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yahoo stock, trade stock
Begin Part 2 of 2
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): 383K actual versus 362k expected and 365k 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.
SUBSCRIBER QUESTIONS
Q: In establishing a position whether it is a stock or call/put option, how much are you investing per trade (money-wise) in order to have a decent and worthwhile profit?
A: A reasonable and worthwhile profit varies from investor to investor. It also varies depending upon how much your brokerage charges you to make option and stock trades. Given that, some are happy with making $500, $750, $1000, $5000; the amounts are as different as the individual and that investor's goals. What we look at in most cases is a percentage gain. Whether we put 5%, 10%, 20% or some other amount of our trading or investment capital into a play, we are looking at what kind of a return we can make on the trade. 5% for a day is not a bad return. 10% or 20% for a week is not bad at all. On the recent selling bouts that we have seen, option positions have been returning 30%, 50% and more in just a few sessions. Thus, it is not the gross dollar amount, but the return on the investment. Is it worth it to make $1000 on an $8000 investment in a session on some QQQ options? 12.5% in less than 8 hours is not a bad use of money. If you put $4000 in that trade it would return $500, the same percentage. When compared to putting it in the bank, that return on your risk capital is very nice indeed.
TEAM TRADES
We hate to sound like a broke record, but the indexes are still offering great plays either way as the emotion swung back to upside enthusiasm. That was too much to resist for another QQQ play.
The Nasdaq gapped open over 70 points, ran up and then immediately pulled back. The pullback volume was lower than the up volume in the first 10 minutes, so we were waiting for a bottom and then a break over the early morning high to try our hand at some upside positions.
That came a half hour later as the QQQ broke over 36.25. The move was already strong, but we were looking at making a half point or so on the options and take it to the house. The May 31 calls were trading 6.3 by 6.5. We put in a limit order of 6.4 and the index ran away from us. Thirty minutes later it was back at 36.20. We had pulled the order, not wanting to get caught if it rolled over. When we saw it was holding and bouncing up, we put the order back in at the ask to get the fill. After that the QQQ rallied to 36.70 but there was not a half point in the options. It sold back again to 36.20 and again we thought of a sell off, but it rallied for good then. We decided to leave it alone, inserting a stop loss at 7 as the index broke sharply higher after 1:00 CT. We thought about selling near the close when the bid was in the 7.5 range, but the momentum was so good we are going to see if we get a carry over tomorrow where we can get another rise before the Nasdaq may turn back.
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: NDE started its breakout move (see last night's report for buy limit), as did ALLY, and APPB and WGR tacked onto yesterday's strong moves. A few Up & Comer stocks are looking good, including ANF making a breakout move from its handle. Software is setting up for puts if this rally fades.
Best Plays:
1) MGL: Ready to move higher in the handle.
2) SRV: Ready to break out of the ascending wedge.
3) ALLY: Breaking out and still a buy.
4) ANF: A breakout move.
5) HI: Looking good.
6) Puts: STI, SEBL, VRSN, CHKP
A New Play:
MGL (Magellan Health--$8.68; -0.07; no options): Hospitals
http://biz.yahoo.com/p/m/mgl.html
STATUS: Is in a handle to its 20-month cup with handle base, squeezing between support and resistance levels (50 day MVA, simple, tested on the low of 8.80, and the 18 day MVA on the high of 8.87). The stock has used the lower support 4 our of the last 5 days, so we are looking for that to foot a move back up once volume surges back in. Volume continues well below average in the handle, dropping back again to 52,100 (avg. 143,136). We will look at taking positions on a breakout over the handle high of 10.49.
Strong money flow and buying. Target: $12
BUY POINT: 10.62, on volume of 215,000 or better. Stop loss: 10.12-10.37.
POSITION: Stock.
http://www.investmenthouse.com/cd/mgl.html
Updated:
SRV (Service Corp--$4.70; +0.30; no options): Personal Services
http://biz.yahoo.com/p/s/srv.html
STATUS: The stock is in an ascending wedge, and moving up from support the last 2 days (10 day MVA, 4.34) on excellent, rising volume (reaching Thursday 1.7 million; avg. 992,500). Pattern high is 4.84, so look for a breakout over that resistance. Huge money flow. Price/volume is excellent the last 2 weeks. Target on breakout: $5-$6.
BUY POINT: Breakout: 4.97, on continued strong volume (min. breakout volume is 1.4 million). Stop loss: 4.47-4.72. Remains a buy on the breakout up to 5.22.
POSITION: Stock.
http://www.investmenthouse.com/cd/srv.html
ALLY (Alliance Gaming--$18.44; 0.00; no options): Leisure
http://biz.yahoo.com/p/a/ally.html
STATUS: Making its breakout move on stronger volume (169,800; avg. 150,181), as it moves up from the test of the breakout (the low tested support again at the 10 day MVA, 17.75). Looking for the break to a new high. Outstanding money flow and buying, and relative strength is out ahead of price. Target: $22-23.
BUY POINT: Over 20.05, on rising volume in the range of 229,000. Stop loss: 19.55-19.80. Remains a buy on the breakout up to 21.05.
POSITION: Stock.
http://www.investmenthouse.com/cd/ally.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 Corp--$50.66; +0.35; optionable (CPN)): Electric Utilities
http://biz.yahoo.com/p/c/cpn.html
STATUS: Pulled up from a low of 49 to close just under the 18 day MVA (50.72) as volume rose to 4.5 million (avg. 4 million). The stock slid down from a breakout high of 58.04 at the end of March, dropping below the buy point of 52.88. Some allowance can be made for the bear market, but we definitely want to see the stock back over the 18 day and moving up. On the momentum established Thursday, we might get that move. Our new buy point will be over 54.03 on stronger volume, for an aggressive play.
BUY POINT: Aggressive: Over 54.03 on volume of 6 million or better. New high: Over 58.04, on similar volume.
POSITION: Aggressive: Stock and/or July $45 calls to buy (CPN GI). New high: Stock and/or July $50 calls to buy (CPN GJ).
http://www.investmenthouse.com/cd/cpn.html
LLL (L-3 Communctns--$83.10; +3.97; optionable (LLL): Telecom
http://biz.yahoo.com/p/l/lll.html
STATUS: The stock shot up from a 3-day lateral movement that was squeezed between the 10 and 50 day MVAs, running on the fumes of Wednesday's high volume doji, since today's volume dropped back below average on the pop up (450,700; avg. 471,454). If volume doesn't roll back in to support this move, expect a pullback to 81-82 at the least, if not the 50 day MVA (79.85). The stock corrected from the 75 level after selling back from the March high of 90.51, and is trying to make a comeback as money flow continues to climb and relative strength remains high.
BUY POINT: Aggressive: Up from here on stronger volume, or on a move up after a pullback to the 50 day MVA (80) or better.
POSITION: Aggressive: Stock and/or July $80 calls to buy (LLL GP; 85 open interests).
http://www.investmenthouse.com/cd/lll.html
SGR (Shaw Grp--$51.00; +2.80; optionable (SGR)): Manufacturing
http://biz.yahoo.com/p/s/sgr.html
STATUS: The stock continued higher, closing at the resistance noted in last night's report (51), after pulling back from a high of 52. Volume was stronger at 624,400 (avg. 531,500). Still looking for the move over 51, and given the intraday high of 52, are adjusting our target to that price, looking to 55 as the next target since the stock has overhead supply to handle up to that level. Relative strength is out ahead of price, a bullish sign, and money flow is pulling back up.
BUY POINT: Aggressive: Over 52 on volume in the range of 843,000 or better. Stop loss: 51.50-51-75. New high: Over 55, on similar strong volume. Stop loss: 54.50-54.75.
POSITION: Both positions: Stock and/or July $50 calls to buy (SGR GJ).
http://www.investmenthouse.com/cd/sgr.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.
ANF (Abercrombie & Fitch--$35.00; +3.09; optionable (ANF): Retail
http://biz.yahoo.com/p/a/anf.html
STATUS: Making a breakout move on volume that surged above average (2.7 million; avg. 1.6 million). ANF is in the handle of its 21-month base, and this move is much more decisive and solid than that of March 27 when price broke over the previous handle high of 35.19. A longer handle was needed, and the stock now looks ready to make a breakout. Target on that move: $39-41. Great money flow, good buying and relative strength broke out.
BUY POINT: 35.92, on continued strong volume (min. breakout volume is 2.4 million). Stop loss: 35.87-36.12. Remains a buy on the breakout up to 37.72.
POSITION: Stock and/or August $30 calls to buy (ANF HF).
http://www.investmenthouse.com/cd/anf.html
HI (Household Intl--$59.73; +1.28; optionable (HI)): Credit Services
http://biz.yahoo.com/p/h/hi.html
STATUS: Moved up on stronger volume (3.2 million; avg. 2 million) after bouncing up and down above the 50 day MVA (57.98) the last few days; HI corrected down to a March low of 53.30 then ran up from there to the current consolidation. The difference today is the stronger volume on the move up: resistance is at 61, but we are looking for a move over the March high of 62 for new positions with stock or calls to buy. Target on a breakout: $68-71.
BUY POINT: New high: 62.13, on continued rising volume. Stop loss: 62.08-62.33.
POSITION: Stock and/or July $55 or $60 calls to buy (HI GK or GL).
http://www.investmenthouse.com/cd/hi.html
LNCR (Lincare Hldgs--$56.69; +2.19; optionable (LQN)): Health Services
http://biz.yahoo.com/p/l/lncr.html
STATUS: Made a strong move after Wednesday's break back over the 50 day MVA (54.08) on quite low volume. A volume surge (529,000; avg. 666,136) herded the stock higher, which tapped near resistance (58) on the high of 57.63. LNCR is in an extended pennant-type pattern, supported by an up trendline (connecting Nov/Feb/Mar lows), over which price broke on the stronger volume. Resistance to beat at the top of the pattern is 61.06 for looking at positions with stock or calls to buy. Target on that move: $67-70.
BUY POINT: 61.19, on volume in the range of 900,000. Stop loss: 60.69-60.94.
POSITION: Stock and/or August $60 calls to buy (LQN HL).
http://www.investmenthouse.com/cd/lncr.html
MEMBER PORTFOLIO: BRCM, CHKP, CSCO, EMLX, IDTI, INTC, JDSU, MVSN, NT, PWER, SUNW, VTSS
No reports on stocks in this portfolio tonight.
PUT PLAYS: Software has sold off pretty well lately and some sector stocks are moving back up to resistance (10 and 18 day MVAs in most cases), so we are watching for moves up to and then back down from resistance for entering with new puts. 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.
Continued Puts: For the most part, software moved up on lower volume. We are looking for a set-up in that sector for possible put positions, among other continued plays.
STI (Suntrust Banks--$62.98; +2.03; optionable (STI):
http://biz.yahoo.com/p/s/sti.html
STATUS: After dropping back through the 50 day MVA (55.77) Wednesday and looking ready for more of a drop, the stock made a bounce back up with the market today. Not a convincing move up, however, as it was on low volume (673,800; average 982,000), and it could not make it back over the 50 day. We will see if it tries again to break through, but we are looking for the move to give up here and for the stock to head back down. The recent low is 57.29, and the 200 day MVA is at 54.86.
BUY POINT: A move below 62 on above average selling volume.
POSITION: May $70 puts to buy (STI QN; 1 open interest).
LEH (Lehman Bro--$62.42; +7.07; optionable (LEH)): Brokerage
http://biz.yahoo.com/p/l/leh.html
STATUS: Moved up for a decent gain despite lower volume (4.1 million) that remained well above average anyway. Closing over the 10 day MVA (62.15), the stock may make it up to the 18 day MVA at 63.96. We are going to watch for another downturn, either from the 18 day MVA or on a break below the current support. In market selling, either move can take the stock back down to the April low of 54.
BUY POINT: On a move down from the 18 day MVA (64) or on a move below 62 in renewed market selling.
POSITION: May $70 puts to buy (LEH QN).
MMM (Minnesota Mining--$103.23; +4.61; optionable (MMM): Conglomerates
http://biz.yahoo.com/p/m/mmm.html
STATUS: Went the other day on the rally. The stock broke back over the 10 day MVA (102.70) and tested near the 18 day MVA on the high of 103.85. That level can prove resistant to further upside, and if the market begins to sell off again, we will look for a sell back down to the 200 day MVA (99.73). Otherwise, a surge over the 18 day MVA on stronger volume is the cue to shut down shorts on this stock. Not the best put now.
BUY POINT: On a move back down after a test of the 18 day MVA (104.36), May $115 or puts to buy (MMM QC).
SEBL (Siebel--$28.76; +4.88; optionable (SGW)): Application Software
http://biz.yahoo.com/p/s/sebl.html
STATUS: Popped up from a Thursday doji to close just under the 18 day MVA (29.09), but volume was lower on the move at 18.8 million (avg. 16 million). That is still strong volume, but if the rally turns into selling, we will look at buying puts on a move back down to the low of 22.95, our initial target. 10 day MVA is at 27.14 if the stock pulls back on even lower volume.
BUY POINT: On a move down from here in market selling.
POSITION: May $40 puts to buy (SGW QH).
MERQ (Mercury Interactive--$38.94; +7.06; optionable):
http://biz.yahoo.com/p/m/merq.html
STATUS: Made a pretty strong move, running up on lower, but still strong volume (6.6 million; average 4.7 million). More of a move is possible, as the stock closed just under its 10 day MVA (39.37), but has another strong level of resistance at the 18 day MVA at 42.23. On the move up to the 18 day, we will see if the move, and the Nasdaq, stalls, watching for a drop back.
BUY POINT: A move back down on strong selling volume with a weak market, after the current move stalls at the 18 day MVA.
POSITION: May $50 puts to buy (RQB QJ; 7 open interests).
VRTS (Veritas Software--$47.16; +7.71; optionable (VIV)): Application Software
http://biz.yahoo.com/p/v/vrts.html
STATUS: Closed on top of the 10 day MVA (46.73), up from a Thursday doji, but volume slipped back just a bit, to 15 million (avg. 14.2 million). The stock can work its way up to the 18 day MVA (50.56) from this support level, but we will look for a turn back down from there, looking at put positions on renewed selling.
BUY POINT: On a move back down from the 18 day MVA (50.56) in market selling. Watch for strong volume on the move to break possible support at 46-47.
POSITION: May $60 puts to buy (VIV QL).
VRSN (Verisign--$34.06; +3.31; optionable (QVR)): Internet Software
http://biz.yahoo.com/p/v/vrsn.html
STATUS: Closed back on top of the 10 day MVA (33.45), showing a doji, but volume was lower for the second day (12.7 million; avg. 8 million). The strong volume can help push the stock up to the 18 day MVA (35.74); if so, we will look for resistance there and a turn back down as the rally turns to selling. For possible puts on that move, look for a target of 25.38, the April low.
BUY POINT: On a move down after a test of resistance at the 18 day MVA (35.74), or, on a move back below the 10 day MVA on stronger volume.
POSITION: May $45 puts to buy (QVR QI; 0 open interest).
CHKP (Check Point Software--$48.69; +6.13; optionable (KEQ)): Security Software
http://biz.yahoo.com/p/c/chkp.html
STATUS: Moved up but on lower, below average volume (12.4 million), halting just short of resistance at the 10 day MVA (48.81). The stock is prime for a move back down if it cannot break above the moving average; we will look at buying puts on a retreat on software selling.
BUY POINT: On a move down from here on stronger volume, for a target of the April low (39.50). Watch for support at 45-46 if the stock pulls back on low volume.
POSITION: May $65 puts to buy (KEQ QM; 25 open interest).
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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