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us stock market, trading system
SUBSCRIBER QUESTIONS
Q: [Wednesday's] comments by the CFO at MSFT were the lamest excuse I've seen for a market to rally. Once CNBC actually read the statements at 3:20, the market sold off. We also find out later that buy programs at 2:00 caused the rally. (Well timed plunge control?) If people listen to CNBC during the day they either never find out what's going on in the market or find out too late.
Why is there so much concern about building fire walls between analysts and investment banking? Why don't companies just keep their "valuable" research and opinions to themselves and to their clients. They only seem to use their up and down grades to move the market to help themselves and the retail investor can go broke without their help. Since it is proven that they have helped to defraud investors with their comments, why isn't the remedy to cease and desist instead of paying a fine?
A: Good obervations. With respect to the buy programs moving the market, you have seen the power of big money when it decides to enter or leave the market. There has always been a lot of commentary about how the retail investor (the 'day traders,' etc.) were running the market up and down in 1999 and 2000. Just Wednesday there was one analyst bemoaning how there was 'mass amnesia' among individual investors as they were buying up internet and tech stocks and running them higher. Sorry, but it was clear at the time and it is clear now that the market is moved by institutions and the hedge funds. With the average volumes on individual stocks and in the market overall there is no way Joe, Bob, Nettie, Janice, etc. sitting at their computers or calling up the broker were causing mass swings in the market, particularly with the current low participation from the retail investor right now. Surely they were not driving AMZN higher when it was over $300/share and trading 7 million shares per day. It is a fact of investing that funds with a lot of money are going toenter and exit the market at certain points based on computer programs that gnerate buy and sell signals according to the investment program parameters the fund is pursuing at that time.
As for the research opinions, it has long been a bone of contention with us (indeed we wrote on the matter several times in 2001 before all of the corporate issues and their incestuous relationships with investment bankers and analysts) but from the other side: if we are a brokerage client, why are we not alerted to these analyst calls that negatively impact the stocks that our brokers were just touting the week before? Many people gave them $ to invest and took their advice and then saw their shares hit by an adverse analyst call from the same brokerage. Talk about abuse of the trust relationship. We still cannot believe there were not class action lawsuits on this as well as congressional investigations given the propensity to sue and Congress' oversized nose it likes to but into all issues.
The point: brokerage research is mostly a sham as you have indicated, designed to move the market to help their own investments and the investments of a very few, elite clients. All of the current 'transparency' has not changed this conflict because they still do not require their top guns to let their front line brokers in on the information and let them disseminate it to their clients first. That just underscores that the analyst calls are used for publicity for the firm as well as for the benefit of a few.
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THE PLAYS: In each report we prepare full write-ups for those that look ready to move. If the move has been made already we discuss the play in the summary table. The purpose is to focus on the next good movers.
NEW PLAYS: Splitting stocks are often market leaders and thus we do not just focus on them at points where they are expected to announce or before they actually split. They provide many opportunities to invest in them and this section is where we can look at some former split stocks and other stocks that are in good position to make us money. In addition, there are emerging trends in the recent move off of the double bottom, and we want to capture those stocks emerging from the obscurity as well.
Upside:
$OEX (S&P 100 options--$464.42; +2.75; optionable): S&P 100
http://biz.yahoo.com/p/$/$oex.html
STATUS: Testing the 50 day MVA. The S&P 100 tested just below the 50 day MVA on the Friday low (455.94) and bounced. You want to see a good jump off the 50 day and OEX did that though volume was not very impressive. It made a higher low, however, and with the economic team shakeup we anticipate the volume to come in for another upside rally.
Volume: 1.233M Avg Volume: 1.55M
BUY POINT: $466.74 Volume=1.5M Target=$486 Stop=$455.45
POSITION: OXB AM - January $465c (53 delta)
http://www.investmenthouse.com/cs/$oex.html
$SOX (Philly Semiconductor Index--$331.35; -0.29; optionable): Chip index
http://biz.yahoo.com/p/$/$sox.html
STATUS: Testing the 50 day MVA. The chips have rallied hard and spent the last week pulling back, the subject of various downgrades and negative comments all based on valuation. Now they have run a long way, but there are still good things happening. Over the past three weeks several chip stocks have affirmed or raised guidance. Friday NSM (National Semi) beat the street by 7 cents and increased its guidance going forward. Many chip stocks pulled back to the 50 day MVA, a good place for them to continue the move higher. We are looking at catching the next move up as the moves can be fast.
Volume: 3.753M
BUY POINT: $335.15 Volume=0 Target=$385 Stop=$324.94
POSITION: SOY AG - Jan $355c (53 delta)
http://www.investmenthouse.com/cs/$sox.html
BGEN (Biogen--$43.33; +0.47; optionable): Biotechnology
http://biz.yahoo.com/p/b/bgen.html
STATUS: Testing the 18 day MVA. BGEN continues to work its way off the lows, stair stepping up the 18 day MVA (42.27) and showing solid accumulation as it does with 8 accumulation weeks to 6 distribution weeks with money flow way up ahead of the price. A very nice, orderly consolidation that can provide a great return.
Volume: 2.378M Avg Volume: 3.6M
BUY POINT: $43.94 Volume=4M Target=$51 Stop=$40.86
POSITION: BGQ DH - April $40c (72 delta) and/or Stock
http://www.investmenthouse.com/cs/bgen.html
FDS (Factset Research--$32.35; +0.1; optionable):
http://biz.yahoo.com/p/f/fds.html
STATUS: Cup. FDS is in the process of forming a cup base, starting up the right side of a base forming the past 8 months. In November it formed a 5-week ascending wedge and broke out on a big volume jump. It has since moved laterally, testing the 10 day MVA on the Friday low and turning to close positive on rising, average volume. It looks ready to continue the move up the right side of its base, and we do not mind getting in here as we know this is what it is doing and will most likely form a handle at some point. Still, it allows a nice gain without having to break to a new high.
Volume: 269.2K Avg Volume: 288K
BUY POINT: $32.85 Volume=428K Target=$39.45 Stop=$30.55
POSITION: FDC EF - May $30c (70 delta) and/or Stock
http://www.investmenthouse.com/cs/fds.html
OVTI (Omnivision Technologies--$17.92; +1.92; optionable): Semiconductor
http://biz.yahoo.com/p/o/ovti.html
STATUS: Testing the breakout. OVTI is in the chip sector, but it was up Friday on good volume, an early leader that took a breather last week to test its move and then started back up ahead of the market. Volume was excellent on the start back up off the 18 day MVA. Accumulation is outstanding at 8 accumulation weeks to 2 distribution weeks. Money flow is huge and moving up ahead of the price. Time to get back on an early leader.
Volume: 1.686M Avg Volume: 870K
BUY POINT: $18.45 Volume=1.2M Target=$22.35 Stop=$16
POSITION: UCM FC - June $15c (74 delta, low OI) and/or Stock
http://www.investmenthouse.com/cs/ovti.html
NEW POST SPLIT PLAYS
ALLY (Alliance Gaming--$17.57; +0.25; optionable): Gaming equipment
http://biz.yahoo.com/p/a/ally.html
STATUS: Cup w/handle. ALLY is forming a short, 7-week cup w/handle base that is sitting on top of a larger cup base that formed starting in March and ending with a breakout in mid-October. Accumulation in the short base is positive at 2 accumulation weeks to 1 distribution week, and 10 accumulation weeks to 6 distribution weeks in the prior base; very solid. A very solid technical pattern.
Volume: 399.9K Avg Volume: 800K
BUY POINT: $17.75 Volume=968K Target=$21.35 Stop=$16.51
POSITION: AQL DC - April $15c (51 delta) and/or Stock
http://www.investmenthouse.com/cd/ally.html
FIC (Fair Isaac & Co.--$41.62; -0.28; optionable): Financial management software
http://biz.yahoo.com/p/f/fic.html
STATUS: Double bottom w/handle. Working in the handle of a 7-month base, testing down to the 18 day MVA (41.15) Thursday and Friday on lower volume and holding its ground. A very nice pattern from the leader in its sector. We want to see a breakout on some strong volume.
Volume: 387.6K Avg Volume: 388K
BUY POINT: Aggressive: 43.05. Breakout: $44.51 Volume=575K Target=$48 Stop=$40.55
POSITION: FIC DH - April $40c (74 delta, low OI) and/or Stock
http://www.investmenthouse.com/cs/fic.html
CONTINUING LEADER PLAYS
Upside:
Play Date: 12/05/2002
AME (Ametek--$37.5; +0.01; optionable): Industrial electrical equipment
http://biz.yahoo.com/p/a/ame.html
STATUS: Double bottom w/handle. AME is working through a 7-month base showing positive accumulation and money flow that is still moving up ahead of price. It has encountered some resistance at 38, working laterally along the 10 day MVA (37.29) and building higher lows. It has held up very well in the market pullback, and we are looking for it to breakout sharply from here when the selling abates.
Volume: 189.8K Avg Volume: 135.681K
BUY POINT: $38.71 Volume=225K Target=$46.45 Stop=$36
POSITION: AME FG - June $35c (73 delta, no OI) and/or Stock
http://www.investmenthouse.com/cs/ame.html
Play Date: 12/07/2002
ALN (Allen Telecom--$9.70; +0.12; optionable): Scientific and Technical
http://biz.yahoo.com/p/a/aln.html
STATUS: Testing the breakout. In one of the best looking market sectors, ALN continues to consolidate its great move up in November, riding laterally along the 10 day MVA (9.40) in a lateral move the past week. Friday the stock started to edge higher on some rising, above average volume. Looks excellent and ready for the next move.
Volume: 282.1K Avg Volume: 215.454K
BUY POINT: $9.86 Volume=412K Target=$11.85 Stop=$9.17
POSITION: ALN FU - June $7.50c (75 delta, low OI) and/or Stock
http://www.investmenthouse.com/cs/aln.html
Play Date: 11/23/2002
ATRS (Altiris--$13.2; -0.06; no options): Altiris
http://biz.yahoo.com/p/a/atrs.html
STATUS: Ascending wedge. Very solid in the wedge, testing the 18 day MVA Friday on low volume, showing a hammer doji on the 18 day MVA (13.05) in the base showing strong accumulation (9 accumulation weeks to 2 distribution weeks.
Volume: 69.3K Avg Volume: 134.818K
BUY POINT: $14.05 Volume=200K Target=$18 Stop=$19.96
POSITION: Stock (no option chain)
http://www.investmenthouse.com/cs/atrs.html
Play Date: 11/30/2002
CKFR (Checkfree--$18.77; +0.16; optionable): Internet software
http://biz.yahoo.com/p/c/ckfr.html
STATUS: Cup w/handle. Testing the 18 day MVA still on lower, below average volume as it moves in what looks to be the latter stages of the handle to its 7-month base. Money flow is still running up ahead of the price and accumulation is excellent at 7 up weeks on rising volume (accumulation) to just 3 down weeks on rising volume (distribution). Super base.
Volume: 543.702K Avg Volume: 1.169M
BUY POINT: $20.45 Volume=1.6M Target=$25.52 Stop=$18.94
POSITION: FCQ EW - May $17.50c (71 delta) and/or Stock
http://www.investmenthouse.com/cs/ckfr.html
Play Date: 12/05/2002
CPHD (Cepheid--$6.03; +0.02; no options): Scientific & Technical instruments
http://biz.yahoo.com/p/c/cphd.html
STATUS: Testing the breakout. Still testing the breakout from its 4.5 month base showing positive accumulation at 6 accumulation weeks to 5 distribution weeks. It now appears to be forming something of a handle. Again, one of the better performing secotrs.
Volume: 199.137K Avg Volume: 292.954K
BUY POINT: $6.35 Volume=500K Target=$8.32 Stop=$5.52
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/cphd.html
Play Date: 11/30/2002
GENZ (Genzyme--$34.43; -0.1; optionable): Biotechnology
http://biz.yahoo.com/p/g/genz.html
STATUS: Testing the move. GENZ provided some fireworkes early last week with a strong move and then slid back later in the week on lower, below average volume. Friday it showed a hammer doji over the 10 day MVA just below 34. It is getting ready for its next move.
Volume: 2.566M Avg Volume: 4M
BUY POINT: $35.15 Volume=5.2M Target=$41.94 Stop=$31.21
POSITION: GZQ DF - April $30c (73 delta) and/or Stock
http://www.investmenthouse.com/cs/genz.html
Play Date: 12/04/2002
MATK (Martek Biosciences--$22.68; +0.05; optionable): Biotechnology
http://biz.yahoo.com/p/m/matk.html
STATUS: Testing the breakout. Very tight, lateral consolidation in what is a flying plateau after the stock shot higher in late November. This stock is just wound up tight looking for the next leg higher. Accumulation is solid at 8 up weeks on rising volume to 4 down weeks on rising volume as money flow shoots higher ahead of the price.
Volume: 99.751K Avg Volume: 198.772K
BUY POINT: $23.39 Volume=300K Target=$27.94 Stop=$21.45
POSITION: KQT FD - June $20c and/or Stock
http://www.investmenthouse.com/cs/matk.html
Play Date: 12/04/2002
QCOM (Qualcom--$41.48; +1.9; optionable): Telecom equipment
http://biz.yahoo.com/p/q/qcom.html
STATUS: Test 18 day MVA. Jumped off the 18 day MVA Friday, making the positions taken on the Wednesday alert look good as volume spiked up above average. Still a buy at this point on the bounce.
Volume: 21.023M Avg Volume: 17M
BUY POINT: New: $42.05 (orig. $40.85) Volume=18M Target=$50 Stop=$37.99
POSITION: AAW DU - April $37.50c (67 delta) and/or Stock
http://www.investmenthouse.com/cs/qcom.html
Play Date: 12/03/2002
SCIO (Scios--$33.72; +0.8; optionable): Wholesale drugs
http://biz.yahoo.com/p/s/scio.html
STATUS: Testing the breakout. It was ready to go. Starting the next move on a solid rise in volume. Still a buy at this point. Accumulation is positive at 5 up weeks on rising volume to 4 down weeks on rising volume.
Volume: 1.124M Avg Volume: 1.066M
BUY POINT: A buy up to 34.10 (orig. $33.05) Volume=1.6M Target=$39.65 Stop=$30.74
POSITION: UIO EF - May $30c (67 delta) and/or Stock
http://www.investmenthouse.com/cs/scio.html
PRE-ANNOUNCEMENT PLAYS
Play Date: 11/02/2002
EXPE (Expedia--$70.21; +0.1; optionable): Online travel. Forecast to announce a split on 1-26-03 in conjunction with earnings. The company has not confirmed this date, but based upon our research this is the date for the release.
BACKGROUND: Based upon our research it does not appear that EXPE has ever split its stock. The company has sufficient shares for a 2 for 1 split.
http://biz.yahoo.com/p/e/expe.html
STATUS: Cup. Still holding support at 70 after the big gap down Wednesday. Volume backed off the last two sessions of the week with the stock showing a doji at support. Not the move we wanted, but held support and now need to see a recovery over 72.50 on volume. Accumulation in the overall base is 7 up weeks on rising volume to 5 down weeks on rising volume. There was really no handle in the 6-month base and this could be the formation of that handle.
Volume: 1.312M Avg Volume: 2.422M
BUY POINT: New: Aggressive on a bounce from here with much stronger volume. Breakout: $78.25 Volume=3.2M Target=$88 (orig. positions 84) Stop=$72.77
POSITION: UED DO - April $75c (61 delta) and/or Stock
http://www.investmenthouse.com/cs/expe.html
Play Date: 10/29/2002
FRX (Forest Labs--$98.35; -9.43; optionable): Drugs. Forecast to announce a split on 12-16-02 in conjunction with a board meeting. The company has not confirmed this date, but based upon our research this is the date for the meeting.
BACKGROUND: Last announced a 2 for 1 split on 12-18-00 in conjunction with a board meeting. The stock price was $135. Prior to that announced a 2 for 1 split on 2-23-98 at a stock price of $62. The annuals shareholder meeting was on 8-8-02 at which time no additional shares were authorized. The company has sufficient shares for a 2 for 1 split.
http://biz.yahoo.com/p/f/frx.html
STATUS: Well, we wanted a test of 105 and we got a tank down to the 50 day MVA. Actually, it was a struggle to recover the 50 day after hitting a low at 92.70. One of FRX' new drugs for which it had an approvable letter from FDA now has to undergo new trials and that means it will be 2 years before it can reach market as opposed to second half 2003. That torched the stock with a big gap down. We sat tight and will see if it can mount a recovery up over the 50 day MVA on the strength of its continuing anti-depressant drugs that account for a huge bulk of its revenues.
Volume: 13.205M Avg Volume: 1.804M
BUY POINT: New positions: Aggressive: a move over 100 on strong volume. Volume=3.1M Target=$115 Stop=$101
POSITION: FHA BS - Feb. $95c (63 delta) and/or Stock
http://www.investmenthouse.com/cs/frx.html
Play Date: 11/02/2002
INFY (Infosys Technologies--$68.52; -11.68; no options): Technical and system software. Forecast to announce a split on 1-9-03 in conjunction with earnings. The company has not confirmed this date, but based upon our research this is the date for the release.
BACKGROUND: Based upon INFY's annual report the company has had a 2 for 1 stock splits in 1998, 1999 & 2000.
http://biz.yahoo.com/p/i/infy.html
STATUS: Cup w/handle. So much for the nice test of the move. INFY tanked hard Friday on massive volume as it announced designs to convert Indian stock to ADR's, the move having a dilutive effect on current shares. Ugly all the way around and now we just need to see if it can move over the 50 day MVA at 72.
Volume: 520.363K Avg Volume: 132.863K
BUY POINT: No new positions right now. Volume=165K Target=$83.65 Stop= $76.48
POSITION: Stock (no option chain)
http://www.investmenthouse.com/cs/infy.html
Play Date: 10/28/2002
WFMI (Whole Foods Market--$53.29; +0.59; optionable): Health food grocery. Forecast to announce a split on 2-12-03 in conjunction with earnings. The company has not confirmed this date, but based upon our research this is the date for the announcement.
BACKGROUND: Last announced a 2 for 1 split on 5-10-01 in conjunction with a board meeting. The stock price was $50.40. The annual shareholder meeting was on 3-25-02 at which time authorized shares were increased. The company has sufficient shares for a 2 for 1 split.
http://biz.yahoo.com/p/w/wfmi.html
STATUS: Testing the breakout. Looking good in the consolidation that is working up the 10 day MVA (52.05). Volume edged up Friday on the gain. Looks ready for the next move.
Volume: 534.014K Avg Volume: 648.5K
BUY POINT: New: 53.95 (orig. $50.11) Volume=975K Target=Initial $57.51 Stop=$49.94
POSITION: FMQ BI - Feb. $45c (64 delta) and/or Stock
http://www.investmenthouse.com/cs/wfmi.html
End Part 2 of 3
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