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us stock market, understanding the stock market
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TEAM TRADES
QCOM: One of those banged up techs, but QCOM had been moving laterally and in a slight ascending triangle for 3 months, not working in a steady downtrend. More of a 'building' pattern off the bottom of its base. We were looking for a move over the high in the pattern at 30, and Friday it gapped over that level and did not really look back. Waited for a pullback, got a slight one and then it started back up, moving over the session high at 31. We were looking at a quick play on this one and particularly looking at options. The January 27.50 options were 6.30 by 6.50 by the time we had issued everything and got back to the option screen. We jumped in just to see it turn back; the pullback we really wanted. Then it moved up from 30.80, rallying to 31.80 before it turned back down to again test 30.80 once again before another moved up toward the close but off the high. It was that kind of session. Playing gaps are difficult; we prefer to have a 'normal' session where the index starts slightly softer and moves up. QCOM will probably give us another entry point early this week, and we will look at augmenting the position on a lower volume test as the stock has 'pop.'
THE PLAYS:
Upside:
Downside: We are focusing on weak sectors that have underperformed the market and are still in trouble even after the late-week rally.
GNTX (Gentex Corp.--$27.18; +0.19; optionable): Auto parts
http://biz.yahoo.com/p/g/gntx.html
STATUS: Put. Auto parts as a group are still struggling (those lower auto sales reported in the retail sales report). After a major tank after breaching the 50 day MVA (28.01), GNTX has rallied back up to test that level, reaching 27.75 on the high and showing a very tight doji. After the big reversal volume Wednesday, volume fell off the table as it rallied up Thursday and Friday, volume falling below average. It looks to be a classic momentum move with the market, tagging along on low volume and now ready to give back some of those big gains it made without many buyers.
Volume: 308.85K Avg Volume: 449.611K
BUY POINT: $26.97 Volume=455K Target=$24 Stop=$28.15
POSITION: GXQ XF - Dec. $30p (-56 delta, $2.65)
http://www.investmenthouse.com/ci/gntx.html
JPM (JP Morgan--$17.19; +1.24; optionable): Big bank
http://biz.yahoo.com/p/j/jpm.html
STATUS: Put, testing 18 day MVA (18.35). There is continued rumor of a big bank in trouble, and JPM keeps making the top 3 list. Even if it is not JPM, if there is an announcement, JPM will be slaughtered as it is still considered 'next in line.' On top of that, technically JPM is still in a deep downtrend. It joined in the move up late in the week but on lower and lower volume than the selling. It managed to test toward the 18 day MVA on the Friday high (17.85) but fell off the high to close as volume was much lower. This is where JPM has found resistance in its entire downtrend, and even if no announcement comes, JPM could work its way down to the target very easily in just a 'normal' pullback to test the market move last week. The option prices are reasonable versus the delta and the target drop. If there is a bank problem and we are in the play on the continuing downtrend, the gains could be impressive. We will still let it make its move, however as the play is the continuing downtrend with a bank implosion as icing (in a perverse way).
Volume: 19.016M Avg Volume: 15.559M
BUY POINT: $17.05 Volume=20M Target=$15 Stop=$18.11
POSITION: JPM XD - Dec. $20p (-64 delta)
http://www.investmenthouse.com/ci/jpm.html
Play Date: 10/12/2002
PNC (PNC Financial--$39.96; +1.68; optionable): Bank
http://biz.yahoo.com/p/p/pnc.html
STATUS: Put. PNC rallied up to the 18 day MVA Friday, actually moving over that level on the high (41.10), but then falling back to close. Volume backed off after the selling that took it down to that level. We are again anticipating some weakness in the financials early in the week and what is nice about PNC is that it can simply test the move it made and give us the play. If it rallies from there that will be fine.
Volume: 1.541M Avg Volume: 1.773M
BUY POINT: $39.74 Volume=1.7M Target=$36.11 Stop=$41.15
POSITION: PNC MV - Jan. $42.50p (-61 delta, $5.40)
http://www.investmenthouse.com/ci/pnc.html
Upside:
PFGC (Performance Food Group--$35.07; +0.22; optionable): Wholesale food
http://biz.yahoo.com/p/p/pfgc.html
STATUS: Testing the 200 day MVA (34.58). Working through something of a 5-month double bottom w/handle base, PFGC broke over the 200 day MVA early in the month on strong volume and is now testing that move. It did not participate in the late-week rally and that presents some concern, but if it does hold here at the 200 day that is a good launching point. We are initially looking at a simple move up to the high at 38 and are looking at options for that move, but PFGC has some of the best credentials in the market and we will let it work for us with stock positions as well. Accumulation is positive at 7 up weeks on rising volume to 6 down weeks on rising volume.
Volume: 449.43K Avg Volume: 453.846K
BUY POINT: $35.25 Volume=500K Target=$38 Stop=$33.75
POSITION: PGU LF - Dec. $30c (82 delta, 73 OI)
http://www.investmenthouse.com/ci/pfgc.html
SHFL (Shuffle Master--$20.10; +1.28; optionable): Card shufflers
http://biz.yahoo.com/p/s/shfl.html
STATUS: Breakout ascending wedge. Friday saw SHFL make a high volume breakout move of the 4-month wedge. Accumulation in the pattern was positive at 6 up weeks on rising volume to 5 down weeks on rising volume. This wedge is part of a larger 6-month cup base, and it looks as if SHFL is ready to make a run up to form the right side of its base. This is a good pattern to take positions on as it makes that move. After it rallies we can either take some gain or see if it forms a handle.
Volume: 759.382K Avg Volume: 286.106K
BUY POINT: $20.38 Volume=375K Target=$24 Stop=$18.75
POSITION: SFQ BW - Feb. $17.50c (74 delta) and/or Stock
http://www.investmenthouse.com/ci/shfl.html
CONTINUING PLAYS:
Watchlist that still look good:
NBIX: Doji at support.
PETM: Could be finishing this handle.
RGIS: Good volume spike.
ROIA: Low volume up to resistance.
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
$OEX 10/10 Test 18 422.68 +16.77 398 415 18M 0 401
Hit the target but let it run. May have to close out early this week if some early weakness. Can always reload.
ACAS 09/10 Put 18.44 +1.2 17.35 14.75 1M 900K 18.25
Current. Up over the 18 day MVA on rising though still below average volume. We held it to see if the stock gives it back on some early market weakness.
ACDO 10/09 Put 46.44 +1.85 42.25 38.65 674K 850K 44.75
Buy not hit. Upped the buy point as it rallied to the 50 day.
AGAM 10/03 Test 50 5.51 0 5.71 7 29K 100K 5.31
New buy not hit. Could be ready to start the move up again.
AMLN 09/18 cup hdl 16.95 +0.73 13.55 16.25 813K 750K 15.05
Current. Moving well again Friday though on low volume and at the former high.
APOL 10/12 BO 43.03 -0.29 44.24 50.88 3.6M 3.3M 42.05
New buy point.
APOL 08/15 A Wedge 43.03 -0.29 40.65 48 3.6M 3.3M 42
Current. Looks ready to continue the move after recovering and consolidating on the 10 day MVA. May take a few more sessions first.
BBI 10/08 Test 50 26 +0.95 25.24 28.65 816K 600K 23.75
Current. Nice move Friday, starting back up on continued above average volume.
BLUD 10/10 BO 18.6 -1.46 20.22 24.24 1.1M 650K 18.75
Buy not issued. Made the big move up on a gap, but then reversed on higher volume. Always careful of those gaps.
BSX 09/12 cup hdl 36.29 -0.54 30.94 40 4M 3.3M 33.94
Current. Took a day off though volume was higher.
CCCG 09/12 Cup 16.88 +0.09 13.45 20 129K 51K 14.75
Current. Another move up Friday.
COCO 09/18 Test 18 37.75 +1.75 38.11 42.75 1.5M 809K 35.44
Current. Blasted higher on strong volume.
COCO 08/01 Rv H&S 37.75 +1.75 29.95 36 1.5M 809K 35.75
Current.
COO 09/26 cup hdl 55.78 +0.68 54 61 447K 375K 52.45
Current. Up again Friday with a doji at a new high.
CYH 10/07 cup hdl 26 +0.02 27.61 31.75 479K 500K 25.68
Buy not hit. High volume test of the 18 day MVA. Still in the pattern.
DP 10/02 cup hdl 45.75 +0.75 47.74 54.94 98K 260K 44.4
Buy not hit. Still in the handle, not participating Friday showing low volume.
ETR 09/24 Put 39.23 -1.46 37.88 34 2.2M 1.3M 41.35
Current. Rallied Thursday but then rolled back down Friday from the 50 day MVA.
FAF 10/08 Put 20.65 +0.7 19.55 17 296K 350K 20.15
Exited on a move over the 50 day MVA.
GNTX 10/12 Put 27.18 +0.19 26.97 24 309K 455K 28.15
New.
HCA 10/07 cup hdl 47.9 +1.05 49.52 56.94 2.5M 3.2M 46.05
Buy not hit. Rallied up off the 50 day MVA on continued above average volume. Looking good.
ITRU 09/26 cup hdl 2.99 +0.12 3.35 4.75 174K 550K 2.99
Buy not hit. Making the recovery over the 50 day MVA. May have been a final shakeout, but need to see the high volume breakout.
JPM 10/12 Put 17.19 +1.24 17.05 15 19M 20M 18.11
New.
KRB 10/08 Put 17.5 +0.25 17.55 14 7M 6M 19.03
Doji below the 18 day MVA.
LNY 10/05 Put 20.25 +1.65 20.2 18 335K 190K 21.45
Hit the target Thursday, turned and rallied Friday.
MME 10/01 cup hdl 40.25 +1.53 37.95 43.65 1.2M 650K 36.95
Current. Nice breakout on high volume.
MMSI 09/23 A Wedge 21.25 -0.47 20.5 24.65 682K 150K 19.65
Current. After starting Thursday like a ball of fire MMSI turned and tanked on high volume despite good earnings news. Friday it was down again but rallied off the 18 day MVA. Still holding.
NBIX 10/08 Rv H&S 39.99 -0.03 42.35 50.75 505K 1.1M 39.39
Buy not hit. Looks ready in the handle.
PETM 08/26 cup hdl 17.99 +0.68 17.04 20.45 1.1M 2.8M 17.25
Current. Up off the 50 day MVA Friday. Not a lot of volume but after this handle on low volume it could be ready for another breakout higher.
PFGC 10/12 Test 50 35.07 +0.22 35.25 38 449K 500K 33.75
New.
PNC 10/12 Put 39.96 +1.68 39.74 36.11 1.5M 1.7M 41.15
New.
QCOM 10/10 BO 31.37 +1.45 31.1 35 22M 20M 28.92
Current. Solid move.
QLGC 08/17 CCall 21.86 +1.01 36.48 0 18M 12M 33.55
Current. Up to the 10 day MVA, showing a doji. Not much power, but we will see how this week plays out re a follow through session.
RGIS 10/03 cup hdl 28.05 +0.18 28.84 33 499K 525K 26.82
Buy not hit. Looking much better with a solid volume spike.
RINO 09/28 A Wedge 14 -0.03 15.55 19.45 68K 225K 14
Buy not hit.
RINO 08/28 cup hdl 14 -0.03 13.8 16.75 68K 300K 14
Current. Holding at 14 still on low volume as it tries to consolidate. Needs to start moving.
ROIA 10/07 Put 15.63 +0.85 15.42 12 237K 300K 16.25
Buy not issued but looks ready to roll over. Can enter at 15.35.
SCSS 09/21 cup hdl 7.88 +0.95 6.02 8.25 1.8M 200K 6.75
Current. Strong blast off after the very low volume consolidation.
SHFL 10/12 A Wedge 20.1 +1.28 20.38 24 759K 375K 18.75
New.
STE 10/07 BO 25.73 +0.28 25.24 29.4 716K 711K 24.15
Current. Took a breather on lower volume.
STE 09/28 BO 25.73 +0.28 23.95 28.75 716K 711K 24.15
Current.
TEVA 08/12 DB hdl 67.03 -0.48 68.25 77.85 632K 1.2M 66.50
Current. Just hanging on at the 50 day MVA as it moves laterally.
TTWO 08/24 cup hdl 28.8 -0.59 26.61 31.94 2.7M 1.5M 27.25
Current. Up early then gave it back on rising volume. Very choppy as usual.
TTWO 08/17 cup hdl 28.8 -0.59 24.75 29.85 2.7M 1.5M 27.25
Current.
UHS 10/09 cup hdl 53 +0.75 52.12 58.25 574K 800K 49.95
Buy not issued. Tried the move but no volume with it Friday.
VAR 09/16 A Wedge 45.11 +1.11 43.96 50.55 436K 550K 42.15
Current. UP off the 10 day MVA on some slightly above average volume.
VRTS 08/19 CCall 14.13 +1.03 19.76 20 11M 8.5M 17.45
Current. Up to the 18 day MVA. Not bad.
VRTX 09/30 Put 16.68 0 17.96 15.75 1M 900K 19.45
VZ 10/10 Test 50 35.19 +2.24 33.25 38.45 14M 10M 30.92
Current. Super move Friday on super volume.
WAG 10/09 Put 33.83 +1.02 32.28 30 3.3M 3.5M 33.35
Current. Up to the 50 day MVA, looking for a pullback early in the week.
WOR 09/04 A Wedge 19.27 +1.02 19.06 24 620K 625K 18.25
Current. Good recovery but on low volume.
XRAY 10/05 cup hdl 40.99 +0.09 42.28 48.75 701K 900K 39.32
Buy not hit. Doji Friday on lower volume right at the 18 day MVA.
ZQK 10/08 Put 21.58 +1.79 20.95 18 316K 380K 21.15
Exited with a trailing stop.
Good Investing!
Jon L. Johnson and your IH Alerts 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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