks on rising volume to 1 down week on rising volume.
Volume: 439.141K Avg Volume: 711.136K
BUY POINT: $31.85 Volume=2M Target=$36 Stop=$29.62
POSITION: IQY AF - Jan. $30c (65 delta) and/or Stock
http://www.investmenthouse.com/ct/itmn.html
OSTE (Osteotech--$9.46; +0.26; optionable): Health services
http://biz.yahoo.com/p/o/oste.html
STATUS: Testing the breakout. OSTE made us some money in the past, and it looks ready to do the same now. After breaking out of a 7-month lateral consolidation in August the stock peaked near 11 and has now pulled back to the 50 day MVA at 9. It is basically at the bottom of its next base right now, but Friday showed a great volume spike on sharply rising volume. Given the stock has already made a good breakout and this is something of a test of that move, we are looking at picking up new positions at this point and riding it off the bottom of the base. That is perfectly fine to do, but on option plays we need to realize that it could form a handle right at 11 (why we set the initial target at that point), and if it stalls around that level it could impact option value. We are offsetting that somewhat with some February options that are still reasonably priced and have a good delta.
Volume: 348.335K Avg Volume: 179.454K
BUY POINT: $9.57 Volume=265K Target=$11.35 Stop=$8.88
POSITION: OQQ BU - Feb. $7.50c (76 delta, low OI) and/or Stock
http://www.investmenthouse.com/ct/oste.html
CONTINUING PLAYS:
Upside:
CENT (Central Garden & Pet--$16.86; +0.09; optionable): Wholesale industrial equipment
Play Date: 09/12/2002
http://biz.yahoo.com/p/c/cent.html
STATUS: Cup w/handle. Started the breakout Thursday on some decent but not great volume. Friday it held up well, testing the 10 day MVA on the low on lower volume and recovering. Just a pause in the action, awaiting the next market improvement. Accumulation is excellent and money flow is shooting up ahead of the move.
Volume: 149.254K Avg Volume: 145.195K
BUY POINT: New positions: 16.95 (orig. $16.15) Volume=300K Target=$18.15 Stop=$14.94
POSITION: EQH KV - Nov. $12.50c (82 delta, low OI) and/or Stock
http://www.investmenthouse.com/ct/cent.html
COCO (Corinthian Colleges--$36.85; -0.99; optionable): Education
http://biz.yahoo.com/p/c/coco.html
STATUS: Ascending wedge. Thursday's jump up was pushed back in the Friday selling, but COCO still looks very good, testing the 18 day MVA on the low (36.44) and able to close right at the 10 day MVA. volume backed off. It just took it easy while the rest of the market sold, and we are still looking for a breakout.
Volume: 608.133K Avg Volume: 827.53K
BUY POINT: Breakout: $38.11 Volume=809K Target=$42.75 Stop=$35.44
POSITION: UCS BF - Feb. $30c (74 delta) and/or Stock
http://www.investmenthouse.com/ct/coco.html
Play Date: 09/26/2002
IDXX (Idexx Labs--$30.5; -0.5; optionable): Diagnostic substances
http://biz.yahoo.com/p/i/idxx.html
STATUS: Cup w/handle. Still in the handle of the 4-month base, testing down but holding the 18 day MVA on the close. Volume dropped next to nothing on the move. Very solid still. Excellent accumulation at 5 up weeks on rising volume to 1 down week on rising volume. Money flow is ahead of the price, and relative strength is ahead of where it was at the May high.
Volume: 168.461K Avg Volume: 297.478K
BUY POINT: $32.11 Volume=468K Target=$36.75 Stop=$29.86
POSITION: IQX LF - Dec. $30c (61 delta) and/or Stock
http://www.investmenthouse.com/ct/idxx.html
Play Date: 09/26/2002
ITRU (Intertrust Technologies--$3.24; -0.04; no options):
http://biz.yahoo.com/p/i/itru.html
STATUS: Cup. After the breakout move Thursday, ITRU stalled out Friday in the market selling, testing the 10 day MVA on the low (3.01) but then recovering on a big volume move. Given the market action this movement was not too bad. Still need it to build on the move, but it may form the handle that it never really formed. Accumulation in the base is positive at 2 up weeks on rising volume to 1 down week on rising volume; again, a simple majority is all that it takes.
Volume: 1.028M Avg Volume: 419.743K
BUY POINT: $3.35 Volume=550K Target=$4.75 Stop=$2.99
POSITION: Stock (no option chain)
http://www.investmenthouse.com/ct/itru.html
PDCO (Patterson Dental--$51.27; -0.91; optionable): Wholesale medical equipment
Play Date: 09/21/2002
http://biz.yahoo.com/p/p/pdco.html
STATUS: Cup w/handle. Still working in the handle of this three-month base, Friday testing the 18 day MVA on the low (50.48) before recovering to close at the 10 day MVA. Volume was up and above average on the trade; we would prefer to see it lower, but it does show that buyers were stepping back in. Need to see a strong breakout move from this one.
Volume: 547.245K Avg Volume: 393.782K
BUY POINT: $53.21 Volume=557K Target=$61.25 Stop=$49.49
POSITION: DOU AJ - Dec. $50c (57 delta) or DOU AI - Dec. $45c (73 delta) and/or Stock
http://www.investmenthouse.com/ct/pdco.html
PRX (Pharmaceutical Resources--$28.2; +0.05; optionable): Generic drugs
http://biz.yahoo.com/p/p/prx.html
STATUS: Ascending wedge. Still in that pattern, bouncing up off the 50 day MVA Wednesday, making a higher low in the pattern, just what you want to see. Friday it tried to make the breakout move coming in with some strong volume, but it could not hold the gain, closing right below the breakout point. Still looks super with that good accumulation in the pattern at 3 up weeks on rising volume to just one down week on rising volume. Need to see the big volume breakout.
Volume: 485.7K Avg Volume: 292.189K
BUY POINT: $28.91 Volume=525K Target=$34.65 Stop=$26.89
POSITION: PRX KE - Nov. $25c (71 delta) and/or Stock
http://www.investmenthouse.com/ct/prx.html
Downside:
AMGN (Amgen--$42; -1.66; optionable): Biotechnology
http://biz.yahoo.com/p/a/amgn.html
STATUS: Put. AMGN tanked below the 50 day MVA (44) 7 sessions back, rallied back up to test the breach, and then rolled over Friday. Friday the stock reached all the way up to 44.75 on the high and then rolled over to close sharply lower on rising, above average volume. These reaches higher and reversals at resistance are classic entry points for downside plays.
Volume: 19.182M Avg Volume: 16.84M
BUY POINT: $41.96 Volume=15M Target=$39 Stop=$43
POSITION: AMQ WI - Nov. $45p (-61 delta)
http://www.investmenthouse.com/ct/amgn.html
GDW (Golden West Financial--$62.68; -1.81; optionable): Savings and loan
Play Date: 09/21/2002
http://biz.yahoo.com/p/g/gdw.html
STATUS: Put. GDW rallied Thursday one more time, moving up to the 50 day MVA (64.81) Volume was lower, and then on Friday's selling it turned back down to close below the 10 day MVA on slightly rising, above average volume. It looks ready for another quick fall here. It can move $6 on its moves so there is still plenty of downside here for more positions.
Volume: 696.7K Avg Volume: 695.508K
BUY POINT: New positions: 62.29 (orig. $62.29). Volume=675K Target=$58.55 Stop=$63.85
POSITION: GDW WM - Nov. $65p (-55 delta)
http://www.investmenthouse.com/ct/gdw.html
LH (Laboratory Corp.--$34.00; +0.80; optionable): Medical labs
Play Date: 09/24/2002
http://biz.yahoo.com/p/l/lh.html
STATUS: Put. One more try at the 50 day MVA (34.17) Friday and it could not clear it on the close. Volume was below average, and we expect it to turn back over.
Volume: 1.831M Avg Volume: 1.937M
BUY POINT: $33.55 Volume=2.5M Target=$27.75 Stop=$35
POSITION: LH WG - Nov. $35p (-61 delta)
http://www.investmenthouse.com/ct/lh.html
STJ (St. Jude Medical--$36.68; -0.4; optionable): Medical appliances
http://biz.yahoo.com/p/s/stj.html
STATUS: Put. Another try over the 50 day MVA (37.02) on the high (37.89) and then a close lower on the session. Volume was up slightly on the rollover; we would have preferred stronger volume, but all the way up on the recovery from the lows volume has been lighter and lighter. Friday looked like the final gasp.
Volume: 685.3K Avg Volume: 1.254M
BUY POINT: New positions: 36.25 (orig. $35.95) Volume=1.9M Target=$32.05 Stop=$37.35
POSITION: STJ MH - Jan. $40p (-54 delta)
http://www.investmenthouse.com/ct/stj.html
SY (Sybase--$11.92; -0.32; optionable): Application software
Play Date: 09/19/2002
http://biz.yahoo.com/p/s/sy.html
STATUS: Put. Never made it to 13, instead stalling at the 10 day MVA (12.27). That is okay. The options cost $1.75 and have a 51 delta. A $1.75 move down in the stock gives you a 50% return at the target.
Volume: 435.9K Avg Volume: 622.965K
BUY POINT: 11.90. The options are inexpensive so that is plenty of room to make some good money. Volume=680K Target=$10 Stop=$13.55
POSITION: SY XV - Dec. $12.50p (-50 delta)
http://www.investmenthouse.com/ct/sy.html
WATCHLIST/ CONTINUING:
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
$OEX 09/28 Put 413.22 -15.29 411 395 8.8M 0 415
New.
$OEX 09/21 BO 413.22 -15.29 424.45 438 8.8M 0 419
As indicated Thursday, when the market could not make the move toward the 18 day so it was time to take the money off the table.
ABFS 09/24 BO 28.81 -1.09 29.18 33.45 459K 421K 27.14
Buy not issued. Going to give the test back now toward the 10 day. On a successful test will move in.
ACS 09/28 Put 42.6 +0.02 41.96 38 1.2M 1.8M 43.35
New.
AET 09/23 Put 37.05 -0.73 38.65 35.85 1.3M 1.7M 40.25
Resumed the downtrend.
AMGN 09/28 Put 42 -1.66 41.96 39 19M 15M 43
New buy point. Looks ready.
AMLN 09/18 cup hdl 15.85 +0.62 13.55 16.25 1.4M 750K 12.45
Current. Surging back up on strong volume.
APOL 08/15 A Wedge 43.63 -0.36 40.65 48 2M 3.3M 42
Current. Trying to make a definitive move but not getting it done. May have to test back again, but straining against the market.
AXP 09/03 Put 31.48 -1.41 33.18 29.25 4.2M 8.5M 33.55
Current. Falling again back below the 10 day MVA. Want a quick move down to pump up the put value again. If it hits and holds 30 we will take it.
BDK 09/16 Put 43 -0.94 42.81 38.45 604K 850K 43.55
Exited, probably prematurely after it moved up over the 50 day MVA. Then it rolled over.
BLC 05/25 Flat 22.62 -0.33 24.25 30 238K 342K 22.55
Buy not hit. On the 50 day MVA in the handle.
BRCM 08/17 CCall 10.95 -0.91 19.2 19.8 16M 9M 17.25
Letting it hold for now.
CENT 09/12 BO 16.86 +0.09 16.15 18.15 149K 300K 15.35
Current. Good breakout and held up well in the selling.
CLE 09/07 DB hdl 22.61 -0.88 22.41 25.94 279K 365K 20.84
Buy not issued. Strong move but tested back Friday on lower volume. This may give another entry point if it can hold at 22.
COCO 09/18 Test 18 36.85 -0.99 38.11 42.75 608K 809K 35.44
Current. Holding the 18 day MVA. Looking good.
CTSH 09/14 Test BO 58.19 +1.16 63.32 70 577K 348K 58.89
CTSH 09/05 A Wedge 58.19 +1.16 60.35 67.94 577K 348K 56.75
Current. Decent recovery but on lower volume. Needs to hold over 57.50.
CUB 09/18 Put 18.06 -1.19 18.98 16 49K 85K 21
Current. Turned from the 18 day MVA and fell hard to the 18 day MVA. This is its critical point it needs to break.
DIAN 09/28 BO 46.09 +2.73 46.28 50 615K 425K 43.04
New.
GDW 09/21 Put 62.68 -1.81 62.29 58.55 697K 675K 63.85
Looks ready for another roll down.
GDW 09/14 Put 62.68 -1.81 63.54 60 697K 675K 64.55
Current.
GLG 09/18 cup hdl 9.52 +0.16 10.59 12.75 627K 1.3M 9.45
Buy not hit. Testing the 50 day MVA.
HD 09/16 Test 50 26.76 -1.51 34.55 38 12M 10M 32.13
Falling through 27. Prior closing low at 26.49. Needs to hold there.
IDXX 09/26 cup hdl 30.5 -0.5 32.11 36.75 168K 468K 29.86
Buy not hit. Looks good still.
ITRU 09/26 cup hdl 3.24 -0.04 3.35 4.75 1M 550K 2.99
Buy not issued. Good volume. Looks ready.
KDE 09/25 A Wedge 23.39 +0.05 21.31 25.55 245K 180K 21.55
Current. Took a breather.
LH 09/24 Put 34 +0.8 33.55 27.75 1.1M 2.5M 35
Buy not hit. One more test of the 50 day MVA.
MCHP 09/26 Put 20.91 +1.13 19.45 16 11M 5.5M 21
Buy not hit. Rallying over the 50 day MVA.
MMSI 09/23 A Wedge 20.14 -0.34 20.5 24.65 135K 150K 18.94
Current. Testing back on lower volume.
OSTE 09/28 Test 50 9.46 +0.26 9.57 11.35 348K 265K 8.88
New.
PDCO 09/21 cup hdl 51.27 -0.91 53.21 61.25 547K 557K 49.49
Buy not hit. Still very good in the pattern.
PFE 09/07 Put 28.58 -1.67 30.55 27 17M 25M 30.25
Current. Rolled over again at the 18 day MVA.
PIXR 08/30 Test BO 49.47 +0.44 50.25 56.55 504K 580K 48.15
Current. Back up to 50 but on lower and lower volume.
PL 09/25 Put 30.38 -0.3 30.45 27.45 237K 200K 31.55
Current. Tested the 200 day MVA once again and rolled down.
PRX 08/20 cup hdl 28.2 +0.05 28.91 34.65 486K 525K 26.89
Buy not hit. Looks super.
RF 09/25 Put 32.5 -0.77 32.95 30 639K 650K 33.65
Current. Tested the 18 day MVA and turned over. Still a buy.
RINO 09/28 A Wedge 15.22 -0.07 15.55 19.45 189K 225K 14
RINO 08/28 cup hdl 15.22 -0.07 13.8 16.75 189K 300K 14
Current. Looks ready at the 15.
STJ 09/21 Put 36.68 -0.4 36.25 32.05 685K 1.9M 33.71
Ready to turn back down.
STT 09/17 Put 38.57 -1.56 39.59 35.75 925K 1.5M 40.97
Current. Rolled over at the 18 day MVA.
SY 09/19 Put 11.92 -0.32 12.75 10 436K 680K 13.55
Buy not issued. Looks ready to make the plunge.
TCB 09/17 Put 42.6 -1.07 44.65 40.75 274K 375K 44.25
Current. No continued strength. Rolled over at the 10 day MVA.
TEVA 08/12 DB hdl 68.18 -1.05 68.25 77.85 1M 1.2M 66.50
Current. Testing the 10 day MVA.
TIER 09/04 cup hdl 18.79 -0.01 20.21 23.25 217K 239K 18.65
Current. Trying to hold at 19 but losing the battle. Need to be ready to pull the plug.
TTWO 08/24 cup hdl 29.45 +1.85 26.61 31.94 4M 1.5M 26.05
Current. Defied the market with a huge volume move to a new high.
TTWO 08/17 cup hdl 29.45 +1.85 24.75 29.85 4M 1.5M 26.05
Current.
UBS 09/28 Put 41.5 -0.62 41.15 37.75 247K 225K 43.15
New.
UNT 09/25 Cup 18.42 -0.38 18.31 22 188K 255K 16.95
Buy not issued. The low volume move Thursday did not hold up. But not a rout. Could turn it up after at test of 18.
WEN 09/21 Put 34.4 -0.29 32.75 30 1.3M 1.6M 33.33
Current. Almost exited, but WEN could not take out the 50 day and then rolled back to close below the 200 day. We will give it another chance to fall to get us a better exit point.
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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us stock market
understanding the stock market
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