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us stock market, understanding the stock market
Begin Part 2 of 3
Support and Resistance
Nasdaq: Closed at 1165.56
Resistance: The August down trendline at 1185 up to 1200 (July intraday low at 1192.42). The 10 day MVA (1202.24). The 18 day MVA (1225.26). 1230 and 1250 are price resistance points. 1270 is still more price resistance from the September lows. The March/May downtrend line at 1275 along with price resistance at 1300. The 50 day MVA (1291.37). 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 1357. 1418, the interim test after the September low. That is followed by price resistance at 1500.
Support: 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 818.95
Resistance: The 10 day MVA (837.37). 850 to 855 (the October 1997 and Q2 1998 lows) stopped things Friday. The 18 day MVA (851.30). The March downtrend line at 857. 875 is price resistance of some significance. The 50 day MVA (887.55). July and August interim highs at 911.64. The September 2000/May 2001 downtrend line at 918. The downtrend lines from the March and April highs (926). Price resistance at 950. 965, the September 2001 closing low.
Support: The first bottom channel line in the March downtrend (816). Price support at 800 held Monday. The lowest channel line in the March downtrend channel (776). 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 7717.19
Resistance: The lowest bottom channel line of the March downtrend (7755). The 10 day MVA (7851.61). The 18 day MVA (7994.73). The August lows (8043) and the September 2001 intraday low (8062). The September closing low at 8235.81. 8250 acted as resistance before after acting as support. The March down trendline at 8235. The 50 day MVA (8367.24). 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 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): 417K actual, 410K expected, 412K prior (revised from 406K).
ISM Services, September (10:00): 53.9 actual, 51.4 expected, 50.9 prior.
Factory orders, August (10:00): 0.0% actual, -0.3% expected, 4.7% prior (revised from 4.4%).
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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THE PLAYS:
NEW BONUS PLAYS:
Upside:
AG (Agco Corp.--$23.72; +0.79; optionable): Farm machinery
http://biz.yahoo.com/p/a/ag.html
STATUS: Testing the breakout. AG just broke over the resistance established by the March to may trading range, tested the move, and is now moving up off the 10 day MVA on some very impressive volume. The trading range broke down in the July selling and AG mounted an impressive recovery. Accumulation since March is solid at 9 up weeks on rising volume to 5 down weeks on rising volume. As John Deere CEO said today at the CEO summit, farm machinery should do fine given the farm bill. AG appears to be living up to that billing.
Volume: 1.759M Avg Volume: 616.818K
BUY POINT: $24.21 Volume=750K Target=$28 Stop=$22.25
POSITION: AG BX - Feb. $22.50c (70 delta, low OI) and/or Stock
http://www.investmenthouse.com/cs/ag.html
INGR (Intergraph--$18.15; +0.36; optionable): System software
http://biz.yahoo.com/p/i/ingr.html
STATUS: Cup w/handle. INGR is not the typical tech stock today, moving in a 4.5 month base that has held the 200 day MVA (16) twice, the only times it touched it. It is now forming a handle to the pattern, moving laterally and lower on the intraday lows on lower, below average volume. Accumulation is excellent at 5 up weeks on rising volume to 0 down weeks on rising volume. Money flow is leading up ahead of price and relative strength has already broken out while the handle is being formed. Looks very good.
Volume: 174.943K Avg Volume: 312.727K
BUY POINT: $18.55 Volume=525K Target=$22.25 Stop=$17.12
POSITION: IGQ AC - Jan. $15c (74 delta, low OI) and/or Stock
http://www.investmenthouse.com/cs/ingr.html
CONTINUING BONUS PLAYS
Upside:
Play Date: 10/03/2002
AGAM (Acres Gaming--$5.66; +0.25; no options): Video poker
http://biz.yahoo.com/p/a/agam.html
STATUS: Testing the breakout. This is a current play that is in the process of testing the breakout of a 5-month base, holding at the former high at 5.50. Thursday it jumped up off the 50 day MVA (5.33) on the strongest volume in 6 months. Looks ready to resume the move. Accumulation is excellent at 8 up weeks on rising volume to 1 down week on rising volume.
Volume: 253.8K Avg Volume: 48.454K
BUY POINT: $5.71 Volume=100K Target=$7 Stop=$5.31
POSITION: Stock (no option chain)
http://www.investmenthouse.com/cs/agam.html
DL (Dial Corp.--$21.97; +0.32; optionable): Soap and deodorant
http://biz.yahoo.com/p/d/dl.html
STATUS: Cup w/handle. After a one-day respite on lower volume it appears DL is ready to move higher despite the selling. It rose Thursday on rising, above average volume. Seems people will need to stay clean and pretty no matter what the economy. Looking for another move to a high on strong volume for new positions. Accumulation is solid at 7 up weeks on rising volume to 3 down weeks on rising volume.
Volume: 594.8K Avg Volume: 514.545K
BUY POINT: $20.25 Volume=712K Target=$25.55 Stop=$20.31
POSITION: DL AD - Jan. $20c (74 delta) and/or Stock
http://www.investmenthouse.com/cs/dl.html
Play Date: 09/26/2002
IDXX (Idexx Labs--$31.69; +0.35; optionable): Diagnostic substances
http://biz.yahoo.com/p/i/idxx.html
STATUS: Cup w/handle. Looks to be making the move, tapping 32 on the high and then backing off a bit on rising, above average volume. Looks very good.
Volume: 296.124K Avg Volume: 284.909K
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/cs/idxx.html
Play Date: 09/24/2002
MBG (Mandalay Resort Group--$34.14; -0.05; optionable): Resorts and casinos
http://biz.yahoo.com/p/m/mbg.html
STATUS: Cup w/handle. Forming another handle as it approached the former high at 36, testing back to the 18 day MVA on the low (32.87) and recovering over the 10 day MVA on rising, above average volume. Accumulation is solid at 5 up weeks on rising volume to 3 down weeks on rising volume. Gaming, casinos and the like are all looking much stronger. Relative strength is breaking out as the stock forms its handle. One of those situations where a strong stock holds up and consolidates while the market sells.
Volume: 1.043M Avg Volume: 737.181K
BUY POINT: $33.51 Volume=1M Target=$38.55 Stop=$32
POSITION: MBG AF - Jan. $30c (75 delta) and/or Stock
http://www.investmenthouse.com/cs/mbg.html
UHS (Universal Health Services--$52.38; +0.38; optionable): Hospitals
http://biz.yahoo.com/p/u/uhs.html
STATUS: Cup w/handle. Making the move higher out of its 3.5 month base after starting the move Wednesday on some solid volume. Thursday's move was on lower, average volume and closed 50 cents off the high. Was struggling with a selling market, so the move was not bad. May test back to 52 one more time before making a definitive move.
Volume: 513.8K Avg Volume: 564.181K
BUY POINT: New positions: 52.45 (orig. $51.79), but need to see the volume. Volume=800K Target=$58.25 Stop=$49.35
POSITION: UHS AJ - Jan. $50c (66 delta) and/or Stock
http://www.investmenthouse.com/cs/uhs.html
PRE-ANNOUNCEMENT PLAYS
MME (Mid-Atlantic Medical--$38.46; +0.34; optionable): Health care plans. Forecast to announce a split 11-6-02 after the close.
http://biz.yahoo.com/p/m/mme.html
BACKGROUND: MME has announced two prior splits in 1993 and 1994. For the first time since that time the stock is back at those levels.
STATUS: Cup w/handle. We slipped this one in on the Wednesday update report because MME was making a good breakout move and we wanted to get it out ASAP. Thursday it had a so-so session, managing a gain but on lower volume. On its high (38.97) it was bucking with the June highs from 39 to 39.70. It is very strong here with accumulation at 3 up weeks on rising volume to just 1 down week on rising volume. We need to see some once again strong volume on the next move that breaks it out. A move over the June highs near 40 puts MME at an all-time high.
Volume: 510.8K Avg Volume: 515.318K
BUY POINT: New positions: on a continued move higher on the target volume (orig. $38.28). Volume=650K Target=$44 Stop=$35.6
POSITION: MME CF - Mar. $30 c (77 delta, low OI) OR MME CG - Mar. $35c (64 delta) and/or Stock
http://www.investmenthouse.com/cs/mme.html
CECO (Career Education--$48.34; -1.22; optionable): Forecast to announce a split on 10-31-02 in conjunction with earnings. At this time the company cannot confirm a date but based upon our research this is the date for the release.
http://biz.yahoo.com/p/c/ceco.html
BACKGROUND: Last announced a 2 for 1 split on 7-31-01 in conjunction with earnings. The stock price was $61. The annual shareholder meeting was on 5-17-02 at which time no additional shares were authorized. The company has sufficient shares for 2 for 1 split.
STATUS: After the strong gap up Tuesday, CECO is testing back to the breakout point at 48 on much, much lower volume. That is pretty much the move we were expecting in the Tuesday report. This looks like a classic test of the breakout. We will want it to hold at 48 on the close and launch back up. After the stock starts moving back up we can enter new positions. Excellent accumulation in the pattern at 7 up weeks on rising volume to just 3 down weeks on rising volume.
Volume: 1.11M Avg Volume: 853.5K
BUY POINT: New buys: A test of 48 that holds and starts back up (48.25; orig. $46.55). Volume=700K Target=$53.53 Stop=$43.29
POSITION: CUY AH - Jan. $40c (70 delta) and/or Stock
http://www.investmenthouse.com/cs/ceco.html
EDMC (Education Management--$44.33; -0.5; optionable): Education and training. Forecast to announce a split on 10-24-02 in conjunction with earnings. At this time the company cannot confirm this date, but based upon our research this is the date for the announcement.
http://biz.yahoo.com/p/e/edmc.html
BACGROUND: Last announced a 2 for 1 split on 12-2-98 at a stock price of $46. The annual shareholder meeting was on 11-8-01 at which time no additional shares were authorized. The company has sufficient shares for a 2 for 1 split.
STATUS: Reverse head and shoulders/ascending wedge. As with CECO, EDMC made a very strong volume breakout move Tuesday and is now testing that move, tapping the 10 day MVA on the low (44.10). That is the breakout point and exactly where we want it to hold on the close. After the stock starts to move higher on rising volume off of 44 we can take new positions.
Volume: 297.603K Avg Volume: 339.181K
BUY POINT: New positions: 44.65 (prior 44.03). Volume=520K Target=$49.45 Stop=$40.95
POSITION: UKN LH - Dec. $40c (65 delta, low OI) and/or Stock
http://www.investmenthouse.com/cs/edmc.html
CONTINUING CANDIDATES
Play Date: 08/24/2002
AZO (Autozone--$80.99; -0.41; optionable): Auto parts
http://biz.yahoo.com/p/a/azo.html
STATUS: After the strong move Tuesday AXO is holding steady, showing consecutive doji's on lower and lower volume (Thursday fell well below average). It is being stingy with its gains which is precisely what you want to see. Looking for another move up for additional positions.
Volume: 1.04M Avg Volume: 1.279M
BUY POINT: New positions: 82.05 (orig. $75.69) Volume=1.5M Target=New positions: 92 (orig. positions $82.55) Stop=$77.45
POSITION: AZO LP - Dec. $80c (58 delta) and/or Stock
http://www.investmenthouse.com/cs/azo.html
Play Date: 10/03/2002
HSIC (Henry Schein--$53.11; +1.48; optionable): Wholesale medical equipment
http://biz.yahoo.com/p/h/hsic.html
STATUS: Testing the 50 day MVA. After breaking out of a three month cup in August HSIC tested back to the 18 day MVA, rallied, and has now tested the 50 day MVA (50.83) and jumped up on huge volume. The 50 day MVA should act as support for a strong stock, and in rising off of that level HSIC has preserved its breakout.
Volume: 766.702K Avg Volume: 423.954K
BUY POINT: $54.45 Volume=550K Target=$59.85 Stop=$52.05
POSITION: HQE AI - Jan. $45c (74 delta) and/or Stock
http://www.investmenthouse.com/cs/hsic.html
PRE-SPLIT
RMCI (Right Management--$22.81; -0.06; optionable): Splits 3:2 on 10-16.
http://biz.yahoo.com/p/r/rmci.html
STATUS: RMCI shook us out Wednesday on some higher volume selling down to the 200 day MVA. We never saw any new to explain the drop. In any event, RMCI sold down to 22 Thursday before reversing and closing just under the 200 day (22.92). On pre-splits we look for indications that a move is going to change direction, and after the sell off the past two weeks the big doji can indicate RMCI is ready to move back up. We are going to let it break over the 50 day MVA (23.44), however, before we re-enter that play.
Volume: 129.884K Avg Volume: 144.818K
BUY POINT: $23.55 Volume=165K Target=$26.55 Stop=$21.9
POSITION: UHU AD - Jan. $20c (74 delta) and/or Stock
http://www.investmenthouse.com/cs/rmci.html
POST-SPLIT
Play Date: 09/07/2002
ERES (Eresearch Tech--$18.2; -0.6; no options): Medical labs
http://biz.yahoo.com/p/e/eres.html
STATUS: ERES made a breakout move on volume Tuesday but then immediately pulled back as the market could not hold the move. Volume backed way off and well below average as the stock tested toward the 18 day MVA (17.80) and managed to recover to close at the 10 day MVA. Looks as if it had to take a break with the market pullback and still looks ready to go.
Volume: 110.9K Avg Volume: 167K
BUY POINT: New positions: 19.45 (orig. $17.35). Volume=200K Target=New positions: 22.25 (orig. positions $19.95). Stop=$17.25
POSITION: Stock (no option chain)
http://www.investmenthouse.com/cs/eres.html
VAR (Varian Medical Systems--$44.98; +1; optionable): Wholesale medical equipment
http://biz.yahoo.com/p/v/var.html
STATUS: Ascending wedge. Medical continues to outperform, and after a long lull in an ascending wedge pattern VAR started back up Thursday on rising, above average volume, clearing the high in its wedge. It closed well off of its high at 45.80, but that was most likely due to the market rollover. Looks ready to move still.
Volume: 709.9K Avg Volume: 500.181K
BUY POINT: New positions: 45.35 (orig. $43.96). Volume=550K Target=$50.55 Stop=$41.85
POSITION: VAR BH - Feb. $40c (72 delta) and/or Stock
http://www.investmenthouse.com/cs/var.html
End Part 2 of 3
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us stock market
understanding the stock market
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