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us stock market, trading system
Begin Part 2 of 2
Support and Resistance Levels
Nasdaq: Closed at 2117.63.
Resistance: 2400 to 2500. Then 2650. 2890 to 2900 is next before the 3000 level.
Support: 2000 to 2050
S&P 500: Closed at 1234.18.
Resistance: 1285 to 1300. Then 1335. Then 1360 to 1375.
Support: 1200 is the next clear level.
Dow: Closed at 10,466.31.
Resistance: 11,020 - 11,028. After that, 11,400.
Support: 10,300 - 10,400. Then 10,000.
Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.
3-5-01
NAPM Services, February (10:00): 52.0% versus 50.1% prior.
3-6-01
Productivity, Fourth quarter revised (8:30): 2.0% versus 2.4% prior.
Factory Orders, January (10:00): -2.2% versus 1.1% prior.
3-7-01
Consumer Credit, January (15:00): $5.3B versus $3.0B prior.
3-8-01
Initial Claims, prior week (8:30): 372,000 versus 372,000 prior.
3-9-01
Non-farm Payrolls, February (8:30): 88,000 versus 268,000 prior.
Unemployment Rate, February (8:30): 4.2% versus 4.2% prior.
Hourly Earnings, February (8:30): 0.3% versus 0.0% prior.
Average Workweek, February (8:30): 34.2 versus 34.3 prior.
Wholesale Inventories, January (10:00): 0.0% versus 0.0% prior.
SUBSCRIBER QUESTIONS
Q: When you talk about something moving on high volume, how can you tell relatively early in the day (say anytime before noon) whether volume is above or below average? All the tools I've seen will tell you average daily volume, but volume is not evenly spread throughout the day. So if a stock's average volume is five million shares a day and it has traded 1.5 million by 11:00, how do you know if it's on track to post an above-average or below average day? Thanks. Love your newsletter.
A: Right. Volume is heaviest in the first hour and the last hour. That is why if we see a breakout, we prefer it to happen later in the session so we can get a better feel if it is going to hit the volume we want. Still, when a stock does breakout, there is usually a rush to buy it when it does move into new high ground: a lot of sights are on it, and if the mutual funds are interested, they will start buying and volume will jump even if it makes the break early in the day. Look at the volume you want and see how far along you are. One good place to compare the current session's volume to the previous session is www.investors.com. That site tells you whether the volume is on a faster or slower track from the previous session. It is another useful tool in determining how volume is faring for the session.
Q: When you are playing QQQ. Which index are you watching? The Nasdaq Composite or the Nasdaq 100 which the stocks in QQQ represent? And are you also watching the intraday chart of QQQ?
A: Yes. We watch them all, but the primary focus is on the QQQ and the Nasdaq 100 that it tracks. All three set up a nice head and shoulders pattern after the rally that was a dead-on play to the downside. We used the Nasdaq 100 to confirm the move we were seeing in the QQQ, and we also kept a tab on the Nasdaq overall.
TEAM TRADES
QQQ: Cannot stay away form it with all of the volatility. Take a look at an intraday pattern: the QQQ, Nasdaq 100 and Nasdaq all set up perfect head and shoulders patterns in the early afternoon, and that was enough to get us ready to enter once it started to fall from the top of the right shoulder. The safest entry point is on the break below the neckline, but we were confident of the move. The March 55 puts were trading 7.7 by 7.9 as the index continued to try but fail to move back over that shoulder top. The QQQ is so liquid we always try to split the spread even if it is narrow. The limit order was at 7.8 and a slight uptick filled it. The index tracker then rolled over and fell. We were looking for the index to fall as far as the height of the pattern; that is the usual drop. That would have put the index at 47.60, a point where the index was hitting highs early in the session. It tried to hold after tapping at 47.20, but it failed, collapsing to 46.80 at the close. A down Friday often leads to a down Monday, so we decided to let it ride the downtrend and look at getting out in the morning on a lower open.
CEFT: A stock we have been tracking on the SSR and still looking strong, Friday it broke to a new closing high on very strong volume. We were looking for a break over its recent closing high at 27.20, and right before the first hour was up it shot past that level on its way to 48.50. Knowing that stocks often come back to test moves over such levels, we did not panic, but were ready to see how much of a test we would get. It pulled back to 47.50 on some brief trades 30 minutes later and started back up. We wanted some of this stock that has been defying the market, and were willing to take a partial position before the actual breakout over 48.13. 47.75 was the best that we could do, but that was fine. The stock ran up to 49.13 and bounced around at the top for three hours. Then it suffered the late selling and closed right at 48. Not bad, but not great. The move was on powerful volume that was established early in the session as there were a few funds piling into the stock. We will look for another move higher on powerful volume once again for more positions.
For a review of frequently asked questions, please use the link below:
http://www.investmenthouse.com/1questions.htm
THE PLAYS:
Please note that when we reference the 10, 18, and 50 day moving averages (MVA), those are exponential moving averages (EMA). The 200 day moving average is always simple (SMA). We will note when we reference a particular MVA differently, e.g., a simple 50 day MVA.
Best Plays: We like all the plays we put on the Daily, but these we are really focusing on for the next session.
1) SJT: Ready for its next leap.
2) BEV: Moving up on great volume.
3) APOG: Tested the breakout and moving up.
4) TSS: Looks great in the pennant.
5) CPN: Consolidating on low volume.
6) Put: AEOS, NVDA
New Stocks:
SJT (San Juan Basin Roy Tr--$14.24; +0.09; no options): Diversified Investments
STATUS: Since January the stock is showing a pattern of flying plateaus that pull back to the 10 day MVA (currently at 14.03) before breaking out to a new high. Recently price has moved in a pretty tight lateral pattern, testing the 10 day MVA the last two days on the intraday low (14.10 Friday). Volume continues to drift lower, Friday dropping to 64,000 (avg. 72,545) as the stock made a slight upward move. It is getting ready to break out again, and on that move, we will look at positions with stock. Outstanding money flow and high relative strength, and good buying.
BUY POINT: Up from here on volume of 98,000 or better (above average volume).
POSITION: Stock.
http://www.investmenthouse.com/cd/sjt.html
(Click to view the chart)
http://biz.yahoo.com/p/s/sjt.html
BEV (Beverly Enterprises Inc--$8.03; +0.34; no options): Long-Term Care Facilities
STATUS: A small stock that is making a breakout move on strong volume (1.74 million; avg. 546,000). BEV is in a large pennant-type pattern with resistance at 8.30. The pattern is support from below by the 50 day MVA (7.18) and more recently, the 18 day MVA (7.61). On a breakout over the upper resistance, we will look at taking positions with stock. Good buying and strong money flow, with a relative strength that has broken out ahead of price (bullish).
BUY POINT: 8.43, on continued strong volume (minimum breakout volume is 737,000). Remains a buy on the breakout up to 8.85.
POSITION: Stock.
http://www.investmenthouse.com/cd/bev.html
(Click to view the chart)
http://biz.yahoo.com/p/b/bev.html
Trading Play: Trading plays are short plays to a near-term target. That doesn't mean the stock won't turn into a good long-term hold at some point, but that is not why we are looking at the play for now:
A small stock for a potential trading play. We have a couple of others setting up well for later in the week:
PTEK (Ptek Holdings Inc--$2.72; -0.12; optionable): Telecom
STATUS: The stock throws flags, a price pattern consisting of a strong move up, then a more or less lateral, tight consolidation on decreasing volume. The stock broke from a flag Thursday on strong volume, pulling back in an immediate test Friday, showing a fairly tight doji on lower, below average volume (254,200; avg. 341,000). PTEK tends to throw up about three strong moves on each flag, and we are looking for two more if it can get over the 200 day MVA. On a move back up, we will look at taking positions with stock on a move over 2.83, the 200 day MVA (and a short-term down trendline, connecting November and February highs). Looks good for a potential run up to 3.44 (November high) or better.
BUY POINT: On a move over 2.84 on stronger volume.
POSITION: Stock.
http://www.investmenthouse.com/cd/ptek.html
(Click to view the chart)
http://biz.yahoo.com/p/p/ptek.html
Updates:
APOG (Apogee Enterprises Inc--$9.00; +0.75; no options): Materials & Construction
STATUS: Covered February 23 when the stock looked ready to move back up after testing its recent breakout. It did, but corrected back to the 18 day MVA by Thursday (at 8.27), and on Friday surged back up on strong volume (271,700; avg. 120,090). Looking for a move over the February high of 9.50 (previous breakout high) for which we will look at adding to positions with stock. Outstanding buying and strong money flow. Relative strength has broken out ahead of price, a bullish sign.
BUY POINT: Over 9.50 on continued strong volume.
POSITION: Stock.
http://www.investmenthouse.com/cd/apog.html
(Click to view the chart)
http://biz.yahoo.com/p/a/apog.html
FWC (Foster Wheeler Corp--$15.31; +1.71; optionable (FWC)): Materials & Construction
STATUS: Covered February 21 when the stock moved up on stronger volume after testing the recent strong breakout. The stock stair-stepped up its 10 day MVA over the next week, breaking out Friday on strong volume (1.4 million; avg. 436,000). The stock may form another handle formation near 16.05 (previous basing high in the quite lengthy base). Just another possible entry point on a pullback, for which we can then look at taking further positions with stock and/or calls to buy. Money flow is huge, and relative strength high. Buying strong.
BUY POINT: Aggressive: On further upward movement on continued strong volume. Safer: On a move back up after a test of 14.27 (or better), buy point for this breakout.
POSITION: Stock and/or July $10 or $12.50 calls to buy (FWC GB or GV).
http://www.investmenthouse.com/cd/fwc.html
(Click to view the chart)
http://biz.yahoo.com/p/f/fwc.html
TTN (Titan Corp--$23.54; -0.56; optionable (TTN)): Business Software
STATUS: Covered March 1. Continues to pull back in its handle formation, showing lower volume (360,900; avg. 416,000) on the way down just as we like it. Friday's move put the software stock back below its 200 day MVA (23.87), but on a move up from support (10 day MVA, 22.88) and subsequent break back over the handle high of 25.40, we will look at taking positions with stock and/or calls to buy. The stock is forming this pattern at the bottom of its 8-month base, and held up pretty well at the end of last week when the sector got hit. Money flow looks good and the stock shows decent buying.
BUY POINT: Breakout: 24.63, on volume of 624,000 or better. A buy on a breakout up to 25.86.
POSITION: Stock and/or July $20 calls to buy (TTN GD).
http://www.investmenthouse.com/cd/ttn.html
(Click to view the chart)
http://biz.yahoo.com/p/t/ttn.html
SBUX (Starbucks Corporation--$47.50; -0.19; optionable (SQX)): Specialty Eateries
STATUS: SBUX remains in the handle of its saucer base (handle high of 51.31), but we don't like that the stock has been falling on higher volume days (Wednesday through Friday) and rising on lower volume (Monday and Tuesday). Friday volume soared to 5.7 million (avg. 2.16 million), but the stock was unable to sustain its move to a high of 49.06, falling back below both short term moving averages (18 day MVA, 47.86). It is trying to run up or were institutions using the move up to sell shares? That is not correct price/volume action, so we may see a drop back to the 50 day MVA from here (46.73). Retail stocks are struggling, the leaders in that sector (CHCS, for one) trying to hold at support and others simply breaking down (AEOS, COST, TLB). We aren't looking at positions on SBUX until it can move back over the 50 range on strong volume.
BUY POINT: Breakout: 51.38 on volume in the range of 3.2 million.
POSITION: Stock and/or July $50 calls to buy (SQX GJ).
http://www.investmenthouse.com/cd/sbux.html
(Click to view the chart)
http://biz.yahoo.com/p/s/sbux.html
TSS (Total System Services--$24.15; +0.01; optionable (TSS)): Business Software
STATUS: Covered last Monday when the stock moved up on stronger volume in its pennant pattern. Price consolidated the rest of the week on top of the 10 day MVA (23.96) as volume continued to drop appropriately below average (13,100; avg. 56,000). On a breakout over the pattern high of 24.63, we will look at positions with stock and/or calls to buy. The stock shows outstanding money flow and a relative strength that has moved out ahead of price (bullish).
BUY POINT: 24.76, on volume of 76,000 or better.
POSITION: Stock and/or May $22.50 calls to buy (TSS EX).
http://www.investmenthouse.com/cd/tss.html
(Click to view the chart)
http://biz.yahoo.com/p/t/tss.html
THE PORTFOLIOS: Each report, we look at these to see which is in a buy position. We don't cover them all each time, just the ones that are looking as if they are ready to pick up a few shares.
THE LEADERS: We are not changing our strategy on the current stocks in the leaders portfolio. Stocks such as JNPR, AMCC, CIEN, GLW, SEBL, VRSN and EXTR continue to exhibit superior earnings power and will rebound, but it is further out in the future. Indeed we still have investments in several of these. What we are doing is looking to those leaders in the current market, those stocks that are asserting good patterns on top of strength in earnings while the other stocks we have been following work through their bases. This provides additional stocks that are showing more near-term potential in the current market. We focus on the stocks that are performing best in a down market as they tend to help lead when the market turns back up.
New Leaders: ACS, CPN, SGR, ESRX, NATI, LLL
Previous Leaders: ADBE, AMCC, ARBA, BEAS, BRCD, CIEN, EMC, EXTR, GLW, JNPR, NEWP, NTAP, PMCS, SCMR, SEBL, VRSN, VRTS,
New Leaders:
ACS (Affiliated Computer Svc--$63.85; +1.34; optionable (ACS)): Computer Software & Services: Information Technology
STATUS: The stock hit a high of 65.50, tapping at a resistance level before pulling back down to close. Volume remained high and only slightly down (664,000; avg. 415,590) as the stock closed at a price hit twice previously (as was 65.90). So, that level is posing as some resistance right now. Since ACS has moved up on pretty good volume over the last week, we will look at taking positions with stock and/or calls to buy on a move over the intraday high (the stock had trouble moving up as volume shot above average, until Friday). On a pullback the stock can find support at the 18 day MVA (62.95).
BUY POINT: Aggressive: Over 66 on higher volume. New high: Over the February high of 68.59 on continued strong volume.
POSITION: Aggressive: Stock and/or July $65 calls to buy (ACS GM).
http://www.investmenthouse.com/cd/acs.html
(Click to view the chart)
CPN (Calpine Corp--$44.46; -0.09; optionable (CPN)): Electric Utilities
STATUS: The 10 day MVA (44.87) held the stock back again Friday, but price held above the 18 day MVA (44.28) as volume dropped back to 1.5 million (avg. 3.7 million). We like low-volume pullbacks in price consolidations, which is what CPN is doing here after dropping back from the 47 range on some mild selling Wednesday. On a move back up to that level, we will see if the stock can break the resistance at the February high of 48.80, which in effect will clear out some overhead supply from September and October. On that move, we will look at positions with stock and/or calls to buy. The aggressive can play this one on a strong, high volume move over the Thursday high of 45.08.
BUY POINT: Aggressive: Over the high of 45.08 on volume of 2 million or better . Safer: Over 49, on average or better volume.
POSITION: Aggressive: Stock and/or July $45 calls to buy (CPN GI). Safer: Stock and/or July $45 or $50 calls to buy (CPN GJ).
http://www.investmenthouse.com/cd/cpn.html
(Click to view the chart)
SGR (The Shaw Group Inc--$52.70; +0.70; optionable (SGR)): Manufacturing: Industrial Equipment & Components
STATUS: SGR moved up again Friday, reaching a high of 54.30 (the February high is 55.39), but volume didn't rise to meet the move, bringing price back down to a loose doji on the market close (315,100; avg. 388,000). That the stock broke some resistance at 52.35 even on the low volume is somewhat encouraging; SGR can hold support there until volume surges back in (if not, 52 or the 10 day MVA at 51.55 can do the same). On a move back over the February high, we will look at positions with stock and/or calls to buy. The aggressive can play the stock on a strong move back up from the 10 day MVA (or better) after a pullback. Continued good buying and strong money flow.
BUY POINT: New High: Over 55.39 on volume of 425,000 or better.
POSITION: Stock and/or July $50 (SGR GJ).
http://www.investmenthouse.com/cd/sgr.html
(Click to view the chart)
UP & COMERS PORTFOLIOS:
EXDS, TQNT, BVSN, SANM, PKI and GMST for now.
No reports on stocks in this portfolio for the weekend report.
MEMBER PORTFOLIO: BRCM, CHKP, CSCO, EMLX, IDTI, INTC, JDSU, MVSN, NT, PWER, SUNW, VTSS
No reports on stock in this portfolio for the weekend report.
PUT PLAYS: We continue to look at stocks that are poised for moves down if this market cannot turn itself around. As always, keep reasonable loss cutting rules in place.
New Puts:
AEOS (American Eagle Outfitter--$32.13; -2.50; optionable (HUJ)): Retail apparel http://biz.yahoo.com/p/a/aeos.html
STATUS: AEOS got hit with the retailers and has made a post-split retreat, dropping back Friday through its 50 day MVA (33.89), moving on increased volume (3.45 million; average 12.6 million). On a further move down there is some support at the November highs and January consolidation lows at 30. We will see if the stock can bounce back up toward the 50 day, and on a failed move and retreat back down, a possible play.
PLAY: A move down after a failed move on the 50 day, with April $36.625 puts to buy (HUJ PY).
TLB (Talbot's--$46.70; -2.20; optionable (TLB)): Retail Apparel
http://biz.yahoo.com/p/t/tlb.html
STATUS: The sector is plummeting, and TLB along with it. After falling out of a cup-with-handle last month the stock bounced a few times on its 50 day MVA (48.65), but Friday it gave up that level, gapping below it on heavy volume (up to 752,700; average 496,000). After the gap down, the stock made a move back up toward the 50 day, but fell back from its intraday high of 48.30 to close with a tight doji. It could try another test of the 50 day, but on a failed move we are looking to ride it down. There is support here from the February low and at 43 from the January low.
BUY POINT: On a move down after a failed test of the 50 day MVA. From here: On a move below 46 on continued strong volume.
POSITION: Test: April $55 puts to buy (TLB PK). From here: April $50 or $55 puts to buy (TLB PK or TLB PL).
NVDA (Nvidia Corp--$43.56; -4.66; optionable (UVA)): Semiconductor.
http://biz.yahoo.com/p/n/nvda.html
STATUS: Has come back down steadily after two tries at its 200 day MVA (59.94) last month, and Wednesday the stock took out its 50 day MVA (49.28) and tested as low as 40 on Thursday. Friday NVDA tried a move back up on the 50 day, but was pushed back down to close with a loose doji after hitting up to 47.94. Volume was huge at 5.89 million (average 2.47 million), and we will look for a strong move down after another test up toward the 50 day, while keeping a watch for it to tank from here.
BUY POINT: Test: On a move back down from the 50 day MVA after a move back up toward that resistance. From here: On a move below 43 on continued strong volume in a weak tech market.
POSITION: Test: April $55 puts to buy (UVA PK). From here: April $50 puts to buy (UVA PJ).
Good Investing!
Jon 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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us stock market
trading system
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