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us stock market, understanding the stock market
Begin Part 2 of 2
SUBSCRIBER QUESTIONS
Q: When you indicate a "buy" point in your report that is identified as a "downside" play, does this refer to short selling the stock at that "buy" point? Since you have a buy and sell point, I was under the understanding that it was a buy point to short-sell the stock and buy it later at the lower price target. Is that correct? Thanks for your help.
A: We usually are buying puts when we play the downside as we like to trade options on many plays as our total risk is defined going into the trade. Thus on a downside play that has a 'buy point' that is referring to buying the put option. We have looked at changing the 'buy' point to 'enter'. Let us know what you think to make it easier to understand.
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THE PLAYS:
Good moves: GRMN; NSCN
Best Plays:
1) EV: Setting up for the downside move.
2) JEFF: Ditto.
3) NATI: Volume coming in with good money flow.
4) CGNX: Ready to move, showing excellent volume.
5) CKFR: Blasting higher toward the breakout.
6) EXC: Set up for the fall.
7) GPN: Lower volume rise up to test the downtrend.
8) PNRA: Bouncing back up to test the downtrend.
New Plays:
Downside:
Play Date: 02/15/2003
BSC (Bear Stearns--$60.36; +1.04; optionable): Investment brokerage
http://biz.yahoo.com/p/b/bsc.html
STATUS: Put. Double topped in November and January, broke the 50 day MVA, tested it, and then started the current downtrend. After a week of selling BSC started up Thursday back toward the 18 day MVA (60.82) and the 50 day MVA (61.50) as volume declined. A lower volume move up in the continuing downtrend. We look for it to fail near the 18 day MVA and then catch it as it rolls over. We will look for a tap at either resistance point intraday and then a reversal or a close with a doji after tapping that level.
Volume: 909.7K Avg Volume: 1.065M
BUY POINT: Test of 61 to 61.50, then $60.75 on the way back down. Volume=1.1M Target=$56.75 Stop=$62
POSITION: BSC PM - Apr. $65p (-79 delta)
http://www.investmenthouse.com/ct/bsc.html
Play Date: 02/15/2003
EV (Eaton Vance--$26.53; +0.53; optionable): Asset management
http://biz.yahoo.com/p/e/ev.html
STATUS: Put. Working in a continuing downtrend, EV is working up to its short term MVA (10 day at 26.83; 18 day MVA at 27.38). This bounce in the continuing downtrend is on lower and lower volume, a sign that there is not much long term buying ongoing as it moves. Looking for a test of the 18 day MVA and then a topping sign at that point (tap the MVA intraday and then falling back, doji toward the session close) to indicate the reversal. That is where we move in.
Volume: 215.3K Avg Volume: 196.482K
BUY POINT: After test of 27.38, then $27.15 on the way back down. Volume=225K Target=$24.15 Stop=$28.12
POSITION: EV QF - May $30p (-79 delta, low OI)
http://www.investmenthouse.com/ct/ev.html
Play Date: 02/15/2003
JEF (Jeffries Group--$37.26; +0.34; optionable): Investment brokerages
http://biz.yahoo.com/p/j/jef.html
STATUS: Put. Still moving in a 1.5 month downtrend after triple peaks November through January. JEF tanked mid-week and as the market recovered late in the week JEF started to do so as well, but it was tepid and on significantly lighter. There is the 10 day MVA at 37.88, just below some strong price resistance at 38. Looking for a move up toward the 18 day MVA (38.68) if it can make it over 38. After that we will pick it up on the way back down after this weak test higher.
Volume: 190.6K Avg Volume: 183.279K
BUY POINT: After a test of 3860ish, $38.35 on the way back down. Volume=210K Target=$34.35 Stop=$39.28
POSITION: JEF PH - April $40p (-80 delta, low OI)
http://www.investmenthouse.com/ct/jef.html
Upside:
Play Date: 02/15/2003
NATI (National Instruments--$33.22; +0.31; optionable): Computer peripherals
http://biz.yahoo.com/p/n/nati.html
STATUS: Pennant. NATI has formed this 3-month pattern as part of a larger 12 month base. Last week NATI showed much better volume, moving well above average as it held over support at 32. We are looking at this as a trade and prefer the options as we get more leverage. Very nice accumulation at 9 up weeks on rising volume to just 4 down weeks on rising volume. Money flow is excellent and moving up ahead of the stock price.
Volume: 460.496K Avg Volume: 275.961K
BUY POINT: $34.05 Volume=425K Target=$39 Stop=$31.67
POSITION: SJQ FF - June $30c (71 delta, low OI) &/or Stock
http://www.investmenthouse.com/ct/nati.html
Play Date: 02/15/2003
SBUX (Starbucks--$22.52; +0.57; optionable): Fancy coffee
http://biz.yahoo.com/p/s/sbux.html
STATUS: Testing the 50 day MVA. SBUX has pulled back the past three weeks after reporting strong sales and gapping up over the 200 day MVA (21.84). Friday it started up on stronger, average volume. Money flow is way out ahead of the stock price. We are viewing this as a trade, but it can make us some good money up to the prior high.
Volume: 3.801M Avg Volume: 3.491M
BUY POINT: $22.74 Volume=4.5M Target=$25 Stop=$21.75
POSITION: SQX GD - July $20c (80 delta)
http://www.investmenthouse.com/ct/sbux.html
CONTINUING PLAYS:
Upside:
Play Date: 02/08/2003
AFFX (Affymetrix--$25.45; +0.16; optionable): Biotech drugs
http://biz.yahoo.com/p/a/affx.html
STATUS: Cup w/handle. Still holding in the handle over the 18 day MVA (25.20) and moving up on a fractional gain with lower volume. Positive accumulation at 3 up weeks on rising volume to 2 down weeks on rising volume with money flow moving up ahead of the price. Just waiting for the breakout.
Volume: 782.303K Avg Volume: 1.007M
BUY POINT: $26.55 Volume=1.5M Target=$30.55 Stop=$24.69
POSITION: FIQ HE - August $25c (64 delta) and/or Stock
http://www.investmenthouse.com/ct/affx.html
Play Date: 02/04/2003
CGNX (Cognex--$22.62; +1.93; optionable): Scientific & technical instruments
http://biz.yahoo.com/p/c/cgnx.html
STATUS: Double bottom w/handle. Dipped a bit deep in the handle, testing the 50 day MVA on the Thursday low (21.40) but then powered up Friday on a second straight day of good volume. Ready to make the breakout. Good accumulation at 3 accumulation weeks to 1 distribution week, and in its larger base that started back in March it is still solid at 8 accumulation weeks to 2 distribution weeks.
Volume: 563.015K Avg Volume: 364.16K
BUY POINT: $22.94 Volume=525K Target=$26.88 Stop=$21.12
POSITION: QCG ED - May $20c (65 delta, low OI) and/or Stock
http://www.investmenthouse.com/ct/cgnx.html
Play Date: 01/28/2003
CKFR (Checkfree--$19.55; +1.25; optionable): Internet software
http://biz.yahoo.com/p/c/ckfr.html
STATUS: Cup w/handle. After a nice, tight and low volume pullback, CKFR jumped up Friday on rising, above average volume. Looks solid and ready to make the breakout.
Volume: 1.98M Avg Volume: 1.339M
BUY POINT: $20.85 Volume=2M Target=$25 Stop=$18.94
POSITION: FCQ EW - May $17.50c (70 delta) and/or Stock
http://www.investmenthouse.com/ct/ckfr.html
Play Date: 01/10/2003
MDCO (The Medicines Company--$16.93; -0.57; optionable): Drugs
http://biz.yahoo.com/p/m/mdco.html
STATUS: 50 day MVA test. Sat out the Friday action, testing down to the 10 day MVA on the close as volume remained above average and edged higher. Still in a very solid pattern, but we want to see it hold over the short term MVA here just below 17 and make its higher move on solid volume.
Volume: 749.302K Avg Volume: 716.944K
BUY POINT: New: 18.08 (orig. $17.35) Volume=800K Target=$20.85 Stop=$16.15
POSITION: MQL DV - April $12.50c (64 delta, low OI) and/or Stock
http://www.investmenthouse.com/ct/mdco.html
Downside:
Play Date: 02/01/2003
BGEN (Biogen--$37.64; +0.07; optionable): Biotechnology
http://biz.yahoo.com/p/b/bgen.html
STATUS: Put. BGEN gapped lower Friday and then spent most of the session recovering. We were looking for a bounce higher, and when it gapped lower we decided to see if it would come back and it did just that. Volume was up on the move, but we are going to let it run back up to the short term MVA at 39 and fail there.
Volume: 4.005M Avg Volume: 3.562M
BUY POINT: Test of 39 that fails: 38.15. Volume=3.5M Target=$34 Stop=$38.65
POSITION: BGQ PH - April 40p (-66 delta) or BGQ OH - Mar. 40p (-61 delta)
http://www.investmenthouse.com/ct/bgen.html
Play Date: 02/13/2003
EXC (Exelon--$48.04; +0.04; optionable): Utilities
http://biz.yahoo.com/p/e/exc.html
STATUS: Put. Doing what we wanted, testing higher Friday up to 48.60 and showing a doji on the candlestick pattern as volume backed off. We actually wanted a move on up to 49, but this may be all it gives. We have s suspicion that EXC will try one more move Monday before turning back down and that is where we want to move in.
Volume: 1.333M Avg Volume: 1.336M
BUY POINT: Another test toward 49, then 48.55. If it makes it to the 200 day MVA at 50, then $49.65. Volume=1.5M Target=$45.55 Stop=$50.85
POSITION: EXC PJ - April $50p (-56 delta)
http://www.investmenthouse.com/cs/exc.html
Play Date: 01/27/2003
GPN (Global Payments--$27.9; +0.22; optionable): Business services
http://biz.yahoo.com/p/g/gpn.html
STATUS: Put. Rallied up fractionally Friday on above average volume, but it was lower than the Thursday reversal. GPN is still in the downtrend, and we don't expect it to rally much further here. May get to the 18 day MVA at 28.50 and then roll over, but that will provide a good entry point.
Volume: 177.6K Avg Volume: 143.541K
BUY POINT: A test of 28 to 28.50, then $27.85. Volume=175K Target=$24.25 Stop=$29.11
POSITION: GPN OF - Mar. $30p (-50 delta)
http://www.investmenthouse.com/ct/gpn.html
Play Date: 02/11/2003
JPM (JP Morgan--$21.85; +0.56; optionable): Money bank
http://biz.yahoo.com/p/j/jpm.html
STATUS: Put. Nice downtrend, but JPM rallied Friday as did most of the market. Volume was lower,however, coming in below average as it moved higher. Still well below the 10 day MVA (22.25) and we are looking for it to turn back at that point or just above. Very good delta and price make this still a good play at this point.
Volume: 8.881M Avg Volume: 10.94M
BUY POINT: $21.74 Volume=12M Target=$18 Stop=$22.85
POSITION: JPM OE - Mar. $25p (-71 delta)
http://www.investmenthouse.com/ct/jpm.html
Play Date: 02/11/2003
MI (Marshall & Ilsley--$26.4; +0.48; optionable): Regional bank
http://biz.yahoo.com/p/m/mi.html
STATUS: Put. Still working in the downtrend, MI bounced up the market bounce Friday. Volume did not join in on the move, remaining well below average. May bounce a bit higher up toward the 18 day MVA (26.74) before rolling over again.
Volume: 268K Avg Volume: 393.955K
BUY POINT: $25.87 Volume=350K Target=$23.35 Stop=$26.85
POSITION: MI OF - Mar. 30p (-96 delta, low OI)
http://www.investmenthouse.com/ct/mi.html
Play Date: 02/12/2003
PNRA (Panera Bread--$27.09; +1.03; optionable): Specialty food
http://biz.yahoo.com/p/p/pnra.html
STATUS: Put. PNRA tanked Thursday, gapping down and not giving us a chance to get in. Friday it started back up but on much lower volume. We are going to let PNRA bounce up toward the 10 day MVA at 28 where we look for it to fail. We will look for signals it is topping, i.e., a test of 28 and a move well down from that level or a doji heading into the close.
Volume: 1.151M Avg Volume: 765.552K
BUY POINT: After a test of 28, $27.48 on the way back down. Volume=1.2M Target=$24 Stop=$29
POSITION: UPQ QF - May $30p (-62 delta)
http://www.investmenthouse.com/ct/pnra.html
Play Date: 02/10/2003
POT (Potash--$58.15; -0.89; optionable): Nonmetallic mines
http://biz.yahoo.com/p/p/pot.html
STATUS: Put. POT may not make it to the 18 day MVA just below 60. After jumping up to the 10 day MVA (58.85) Thursday on some stronger volume, it immediately reversed course Friday as the 10 day MVA continues to exert resistance. Lower volume Friday, but we want to see more as it continues lower.
Volume: 106.5K Avg Volume: 196.895K
BUY POINT: New: 58.05 Volume=175K Target=$55 Stop=$60.05
POSITION: POT RL - June $60p (-52 delta)
http://www.investmenthouse.com/ct/pot.html
WATCHLIST/ CONTINUING:
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
$OEX 02/03 Put 422.57 +8.530 430 413 0 0 424
Current. Rallied up to the 10 day MVA on lower volume. Looking for a stall out again for new positions as well.
AFFX 02/08 Cup hdl 25.45 +0.16 26.55 30.55 782K 1.5M 24.69
Buy Not Issued.
AMGN 01/22 A Wedge 52.6 +0.82 53.12 62 9.8M 20M 50.25
Current. Moving up nicely after the test of the 18 day MVA, but not exciting anyone with the below average volume.
APPX 01/25 Test BO 23.01 -0.4 25.4 30 724K 770K 23.32
Current. Struggling to hold the 18 day MVA, APPX needs to move up here or we dump it.
ASKJ 12/26 Cup hdl 6.2 +0.03 2.89 7 493K 305K 5.05
Current. Still holding up very well over the 10 day MVA.
ATRS 02/01 Test 50 14 +0.32 15.04 18 30K 218K 13.99
Buy Not Hit.
AVO 12/16 A Wedge 12.54 +0.21 12.06 14.45 145K 210K 11.94
Current. Not bad. Tested the 50 day MVA on the Thursday low and then jumped up Friday on rising, average volume.
BGEN 02/01 Put 37.64 +0.07 37.65 34 4M 3.5M 38.65
Buy Not Issued.
BSC 02/15 Put 60.36 +1.04 60.75 56.75 910K 1.1M 62
New.
BSTE 02/08 Put 32.7 +1.01 33.74 30.04 171K 500K 34.88
Current. Rallied up Friday, but on very low volume. Still in the downtrend.
CGNX 02/04 DB hdl 22.62 +1.93 22.94 26.88 563K 525K 21.12
Buy Not Issued. Looks ripe.
CHIR 02/08 Put 36.31 +0.49 36.52 33.52 1.6M 2M 37.36
Current. Moving up to test the downtrend on lower, below average volume.
CKFR 01/28 Cup hdl 19.55 +1.25 20.85 25 2M 2M 18.94
Buy Not Hit. Nice move Friday toward the breakout.
CTXS 02/08 Put 11.86 +0.24 11.55 9.05 3.1M 450K 12.75
Current. Tested the 10 day MVA on the high and then gave back most of the move as volume remained low.
CVD 12/21 Cup hdl 22.95 -0.45 24.75 29.74 526K 581K 24.25
Current. Still trying to bounce up to the 50 day MVA near 24.
CVD 11/05 Test BO 22.95 -0.45 23.65 28 526K 581K 24.88
Current.
CVH 01/25 Put 25.4 -0.42 27.95 24.25 3.2M 600K 27.35
Current. Sold hard and then rebounded on strong volume. Still in the downtrend and resistance at 26.
DCX 02/03 Put 30.5 +1.55 31.15 26.55 903K 950K 31.35
Current. Jumped over the short term MVA Friday on above average volume after the nice move lower. Announced a recall this weekend, however, on many, many vehicles and that may turn it back.
EV 02/15 Put 26.53 +0.53 27.15 24.15 215K 225K 28.12
New.
EXC 02/13 Put 48.04 +0.04 49.65 45.55 1.3M 1.5M 50.85
Buy Not Hit. Making the weaker test higher to set the play up.
FAST 02/01 Put 31.75 +0.31 32.29 29.15 505K 800K 32.94
Current. Rallied to tap the 10 day MVA on the Friday high as volume remained very low.
FON 02/03 Put 12.3 +0.15 12.42 10 5.5M 3.8M 13.05
Current. Again testing 11.80 on the low and bouncing back as volume moved back above average. FON has not given it up and if it does not do so early this week we will close it.
GPN 01/27 Put 27.9 +0.22 27.55 24.55 178K 175K 28.78
Current. After the tap lower Thursday it managed a small gain toward resistance at 28.
GRMN 11/06 Cup hdl 30.87 +1.11 22.34 34 449K 198K 28.35
Current. Nice move continues off the 50 day MVA.
JEF 02/15 Put 37.26 +0.34 38.35 34.35 191K 210K 39.28
New.
JPM 02/11 Put 21.85 +0.56 21.68 18 8.9M 12M 22.85
Current. Lower volume bounce to test the downtrend.
LM 02/13 Put 48.13 +1.6 47.74 44 544K 500K 48.25
Buy Not Hit. Jumped up more than we wanted and on higher volume, but did tap at the 18 day MVA and slide back some.
MDCO 01/10 Cup hdl 16.93 -0.57 17.35 20.85 749K 800K 16.15
Current.
MI 02/11 Put 26.4 +0.48 25.87 23.35 268K 350K 26.85
Buy Not Issued.
MMC 01/30 Put 41.27 +1.58 43.45 38 1.9M 2M 42.25
Current. Rallied up Friday on some rising, above average volume. Resistance at 42 should stall the move.
MSN 12/21 Test BO 6.39 -0.21 5.92 7.45 99K 150K 4.94
Buy Not Issued.
MSN 12/04 Cup hdl 6.39 -0.21 4.85 6.35 99K 150K 5.94
Current. Testing lower, unable to clear the 18 day MVA on the Friday high. Very, very low volume.
MSN 11/23 Cup hdl 6.39 -0.21 4.15 6.35 99K 150K 5.94
Current.
NATI 02/15 Test 50 33.22 +0.31 34.05 39 460K 425K 31.67
New.
NFLX 01/25 A Wedge 14.24 +1.02 13.28 15.88 603K 503K 12.15
Nice move on volume Friday.
NPSP 02/04 Put 23.68 +1.32 21.12 17 706K 600K 23.05
Exited.
NSCN 12/22 Pennant 19.41 +1.71 17.24 21.24 1.6M 1.8M 18.25
Current. Very nice bounce up off of the 50 day MVA on another session or strong, above average volume. Very nice.
NSM 01/25 Put 14.04 +1.2 13.96 11.95 3.1M 2.8M 14.25
Current. Jumped over the 18 day MVA on the close as volume jumped. Will see if the market makers push it down this week as the February expiration comes closer.
PNRA 02/12 Put 27.09 +1.03 27.48 24 1.2M 1.2M 29
Buy Not Issued. Bouncing up, setting up for the next move.
POT 02/10 Put 58.15 -0.89 59.35 55 106K 175K 60.05
Buy Not Hit. Ditto.
PRX 02/08 BO 33.88 +0.25 33.11 39.74 303K 435K 30.54
Buy Not Issued.
QCOM 12/21 Test 50 34.7 +0.79 39.15 48 28M 18M 36.41
Buy Not Issued.
QCOM 12/04 Test 18 34.7 +0.79 40.85 50 28M 18M 37
Current. Trying to start the recovery from the news of MSFT trying to develop competing chips.
QCOM 11/07 Test BO 34.7 +0.79 34.78 42 28M 18M 37
Current.
QLGC 11/07 Test BO 34.56 +1.02 41.4 50 7.7M 25M 39.88
ROST 02/05 Put 36.28 +0.34 36.75 33.45 1.3M 1.7M 37.88
Current. Reached down but came back for a modest gain. Volume was very low.
SBUX 02/15 Test 18 22.52 +0.57 22.74 25 3.8M 4.5M 21.75
New.
UCBH 01/28 Put 42.91 +0.62 42.45 40 145K 1.7M 43.25
Current. Not what we wanted, starting up to the 50 day MVA. If it does not turn over first thing this week we will close it out.
WB 01/29 Put 35 +0.78 35.28 32.05 2.7M 3.5M 36.05
Current. Bounced Friday on continued below average volume, but managed to clear the 10 day MVA. May go up to test the 18 day at 35.35.
WFSL 01/28 Put 21.96 +0.06 23.96 21 228K 301K 22.74
Current. Doji at the 10 day MVA and resistance at 22. If it does not start to fall early this week we exit.
YHOO 12/11 Test 50 18.9 +0.85 17.32 22.75 8M 20M 17.74
Current. Nice recovery Friday.
Good Investing!
Jon L. Johnson and your Technical Traders Report 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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us stock market
understanding the stock market
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