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Begin Part 2 of 2
Economic Calendar
12-23-02
Personal Income, November (8:30): 0.2% expected, 0.1% prior.
Personal Spending, November (8:30): 0.4% expected, 0.4% prior.
12-24-02
Durable goods orders, November (8:30): 0.9% expected, 2.4% prior.
12-26-02
Initial Jobless claims (8:30): 400K expected, 433K prior.
12-27-02
Michigan sentiment revision, December (9:45): 86.5 expected, 87.0 prior.
New home sales, November (10:00): 1M expected, 1.007M prior.
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SUBSCRIBER QUESTIONS
The Thursday night 'editorial' portion of the market summary in the reports (and there was a warning it was editorial before the soap box was pulled out) drew many responses. Many were in agreement about shrinking government and providing stimulus addressing the root problem. Many addressed the comments regarding the extension of unemployment benefits being useless as a form of stimulus and not the best way to spend dollars that were supposed to be used to stimuluate the economy. A lot of those comments correctly accused me of being insensitive to the unemployed who are exasperated by the inability to find a job in this economy.
My purpose was to further stir that exasperation and anger and to provoke responses, ideas, and hopefully action. It is easy to write about the problems, but so hard to come up with solutions that are acceptable to enough to get them enacted. Even if good ideas arise, it takes action (calls, letters, emails, you know, just being the squeaky wheel) to get an idea rooted so it can grow. I have had the unpleasant experience of graduating with degrees twice in my life when the country and the field I had studied for were in recession. Did what I was told, got my degree and even re-educated myself when my other field was dead, and still it was a struggle. I have been there and it is frustrating, daunting, and dispiriting. The one thing those experiences taught me was to face all of those emotions with a simple attitude: they can only say 'no,' it only takes one 'yes,' and that I can make that 'yes' happen. That helped me deal with the 50+ face-to-face 'no's' and the hundreds of 'thanks but no thanks' letters. Seeing so many in that same situation today and knowing it was caused through the poor choices those in power made is one of the reasons I am so angry and so adamant about getting the government to fix what it broke and help those that lost most everything get it back NOW while there is time to enjoy the rest of the lives that were tarnished.
As a result of the nerves touched, there were some great ideas that came out. One of the most innovative and one that should be palatable to all comes from another worker laid off but then re-educated at his own expense only to find no work in this economy. Here is the idea:
"I do agree that the Fed can and should do something about this problem and my thought is to provide businesses with a full tax credit for every person they hire. The business gets the tax credit and the Fed gets increased revenue as the formerly unemployed person is now a tax payer. The people currently working at the business and who are in all likelihood over worked will finally get some relief. The problem that we have is 20% of the people are doing 80% of the work. Pareto's Law in action.
Unfortunately I don't believe that this government is innovative enough to do something like this and if they do it will be so watered down as if to be non-existent. Don't believe all the rhetoric about things getting better because they are not."
This is an excellent idea. It addresses some of the roots of the problem and has the beauty of having an IMMEDIATE impact: it gets businesses to invest in their business (personnel make it all happen), it puts workers back to work and part of the productive system, it obviates the need for spending scarce resources on unemployment benefits, and it helps unlock more consumption by those unemployed put back to work. Combine that with a modest $2500 to $5000 investment tax credit for capital equipment purchases and you have one of the most powerful, directed, and immediate economic stimulus plans ever devised.
Keep the ideas coming, and please do your part and take action by calling, writing, and being that squeaky wheel to those in Congress and in the White House. If it is demanded often and loud enough they will listen.
THE PLAYS:
Good moves: MATK; NTES; VZ
NEW PLAYS:
Upside:
LOOK (Looksmart Ltd.--$2.71; +0.01; no options): Internet information provider
http://biz.yahoo.com/p/l/look.html
STATUS: Cup w/handle. Nowhere near its all-time highs (but most stocks are not), LOOK is nonetheless forming its own 8-month base, working on a lateral handle the past three weeks after breaking over its 200 day MVA in late November. The handle is a wedge with a top at roughly 2.75. Those sometimes are not the perfect handles, but they do often deliver explosive moves higher that we can capitalize upon. The stock is showing positive accumulation during the base and money flow is rising nicely ahead of the stock price as it moves laterally. That along with the consolidation of the break over the 200 day is a combination that we saw pay off handsomely in October and November. Looking for LOOK to give us a similar play from here.
Volume: 657.6K Avg Volume: 605K
BUY POINT: $2.94 Volume=950K Target=$4.95 Stop=$2.58
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ci/look.html
NSCN (Netscreen Technologies--$16.13; +0.09; optionable): Security software
http://biz.yahoo.com/p/n/nscn.html
STATUS: Pennant. NSCN is currently in a three-week pennant coming at the end of a nice rise off the summer lows under 10. NSCN was a new issue in December 2001 and it immediately started the current base in January. It is not ready for a breakout to a new high, but this is a good consolidation point after a strong run off the lows, and it has rested well for the next mmove. Accumulation since January is positive at 13 accumulation weeks to 11 distribution weeks, very good for this stage in the base when it is just starting to build the right side. Volume has been very low this month as NSCN formed the pennant, and that is what it should be; nice, quiet action in a consoldation works out the easy sellers and leaves the hardcore holders. Money flow into the stock is huge. A lot of positives.
Volume: 297.8K Avg Volume: 1.25M
BUY POINT: $16.69 Volume=1.8M Target=$20.15 Stop=$15.45
POSITION: QKN FC - June $15c (67 delta, low OI)
http://www.investmenthouse.com/ci/nscn.html
SYK (Stryker--$66.4; +1.14; optionable): Medical supplies and instruments.
http://biz.yahoo.com/p/s/syk.html
STATUS: Reverse head and shoulders. After a strong run off of the July low that saw SYK gain over $20, the stock has started moving laterally over the 50 day MVA (63.50), forming the current bullish pattern it is using to consolidate its gains. The pattern is solid as SYK used the 50 day MVA as the bottom of the base while accumulation during the consolidation is solid at 3 up weeks on rising volume to 1 down week on rising volume. After trading below average for the month, volume surged back to above average levels Friday. Looks ready to make the breakout from the pattern.
Volume: 856.8K Avg Volume: 775K
BUY POINT: $67.53 Volume=1.2M Target=$77.62 Stop=$62.84
POSITION: SYK FM - June $65c (70 delta) and/or Stock
http://www.investmenthouse.com/ci/syk.html
Downside:
RIMM (Research In Motion--$13.06; -0.7; optionable): Telecom wireless devices
http://biz.yahoo.com/p/r/rimm.html
STATUS: Put (Descending wedge). RIMM tried to break over its 200 day MVA (14.75) after racing up to that level in the November rally, but it slid down along that resistance, and Friday the bottom of the pattern at 14 gave way on a strong surge in volume. These lower lows and constant lows form what is known as a descending wedge/triangle, and it is the opposite of the bullish ascendinge wedge/triangle. The breakdown on volume from this pattern indicates there is more selling ahead. The options have a decent delta and are priced right for a nice gain down to the target.
Volume: 2.901M Avg Volume: 1.77M
BUY POINT: $12.94 Volume=1.7M Target=$9.95 Stop=$14.04
POSITION: RUL OC - Mar. $15p (-54 delta)
http://www.investmenthouse.com/cI/rimm.html
CONTINUING PLAYS:
Our stock summary table program developed a bad case of the pre-holiday bah humbug's and crashed. We have been working all day on it but the fix is not quite in and thus we cannot generate the summary table. We apologize for this and are working to have it up and running for Monday.
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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