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us stock market, understanding the stock market
Begin Part 2 of 3
Economic Calendar
10-7-02
Consumer credit, August (2:00): $4.2B actual, $10.5B expected, $10.8B prior.
10-10-02
Initial jobless claims (8:30): 384K actual, 415K expected, 417K prior.
Wholesale inventories, August (10:00): 0.2% actual, 0.2% expected, 0.6% prior.
10-11-02
Retail sales, September (8:30): -0.9% expected, 0.8% prior.
Retail ex-auto (8:30): 0.2% expected, 0.4% prior.
PPI, September (8:30): 0.2% expected, 0.0% prior.
Core PPI (8:30): 0.1% expected, -0.1% prior.
Michigan sentiment, prelim, October (9:45): 85.3 expected, 86.1 prior.
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TEAM TRADES
HLYW: HLYW caught our eye early in the week as it tested its break over its 200 day MVA on low volume and started up Wednesday on high volume. Good accumulation to boot. Thursday HLYW was up fast but then moved laterally for the next 45 minutes. We were watching this one closely. It blew past the buy point early and we were seeing if it would come back a bit. It showed strength when the market turned down as it just moved laterally as noted. When the SP500 bounced, HLYW started up out of the lateral consolidation. That was too much. The stock was at 18.50 and the options were 4.40 by 4.80. We went for both, feverishly putting in orders (did not have them pre-entered; that can be a problem at times). Turned out okay, however, as the stock ran up but tested lower once more before it really started to run. That saved us on the positions. The stock flew, fought off some afternoon weakness, and then rallied to the close. A momentum play but with great accumulation and volume as well.
THE PLAYS:
Good moves: APPX; BSX; KDE; RNR
NEW BONUS PLAYS:
Upside:
QCOM (Qualcom--$29.92; +2.01; optionable): Telecom equipment
http://biz.yahoo.com/p/q/qcom.html
STATUS: Trading range. QCOM had traded up to the top of its 4-month trading range (24 to 30), holding the past two weeks above the mid point at 28 (the 50 day MVA is at 28.37). Money flow is racing up ahead of the stock. Accumulation in the trading range is solid at 5 up weeks on rising volume to 2 down weeks on rising volume. With a market recovery QCOM looks ready to rally higher out of its range it has held during all the selling. After it makes the move we can either sell calls against the position or take the gain.
Volume: 19.018M Avg Volume: 14.913M
BUY POINT: $30.22 Volume=20M Target=$35 Stop=$27.96
POSITION: AAW AY - Jan. $27.50c (67 delta) or AAW AE - Jan. $25c (77 delta) and/or Stock
http://www.investmenthouse.com/cs/qcom.html
Downside:
WCNX (Waste Connections--$31.12; +1.24; optionable): Waste management
http://biz.yahoo.com/p/w/wcnx.html
STATUS: Put. Not abandoning the downside at all as the rally was not kind to all stocks. WCNX broke its 200 day MVA (32.03) Friday and has banged up and down since then between 32 and 30. Thursday it tried to take the 200 day MVA, but volume was very light and it stalled out. Looks as if it has no power to make the move back over that resistance; two tries have failed. There is distribution ongoing. It may give another test up toward 32, but we are looking for positions on a fall from the close.
Volume: 209.35K Avg Volume: 301.863K
BUY POINT: $31.05 Volume=325K Target=$27.25 Stop=$32.55
POSITION: NBU MB - Jan. $35p (-52 delta)
http://www.investmenthouse.com/cs/wcnx.html
CONTINUING BONUS PLAYS
Upside:
Play Date: 09/19/2002
APPX (American Pharmaceutical--$17.87; +1.32; no options): Drug manufacturer
http://biz.yahoo.com/p/a/appx.html
STATUS: Cup w/handle. It held well during the selling, and when the rally came all of that accumulation (9 to 4) paid off with a strong breakout. Still in the buy zone, and we can pick up new or additional positions before 18, preferably on a pullback toward 17 on some early softness.
Volume: 744.464K Avg Volume: 157.909K
BUY POINT: New positions: before 18, preferably after a pullback to test 17 (orig. $17.11). Volume=225K Target=$20.55 Stop=$15.85
POSITION: Stock (no option chain)
http://www.investmenthouse.com/cs/appx.html
Play Date: 10/05/2002
CHD (Church & Dwight--$33.52; +0.23; no options): Consumer cleaning products
http://biz.yahoo.com/p/c/chd.html
STATUS: Cup w/handle. CHD continues to move in the handle of its 5-month base, testing lower Wednesday and then rising slightly Thursday on a jump in volume. It looks as if it is getting close. Some more positive economic news should help it make the breakout. Solid accumulation at 5 up weeks on rising volume to 2 down weeks on rising volume.
Volume: 245.3K Avg Volume: 152.136K
BUY POINT: $34.35 Volume=225K Target=$39.75 Stop=$31.95
POSITION: Stock (no option chain)
http://www.investmenthouse.com/cs/chd.html
Play Date: 10/09/2002
HLYW (Hollywood Entertainment--$19.65; +2.16; optionable): Music and video stores
http://biz.yahoo.com/p/h/hlyw.html
STATUS: Breaking over resistance. Blasted off Thursday on some huge volume. It gapped higher so we had to wait, but it would not come back. We modified the buy point and target given the strength of the move.
Volume: 3.621M Avg Volume: 755.681K
BUY POINT: Riding current positions ($18.45). Will test the move at some point. Volume=965K Target=$22 Stop=$17.16
POSITION: HWQ AC - Jan. $15c (74 delta) and/or Stock
http://www.investmenthouse.com/cs/hlyw.html
Play Date: 10/08/2002
NBIX (Neurocrine Biosciences--$40.02; +0.4; optionable): Biotechnology
http://biz.yahoo.com/p/n/nbix.html
STATUS: Reverse head & shoulders. May have completed the test now. NBIX tested the 50 day MVA on Thursday's low (37.93) and rebounded on some strong volume. It still has that resistance at 42 to clear to complete the pattern. Needs to do that on strong volume. Accumulation is solid at 11 up weeks on rising volume to 5 down weeks on rising volume.
Volume: 1.006M Avg Volume: 710.545K
BUY POINT: $42.35 Volume=1.1M Target=$50.75 Stop=$39.39
POSITION: UOT BH - Feb. $40c (60 delta) and/or Stock
http://www.investmenthouse.com/cs/nbix.html
Play Date: 10/01/2002
UHS (Universal Health Services--$52.25; +0.25; optionable): Hospitals
http://biz.yahoo.com/p/u/uhs.html
STATUS: Cup w/handle. Still working on that handle this week though it is wedging up the 10 day MVA (51.28) and not testing a bit lower as preferred. Friday showed a doji on a very sharp rise on volume. It is either going to make the move or test back down a bit toward 51.
Volume: 977K Avg Volume: 582.045K
BUY POINT: New positions: 52.55 (orig. $51.79). 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
Downside:
Play Date: 10/09/2002
ACDO (Accredo Health--$44.58; +2.2; optionable): Specialized health services
http://biz.yahoo.com/p/a/acdo.html
STATUS: Testing the 10 day MVA. ACDO moved up through the 10 day MVA (44.11) on even lower, below average volume. This is not a strong move, and we are not losing interest in the play. It may now test the 18 day MVA before it rolls over (45.26).
Volume: 625.283K Avg Volume: 756.09K
BUY POINT: New buy point: 43.96 Volume=850K Target=$38.65 Stop=$44.75
POSITION: DZU WI - Nov. $45p (-54 delta)
http://www.investmenthouse.com/cs/acdo.html
PRE-ANNOUNCEMENT PLAYS
Play Date: 09/20/2002
CECO (Career Education--$47.78; +1.52; 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: Testing the 50 day MVA (45.46). After the wild action prompted by the DV warning, CECO tested the 50 day MVA and held. Thursday it tested that level again on the low and then started back up on rising, average volume. It is rightfully recovering. There is resistance at 48 from several prior highs, and we will look for a break over that level on strong volume for new or additional positions.
Volume: 888.322K Avg Volume: 938.181K
BUY POINT: New positions: 48.25 (orig. $46.55) Volume=700K Target=$53.53 Stop=$44.48
POSITION: CUY AH - Jan. $40c (70 delta) and/or Stock
http://www.investmenthouse.com/cs/ceco.html
Play Date: 09/07/2002
EDMC (Education Management--$43.73; +0.48; 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: Held above the 50 day MVA (42) during all of the DV news. Tested the 50 day MVA Thursday on the low and jumped up to close just over the 10 day MVA on rising, above average volume. A good low volume consolidation the past four sessions and looks ready to move back up.
Volume: 368.464K Avg Volume: 359.363K
BUY POINT: $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
Play Date: 10/05/2002
IGT (International Game Technology--$65.8; -0.97; optionable): Gaming electronics. Forecast to announce a split 10-23-02 in conjunction with earnings (company has not confirmed this date).
http://biz.yahoo.com/p/i/igt.html
BACKGROUND: IGT has never announced a stock split, but the gaming sector is performing well and the stock is near an all-time high, a leader in the market.
STATUS: Cup w/handle. IGT tested below the 50 day MVA (64.78) on the low and rallied to close above that level on strong volume. Finally saw the volume break free on a test of the 50 day MVA as it should. IGT is now sitting right at some resistance at 66. We want to see the stock move over 68 on strong volume for some aggressive positions followed by a breakout over 70 for the breakout to add to or start positions. Accumulation in the pattern is positive at 9 up weeks on rising volume to 8 down weeks on rising volume; all it takes is positive accumulation.
Volume: 1.792M Avg Volume: 986.727K
BUY POINT: $70.95 Volume=1.2M Target=$80 Stop=$66.45
POSITION: IGT DN - April $70c (51 delta) or IGT AM - Jan $65c (61 delta) and/or Stock
http://www.investmenthouse.com/cs/igt.html
Play Date: 10/02/2002
MME (Mid-Atlantic Medical--$38.72; +0.64; 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 at $35 and $40. For the first time since that time the stock is back at those price levels.
STATUS: Cup w/handle. Some very strong volume moves the past two sessions as MME made the breakout Thursday. It gapped higher and then spent the rest of the day pulling back. We though about taking positions but decided to hold off and see if it tests a bit lower first given it sold back most of the session. Made the move on the AET news, so we want to see it hold and then start back up. Solid accumulation at 3 up weeks on rising volume to just 1 down week on rising volume.
Volume: 1.036M Avg Volume: 514.181K
BUY POINT: After a test of 38.25 holds, $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
CONTINUING CANDIDATES
Play Date: 08/24/2002
AZO (Autozone--$79.38; +1.9; optionable): Auto parts
http://biz.yahoo.com/p/a/azo.html
STATUS: Cup w/handle. Came under pressure Wednesday but held on, rallying Thursday on lower though still strong and above average volume. Still in the handle formation to its 5.5 month base, and this lower test may be just the shakeout it needed to weed out those last weak holders.
Volume: 1.591M Avg Volume: 1.309M
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--$52.6; +1.07; optionable): Wholesale medical equipment
http://biz.yahoo.com/p/h/hsic.html
STATUS: Testing the 50 day MVA. Forming a very tight, lateral consolidation above the 50 day MVA (51.09). Appears to be building pressure as volume remains below average. Getting close.
Volume: 358.792K Avg Volume: 426.363K
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
POST-SPLIT
BLUD (Immucor--$20.07; +1.09; optionable): Diagnostic substances
http://biz.yahoo.com/p/b/blud.html
STATUS: Breakout. After moving laterally just over resistance at 18 the past week on low volume, BLUD was just waiting for a rally. It came and BLUD took off on some very strong volume. We want to go ahead and get in on this move.
Volume: 921.875K Avg Volume: 331K
BUY POINT: $20.22 Volume=650K Target=$24.24 Stop=$18.75
POSITION: QMQ CW - Mar. $17.50c (73 delta) and/or Stock
http://www.investmenthouse.com/cs/blud.html
MCHP (Microchip--$21.66; +1.69; optionable): Semiconductors
http://biz.yahoo.com/p/m/mchp.html
STATUS: Break resistance. MCHP has performed better than many semiconductors, moving up then laterally when the market was selling. Thursday it was up on the news, rallying on above average volume as it cleared the 50 day MVA (20.68). It has some resistance from its prior high at 22 in early October. We are looking at this play as trade up to near the 200 day MVA (25.43).
Volume: 5.666M Avg Volume: 4.695M
BUY POINT: $21.85 Volume=6M Target=$25.75 Stop=$20.32
POSITION: QMT AW - Jan. $17.50c (77 delta) and/or Stock
http://www.investmenthouse.com/cs/mchp.html
RNR (Renaissance Holdings--$40.9; +2.45; optionable): Property & casualty insurance
http://biz.yahoo.com/p/r/rnr.html
STATUS: Cup w/handle. RNR blasted out of its 5.5 month base Thursday on solid volume. Accumulation in the pattern is solid at 6 up weeks on rising volume to 2 down weeks on rising volume. A solid move that cleared resistance and pushed the stock to a new high. A buy up to 41.55.
Volume: 543.9K Avg Volume: 425.681K
BUY POINT: New positions: 41.05 (orig. $39.61). Volume=623K Target=$45.88 Stop=$37.45
POSITION: RNR AG - Jan. $35c (73 delta, low OI) and/or Stock
http://www.investmenthouse.com/ct/rnr.html
End Part 2 of 3
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us stock market
understanding the stock market
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