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understanding the stock market, stock watch
Begin Part 2 of 2
Support and Resistance
Nasdaq: Closed at 1213.72
Resistance: The 10 day MVA (1215.52). 1230 and 1250 are price resistance points. The 18 day MVA (1237.58). 1270 is still more price resistance from the September lows. The March/May downtrend line at 1280 along with price resistance at 1300. The 50 day MVA (1300.97). 1316, an early August interim high. 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 1360. 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). The August down trendline at 1200. 1160 has held twice intraday. There is price support from 1080 to 1100. Then there is a big shelf of support at 1050 down to 1000.
S&P 500: Closed at 847.91
Resistance: 850 to 855 (the October 1997 and Q2 1998 lows) stopped things Friday. The 18 day MVA (858.30). The March downtrend line at 862. 875 is price resistance of some significance. The 50 day MVA (892.90). July and August interim highs at 911.64. The September 2000/May 2001 downtrend line at 922. The downtrend lines from the March and April highs (930). Price resistance at 950. 965, the September 2001 closing low.
Support: The 10 day MVA (844.47). The first bottom channel line in the March downtrend (822). Price support at 800 held Monday. The lowest channel line in the March downtrend channel (783). Then the July intraday 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 7938.79
Resistance: The August lows (8043) and the September 2001 intraday low (8062). The 18 day MVA (8059.36). The September closing low at 8235.81. 8250 acted as resistance before after acting as support. The March down trendline at 8248. The 50 day MVA (8419.82). Some price resistance at 8500. 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 10 day MVA (7909.45). The lowest bottom channel line of the March downtrend (7825). The July low (7532.66). The October 1998 lows are at 7400 and 7467. After that is 7000, at some 1997 lows and highs.
Economic Calendar
9-30-02
Personal income, August (8:30): 0.3% actual, 0.5% expected, 0.0% prior.
Personal spending, August (8:30): 0.4% actual, 0.5% expected, 1.0% prior.
Chicago PMI, September (10:00): 48.1 actual, 53.0 expected, 54.9 prior.
10-01-02
Auto sales, September: 6.1M expected, 6.6M pior.
Truck sales, September: 7.8M exepcted, 8.8M prior.
ISM index, September (10:00): 49.50 actual, 51.0 expected, 50.5 prior.
Construction spending, August (10:00): -0.4% actual, -0.1% expected, 0.0% prior.
10-03-02
Initial claims (8:30): 410K expected, 406K prior.
ISM Services, September (10:00): 51.4 expected, 50.9 prior.
Factory orders, August (10:00): -0.3% expected, 4.4% prior.
10-04-02
Nonfarm payrolls, September (8:30): 6K expected, 39K prior.
Unemployment Rate, September (8:30): 5.9% expected, 5.7% prior.
Average workweek, September (8:30): 34.1 expected, 34.1 prior.
Hourly earnings, September (8:30): 0.3% expected, o.3% prior.
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TEAM TRADES
These sessions are difficult. What looked to be the return of selling was snuffed with some upside war news that sent stocks higher. A little covering became more short covering, and then some more on top of that. We closed out some new and old downside positions while at the same time keeping an eye on those upside patterns that had formed up well during the selling: those stocks that can hold up and complete their patterns during selling are showing uncommon relative strength and support. They set themselves for a move higher when the buyers come in. One example today (and there were a few) was ADLR. The stock was in a 5-month base, spending the last month moving laterally, forming the handle. It was tedious, but the accumulation was good and the pattern held. Tuesday when the market started back up it made the breakout. ADLR was up all session on some good volume, but with just over 1.5 hours left it made the breakout move, surging on strong volume. The stock hit the buy at 14.74, moved to 14.82ish and moved laterally. The volume was good, the action was solid on the breakout, so it was time to buy. With the stock holding laterally, it was fairly easy; it gets trickier when the stock is running up fast. With this rest we were able to put in a limit order near the ask and see if it would pullback and hit it. We got a partial fill and then needed to bump up the limit a bit to get the full fill. The stock then moved up another 20 cents or so in the last 15 minutes. Not a bad move at all.
THE PLAYS:
Tuesday plays:
MSN: Moved higher but did not participate much.
CMCSA: Tested higher to the 18 day MVA on lower volume. Will watch and see if it rolls back down.
WEN: Did not tank, but moved back up to once again test the 200 day MVA. Lower volume.
Best Plays:
1) MME: Moving up in the handle on some rising volume.
2) ADLR: Still a buy on the solid breakout.
3) Continuing: DL: Started the move and still looks good. GE looks ready to fall again. PETM could be forming a second handle here.
NEW PLAYS:
Upside:
BCGI (Boston Communications--$10.4; +0.08; optionable): Wireless communications
http://biz.yahoo.com/p/b/bcgi.html
STATUS: Cup w/handle. Forming up a handle to a 5.5-month base after making a strong move late last week on some rising, above average volume. As BCGI tests back the last three sessions, volume dropped below the strong volume last week on the explosive move higher to complete the base. Accumulation is solid at 6 up weeks on rising volume to 3 down weeks on rising volume. Money flow is excellent and relative strength broke on the move up. Wireless is one of the best performing sectors in tech recently as it shows the most demand.
Volume: 219.8K Avg Volume: 135.545K
BUY POINT: $10.93 Volume=250K Target=$14 Stop=$9.96
POSITION: QGB LB - Dec. $10 c (63 delta) and/or Stock
http://www.investmenthouse.com/cd/bcgi.html
MME (Mid-Atlantic Medical--$36.9; +0.7; optionable): Health care plans
http://biz.yahoo.com/p/m/mme.html
STATUS: Cup w/handle. Moving in a 6-week handle to a 15-week base. The handle is getting a bit stretched out but volume is very low as it works above the 50 day MVA (35.00). It showed good volume up off of that level lat week, and Tuesday it showed another good volume bump as it moved higher off the 18 day MVA at 36, but volume was still a bit below average. Accumulation is solid at 3 up weeks on rising volume to just 1 down week on rising volume. A breakout over the June highs near 40 put MME at an all-time high.
Volume: 329.1K Avg Volume: 532.727K
BUY POINT: $37.95 Volume=650K Target=$43.65 Stop=$35.29
POSITION: MME CF - Mar. $30 c (77 delta, low OI) OR MME CG - Mar. $35c (64 delta) and/or Stock
http://www.investmenthouse.com/cd/mme.html
Revisited:
Play Date: 09/21/2002
ADLR (Adolor--$15; +0.98; optionable): Drug manufacturer
http://biz.yahoo.com/p/a/adlr.html
STATUS: Cup w/handle. After a lengthy, 6-week handle, ADLR started a strong move Tuesday on the strongest volume in 2 months. Still a buy at this point.
Volume: 322.65K Avg Volume: 116.5K
BUY POINT: New positions: 15.08 (orig. $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
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.
WB 09/25 Put 34.27 +1.58 33.25 30 4.1M 4M 34.15
Current. Up over the 18 day MVA on rising volume. Will see if it fails again.
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.
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
ACL 08/06 cup hdl 37.4 -1.35 38.3 42.45 1.6M 900K 35.88
Current. Turned back down after hitting the buy Monday. Volume backed off, but it did not participate in the rally. Volume on the upside the prior three sessions was superb.
ADLR 09/21 cup hdl 15 +0.98 14.74 17.74 323K 161K 13.65
Current. Still a buy.
AEM 09/19 cup hdl 15.52 -0.49 17.05 20.55 616K 1.2M 15.75
Buy not hit. Struggling gold stock.
ALLY 09/07 cup hdl 15.92 +0.46 15.86 18.25 398K 675K 14.55
Current. Recovering nicely, holding above the 18 day MVA.
AMGP 08/28 cup hdl 32.48 -1.07 30.32 34.94 477K 350K 28.65
Current. Testing back to the 10 day MVA on much lower volume.
BCGI 10/01 cup hdl 10.4 +0.08 10.93 14 220K 250K 9.96
New.
CARS 08/30 cup hdl 25.18 +0.2 25.18 28.95 158K 400K 23.42
Buy not issued. Hitting the price buy but again no volume to support it. When it comes it should be huge.
CCCG 09/12 Cup 13.52 +0.45 13.45 16.15 33K 51K 12.41
Current. Held the 10 day MVA and moved up but not much volume.
CMCSA 09/30 Put 22.78 +1.45 21.18 18 399K 300K 23.35
Buy not hit. Testing the 50 day MVA on some lower volume.
COO 09/26 cup hdl 53.25 +0.75 54 61 303K 375K 50.22
Current. Holding the 10 day MVA.
CUB 09/18 Put 16.61 -0.39 18.98 16 167K 85K 21
Target hit!
CVTX 09/24 Put 21.54 +0.63 19.65 16 353K 750K 21.25
Buy not issued. Testing the 50 day on no volume.
DL 09/28 cup hdl 22.03 +0.57 21.84 25.55 508K 712K 20.31
Current. Low volume Tuesday, but solid up to that point.
GE 09/26 Put 26.2 +1.55 26.25 24 40M 35M 27.85
Buy not issued the first time. Trying to roar back, hit and closed at the 10 day MVA on lower volume. Still in the downtrend and we are ready for it to fall again.
GLG 09/18 cup hdl 9.1 -0.15 10.59 12.75 621K 1.3M 9.45
Buy not issued.
JP 08/30 Put 41.4 +1.3 41.72 38.55 473K 700K 41.35
Current. Over the down trendline on low volume. Needs to get below 40.50 again.
KKD 09/21 Put 31.5 +0.24 32.4 29.65 789K 875K 33.75
Current. Up to the 10 day MVA on much lower volume.
LBIX 09/25 Cup 2.72 +0.23 2.95 4 174K 150K 2.45
Buy not hit. Held the 50 day MVA and moved up on some rising, above average volume.
LOW 07/06 Test 50 42.2 +0.8 0 0 8.5M 0 0
MME 10/01 cup hdl 36.9 +0.7 37.95 43.65 329K 650K 35.29
New.
MRK 09/28 Put 46.38 +0.67 46.08 43.75 8.6M 7M 48.65
Current. Doji at 46, still below the 10 day MVA.
MSN 09/30 Test 18 3.77 +0.07 3.91 5.45 93K 200K 3.59
Buy not hit.
NCC 09/17 Put 29.8 +1.27 28.96 25.95 1.7M 14M 29.75
Current. Jumped up to the 50 day MVA on continued stronger volume. 30 is some resistance, and it needs to falter and fall here.
NOC 07/06 Test 50 122.8 -1.24 0 0 2.1M 1.7M 0
PETM 08/26 cup hdl 18.31 +0.5 17.04 20.45 1.7M 2.8M 17.25
Current. Being careful with this one, but it is taking on the characteristics of another handle here as it holds above the June pre-correction high at 18.
PG 09/21 Test 18 91.17 +1.79 91.55 103 5.2M 5.5M 89.45
PL 09/25 Put 31.98 +1.21 30.45 27.45 167K 200K 31.55
Current. Jumped over the 50 day MVA, but volume was very low and below average. Will see if it tests.
QLGC 08/17 CCall 25.25 -0.79 36.48 0 18M 12M 33.55
Current.
RCII 08/24 Test 18 51.9 -0.05 58.02 66.45 497K 701K 53.96
RFMD 09/05 Test 18 6.49 +0.49 6.08 9 4.7M 9.5M 5.65
Current. Up off of 6 once again though volume was still below average.
SCSS 09/21 cup hdl 6.02 -0.13 6.02 7.25 198K 200K 5.61
Current. Tested the 10 day MVA on the low and recovered. Low volume once again.
STE 09/28 BO 25.48 +0.57 23.95 28.75 869K 711K 22.12
Current. Moving up still on the breakout move.
SY 09/19 Put 11.99 +0.37 12.75 10 833K 680K 13.55
Buy not issued. Up on some rising volume, but stalled at the 10 day MVA.
TT 09/19 cup hdl 13.2 -0.3 13.71 16.55 9.7K 50K 12.71
Buy not issued. Testing lower to the 18 day MVA.
UPC 09/17 Put 28.41 +0.95 28.32 26 511K 615K 28.95
Current. Back up to the 18 day MVA on continued below average volume.
VMI 09/10 BO 23.2 -0.15 24.23 26.85 32K 120K 22.53
VMI 08/30 BO 23.2 -0.15 22.38 26.85 32K 120K 23
Extited.
VRTS 08/19 CCall 14.85 +0.18 19.76 20 12M 8.5M 17.45
Current.
WB 09/25 Put 34.27 +1.58 33.25 30 4.1M 4M 34.15
Current. Up over the 18 day MVA on rising volume. Will see if it fails again.
WEN 09/21 Put 34.65 +1.54 32.75 30 1.4M 1.6M 33.33
Current. Did not drop, rallying up to the 200 day MVA on lower volume than the Tuesday selling.
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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understanding the stock market
stock watch
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