|
|
us stock market, stock trader
* * * *
11/30/02 Technical Traders Report
* * *
Technical Traders Report Subscribers:
MARKET ALERTS
Targets hit alerts issued Friday: CREE; QCOM; SYMC; VZ; ROOM
Buy alerts issued: None issued
Trailing stops issued: None issued
Stop alerts issued: None issued
You can sign up for Technical Trader alerts at the following link:
http://www.investmenthouse.com/alertttr.htm
SUMMARY:
- Nasdaq stalls at 200 day MVA as Thanksgiving move runs out of steam.
- A bit of a breather ahead before the holiday rally resumes.
One last rally attempt comes up short.
The chips were out leading early once again, but the Nasdaq had no muscle left to make a sustained move over the 200 day MVA. It made the effort but could not find any serious buyers. Without the buy side interest and given the move to this point, the 200 day put the stop on the upside action. In the end the indexes closed slightly lower but put together yet another winning week. It was quite a November.
THE MARKET
The Nasdaq may have provided a bit of a preview of the week to come. It ventured above the 200 day MVA on the open and even managed a bit higher move. It has run hard and far, however, and that key MVA proved too much to try and tackle on a shortened session after a strong run when many were ready to take some gain and bask a bit in the glow of a good month. Nothing wrong with that.
As we indicated Wednesday night, the market has had about as much good news as it can price in right now other than capturing Bin Laden or some pronouncement by major companies that they are flush with new orders and have to quickly hire 30% more staff. That in combination with the near resistance will make it hard for the market to make headway without stepping back to consolidate the gains.
Of course, as sure as the sun rises there will be calls that the market has failed to follow through, that the rally has run out of steam, that the downtrend will resume, etc. Indeed, we hope to continue to hear this as opposed to seeing a broad-based pronouncement that the market and economy are unquestionably back. The more the group of analysts believe something as a certainty, the more certain we can believe that is not the case. If things get too rose we could see some pretty scary individual drops that get the boo birds back out. For now we expect a pullback and consolidation that could last a week or more, just enough to get the doubts up before another move.
Sentiment Indicators
VIX: 31.08; +0.24
VXN: 49.48; +2.06
Put/Call Ratio (CBOE): 0.62; -0.05
Nasdaq
Ran up to that 200 day MVA and could not find anyone willing to put up more money.
Stats: -9.16 points (-0.62%) to close at 1478.78
Volume: 843.089M (-51.38%). Light holiday volume.
Up Volume: 444M (-1.076B)
Down Volume: 387M (+230M)
A/D and Hi/Lo: Decliners led 1.01 to 1. No one was really enthusiastic either way.
Previous Session: Advancers led 2.99 to 1
New Highs: 80 (-1)
New Lows: 15 (-6)
The Chart: http://www.investmenthouse.com/cd/$compq.html
The Nasdaq could not make a move and hold over the 200 day MVA (1494). Indeed, its failure to do so was one reason the market sold off later in the session: when it could not keep defying the naysayers and take out the next level that was enough to get most taking some profits. We were in there as well, taking some gains (particularly in our January option positions) in anticipation of some softness this week.
As we indicated Wednesday, we expect to see the Nasdaq do some consolidation, pulling back to rest and gather itself for another run at the 200 day MVA. The moves the past four sessions have been more of a drift higher than a solid rally, but the volume on the way up was very convincing. Maybe it can breakout over the 200 day, run a bit, and then consolidate above that level. Friday's shortened action indicates to us it is more likely to do the former. Thus we are going to look for a move back toward the August high (1426) or the 18 day MVA (1417) this week. Best would be some gradual selling as it works laterally, but there could be some uncomfortable sessions such as last Tuesday when the Nasdaq turned and fell rather abruptly. After such a solid run a bit of complacency may need shaking out.
S&P 500/NYSE
The large cap index still has a good looking chart, but it may have a harder time making headway if the Nasdaq cannot move over the 200 day MVA right away.
Stats: -2.56 points (-0.27%) to close at 936.31
NYSE Volume: 631.972M (-53.1%)
Up Volume: 293M (-877M)
Down Volume: 332M (+162M)
A/D and Hi/Lo: Advancers led 1.01 to 1. Just as with the Nasdaq, no one could get a clear majority going.
Previous Session: Advancers led 3.84 to 1
New Highs: 24 (-10)
New Lows: 9 (-3)
The Chart: http://www.investmenthouse.com/cd/$spx.html
The best action we could picture for the SP500 other than a blast off form this lateral move is a continued lateral drift that tests the July, August and September interim tops at 911 and the 18 day MVA at 913. That would allow the Nasdaq to come back and regroup and build a very nice lateral consolidation for the large cap index. That would also get the anxiety back up as there would once again be those that would view an orderly, lateral consolidation as a precursor to a breakdown just as they did before this last leg broke out and rallied. We would like to see it; again, that provides more fuel for the rally as it keeps investors uncertain about whether they should move back into stocks or keep those bonds that are getting pounded, chase after the yellow metal, or jump into real estate now that that market has rallied to near its peak. A test of 900 would not be out of the question, and if it does test and hold, that will be a good place to get into some more OEX calls IF the consolidation is length enough, i.e., runs a week or so.
Dow:
The Dow continues to sport that good pattern similar to the SP500. It would have been nice if it could have followed the Nasdaq higher and actually made its 200 day MVA (9178) as well on this leg; that would give it a lot more cushion to consolidate on. Still, we cannot complain about its position. It is sitting on top of the July, August and September interim tops (8726 to 8762) as well as the early November high at 8800. It could comfortably come back to test those and even the 18 day MVA (8678) and still have an excellent launching point for a run at the 200 day.
Stats: -35.59 points (-0.4%) to close at 8896.09
Volume: 631.972M (-53.1%)
The Chart: http://www.investmenthouse.com/cd/$indu.html
THIS WEEK
It is a big week again as far as economic news. The national ISM is out Monday after the open, and after the Chicago PMI expectations will be higher. The current expectations call for a number below 50, but we won't be surprised if that is raised by the time Monday rolls around. Wednesday there is productivity, factory orders, and ISM services. Friday is the jobs report. Expectations are still low for non-farm payrolls, but they could rise as well. We are expecting more in the range of 75K non-farm jobs added.
Expectations can be a dangerous game when they start getting jacked up. If they never see you coming you can be a lot more effective. Now people are looking for better than expected news. That can be fraught with trouble. What would be great would be continued solid economic numbers suggesting that everything that the economy as been showing us (though many economists and analysts have not been listening) is true. Then if the market sells off it is truly because it needs to take a breather. That could be a good set up for a nice jobs report on Friday. The key will be the non-farm payroll jobs created. It is too early to be looking for the 125k jobs needed per month just to keep status quo, but if expectations stay lower and we do get that upside surprise, a sell off prior to that would make room for another move higher.
We could be wrong and the market could just continue this move with the Nasdaq moving over the 200 day MVA and holding that level and the Dow and SP500 moving up to their next big resistance before deciding to take a breather. We don't have a problem with that at all, but we also like to keep somewhat more reality in our forecasts. This would be a good place to rest if the market needs it. We anticipate that will happen, but we will also be ready in the event it decides to move higher from here. We won't chase extended stocks, but we will continue to look for good entry points from those that continue to breakout from good bases and those that have pulled back to test support levels and are ready for the next leg up. That way we can continue to put money to work in good stocks that are not extended (that money from the targets hit from the past two weeks) and continue to earn good returns as money works its way around the market. Remember what we discussed a couple of weeks back: in a healthier market, money will rotate to new sectors while some take breathers after good moves. That keeps stocks making solid breakout moves and keeps fresh new faces for us to invest in as we let our winners run and rest for new buy points and new option plays on them while we hold the stock positions.
Support and Resistance
Nasdaq: Closed at 1478.78
Resistance: Price resistance at 1500 and the 200 day MVA (1494). 1574, the May low, is next.
Support: the 10 day MVA at 1447. The August high at 1427. Then 1418, the interim test after the September 2001 and the 18 day MVA at 1417. 1357.09, the October 1998 bear market low. July, August, and September interim highs at 1345. The 50 day MVA (1355).
S&P 500: Closed at 936.31
Resistance: Price resistance at 950. 965, the September 2001 closing low along with the August 2002 high. Then the 200 day MVA (983) and price resistance at 990.
Support: The November high at 925.66. 921 is some price support. The 10 day MVA is at 922 and possible support. July, August and September interim highs at 909 to 911 and the 18 day MVA (913). The top of the late October consolidation range at 899. The 50 day MVA (896). The September 2000/May 2001 downtrend line at 872. The March down trendline at 858. 850 to 855 (the October 1997 and Q2 1998 lows).
Dow: Closed at 8896.09
Resistance: A range of resistance from 9000 on up to 9050. The 200 day MVA (9178). 9500 from June and July lows.
Support: The early November high at 8800. The 10 day MVA (8778). The late July and early September interim high at 8726 to 8762.14 (8745 closing). The 18 day MVA (8678) and then the October high at 8500. The exponential 50 day MVA (8491) and then 8250.
Economic Calendar
12-02-02
Auto sales, November: 5.5M expected, 5.2M prior.
ISM index, November (10:00): 49.5 expected, 48.5 prior.
Construction spending, October (10:00): -0.2% expected, +0.6% prior.
12-04-02
Productivity (revised), Q3 (8:30): 4.5% expected, 4.0% prior.
ISM Services, November (10:00): 53.2 expected, 53.1 prior.
Factory orders, October (10:00): 0.9% expected, -2.3% prior.
12-05-02
Initial jobless claims (8:30): 364K prior.
12-06-02
Unemployment rate, November (8:30): 5.8% expected, 5.7% prior.
Non-farm payrolls, November (8:30): 13K expected, -5K prior.
Workweek: 34.2 expected, 34.1 prior.
Hourly earnings: 0.3% expected, 0.2% prior.
Consumer credit, October (2:00): $7.3B expected, $9.9B prior.
ONLINE SEMINARS LIVE OR NOW ON CD!!
There is an incredible wealth of knowledge, years of experience, and 'how to' plans of action in these seminars. As one graduate put it, "I had no idea how little I knew about market direction and the reasons behind it until I took your course." Our graduates over the past year and one-half have made the bear market in stocks their own private second bull market because they learned how to and when to enter the downside and make dramatic profit from what most investors dread. Have the knowledge to take advantage of any kind of market as well as the confidence to act when you see the action unfold. We cover it all from trends, to accumulation/distribution, patterns, stocks, buying and selling options naked, covered, or creating spreads. Go to
http://www.stockseminarsonline.com
and look for the link to the CD seminars or the next live series dates where you can learn and ask questions from the comfort of your home without having to incurr costly travel expenses and time away from work, costs and time that very few can deduct from their taxes. This is Jon Johnson's internet site for online seminars and they get you up to speed on how to deal with up or down markets. Hope you check it out.
THE PLAYS:
Good moves: MSN; RINO
Best Plays:
1) DMRC: Nice pattern.
2) SRNA: Ready to make its next move.
3) AVP: May be the final shakeout.
4) ISSX: Nice consolidation of the move.
5) QLGC: Forming up another nice pattern.
6) JOSB: Still have the eye on this one.
7) ZBRA: Nice test still.
8) YHOO: Very good lateral consoldidation.
New Plays:
Play Date: 11/30/2002
DMRC (Digimarc--$15.77; -0.18; optionable): Security software
http://biz.yahoo.com/p/d/dmrc.html
STATUS: Cup w/handle. Moving through an 8-month base sporting excellent accumulation at 8 up weeks on rising volume (accumulation) to 3 down weeks on rising volume (distribution). The security software sectors is performing very well (a necessary service), and the accumulation in DMRC is indicative of that need. Money flow is very strong in this stock and relative strength is showing a positive divergence, i.e., it is higher at this stock price than it was when the stock was at $20 back in April. Very nice base, and the handle looks good with a test of the 10 day MVA on the Friday low (15.75).
Volume: 33.078K Avg Volume: 65.681K
BUY POINT: $17.01 Volume=100K Target=$20.45 Stop=$15.65
POSITION: DQT EC - May $15c (66 delta, low OI) and/or Stock
http://www.investmenthouse.com/ct/dmrc.html
Play Date: 11/30/2002
FRGO (Fargo Electronics--$11.77; +0.19; no options): Business software
http://biz.yahoo.com/p/f/frgo.html
STATUS: Cup. Moving through an 8-month base showing excellent accumulation at 7 accumulation weeks to just 3 distribution weeks. Last Tuesday the stock rallied up to the high on the left side of the base (12.39) and then immediately fell back to the 10 day MVA at 11. It started to bounce form there, and if it shows some volume we will look at entering positions. Otherwise we will look for a handle to form below 12.39 and then give a big breakout move.
Volume: 107K Avg Volume: 129.09K
BUY POINT: $12.49 Volume=270K Target=$15 Stop=$11.62
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/frgo.html
Play Date: 11/30/2002
ICST (Integrated Circuit System--$23.28; -0.64; optionable): Semiconductors
http://biz.yahoo.com/p/i/icst.html
STATUS: Cup w/handle. ICST has formed a nice 11-month cup with handle, forming the handle the past week after hitting up over 24 and starting to come back. Volume in the handle has really dried up just as it should: it moves slightly lower but there is not any volume. That indicates there are not many sellers on the final shakeout of the eager sellers. Now we sit tight and look for the breakout over the buy point on volume. Accumulation in the base is solid at 12 accumulation weeks to 7 distribution weeks. We anticiapte it will move laterally along the 18 day MVA (22.75) for a few more sessions and then give us the breakout.
Volume: 349.343K Avg Volume: 1.923M
BUY POINT: $25.05 Volume=3M Target=$29.94 Stop=$23.3
POSITION: IUY DX - April $22.50c (66 delta, low OI) and/or Stock
http://www.investmenthouse.com/ct/icst.html
Play Date: 11/30/2002
MBT (Mobil Telesys--$38.95; +0.15; no options): Wireless communications
http://biz.yahoo.com/p/m/mbt.html
STATUS: Cup w/handle. Wireless continues to be one of the best performing sectors, and MBT is currently in an 11-month base with solid accumulation at 9 accumulation weeks to 5 distribution weeks. It is currently forming a handle between 38 and 39, just over the 10 day MVA at 37.80. We expect it to take a few more days to form the handle, testing lower toward 38, and then give a breakout.
Volume: 89.9K Avg Volume: 150K
BUY POINT: $40.06 Volume=225K Target=$47.96 Stop=$37.26
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/mbt.html
QLGC (Qlogic--$43.44; -0.37; optionable): Data storage
http://biz.yahoo.com/p/q/qlgc.html
STATUS: Ascending wedge. A current position, QLGC is forming up a nice continuation pattern, i.e., something of an ascending wedge with a constant high at 45. This is a good pattern for the stock to consolidate its strong move up off of the October low, making higher lows and building upward pressure as it does for an upside breakout. Money flow continues to scream higher ahead of the price as it makes this month-long sidestep to consolidate the prior gains. QLGC is a leader in the storage sector, and it is one of the areas that keeps on growing.
Volume: 3.764M Avg Volume: 17M
BUY POINT: $45.04 Volume=20M Target=$51.45 Stop=$41.89
POSITION: QLC DH - April $40c (65 delta) and/or Stock
http://www.investmenthouse.com/ct/qlgc.html
Play Date: 11/30/2002
SRNA (Serena Software--$18.17; -0.39; optionable): Business software
http://biz.yahoo.com/p/s/srna.html
STATUS: Testing the breakout. SRNA has moved smartly off of its low though it is still rather deep down in its base. Nonetheless it broke out of 3-month cup w/handle base last Monday and spent the rest of the week testing that move, tapping the 10 day MVA on the lows (18.07) and rebounding slightly. It may continue to move laterally, testing that level early this week, but it has support there also from the early November high. Thus we look for that to hold and propel SRNA higher.
Volume: 98.629K Avg Volume: 442.318K
BUY POINT: $19.85 Volume=710K Target=$24.55 Stop=$18.46
POSITION: NHU EW - May $17.50c (66 delta, low OI) and/or Stock
http://www.investmenthouse.com/ct/srna.html
Play Date: 11/30/2002
UNTD (United Online--$15.93; +0.07; optionable): Internet software
http://biz.yahoo.com/p/u/untd.html
STATUS: Testing the breakout. UNTD was an early leader in the rally. It broke out of a second cup w/handle in early November, and is now moving up the short term MVA as a good breakout should. This is the second test of the 10 day MVA (15.62) since the breakout, and stocks typically give 4 to 5 such bounces before testing lower. This is a good entry point as it is still relatively early in the run.
Volume: 376.764K Avg Volume: 825K
BUY POINT: $16.25 Volume=1M Target=$19.65 Stop=$15.11
POSITION: QAB CC - Mar. $15c (65 delta, low OI) and/or Stock
http://www.investmenthouse.com/ct/untd.html
End Part 1 of 2
|
us stock market
stock trader
|
