|
|
us stock market, understanding the stock market
* * * *
2/20/03 Investment House Alerts Report
* * *
IH Alert Subscribers:
MARKET ALERTS:
Targets hit alerts issued Thursday: BLS
Buy alerts issued: CCMP
Trailing stops issued: None issued
Stop alerts issued: FON (took the money off the table since not falling)
Volume rises on some rather mild selling.
Once again the markets slipped lower, and again the selling was not particularly strong. Volume did increase as the indexes slid lower with the SP500 and DJ30 falling below their 10 day MVA. Nasdaq managed to hold above its 18 day MVA on the low, however, minimizing losses on the back of the semiconductor index that managed a gain after its second consecutive upgrade. That kept the techs in the leadership role, holding the line on some stronger volume.
Nasdaq remained the leader, but the other large cap indexes were not falling in line with it on a day where some significantly worse economic reports were released. They have the look of continuing the downtrend: stalling at the 18 day MVA and rolling lower on rising volume. The selling was not broad, however, with NYSE breadth just slightly negative. That indicates some big names were falling back but not most stocks in general. Thus the downtrend is trying to assert itself, but tech stocks are resisting with just a slight majority of stocks finishing lower.
THE MARKET
Rising volume on the selling, but it was still quite low volume in the bigger picture. Nasdaq held up, and though the DJ30 and SP500 slid lower for the second consecutive session, they held up remarkably well given the rather hefty load of poor economic news. Technically it was a distribution session, and unlike Wednesday, a late session rally attempt failed with the indexes falling back near session lows with a late thud. With buyers supporting Nasdaq at the 18 day MVA, the higher volume large cap slide is not as bad as it seems at first blush. It is not a strong endorsement of the rally attempt, but it is not the kiss of death. The big question is whether Nasdaq leads the market or the other indexes control the action. Despite the index losses Thursday, the internals show a standoff though that last half hour action to the downside was important.
Market Sentiment
VIX: 35.67; +0.45
VXN: 48.56; +0.93
Volatility continues to languish at relatively low levels, indicating a general lack of anxiety to drive the market higher. It is more akin to apathy and a wait and see attitude (following Greenspan's lead).
Put/Call Ratio (CBOE): 0.86; -0.01. Really not indicating much as it fell on a session that was down more than previous sessions.
Nasdaq
Held up well, holding the 18 day MVA in a tight range on higher volume.
Stats: -3.09 points (-0.23%) to close at 1331.23
Volume: 1.338B (+12.39%). Pretty significant jump in volume, but still below average. The higher volume when an index compresses against a support level is actually a good sign. It shows that buyers are buying stocks as fast as they are being sold, and that holds the index over the support level.
Up Volume: 638M (+276M)
Down Volume: 673M (-142M)
A/D and Hi/Lo: Advancers led 1.02 to 1.
Previous Session: Decliners led 1.62 to 1
New Highs: 58 (+14)
New Lows: 76 (+10)
The Chart: http://www.investmenthouse.com/cd/$compq.html
Nasdaq has been the relative strength leader in the move up, and it is also holding up the best on the pullback. It has been helped by back-to-back semiconductor sector upgrades. Indeed, the SOX was the lone positive large index Thursday, and its stocks are showing some improving patterns. They have helped Nasdaq hold the 18 day MVA (1324) the past two sessions. It ran into the exponential 50 day MVA (1348), but that has not sent it scurrying back down. That price/volume action discussed above shows how there is some buying at this level that is making Nasdaq stingy with its gains.
S&P 500/NYSE
Tried to move over the 18 day MVA, but rolled over and slipped below the 10 day MVA to close as volume edged higher.
Stats: -8.03 points (-0.95%) to close at 837.1
NYSE Volume: 1.177B (+10.48%). Rising volume as the index started lower, though still well below average.
Up Volume: 386M (+65M)
Down Volume: 759M (+20M)
A/D and Hi/Lo: Decliners led 1.14 to 1. No breadth on the selling, indicating the selling was concentrated in those large caps that are the most influential regarding index moves.
Previous Session: Decliners led 1.61 to 1
New Highs: 24 (-5)
New Lows: 62 (+11)
The Chart: http://www.investmenthouse.com/cd/$spx.html
The chart looks very much like a test of the 18 day MVA (847) in a downtrend and then starting back down on rising volume. Unlike Wednesday, the 10 day MVA (839) did not bounce the index up. That is definitely the easier scenario to believe given the overall market trend. Nasdaq could provide the anchor to arrest the large cap move lower, but would it would most likely help a lateral move to consolidate some and build some better foundation as opposed to a big near term bounce. As it is, 850 to 860 remains some pretty serious resistance, and the last half hour was not a bullish picture.
DJ30:
The blue chips also moved over the 18 day MVA (8012) on the intraday high but then rolled back over as Dow volume rose to near average levels. The DJ-30 is populated by large caps (large ones), and those are the names that were selling the most Thursday. As with SP-500 the chart looks like the continuation of the downtrend as the near resistance level at 8000 to 8150 has turned it over on rising volume. But for Nasdaq's relative strength this would be a clearer signal the selling was ready to resume.
Stats: -85.64 points (-1.07%) to close at 7914.96
Volume: 1.177B (+10.48%)
The Chart: http://www.investmenthouse.com/cd/$indu.html
FRIDAY
Before the open consumer prices are released and we will see if the higher producer prices turn up there. We don't expect an appreciable rise, but over the next few months that could most certainly be the case unless the economy nosedives; the latter is of course the scenario no one wants.
The market did not give the Thursday economic data too much credence, and we don't expect it to give much to the CPI. Volume has been lower this week after the higher volume move up Friday. Lower overall volume on the move up and then a return of higher volume on selling are classic signs of a return to the downtrend. But for Nasdaq showing some relative strength and holding its near support it would be a no-brainer the downtrend was resuming.
Some semiconductor stocks are trying to start forming 'building patterns' and some are breaking higher over near term resistance on the two sessions of upgrades. While the strength of the moves vary, some have been on very solid volume. The SOX itself closed just below the exponential 50 day MVA (293), falling back below that level on the close after testing close to the simple 50 day MVA (298) early and late before falling back. Its action with respect to the 50 day MVA will have a strong bearing on Nasdaq's ability to hold the 18 day MVA and continue its move.
In sum, the market is not tremendously oversold after this bounce to test near resistance. The semiconductor stocks are trying to lead the market higher with some nice individual moves, but the SOX is right at the 50 day MVA and its recent down trendline now at 300. The techs are trying to change their character, but there is a lot of resistance to overcome in the continuing downtrend. With the softer overall action we have been willing to let positions ride as long as they remain in their trends. As noted Wednesday, Nasdaq is trying to make a stand, but the monkey is still on the bulls' backs.
Support and Resistance
Nasdaq: Closed at 1331.23
Resistance: July, August, and September interim highs at 1345. Exponential 50 day MVA (1349) and simple 50 day MVA (1362). 1357, the 1998 bear market low.
Support: The 18 day MVA (1324). The 10 day MVA at 1317 and price support at 1300. 1250 after that is another point where some lows have held.
S&P 500: Closed at 837.10
Resistance: The 18 day MVA (847). Price resistance at 850 to 860. The bottom of the October consolidation range at 875. The exponential 50 day MVA (870).
Support: The 10 day MVA (839) is still not totally broken. The September 2000/May 2001 downtrend line at 811. After that 800.
Dow: Closed at 7914.96
Resistance: 8000 and the 18 day MVA (8012). A range of resistance here at 8000 to 8150 from the late January lateral move. Then 8250, the bottom of the October consolidation range.
Support: The 10 day MVA (7940) is still in the realm. Soft support at 7750, then 7500.
Economic Calendar
2-19-03
Housing starts, January (8:30): +0.2% (1.850M), actual, 1.775M expected, 1.835M December
Building permits, January (8:30): -5.6% (1.781M) actual, 1.800M expected, 1.887M December
2-20-03
Initial jobless claims (8:30): 402K actual, 386K expected, 381K prior (revised from 377K)
PPI, January (8:30): 1.6% actual, 0.5% expected, -0.1% prior (revised from 0.0%).
Core PPI: 0.9% actual, 0.1% expected, -0.5% prior (revised from -0.4%)
Leading economic indicators, January (10:00): -0.1% actual, 0.0% expected, 0.2% prior (revised from 0.1%)
Philly Fed, February (12:00): 2.3 actual, 11.0 expected, 11.2 prior.
2-21-03
CPI, January (8:30): 0.3% expected, 0.1% prior.
Core CPI: 0.2% expected, 0.1% prior.
SUBSCRIBER QUESTIONS
Q: I have taken your online seminars and found them to be very useful in cutting through the noise and understanding the moves my stocks and the indexes make. I was wondering if you are planning any further seminars such as short term trading, understanding economic matters discussed in the report, etc?
A: We are developing more topics for the seminars in order to provide a complete source for all investors regardless of skill level or style of investing. As such we are looking at a short-term trading seminar and service, and we have had other requests for more detailed discussions and explanations of economic reports. We are in the developmental stages, so I if you have any subjects or topics you would like to see covered, please let us know.
SEMINARS 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
This is Jon Johnson's own site devoted exclusively to seminars designed to teach you what you need to know about the stock market and stock movement and how to take advantage of those moves without incurring the usual high costs of travel and related expenses usually associated with seminars.
THE PLAYS:
Good moves: ZMH
New:
Downside:
Play Date: 02/20/2003
AIG (American Intl. Group--$49.76; -0.42; optionable): P&C Insurance
http://biz.yahoo.com/p/a/aig.html
STATUS: Put. Insurance carriers have been in some strong downtrends, AIG no exception. The past two weeks AIG rallied up in the downtrend, testing toward the 18 day MVA (51.33) as have many stocks. It did not reach that point on its rebound, sliding lower the past two sessions to hold the 10 day MVA on the Thursday close. Volume fell back below average as it did fall back, indicating the selling has not been intense on the pullback. What we want to see is a strong move lower and some good early volume to enter the downside play.
Volume: 4.463M Avg Volume: 6.676M
BUY POINT: $49.48 Volume=6M Target=$46 Stop=$51.25
POSITION: AIG QJ - May $50p (-47 delta)
http://www.investmenthouse.com/ci/aig.html
Revisited:
Upside:
Play Date: 01/29/2003
BG (Bunge Ltd.--$25.89; -0.15; optionable): Chemicals
http://biz.yahoo.com/p/b/bg.html
STATUS: Testing the breakout. A very nice test of the 10 and 18 day MVA (25.75) in a very orderly pullback to this near term support. The action Thursday was a very tight trading range as volume rose slightly. Now we look for a big volume move higher and the breakout.
Volume: 213.8K Avg Volume: 448.045K
BUY POINT: $26.25 Volume=675K Target=$31.45 Stop=$24.41
POSITION: BG GE - July $25c (63 delta) and/or Stock
http://www.investmenthouse.com/ci/bg.html
Play Date: 02/11/2003
BHE (Benchmark Electronics--$35.6; +0.4; optionable): Printed circuit boards
http://biz.yahoo.com/p/b/bhe.html
STATUS: Ascending triangle. BHE continues to work through its 6-week pattern, moving on higher, average volume this week as it has moved to 35.65, roughly the high the past three sessions. Volume has been decent, but not the big surge we have been looking for. Looking for that stronger move on volume to break it out.
Volume: 457.4K Avg Volume: 394K
BUY POINT: New: $35.75 (orig. $35.15) Volume=500K Target=$42 Stop=$32.69
POSITION: BHE GG - July $35c (54 delta) and/or Stock
http://www.investmenthouse.com/ci/bhe.html
Play Date: 02/19/2003
BMC (BMC Software--$18.77; -0.17; optionable): Application software
http://biz.yahoo.com/p/b/bmc.html
STATUS: Cup w/handle. BMC spent Thursday moving laterally and slightly lower on continued below average volume. This is the action we anticipated, and it may take another day of this quiet trade before it is ready to make the break higher. No problem.
Volume: 1.264M Avg Volume: 1.82M
BUY POINT: $19.29 Volume=2.5M Target=$23.15 Stop=$17.94
POSITION: BMC HW - Aug. $17.50c (69 delta) and/or Stock
http://www.investmenthouse.com/ci/bmc.html
Downside:
Play Date: 02/13/2003
PFCB (PF Changs--$33; +0.04; optionable): Restaurants
http://biz.yahoo.com/p/p/pfcb.html
STATUS: Put. Still looking at PFCB as it showed a doji on the candlestick pattern right below the 10 and 200 day MVA as volume backed off to well below average. This 33 level has been holding some, so if PFCB gives the break lower on some early strong volume the downside play will be on.
Volume: 380.699K Avg Volume: 484.227K
BUY POINT: $32.45 Volume=700K Target=$27.75 Stop=$33.88
POSITION: HUO PG - Apr. $35p (-65 delta)
http://www.investmenthouse.com/ci/pfcb.html
End Part 1 of 2
|
us stock market
understanding the stock market
|
