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Begin Part 2 of 2
SUBSCRIBER QUESTIONS
Q: I always like looking at your support and resistance values for the three major indices. However, I find them (in my humble opinion) overdone and confusing. There are simply too many values which serve to do little more than make my head spin.
A: When a market is moving down there are many potential support levels, some key, some just possible points were a bounce can occur. A strong downtrend will, as we have seen, snap most support levels as it continues to move lower. It will often hit a level of potential support (either an old high, a trading range, a key moving average) and bounce up from there. That can be used as a trading point or as a bounce to get out of positions that are heading the wrong way. During this bear market that is one of the main reasons we track support levels. The other is to look for those critical levels that may hold as a longer term bottom such as 800 to 775 on the S&P 500. That is a key level as we have noted in the body of the report that can act as a longer term support level. We watch for that but we don't bank on it until you see it hold and then see the markets follow through with buying.
As for resistance points, those are key in the downtrend because those are great points to enter into the downside plays. The 10 and 18 day MVA typically act as resistance in continuing downtrends. Look at the chart of any of the 3 major averages of late and after they try to rally a bit they tend to stall and then move down just below those short term moving averages, testing them on the highs, until the next important support level is hit where they once again try another bounce higher that will either be the end of the selling or just a respite before more selling resumes. Thus while all the numbers may be confusing, in the big picture of the downtrend they fall into place and they have to be looked at in that view as opposed to just a string of numbers.
THE PLAYS:
NEW BONUS PLAYS:
Upside:
HCA (HCA, Inc.--$47.48; -0.33; optionable): Hospitals
http://biz.yahoo.com/p/h/hca.html
STATUS: Cup w/handle. Forming the handle to a 3.5 month base. HCA tested the 18 day MVA on the low and closed right at the 10 day MVA as it pulls back from its recent high at 49.42. Accumulation in the base is excellent as 4 up weeks on rising volume to 1 down week on rising volume. The handle volume is up and down; better to see it very low but we note it is lower than it has been of late. The health services sector continues to be one that is acting as a haven in the selling as its stocks form up good bases as the market sells off.
Volume: 2.504M Avg Volume: 2.585M
BUY POINT: $49.52 Volume=3.2M Target=$56.94 Stop=$46.05
POSITION: HCA BI - Feb. $45c (67 delta) and/or Stock
http://www.investmenthouse.com/cs/hca.html
Downside:
SRE (Sempra Energy--$19.2; -0.06; optionable): Electric Utilities
http://biz.yahoo.com/p/s/sre.html
STATUS: Put. Failing the test of the 18 day MVA (20.11). Showed a doji on the session as it tested the 10 day MVA on the high (19.87) and then rolled back down. It has some support at 19, but this is SRE's first test of the short term moving averages after it sold off of its high in late August (24). The selling volume has outpaced the upside volume. Looks ready for a move back down. Some support at 18 and it will probably pause there, but still looks ready for a test of the low.
Volume: 1.126M Avg Volume: 1.208M
BUY POINT: $18.88 Volume=1.2M Target=$16.15 Stop=$20.35
POSITION: SRE MD - Jan. $20p (-50 delta, low OI)
http://www.investmenthouse.com/cs/sre.html
WATCHLIST/ CONTINUING
Still looking very good (see Weekend report for specifics):
CHD; RE; DK; AG; AZO; XRAY.
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
ACAS 09/10 Put 16.34 -0.38 17.97 14.95 1.1M 900K 19.22
AG 10/03 Test BO 22.85 -0.43 24.21 28 660K 750K 22.25
AGAM 10/03 Test 50 5.31 -0.09 5.71 7 31K 100K 5.31
AGN 10/05 Put 53.72 +0.37 53.15 50 1.2M 1.1M 54.85
ALLY 09/07 cup hdl 14.59 -0.97 15.86 18.25 506K 675K 14.55
APOL 08/15 A Wedge 40.18 -0.37 40.65 48 2.9M 3.3M 42
APPX 09/19 cup hdl 15.75 0 17.11 20.55 82K 225K 15.85
AZO 10/01 DB hdl 81.07 -0.2 81.55 92 1.6M 1.5M 77.45
AZO 08/24 DB hdl 81.07 -0.2 75.69 82.55 1.6M 1.5M 71.25
BCGI 10/07 cup hdl 10.29 -0.01 10.55 14 48K 250K 9.81
BCGI 10/01 cup hdl 10.29 -0.01 10.93 14 48K 250K 9.96
BLL 08/27 cup hdl 47 -1.54 48.35 55 415K 800K 51.88
BLL 08/06 Rv H&S 47 -1.54 44.55 54.55 415K 800K 51.88
Exited with trailing stop.
BRCM 08/17 CCall 9.7 -0.4 19.2 19.8 10M 9M 17.25
BSX 09/12 cup hdl 35.06 -0.08 30.94 35.58 3.1M 3.3M 33.45
BYD 09/16 Test BO 16.55 -0.44 18.05 20.75 218K 461K 16.79
BYD 08/19 cup hdl 16.55 -0.44 16.56 19.88 218K 461K 16.45
CECO 09/20 Test 50 45.83 +0.33 46.55 53.53 1M 700K 44.48
Held at the 50 day MVA as the selling abated in education.
CHD 10/05 cup hdl 33.06 +0.02 34.35 39.75 175K 225K 31.95
CHS 09/14 cup hdl 15.25 -0.42 19.05 22.94 1.3M 1.8M 17.72
CLX 09/25 Put 40.35 +0.09 41.25 37.25 883K 1.2M 42.35
CMCSA 09/30 Put 18.54 -1.41 21.18 18 210K 300K 22.15
COCO 09/18 Test 18 33.93 +1.72 38.11 42.75 1.6M 809K 35.44
COCO 08/01 Rv H&S 33.93 +1.72 29.95 36 1.6M 809K 34.25
Up to the 50 day MVA on lower though still strong volume. Now it needs to continue the move and not fail.
DL 10/03 cup hdl 22.12 +0.56 22.25 25.55 476K 712K 20.31
Looks ready for the next move.
DL 09/28 cup hdl 22.12 +0.56 21.84 25.55 476K 712K 21
EASI 08/03 Flat 50.46 -2.71 50.25 58 328K 300K 55
Blowing lower on volume.
EDMC 09/07 Rv H&S 43.34 +0.35 44.03 49.45 415K 520K 40.95
ERES 09/07 A Wedge 16.2 -1.34 17.35 19.95 434K 200K 16.95
FNFG 09/20 BO 30.94 -0.38 31.75 36.51 163K 87K 29.53
FNFG 07/27 Test BO 30.94 -0.38 28.4 33.45 163K 90K 29.25
GG 09/19 cup hdl 10.01 -0.66 11.98 14.45 1.8M 2.4M 10.95
GTK 09/19 Test BO 23.37 -0.69 25.95 30 577K 1.3M 24.04
HCA 10/07 cup hdl 47.48 -0.33 49.52 56.94 2.5M 3.2M 46.05
HET 10/05 Cup 47.49 -2.02 50.7 58.75 1.1M 1.8M 47.45
HSIC 10/03 Test 50 51.8 -0.8 54.45 59.85 333K 550K 52.05
HSIC 09/04 BO 51.8 -0.8 52.05 59.85 333K 550K 50.15
IDXX 09/26 cup hdl 31.27 -0.2 32.11 36.75 293K 468K 29.86
IGT 10/05 cup hdl 65.24 -2.11 70.95 80 840K 1.2M 66.45
INGR 10/03 cup hdl 16.65 -1.09 18.55 22.25 244K 525K 17.12
KDE 09/25 A Wedge 23.75 -0.02 21.31 25.55 265K 180K 22.85
LANC 09/21 Test 18 41.8 -1.12 44.25 50.88 149K 254K 41.15
MBG 09/24 cup hdl 31.8 -2.08 33.51 38.55 1.2M 1M 32.45
MME 10/02 cup hdl 36.72 -0.46 38.28 44 318K 650K 35.6
PFCB 09/14 Put 29.08 -0.87 28.98 26 668K 650K 29.75
RE 10/05 Put 53.62 +0.07 53.35 50 599K 550K 55
RFMD 09/05 Test 18 6.05 -0.31 6.08 9 5.3M 9.5M 5.94
RGLD 09/28 Test 50 19.22 -0.15 18.65 22.35 396K 575K 17.34
RMCI 10/03 PreSplt 22.92 +0.69 23.55 26.55 177K 165K 21.9
SPW 09/10 PreSplt 93.16 -2.38 105.15 110 222K 425K 102.55
SRE 10/07 Put 19.2 -0.06 18.88 16.15 1.1M 1.2M 20.35
STE 10/07 BO 24.5 +0.1 25.24 28.75 784K 711K 23.35
STE 09/28 BO 24.5 +0.1 23.95 28.75 784K 711K 23.12
STJ 10/05 Put 35.85 +0.65 35.05 32 923K 1.3M 36.35
STJ 09/21 Put 35.85 +0.65 36.25 32.05 923K 1.9M 37.35
UHS 10/01 cup hdl 51.55 +0.5 51.79 58.25 616K 800K 49.35
UOPX 09/23 cup hdl 28.99 -0.86 32.1 37 155K 262K 29.85
VAR 09/16 A Wedge 42.67 +0.66 43.96 50.55 631K 550K 41.85
VAR 08/10 Dbl btm 42.67 +0.66 42.75 46.9 631K 550K 41.25
WB 09/25 Put 28.75 -1.46 33.25 30 4.6M 4M 31.05
XRAY 10/05 cup hdl 41.55 +0.04 42.28 48.75 346K 900K 39.32
Good Investing!
Jon L. Johnson and the Stock Split Report 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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