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us stock market, stock prices
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Tech Traders 3/13/01 Market Summary
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Technical Traders Subscribers:
Continuing Plays: Stocks that are holding up on the report: HI, WR, LIN, MFC, RE, CORS, ADVP; we have covered some of the best in tonight's update. We are also including new and continued puts tonight: If put positions were not closed today, consider doing so tomorrow if the market continues to head higher, unless the stocks hit resistance and turn back down from there. Several of the put plays tonight are in anticipation of a continued move up toward resistance; that is, they may head higher until they hit resistance, which can then take them back down after a day or two if the rally fades.
RE (Everest Re Group Ltd--$63.97; -0.32; optionable (RE)): Insurance
http://biz.yahoo.com/p/r/re.html
STATUS: Still in the handle of the cup base, volume lower at 243,500 (avg. 479,000). Looking for a move up on a volume surge to break the stock over the handle high at 67.75. Moved up from a test of the 50 day MVA on the low of 62.30. Initial profit target: $78-$81.
BUY POINT: Breakout: 67.88 on volume of 719,000 or better. Stop loss: 67.38-67.63.
POSITION: Stock and/or July $60 calls to buy (RE GL 12 open interest).
http://www.investmenthouse.com/ct/re.html
(Click to view the chart)
MFC (Manulife Financial Corp--$27.05; +0.25; optionable (MFC)): Insurance
http://biz.yahoo.com/p/m/mfc.html
STATUS: Moved up on stronger volume, holding at support of the up trendline (connects August and January lows) and closing right on the 18 day MVA. Volume was stronger at 212,800 (avg. 267,000) as the stock moved up slightly in the handle of the double-bottom pattern. Looking for a breakout over the handle high of 28.22.
BUY POINT: 28.35; on volume of 401,000 or better.
POSITION: Stock and/or June $25 calls to buy (MFC FE; options have no open interest).
http://www.investmenthouse.com/ct/mfc.html
(Click to view the chart)
LIN (Linens 'n Things Inc--$36.51; -0.14; optionable (LIN)): Retail
http://biz.yahoo.com/p/l/lin.html
STATUS: Still holding in the handle, recovering from a low of 34.25 on stronger, above averge volume (779,700; avg. 613,000). Showing a tight doji, we are looking for a move up from here in a continued rally. Handle high in the newly formed cup with handle base is 37.40. Initial profit target: $43-$45.
BUY POINT: Breakout: 37.53, on volume of 920,000 or better. A buy on the breakout up to 39.41. Stop loss: 37.03-37.28.
POSITION: Stock and/or July $35 calls to buy (LIN GG).
http://www.investmenthouse.com/ct/lin.html
(Click to view the chart)
New Play to look at:
BBBY (Bed Bath & Beyond Inc--$27.81; +0.93; optionable (BHQ)): Retail
STATUS: Testing the breakout from a cup with handle base. The stock tested support on the low of 27 and moved up on higher, above average volume (4.4 million; avg. 3.6 million). Looking for a move over Friday's closing (breakout) high of 28.44 on continued rising volume. Initial profit target: $32-$34.
BUY POINT: 28.57, on volume of 5.9 million or better. Stop loss: 28.07-28.32.
POSITION: Stock and/or May $25 calls to buy (BHQ EE).
http://www.investmenthouse.com/ct/bbby.html
(Click to view the chart)
CAH (Cardinal Health Inc--$100.75; +1.49; optionable (CAH)): Drugs wholesale
STATUS: Moved up from support (18 day MVA, 99.59) on stronger, above average volume (1.5 million; avg. 1.3 million). The stock is bouncing up and down as it trends up its 50 day MVA (currently at 98.02), in a short base (previous high is 104.94). Looking for a move over that high in a continued rally. Initial profit target: $121-$126.
BUY POINT: Aggressive: On further upward movement on continued rising volume. Breakout: 105.07, on volume of 1.7 million or better. Stop loss: 104.57-104.82.
POSITION: Aggressive: Stock and/or April $90 calls to buy (CAH DQ). Breakout: Stock and/or April $100 calls to buy (CAH DT).
http://www.investmenthouse.com/ct/cah.html
(Click to view the chart)
Puts:
New Puts:
JNJ (Johnson & Johnson--$94.15; -0.80; optionable (JNJ)): Drug Manufacturers
STATUS: Opened above but then broke support of the 200 day MVA (94.78), dropping to a low of 92.49 before battling back up on stronger volume (4.9 million; avg. 3.3 million). If the stock cannot break the resistance of the moving average, we will look for a turn back down after a test of that level (95 range). We will look at buying puts on a move down, with a target of 90. Possible support in the 92-93 range, so look for strong volume on the move down.
BUY POINT: On a move down after a test of the 94.78 range, on continued strong volume.
POSITION: April $105 puts to buy (JNJ PA).
http://www.investmenthouse.com/cd/jnj.html
(Click to view the chart)
Continued Puts:
JPM (JP Morgan Chase & Co--$47.40; +1.91; optionable (JPM)): Financial
STATUS: Moved up from a test of Monday's closing price (on the low of 45.60), the high tapping resistance at the 200 and 10 day MVAs (51.28 and 47.93, respectively). Volume was lower, what we look for on such moves up to resistance as it is a set-up for a fall back down. On a move below 44 (potential support) we will look at buying puts with an initial target of 40.
BUY POINT: On a move below 44 on above average volume, April $55 puts to buy (JPM RK).
http://www.investmenthouse.com/cd/jpm.html
(Click to view the chart)
FITB (Fifth Third Bancorp--$53.88; +1.94; optionable (FTQ)): Regional Banks
STATUS: After making the drop as expected (the stock couldn't hold for a break of resistance at its 50 day MVA, 55.80), FITB moved back up from a low of 51.38 to the stiff-looking lower resistance level at 54. The move was on lighter, below average volume of 1.8 million (avg. 1.8 million), so we will look for a turn back down. Want to see stronger volume to take the stock down to our target in the range of 50.60, the 200 day MVA.
BUY POINT: On a move back down after another possible test of 54 (tapped on the intraday high) on stronger volume.
POSITION: April $60 puts to buy (FTQ PL).
http://www.investmenthouse.com/cd/fitb.html
(Click to view the chart)
QQQ (Nasdaq 100--$44.45; +2.15; optionable (QQQ)):
STATUS: Moved up on still strong but lower volume (79.6 million; avg. 60 million). We are looking for a possible move back up to the 10 day MVA at 47.62, then on a downturn in the market look for the index to head back down to the 42 range. We will look at buying puts on that move.
BUY POINT: After a move up to resistance at the 47 level (10 day MVA), on a move back down with a target of 42.
POSITION: April $52 puts to buy (QQQ PZ).
http://www.investmenthouse.com/cd/qqq.html
(Click to view the chart)
THE SUMMARY:
TONIGHT:
- Indexes rally back on mixed volume after bad beating. Is it another rally or a bounce after being slammed?
- More calls for another oversold rally.
- Weak retail sales, GE's double digit growth appear to act as catalysts for the move up.
- Mixed news after hours, but it did not slow the momentum.
- Team Trades
A solid bounce that did not fade.
The market action is what you love to see if you are a bull: a weak to moderately higher open, some selling, and then a long, steady rally that build momentum through the close. It even held on after the close as the big names kept on rising. That is solid action, and after a whacking as it took on Monday, the fact that sellers did not rush in to sell before the close is a positive. We were looking for that fade, but the hiccup in the last half hour never got on track and the market on close buy orders rallied things back up on the close.
As noted last night, stocks and indexes often move the other way after a really bad beating or a very strong upside move. After a strong move profit takers come in and stocks then digest their gains on some selling. After a hard dive stocks often bounce as bargain hunters come in to load up on the bargains. The key is to look at the quality of the moves. If the profit taking following a big gain is on light volume, that shows the selling is marginal and the rally is usually in good shape. If the rally after a big slam is on even stronger volume to the upside, that is a positive as well. If the move back up comes fast and immediately breaks back through resistance, that is also a positive.
What was today?
A real mix of indicators that does not say the bottom has been hit or that the rally attempt is a dud. For one, the Dow rallied right up to 10,300 but did not take it out. Perhaps it just ran out of time in the session because it was on a steady climb in the last two hours and the bell rang as it approached 10,300. The Nasdaq 100 had a strong day (it led the Nasdaq higher), but it is still facing some near-term resistance as well.
Volumes were overall pretty darn good. NYSE volume jumped 10% on the Dow's and S&P 500's climb. The big-name techs that led the rally were mixed, with some moving on stronger, above average volume and others moving up on lower volume or rising but still well below average volume. After the Monday's slaughter, however, the fact that many moved up on solid, rising volume was good indeed. We had almost expected a low volume rally, but today, while not giving us a full 'thumbs up' from volume, was much better than we expected.
The market, however, still remains bifurcated, i.e., money rotating (and rapidly when it does) from more defensive sectors to back into big name techs whenever conditions are oversold enough. Look at the rally on the Nasdaq: it was all the household names that are more often than not in really pitiful patterns. JNPR raced up $10 today (counting after hours trades), but the 21% move comes after two months of a 45 degree decline. It is still in a wicked downtrend and does not appear to be in any position to make a lasting move. AMAT, NVLS, KLAC look better (indeed the entire SOX is etching out a big double bottom pattern) and can possibly provide some leadership, but among the big names there are not many leadership quality patterns. Instead, we saw the pharmaceuticals sell off as money ran from these areas into the household name techs. The leading techs of late (the no-names, e.g., SDS, LLL, ACS) also did not fare well in today's up market. It is as if a switch goes on and investors run back to the old names for new bargain prices. It could very well lead to a more sustained rally along the lines of the January move, but no guarantees on these: look for good volume and grab your favorite if you want to play that game. Problem is, without a real building period in these big name stocks, there is a high risk of failure, and that just adds more overhead of disgruntled sellers with each failed rally attempt.
This left many of the television analysts talking of another rally, oversold or otherwise. No one rightly wants to say this is the real thing, and many were saying it was most likely a bear market rally with Merrill Lynch saying investors could see the most significant rally of the year over the next 60 days. Volume and the action of the real leading stocks over the next week will tell us more about whether this looks to be the case or not.
Weak retail sales the catalyst we were searching for last night?
Retail sales for February limped in at minus 0.2% when they were expected to rise 0.3%. that is the first decline in three months while January was revised to a much higher 1.3% gain from the originally report 0.7% gain. Once again we see that the numbers that are coming out the past three months have been way off the actual numbers. Is it that confusing a time even for the number crunchers? There is no doubt the continual revisions are keeping the market on edge.
But, the sharply lower retail numbers appeared to have a positive impact. After dipping right after the news, they turned and raced higher. Seems that bad news for the economy is still viewed as good for the stock market even as the economic news overall appears to be improving. Now we have been saying that at some point the stronger economic news would be factored in by investors as a positive. Either something else is going on or we are still not there yet. Poor retail sales, one of the handful of really bad indicators for the economy, is not what we need. Yet, it was enough to raise the hopes of more aggressive Fed action, and that apparently is still seen by investors as more desirable than an actually improving economy. Perhaps investors do in fact believe the economy is stronger but slyly still want more rate cuts knowing that will be the nearest term first aide for the market. Don't underestimate the collective.
Onward and upward? Put/Call ratio closes over 1.0.
Can retail sales keep things going? Of course not. This first step of a rally has a long way to go. We have the rubble of two dozen rally attempts littering the path from March 2000. It helped get things started, but there has to be something to carry the torch from here unless today saw a major shift (that's shift) in investor psyche.
Consider the put/call ratio. The CBOE reported the ratio at 1.01 today, and the overall volume was heavy compared to the spike in December (1.2 million overall on the December peak versus 1.7 million overall today). Will this be one of the final pegs falling into place? We have been looking for this result, but we want to see the final figures tomorrow. One thing that has been skewing the number of late has to do with the low (low enough?) prices of a lot of big tech stocks. They are buying back shares (MSFT, DELL, and others) by selling puts on their stock. The idea is the same that we often employ when we want to buy a stock at a certain price: we sell the put and let the stock be put to us. That way we get some cash for doing it and buy the stock where we want and get paid some money for doing so. So far, however, the numbers look good with a spike above 1.0 on the close and solid option volume.
Good after hours momentum
Stocks continued to rise after hours. All of the big names that enjoyed solid days kept on moving up after the close. That means most of the bigger names were the movers. This momentum continued even as MOT announced 7000 more layoffs and MetLife warning. Those were counterbalanced by Comverse Technology beating the street by 3 cents and Kohl's once again sporting rising sales and earnings. That company is so consistent even when the economy is down; great management.
End Part 1 of 2
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us stock market
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