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world stock market, us stock market
Begin Part 2 of 3
THIS WEEK
Another week of economic data starts with the ISM Services and ends with the December employment report. The market needs a continued dose of good economic data to counter the continued overhang from the seemingly unending worries over Iraq, Venezuela, and North Korea. Indeed, there are some saying that Venezuela will hit the boiling point this weekend, and of course that would have a deleterious effect on the market until the issues were on the road to resolution.
With those competing points what we expect to see is simply the indexes trade in the range (where it is already at the peak) or even move up to next resistance at the left shoulder before it runs out of gas. What we will be watching is whether there are more stocks breaking out as the market tries to move higher. Those will key any move higher. As noted, there were more Friday though still scattered and by no means leading the way. In addition to those breakouts, we started to see some of the stocks that helped lead the move off the October low make some similar moves. Those look as if they are going to help provide some upward movement to test the key resistance levels ahead, and they can provide us good money making runs to that point and maybe beyond. Frankly, given the plethora of yet unresolved world events we would be surprised to see enough buyers come in to send the market up over key resistance once reached, but we can make some money on that move.
Yet, Tuesday the President outlines his stimulus package, and if it has the right mix to satisfy investors that will provide some fuel. There will be enough partisan bickering to make you puke as the focus will be on posturing and not what is good for the country. The fact that it is being addressed at all sometimes seems amazing given the rancor and class warfare raised by our representatives each time it comes up. In short, there are going to be positives that are ready to drive the market, but the problem is at next resistance; will there be enough buyers willing to step in to drive prices higher in spite of the global tensions.
We will thus continue to play it conservative, looking for stocks breaking out of good patterns but also looking at a few more trades on stocks that are in good position to rally near term and put money in the pocket. There remain a few out there while the market tries to show some strength in the midst of a lot of uncertainty.
Support and Resistance
Nasdaq: Closed at 1387.08
Resistance: Simple 50 day MVA (1386) has not been totally cleared. The August high at 1427. The 200 day MVA (1444). Price resistance at 1500. 1574, the May low, is next.
Support: The 18 day MVA (1376) is some support. 1357, the 1998 bear market low. July, August, and September interim highs at 1345. Some price support at 1300. 1250 is the next price support after that.
S&P 500: Closed at 908.59
Resistance: The July, August and September interim highs at 909 to 911. 921 is some price resistance. The early November high at 925.66 and key resistance. Price resistance at 950. 965, the September 2001 closing low along with the August 2002 high.
Support: The simple 50 day MVA (902.48). The exponential 50 day MVA (897). The bottom of the October consolidation range at 875. The September 2000/May 2001 downtrend line at 848. 850 to 855 (the October 1997 and Q2 1998 lows). The March down trendline at 822.
Dow: Closed at 8601.69
Resistance: The top of the recent range at 8630 to 8670. The late July and early September interim high at 8726 to 8762.14 (8745 closing). The early November high at 8800 is key. A range of resistance from 9000 on up to 9050.
Support: The simple 50 day MVA (8552) held on the Friday intraday low. The October high at 8500. The exponential 50 day MVA (8495). 8250, the bottom of the October consolidation range. Then 8000.
Economic Calendar
1-06-03
ISM services, December (10:00): 55.8 expected, 57.4 prior.
1-07-03
Factory Orders, November (10:00): -0.6% expected, 1.2% prior.
1-08-03
Consumer credit, November (2:00): $3.8B expected, $1.5B prior.
1-09-03
Wholesale inventories, November (10:00): 0.2% expected, -0.3% prior.
1-10-03
Non-farm payrolls, December (8:30): 21K expected, -41K prior.
Unemployment rate, December (8:30): 6.0% expected, 6.0% prior.
Hourly earnings: 0.3% expected, 0.3% prior.
Average workweek: 34.2 expected, 34.2 prior.
SUBSCRIBER QUESTIONS
Q: A question regarding revisted stocks. When a stock that was a previous play that hit the buy point, if we already purchased this stock the 1st time and it comes up as a revisited play, would that be an add to point if it hits the buy point listed on the revisited play. Would that be a strong stock that is testing the breakout?
A: Good question. There is more than one point to buy a good stock. Contrary to what some investment advisors think, a great stock will give you more than one entry point. Stocks run higher then test the moves continually. They breakout, run, test back, run some more. We can use those tests as entry points as long as the stock continues to show good action, i.e., making higher lows and showing good price/volume action as it does (rising on the move up, falling overall on the move back down). We like to focus our money in stocks that are doing well, stocks that are showing accumulation and winning attributes. That way we get more money into winners as opposed to spreading our money too thin in so-so stocks. That is why we were selling several positions before year end to free up money and also book any loss so we could write it off.
For revisited plays that have already hit the buy point we are viewing that as a good entry point for add-to positions or new positions. It is showing continued good action, something we want to take a greater part in. In that sense it is one of the stronger stocks because it continues to show good performance and it is at a point where it is a natural buy. If it continues its ways it will be a solid entry point. At the current time we are riding several stocks well past their target price simply because they are showing very good continued action. We have been letting them run and averaging into more and more positions in the stock as the opportunity is presented.
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THE PLAYS:
Good moves: ADTN; AMTD; GRMN; MSN; SINA
Best Plays:
1) SOHU: Making a new high on volume.
2) KLAC: Breaking over the 50 day MVA on volume.
3) BRCM: Nice test of the move over the 50 day.
4) BBBY: Nice day of rest.
5) NSCN: Trying to make the move as volume rolls in.
6) TECH: Higher volume breakdown.
7) UNTD: Looks ready for the next leg.
8) HSIC: Turned over on rising volume.
9) URBN: Turning back over at the 18 day MVA.
New Plays:
Upside:
Play Date: 01/03/2003
KLAC (KLA Tencor--$39; +1.64; optionable): Chip equipment
http://biz.yahoo.com/p/k/klac.html
STATUS: Test 50 day MVA (37.31). KLAC enjoyed a strong move off the October low, peaked in December and has fallen back to test 35, the point where it held after the first surge and the first test of that initial surge. Up over the 50 day MVA Friday on strong volume, KLAC is now in a similar position to where it was then. We would prefer to see it test the 50 day and then get in, and it still may do that. However, we like the move and on a continued run from here we will start taking positions.
Volume: 12.818M Avg Volume: 15.755M
BUY POINT: $39.25 Volume=12M Target=$45.25 Stop=$36.55
POSITION: KCQ CG - Mar. $35c (72 delta)
http://www.investmenthouse.com/ct/klac.html
Play Date: 01/03/2003
MEDI (Medimmune--$28.2; +0.32; optionable): Biotechnology
http://biz.yahoo.com/p/m/medi.html
STATUS: Ascending wedge. MEDI has worked into an ascending wedge as it works off the bottom of its year long base. Accumulation since the August high where this latest correction started is 4 up weeks on rising volume to 2 down weeks on rising volume. It tried to take out the 200 day MVA (28.11) in late December, but then it fell back to tape the 50 day MVA just over 26. As a stock with upside aspirations should, MEDI jumped off that level on some rising though still below average volume. Friday MEDI cleared the 200 day MVA. Money flow is rising ahead of the price, and we are looking at positions on a further move from here on rising volume. The next entry point is above the December high at 29.25.
Volume: 3.769M Avg Volume: 4.634M
BUY POINT: $28.55 Volume=5M Target=$33.88 Stop=$26.98
POSITION: MEQ FE - June $25c (MEQ FE) and/or Stock
http://www.investmenthouse.com/ct/medi.html
SOHU (Sohu.com--$7.08; +0.52; no options): Internet information provider
http://biz.yahoo.com/p/s/sohu.html
STATUS: Breakout. SOHU is one of the group of internet stocks that have been surging since October. It has formed the current 6-week cup base showing accumulation at 3 accumulation weeks to 0 distribution weeks (7 to 0 since September), and Friday provided a solid, above average volume breakout to a two year new high. Money flow matches the stellar accumulation. Looking for more here as these have been providing us great retuns.
Volume: 802.113K Avg Volume: 535.863K
BUY POINT: $7.15 Volume=800K Target=$9 Stop=$6.65
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/sohu.html
Downside:
TECH (Techne--$28.16; -0.83; optionable): Biotechnology
http://biz.yahoo.com/p/t/tech.html
STATUS: Put. TECH is breaking down below the 200 day MVA (29.34) after a volatile three weeks of trading around that level. It tried to recover in late December, but rolled over. It bounced up last week but then Friday TECH was turned back and sold on a sharp increase in volume. The selling recently has been on higher volume while the recovery sessions were on much lower, below average volume. Not any accumulation to pick the stock back up. There is support at 28 where the stock tapped Friday. On a break below that on continued strong volume we will move in as the door is opened at that point for a further drop.
Volume: 626.235K Avg Volume: 434.09K
BUY POINT: $27.88 Volume=400K Target=$24 Stop=$29.21
POSITION: TGQ NF - Feb. $30p (-60 delta) or TGQ PF - April $30p (-53 delta)
http://www.investmenthouse.com/ct/tech.html
CONTINUING PLAYS:
Play Date: 12/28/2002
APSG (Applied Signal--$11.51; +0.19; no options): Communication equipment
http://biz.yahoo.com/p/a/apsg.html
STATUS: Cup w/handle. Tried to make the breakout Tuesday on some solid volume, but then turned and fell back to the 18 day MVA at 11.25. Friday it held on the close above the 10 day MVA with a tight doji on the candlestick pattern. Solid accumulation at 7 up weeks on rising volume (accumulation weeks) to 4 down weeks on rising volume (distribution weeks). Money flow continues its strength. Telecom is one of the stronger sectors and we are looking for an APSG breakout.
Volume: 12.272K Avg Volume: 34.863K
BUY POINT: $12.04 Volume=85K Target=$14.55 Stop=$11.45
POSITION: Stock (no option chain)
http://www.investmenthouse.com/ct/apsg.html
Play Date: 12/16/2002
AVO (Advanced Medical Optics--$12.3; +0.1; optionable): Medical instruments
http://biz.yahoo.com/p/a/avo.html
STATUS: Ascending wedge. AVO is moving higher but it not gathering a lot of volume as it does. Accumulation is positive at 4 accumulation weeks (up price on rising volume) to 3 distribution weeks (down price on rising volume). It is making the move, just need some volume to go along with it.
Volume: 71.1K Avg Volume: 122.545K
BUY POINT: New: $12.45 (orig. $12.06) Volume=210K Target=$14.45 Stop=$11.22
POSITION: AVO DB - April $10c (72 delta, low OI) and/or Stock
http://www.investmenthouse.com/ct/avo.html
Play Date: 01/02/2003
BBBY (Bed, Bath & Beyond--$35.27; -0.93; optionable):
http://biz.yahoo.com/p/b/bbby.html
STATUS: Cup w/handle. Still working through a current 9-week base showing solid accumulation at 6 accumulation weeks to 4 distribution weeks. BBBY surged Thursday on strong volume but took a breather Friday on lower volume with the questions regarding retail with HD and RSH warning. It held the 10 day MVA on the low (35.05) and managed a small bounce up from there. Looks just like a breather on the news, and we look for BBBY to move up from here. Again, this is one that we feel is one of the core retail holdings these days and are looking at positions here.
Volume: 2.786M Avg Volume: 3.64M
BUY POINT: $37.55 Volume=5.7M Target=$45 Stop=$34.92
POSITION: BHQ EG - May $35c (61 delta) and/or Stock
http://www.investmenthouse.com/ct/bbby.html
BRCM (Broadcom--$16.5; -0.11; optionable): Communication chips
http://biz.yahoo.com/p/b/brcm.html
STATUS: Testing the 50 day MVA. BRCM peaked in late November, then sold back to the 50 day MVA (15.40) where it traded for the past three weeks. It never collapsed, and after a shakeout early last week it jumped off the 50 day on sharply rising volume Thursday. We were waiting for it to test back to the 50 day just as many stocks did after their first moves coming off the October low. Friday BRCM did just that with a lower volume tap of the 50 day on the low and a rebound to close slightly lower. Looks ready for another move higher from here. We are ready to start some positions for this trade up to the recent high near 21.
Volume: 7.647M Avg Volume: 10.782M
BUY POINT: $16.85 Volume=12M Target=$20.45 Stop=$15.67
POSITION: RCQ EC - May $15c (69 delta) and/or Stock
http://www.investmenthouse.com/ct/brcm.html
Play Date: 11/13/2002
COLM (Columbia Sportswear--$45.24; -0.93; optionable): Apparel
http://biz.yahoo.com/p/c/colm.html
STATUS: Test 50 day MVA. COLM made a big jump off the 50 day MVA at 43 early last week, then surging Thursday on some impressive volume. Friday the retail sector was hit with a few worries with the HD and RSH warnings, and COLM took a breather on lower, below average volume but still managed to hold the 10 day MVA on the close. We are looking for the move to resume this week and will pick up COLM as it comes off the 10 day MVA on some good volume.
Volume: 304.724K Avg Volume: 349.227K
BUY POINT: New: $46.55 (orig. $41.96) Volume=389K Target=$48.45 Stop=$44.25
POSITION: TQQ DH - April $40c (60 delta, low OI) and/or Stock
http://www.investmenthouse.com/ct/colm.html
Play Date: 12/19/2002
GPN (Global Payments--$31.64; -0.11; optionable): Management services
http://biz.yahoo.com/p/g/gpn.html
STATUS: Testing the breakout. GPN shot out of its ascending wedge in late December and is now moving laterally above the 10 day MVA (31.50), holding up well in the recent selling, being grudging with its breakout. That is what you want to see on a consolidation post breakout. Looking for the stock to clear the recent high at 32.24 on once again above average volume for new positions.
Volume: 107.2K Avg Volume: 164.545K
BUY POINT: New: 32.31 (orig. $31.55) Volume=225K Target=$38 Stop=$30.12
POSITION: GPN EF - May $30c (71 delta, low OI) and/or Stock
http://www.investmenthouse.com/ct/gpn.html
End Part 2 of 3
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world stock market
us stock market
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