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yahoo stock, top stock pick
Begin Part 2 of 2
Support and Resistance Levels
Nasdaq: Closed at 1673.00.
Resistance: 1800. 10 day MVA is at 1875.
Support: Snapped 1750 and could drop to 1500 or 1300. Could not.
S&P 500: Closed at 1106.46.
Resistance: 10 day MVA is at 1148. The down trendline is at 1170.
Support: 1085.
Dow: Closed at 9485.71.
Resistance: The 18 day MVA at 9890. 10,000 is the next level.
Support: 9106 is the intraday low it needs to successfully test. Then it is 8750.
Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.
4-2-01
Auto Sales, March (8:30): 6.6M versus 7.0M prior.
Truck Sales, March (8:30): 7.2M versus 7.5M prior.
Construction Spending, February (10:00): 0.6% actual versus 0.4% expected and 2.2% prior (revised from 1.5%).
NAPM Index, March (10:00): 43.1% actual versus 42.5% expected and 41.9% prior.
4-3-01
Factory Orders, February (10:00): 0.2% versus -3.8% prior.
4-4-01
NAPM Services, March (10:00): 51.5% versus 51.7% prior.
4-5-01
Initial Claims, 3/31 (8:30): 362K versus 362K prior.
4-6-01
Non-farm Payrolls, March (8:30): 70K versus 135K previous.
Unemployment Rate, March (8:30): 4.3% versus 4.2% prior.
Hourly Earnings, March (8:30): 0.3% versus 0.5% prior.
Average Workweek, March (8:30): 34.1 versus 34.2 prior.
Wholesales Inventories, February (10:00): 0.1% versus -0.3% prior.
Consumer Credit, February (15:00): $95.B versus $16.1B prior.
TEAM TRADES
OEX: The OEX gapped down and sold to 577.75 or so, tried to bounce, but fell short of Monday's low. That failed move was all we needed with the negative market. We were looking at April $590 options which were 21.60 by 23, not too terrible of a spread. We snuck a limit order in at 22.75 and got a decent fill. The OEX was pretty much off to the races over the next two hours. We put in a stop loss at 22 since we weren't going to be watching from here; it looked ready to head down after failing to move higher on the test of that earlier low. Volume was higher on the move down.
At 12:47 the options were at 27 by 29 (they had been higher around 11:00), and the index was trying to rally, moving back over the 5 and 15-minute moving averages again (it did the same thing twice during the 11:00 hour). Volume tapered off on the move, however, so we figured it was going to fail. The crossover occurred just after noon and the options started inching back up to 28.60 by 30.10 in the next few minutes. The index was heading for a break of the new low hit a few minutes earlier, and when it broke it (565.74), we raised the stop to 30. That locked in a gain of over 7 points if it started to sell, not bad at all. By the end of the day, they were at 35.10 by 36.50. Letting them ride for now.
ADVP: We were minding our own business, watching for an entry point on an option play when an alarm popped up on eSignal. It was for ADVP and when we looked ADVP had raced up to 55.25 and then gapped over 55.50. Volume was not bad and we were looking to get in on a pullback after the gap. It kept running up and away from us, finally hitting just over 57. Well, we decided to see if it would come back and test to some extent the ascending wedge it had formed and broken out of in the session. It started back and tested 55.75 and began to move up. We thought that looked decent and bought a partial position at 55.8125. Well, it sold all the way back down to just under 54 before making another run at the close to finish the day at 55.25. Not bad with the volume, but not great either. We got the full-fledged test of the top of the ascending wedge at 54, and we should have waited for it. As it is, we will look at more positions if it starts up again. This is one of those that could really move when the selling weight is lifted a bit from the market.
For a review of frequently asked questions, please use the link below:
http://www.investmenthouse.com/1questions.htm
THE PLAYS:
Reading the Plays: Please note that when we reference the 10, 18, and 50 day moving averages (MVA), those are exponential moving averages (EMA). The 200 day moving average is always simple (SMA). We will note when we reference a particular MVA differently, e.g., a simple 50 day MVA. Please click on the Yahoo and chart links for company and charting information.
Best Plays: Some formerly covered stocks are looking good (APPB and DYII), and tonight we are looking at stocks that can bounce in a chip sector rally. Software began its selling, with CHKP delivering, and EBAY giving the anticipated drop. We will have to watch these stocks carefully tomorrow; if the market rallies, they can set up for another round of selling if they don't sell from here.
Best Plays:
1) NVLS: Showing a perfect doji after a few days of selling.
2) KLAC: And another doji at the bottom of the recent sell-off.
3) NVDA: Moving up in its handle.
4) PFGC: Moving up on good volume in a good pattern.
5) DYII: Still looks good in the ascending wedge.
Semiconductors: These stocks are from the basket of chip stocks introduced back on 3-22 as the SOX rallied. If the index can bounce here, the following can offer some quick and aggressive upside plays.
NVLS (Novellus--$35.94; -0.31; optionable (NLQ)):
http://biz.yahoo.com/p/n/nvls.html
STATUS: Showing another perfect star doji after 4 days of hard selling. This doji was nearer the intraday low of 35.38 (high was 38.19), but volume was a tad lower at 12.6 million (avg. 7.8 million). After the big drop, too, a doji, and particularly the star, is a strong sign for a move back up. On that move, we will look for an aggressive, quick move up to the 42.50 (50 day MVA) and then 48.
BUY POINT: Aggressive: On a move up from here on continued strong but rising volume.
POSITION: Stock and/or June $30 calls to buy (NLQ FF).
KLAC (Kla-Tencor--$35.44; +0.63; optionable (KCQ)):
http://biz.yahoo.com/p/k/klac.html
STATUS: Another chip stock showing a doji, this one not a star but pretty tight anyway. Volume was just higher at 12.6 million (avg. 8.6 million), and the doji is at the bottom of the intraday range (high was 37.38, low 34.69), but after the halt of the strong selling, the doji suggests a move up from here. On that move, we are looking at a target at the 45 level on a rally back, for potential aggressive positions with stock or calls to buy.
BUY POINT: Aggressive: Up from here on continued strong volume.
POSITION: Stock. June $35 calls to buy (KCQ FG) have sufficient open interests buy a lower delta (.621). June $30 calls to buy (KCQ FF), with a delta of .727, have 66 open interests.
New Plays:
NVDA (Nvidia--$64.25; +2.06; optionable (UVA)): Semiconductor
http://biz.yahoo.com/p/n/nvda.html
STATUS: The stock pulled back to the 18 day MVA (62.14) in the handle of a 6-month cup base, one chip stock that has defied its sector and the Nasdaq. Volume has been quite high on the pullback, but it has decreased in the handle (to Monday's lowest level in the handle which was still above the average of 3.3 million). Tuesday, however, volume shot higher, to 8.3 million as the stock moved up from a test of the February high (61). Looking for a move up from here for a breakout over the handle high (71.69). Target on a breakout: $79-83.
BUY POINT: Aggressive: Up from here on continued strong volume. Stop loss: 63.75-64. Breakout: 71.82, on continued strong volume. Remains a buy on the breakout up to 75.41. Stop loss from the breakout: 71.32-71.57.
POSITION: Aggressive: June $55 calls to buy (UVA FK). Breakout: Stock and/or June $65 or $70 calls to buy (UVA FM or FN; deltas are 0.58 and 0.524, respectively).
http://www.investmenthouse.com/cd/nvda.html
PFGC (Performance Food--$52.56; +0.75; optionable (PGU)): Food Wholesale
http://biz.yahoo.com/p/p/pfgc.html
STATUS: Moving up from support (10 day MVA, 51.11) on stronger volume of 118,500 (avg. 146,636). The stock is in a 3-month cup base, and has formed a pennant-type pattern as price moves up in the right side of the base. We are looking for a move up from here, for a break over the pattern's high at 54.50 (March high) for potential positions with stock or calls to buy. Previous base high is 56.75; after pulling back from that, PFGC has run up three times from the 50 day MVA (48.97) to the resistance (53-54). Money flow is strong, and relative strength has broken out ahead of price. Target on a breakout: $60-63.
BUY POINT: 54.63, on volume of 198,000 or better. Stop loss: 54.13-54.38. Remains a buy on the breakout up to 57.36.
POSITION: Stock and/or June $50 calls to buy (PGU FJ).
http://www.investmenthouse.com/cd/pfgc.html
Updated:
APPB (Applebee's--$36.06; +0.12; optionable (AQB)): Restaurants
http://biz.yahoo.com/p/a/appb.html
STATUS: Testing its recent breakout from a short cup with handle and moving in a 6-day lateral consolidation. Volume was declining until Tuesday, when it shot up to 753,900 (avg. 310,454). Looking for a move up from here; stocks can make greater gains after successfully testing the breakout, and this has been a good-looking pattern. The 10 day MVA is at 35.30, and if the stock does not use this volume surge to break out, we will look for a pullback to that support for the move. Target: $40-42.
BUY POINT: 36.57, on volume of 419,000 or better. Stop loss: 36.07-36.32.
POSITION: Stock and/or August $35 calls to buy (AQB HG).
http://www.investmenthouse.com/cd/appb.html
DYII (Dynacq--$15.25; +0.69; no options): Health Services
http://biz.yaho o.com/p/d/dyii.html
STATUS: Moved up from support (10 day MVA, 14.56) on a bounce from that support. Volume was lower on the move, but still above average (90,300; avg. 44,636). We will see if volume can surge back to pop this stock out of the ascending wedge pattern -it is a good-looking one. Huge money flow and relative strength has broken out ahead of price.
Target on a breakout: $18-19.
BUY POINT: 16.10, on volume of 60,000 or better. Stop loss: 15.60-15.85.
POSITION: Stock.
http://www.investmenthouse.com/cd/dyii.html
THE PORTFOLIOS: Each report, we look at these to see which is in a buy position. We don't cover them all each time, just the ones that are looking as if they are ready to pick up a few shares.
THE LEADERS: Some of the new leaders have fallen under the pressure of the bear market and can no longer be considered top picks for such investments (ACS, LLL, NATI, ESRX). We continue to look to stocks like CPN as the new leaders, as they are holding up well. With this in mind, we must reiterate that while we are looking for any of these stocks to once again yield long-term investments when the markets turns, for now the plays for moves up in such stocks should only be considered short-term. We must focus on the stocks that are performing best in a down market as they tend to help lead when the market turns back up.
New Leaders: CPN, SGR (ESRX, NATI, LLL, ACS)
Previous Leaders: ADBE, AMCC, ARBA, BEAS, BRCD, CIEN, EMC, EXTR, GLW, JNPR, NEWP, NTAP, PMCS, SCMR, SEBL, VRSN, VRTS
CPN (Calpine--$52.71; -1.32; optionable (CPN)): Electric Utilities
http://biz.yahoo.com/p/c/cpn.html
STATUS: Tested the recent breakout by pulling back to the 10 day MVA, tested on the low of 52.11 intraday. Volume was higher at 3.6 million (avg. 4 million), just beating average levels, so we want to see the stock hold here for a move back up and over the March high of 58.04. Target on that move: $64-67.
BUY POINT: Aggressive: On a bounce back from the 10 day MVA (52.35) on continued rising volume. New high: Over 58, on volume of 4.8 million or better.
POSITION: Both positions: Stock and/or July $45 calls to buy (CPN GI). New high:
http://www.investmenthouse.com/cd/cpn.html
LLL (L-3 Communtns--$79.95; +0.70; optionable (LLL)): Telecom
http://biz.yahoo.com/p/l/lll.html
STATUS: Broke over the 50 day MVA (79.74) on volume that surged back over average (594,600; avg. 465,954). The stock moved up from the March low at 73.75 over the last 6 days until finally breaking it over a convergence of the 50, 10 and 18 day MVAs, pretty solid resistance. That's a good sign, and the volume surge suggests a continued move from here. LLL faces upper resistance, pretty staunch from the looks of it, at the 85 level, but the aggressive can look at playing the stock up to that level.
BUY POINT: Aggressive: Up from here on continued strong volume.
POSITION: Stock and/or July $75 calls to buy (LLL GO).
http://www.investmenthouse.com/cd/lll.html
UP & COMERS PORTFOLIOS: We have added some new stocks to this portfolio: LNCR, BJ, ANF, LOW, HI and THQI. We like the patterns and their earnings numbers, and they are holding up in this market. The currently existing members (EXDS, TQNT, BVSN, SANM, PKI and GMST) are on a current watchlist we will continue to monitor for recovery when the market finally emerges from the bear market.
LNCR (Lincare--$52.94; -1.75; optionable (LQN)): Health Services
http://biz.yahoo.com/p/l/lncr.html
STATUS: Subscriber request. The stock is trying to consolidate after pulling back from the December high (61.06) and has recently been under some selling pressure, showing more higher volume selling than buying most recently. The stock dropped below the 50 day MVA Tuesday (53.95), but the move was on even lower volume (231,300; avg. 710,000) and closed at a price it hit 3 times in the last few months. 52.88 (hit 4 times), is just lower, other possible support. Thus, we want to see a move back up from this range, for a move back over the 50 day and the stock's up trendline at 56 (connects Nov/Feb/Mar closing lows). March low is 50.
BUY POINT: Aggressive: Over 56 on strong volume. New high: Over 61.06 (December closing high) on volume in the range of 312,000.
POSITION: Stock and/or August $55 calls to buy (LQN HK; 28 open interests). New high: Stock and/or August $60 calls to buy (LQN HL). Both options have deltas below .75.
http://www.investmenthouse.com/cd/lncr.html
MEMBER PORTFOLIO: BRCM, CHKP, CSCO, EMLX, IDTI, INTC, JDSU, MVSN, NT, PWER, SUNW, VTSS
PUT PLAYS: Software may be in for more selling, and we continue to watch the indices for downside, as they have been quite lucrative of late (OEX). We will have to watch these plays carefully tomorrow; if the market rallies, they can set up for another round of selling if they don't sell from here. As always, keep reasonable loss cutting rules in place, be ready to close positions quickly if necessary, and make sure you see the downside move, along with the market going down as well, and then enter.
New Put:
BJS (BJ Services--$66.50; -1.95; optionable (BJS)): Oil and gas equipment
http://biz.yahoo.com/p/b/bjs.html
STATUS: Has been very weak, falling steadily the last week from its 50 day MVA (74.59), and today landing on its 200 day MVA (66.41). We will see if the support holds, but volume, though down, remained strong on the selling (1.88 million; average 1.7 million). We will see if the support holds, and will watch existing positions for a bounce, but for new put positions we are looking for a strong move down through support. Our target from here is 60 (January and some 1999 lows).
BUY POINT: A move below 65 on continued strong volume.
POSITION: May $75 puts to buy (BJS QO).
http://www.investmenthouse.com/cd/bjs.html
Continued Puts:
ADBE (Adobe--$30.88; -3.12; optionable (AEQ)): Application Software
http://biz.yahoo.com/p/a/adbe.html
STATUS: We wrote ADBE last night as a possible trading play on a breakout from the cup with handle pattern it formed since February, but we also wrote for a possible downside play, and the stock started that move as software sold off, and looks ready for more as that sector continues to churn out dismal earnings reports and forecasts. After breaking support of the short term moving averages (32 level) on stronger volume, we continue to watch for a drop to the March low of 25 in continued selling.
BUY POINT: On a move down from here on continued rising volume, in sector selling.
POSITION: May $40 puts to buy (AEQ QH; 40 open interests).
CHKP (Check Point Software--$41.38; -5.50; optionable (KEQ)):
http://biz.yahoo.com/p/c/chkp.html
STATUS: Turned down on sector selling, gapping lower and never making it close to the upper resistance level (10 day MVA, 50.22). Volume shot to 21.2 million (avg. 10.3 million), and on continued sector selling, we will look at more puts. Target: $37-35.
BUY POINT: On a move down on continued strong volume.
POSITION: May $55 puts to buy (KEQ QK).
EBAY (Ebay --$30.69; -4.62; optionable (QXB)): Internet Software & Services
http://biz.yahoo.com/p/e/ebay.html
STATUS: Gave the move, breaking support at 35, then again at the March low of 31.44. Volume was strong on the selling, coming in at 8 million (avg. 5.2 million). Dropping from the right shoulder in the head and shoulders pattern, we now look for the stock to break below the left shoulder (29). 26.75 is the December low in that portion of the pattern.
BUY POINT: Below 29 on continue rising volume.
POSITION: Aggressive: May $40 puts to buy (QXB QH).
CIEN (Ciena--$35.69; -6.75; optionable (EUQ)): Telecommunications
http://biz.yahoo.com/p/c/cien.html
STATUS: Broke to a new low on very strong volume (52,8 million; avg. 20.4 million). Looking for more downside on continued selling for possible puts.
BUY POINT: Down from here on continued strong volume.
POSITION: May $45 puts to buy (EUQ PI).
VRTS (Veritas Software--$39.89; -7.51; optionable (VIV)): Computer Software
http://biz.yahoo.com/p/v/vrts.html
STATUS: Dropped after hitting resistance at the 10 day MVA (48.23), and volume was much stronger on the move (19.2 million; avg. 14.3 million) as the stock hit a new low. Looking for more downside in this sector.
BUY POINT: On a continued move down on increasing volume.
POSITION: May $55 puts to buy (VIV QK).
DJX (1/100 Dow Jones--$94.86; -2.92; optionable (DJV)):
STATUS: Dropped on stronger volume, tapping a low at 94.28, potential support. On a move below that level, the index can fall to the March low of 91.09. On that move, we will look at playing it down to that range.
BUY POINT: Aggressive: On a move down from here on continued strong volume.
POSITION: May $102 puts to buy (DJV QX).
OEX (Standard & Poors 100--$562.38; -22.02; optionable (OEB)):
STATUS: Broke below Thursday's low of 577, our target for entering the downside play. The index opened at the 10 day MVA (584) and headed down on stronger volume (1.37 million; avg. 1.2 million), hitting a new closing low. Looking for continued selling, but it is getting extended to the downside.
Target: March low at 548.
BUY POINT: On continued selling: a move down on rising volume.
POSITION: Aggressive: April $570 puts to buy (OEB PN). These are expensive options but the moves can be lucrative; this index is played nearer term to avoid paying for time and volatility to the extent that we can. That also means that when we get the move we want, we get out and try to get in at the next chance.
Good Investing!
Jon Johnson and The Daily Staff
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 of 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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