|
|
us stock market, trade stock
Begin part 2 of 2
SUBSCRIBER QUESTIONS
Q: On Friday morning, CNBC gave an advisory that Trimtabs.com was indicating that the market would sell off next week do to liquidity problems. Seems that due to a large number of offerings of new stock, they feel that there will not be enough buyers and/or money to absorb the new issues. Seems something like 8 billion dollars worth of stock if I understood correctly. My question is, what do you know about these people, and is their call a legitimate one. I would appreciate and value your call concerning this matter. Also, I am very impressed with you insights on the market. Very informative. Thanks.
A: Thanks for the kind words. Trimtabs issues these reports every time there is a greater than usual number of new offerings coming to market. This could be in the form of IPO's or additional offerings from existing exchange companies. The idea is, as you point out, somewhat intuitive in that there has to be enough demand in the market to buy the stock that is hitting the market. Either the new issues will suffer, existing issues will suffer, or the whole market will suffer as this stock hits the street and pushed up the amount of available product so to speak.
There is some basis in this if you look at stock split plays. As a stock moves into its split it tends to run higher and then back off when it splits as there is much more stock on the market and trade has to be greater to drive shares higher. Of course the price is lower so it is not an exact correlation: a $50 stock split to $25 still takes the same amount of money to impact the price the same percentage. Still we would often see stocks fall right at the split as more stock was on the market. That is not always true, however. One thing we saw in the bear market was stocks actually rallying higher as the split became effective. Basically investors wanted the stock and rallied it higher even though there was 'more' stock in the market. The stocks were rallying on a perceived economic improvement, and big money was moving in at the split and driving it higher.
We have seen many of these Trimtabs calls on market supply. They are very short term calls (the one you reference discussed the next two weeks as being lower). Sometimes the market moves lower, sometimes it moves up. Intuitively it makes some sense. In real life there are many more variables. Primary is the demand for stock, something the Trimtabs calls suupsedly take into account. Right now institutions are accumulating stock. There is still $2 trillion on the sidelines. If insitutions want to continue to buy good stocks they have plenty of capital to do it.
Further, history shows some very important details. First, all during the bull run, new IPO after new IPO hit the market, yet the market continued to move higher. What did that mean? It meant that when demand is high enough, it will absorb new issues. Thus Trimtabs is absolutely right that if there is more supply than demand the market will suffer. But it is the degree of demand that will determine how the indexes perform. There could be excess supply for the ENTIRE market to absorb, but we would most likely see the leaders continue to attract their share of existing funds. Thus even if Trimtabs is right it would be a short term effect and it does not impact the leading stocks to a great extent.
Finally, there is one statistic that flies the the face of an idea that new issues hurts the market. In all important market moves, the number of new issues directly correlates to market performance. New issues tend to become the new market leaders as they bring the latest and greatest technology to market. They tend to have stellar sales and earnings. When a market is healthy, the economy is or is going to be healthy, and new issues start to surface. History shows that markets tend to perform better the more new issues come to market. What drives the market is demand, and we have seen Trimtabs' calls correspond to market activity and we have also seen them not. The question is how much aggregate demand there is. Trimtabs does a good analysis of existing demand based on average shares traded, but that is a crude measure of latent demand.
THE PLAYS
Good movers on Monday: AMZN; CLE; DRIV; FDRY; FFIV; IBM; GRMN; JNPR; KLAC; OVTI; SSYS; THOR; TSCO; USAI; VTAL; YHOO
Monday Plays:
MDCO: Up off the 18 day MVA on rising, average volume.
TXN: Still in the pattern, but did not participate in the Monday rally.
IBM: Nice volume move.
WFR: Voume is surging. Looks ready.
Best Plays:
1) FLSH: Great pattern and volume.
2) VSTA: Strong volume bounce off the 18 day MVA.
3) Continuing: CTXS looks ready to bounce again. MXIM is showing good action again. RCII is in a great 10 day MVA test. WFR is showing a huge volume surge.
New Plays:
Play Date: 05/12/2003
FLSH (M-Systems Flash Disk--$8.92; +0.54; no options): Semiconductor memory chips
http://biz.yahoo.com/p/f/flsh.html
STATUS: Reverse head and shoulders. FLSH is nearing the breakout of its 6-month base showing solid 7 to 3 accumulation (7 up weeks on rising volume to 3 down price weeks on rising volume in the base). That accumulation indicates that there are more buyers than sellers in the stock and it forms a solid foundation to move higher. It formed a very nice right shoulder, holding the 18 day MVA (8.16) on the low; that makes this a shallower shoulder than the left, indicating more strength in the pattern. It is right at the neckline breakout point and shows strong money flow as well.
Volume: 307.75K Avg Volume: 127.681K
BUY POINT: $3.06 Volume=195K Target=$3.94 Stop=$2.85
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cd/flsh.html
Play Date: 05/12/2003
SFNT (Safenet--$27.71; +1.94; optionable): Security software
http://biz.yahoo.com/p/s/sfnt.html
STATUS: Cup with handle. SFNT was a leader off of the October low, but the security software stocks all hit speed bumps and SFNT corrected back into this 4-month base where it gave back just under half its value. It has spent the last two months forming the right side of the base that shows solid 7 to 3 accumulation. Monday SFNT made a breakout move from the handle on solid, above average volume. It closed well off of its intraday high (28.70), but the pattern and volume indicated buyers. What we like about this play is that it can run up to the high in the pattern (32.21 in January) and still give us a nice return on stock positions. If it is strong it should move even higher and give us a bigger gain.
Volume: 488.857K Avg Volume: 262.59K
BUY POINT: $28.11 Volume=394K Target=$32.35 (initial) Stop=$26.14
POSITION: UUI IE - Sept. $25c (69 delta) or UUI IF - Sept. $30c (46 delta) &/or Stock
http://www.investmenthouse.com/cd/sfnt.html
Continuing:
Play Date: 05/07/2003
ASCL (Ascential Software--$3.83; -0.01; no options): Application software
http://biz.yahoo.com/p/a/ascl.html
STATUS: Flying plateau. After the strong breakout from the 5-month flat base, ASCL has spent the past 3 weeks moving laterally in a tight range. It has held above the 18 day MVA, testing that Monday (3.73). Money flow is string, holding higher even as price moves laterally and slightly lower. Accumulation is solid. Looking for a strong volume breakout.
Volume: 995.122K Avg Volume: 1.067M
BUY POINT: $4.05 Volume=1.7M Target=$4.96 Stop=$3.77
POSITION: - Stock
http://www.investmenthouse.com/cd/ascl.html
Play Date: 04/28/2003
VSTA (Vista Care--$21.25; +0.67; no options): Health services
http://biz.yahoo.com/p/v/vsta.html
STATUS: Testing the breakout. VSTA is a new issue in December, and it blasted out of its 3.5 month cup with handle in late April, rallied, and is now testing that move. Monday it sold below the 18 day MVA (20.25) intraday after selling back Thursday and Friday, but then exploded higher on very strong, above average volume. Once those last sellers were shaken out, the demand overwhelmed the supply. Looking to pick it up here on a further upside move on continued strong volume.
Volume: 837.825K Avg Volume: 130.59K
BUY POINT: New: $21.39 (orig. $19.98) Volume=156K Target=New: $25.65 (orig. positions $23.85) Stop=$19.97
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cd/vsta.html
MEMBER PORTFOLIO: AMZN, BRCM, IBM, IGEN, KLAC, MSFT, RCII, TEVA, WMT YHOO
These are the stocks that our subscribers vote to put in a 'portfolio' to track their progress and comment upon when they reach buy points, sell points, or levels to write some covered calls on. They are not intended to be held as a portfolio by subscribers and are not covered in their entirety in every report. When something interesting is developing we take note.
AMZN 05/03 BO 31.7 +0.74 30.3 35.45 7.3M 12M 28.74
Current. Nice continuation of the breakout. Volume was below average but rising.
BRCM 05/03 Cup hdl 19.31 +0.46 19.2 22.94 12M 15M 17.86
Current. Making the move on solid, average volume.
IBM 01/11 Cup hdl 89 +1.45 88.62 100 8.4M 14M 84.75
Current. Nice rally higher on volume.
KLAC 04/02 Test 50 43.63 +1.14 39.4 45.48 12M 13M 40.65
Current. Up off the 18 day MVA on much stronger, average volume.
RCII 01/11 Test BO 65.1 +0.27 0 0 299K 0 62.45
Nice test of the 10 day MVA on rising though still below average volume.
YHOO 12/11 Test 50 26.17 +1.13 17.32 25 11M 20M 23.94
Current. Nice break higher on volume.
CONTINUING/WATCHLIST:
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
ALTR 04/15 Rv H&S 17.4 +0.26 15.75 18.81 6.9M 12M 16.02
Current. Still moving up off the 10 day MVA but on lower, below average volume.
AMZN 05/03 BO 31.7 +0.74 30.3 35.45 7.3M 12M 28.74
Current. Nice continuation of the breakout. Volume was below average but rising.
ASCL 05/07 FlyPlat 3.83 -0.01 4.05 4.96 995K 1.7M 3.77
Buy Not Hit. Still solid in the pattern.
BCE 04/05 Cup 20.4 +0.29 19.9 23.75 307K 550K 19.65
Current. Nice move up off the 10 day MVA test on rising volume.
BCGI 04/24 Test BO 17.44 +0.43 18.55 22.26 811K 431K 17.55
Current. Rallying off the 50 day MVA on continued above average volume.
BLL 03/03 A Wedge 55.3 -0.69 54.22 62 454K 550K 55.74
Current. Hanging on at the 50 day MVA as volume rises to average. It holds or we fold it.
BLTI 02/10 Test BO 11.26 +0.21 7.2 9.5 458K 300K 11.25
Current. Rising after the gap down but volume is lower.
BRCM 05/03 Cup hdl 19.31 +0.46 19.2 22.94 12M 15M 17.86
Current. Making the move on solid, average volume.
C 04/18 Rv H&S 39.39 +0.34 40.54 47.55 11M 23M 38.45
Buy Not Issued. Gapped lower but rallied to hold the pattern.
CHIR 05/03 Cup hdl 41.23 +0.42 42.9 51 1.3M 2M 40.25
Current. Trying to rally back, overtaking the 10 day MVA but on lower, below average volume.
CLE 04/14 Cup hdl 28.21 +1.01 26.05 30 748K 567K 24.78
Shooting higher on more strong, above average volume.
CNQR 04/22 Test 18 5.95 -0.13 6.12 7.42 169K 250K 5.65
Buy Not Issued.
CTL 05/01 Cup hdl 32.49 +0.31 32 38 1.4M 1.3M 30.55
Current. Gapped up on some strong volume.
CTXS 03/29 Cup hdl 19.07 +0.33 14.12 17.25 2.5M 5.3M 17.94
Current. Showing a doji at the 10 day MVA on very low volume.
DCLK 04/26 Test BO 9.37 +0.29 9.04 11.35 812K 1.9M 8.54
Current. Rallying higher off the 10 day MVA on rising volume.
DKS 03/18 DB hdl 29.55 +0.76 23.81 28.42 483K 225K 28
Current. Up off the 18 day MVA on continuing above average volume.
DKS 02/19 DB hdl 29.55 +0.76 22.75 27.35 483K 225K 28
Current.
DRIV 05/08 Test BO 17.86 +0.91 17.62 20.95 1.5M 1.4M 16.23
Current. Nice rally off the 10 day MVA on strong volume.
DSPG 04/26 Test BO 22.2 +0.46 21.1 25.1 422K 300K 20.25
Current. Strong volume on another move higher, but gave back much of the move.
DSPG 04/09 Test BO 22.2 +0.46 19.35 23 422K 308K 20.25
Current.
EBAY 12/12 Test 18 94.74 +0.07 69.45 92 5.1M 12M 91.22
Current. Trying to break over resistance at 96 as volume starts back up.
EBAY 10/15 Test 50 94.74 +0.07 62.45 92 5.1M 12M 91.22
Current.
EFII 03/27 Cup hdl 19.5 -0.31 18.43 22.25 419K 498K 19.15
Current. Higher volume selling that managed to hold the 18 day MVA. Needs to bounce here.
FDRY 04/29 Cup hdl 12.64 +0.77 10.9 13.15 4.8M 4.4M 10.74
Current. Strong volume surge off the 10 day MVA.
FFIV 04/23 A Wedge 16.46 +1.02 15.3 18.32 967K 750K 14.05
Current. Blasting higher with a relative strength breakout.
FLSH 05/12 Rv H&S 8.92 +0.54 3.06 3.94 308K 195K 2.85
New.
GRMN 11/06 Cup hdl 47.65 +1.75 22.34 37.45 956K 198K 42.45
Current. Nice volume move higher on another breakout.
HAS 04/12 Test BO 16.2 +0.09 14.88 17.88 830K 1.2M 15.55
Current. Still working up the 18 day MVA but on very low volume.
HAS 03/31 Test BO 16.2 +0.09 14.65 17 830K 1.2M 15.35
Current.
IART 04/24 FlyPlat 26.5 +0.51 26.25 32 259K 485K 25.45
Nice low volume consolidation.
IBM 01/11 Cup hdl 89 +1.45 88.62 100 8.4M 14M 84.75
Current. Nice rally higher on volume.
IGEN 01/11 A Wedge 37.38 -0.2 0 0 286K 375K 36
IGLD 04/21 Cup 6.05 +0.19 4.3 6.45 407K 543K 4.75
Current. Gapped higher on rising, above average volume, but showing a doji. Still going to let it work for us.
ILXO 04/15 Cup hdl 14.23 +0.23 11.6 15.32 369K 293K 12.44
Current. Trying to make the breakout, edging higher on strong, above average volume.
JNPR 04/15 Flat 12.53 +0.53 10.6 13.42 16M 17M 10.78
Current. Nice higher volume move up off the breakout test.
KLAC 04/02 Test 50 43.63 +1.14 39.4 45.48 12M 13M 40.65
Current. Up off the 18 day MVA on much stronger, average volume.
MDCO 05/10 Test 18 21.33 +0.33 21.25 25.48 850K 825K 19.76
Current. Volume surges to average on the move off the 18 day.
MME 04/30 BO 45.67 -0.27 45.65 54.45 1.2M 634K 42.45
Current. Held steady on strong volume.
MSFT 01/11 A Wedge 26.21 -0.14 26.62 30 54M 57M 25.55
MXIM 04/18 Rv H&S 40.61 +0.79 40.12 45 8.1M 1.2M 38.65
Current. Trying to move up off the 18 day MVA as volume rises.
MYK 03/22 Cup hdl 9.24 +0.05 8.88 10.88 94K 180K 8.26
Current.
NTES 04/01 Cup 25.4 +0.84 17 27 1.3M 1M 22.55
Current. Trying to start a new bounce up off the 10 day MVA on rising, average volume.
NVDA 05/08 Cup hdl 20.77 -0.6 17.55 21.25 25M 11M 16.32
Buy Not Issued.
OVTI 02/24 Cup hdl 29.84 +1.2 19.05 31 1.4M 1.2M 25.95
Current. Nice volume move as OVTI continues the run off the 10 day MVA test.
POSS 04/23 Cup 19.72 +0.42 20.18 24 87K 342K 18.45
Current. Trying to hold the 10 day MVA in a handle.
QCOM 04/16 Put 31.12 +0.01 32.56 29 15M 16M 30.28
QLGC 03/15 Test BO 47.45 +0.7 38.85 45 5.1M 11M 42.22
Current.
QLGC 11/07 Test BO 47.45 +0.7 41.4 50 5.1M 25M 42.22
QLGC 08/17 CCall 47.45 +0.7 36.48 0 5.1M 12M 42.22
Current.
RCII 01/11 Test BO 65.1 +0.27 0 0 299K 0 62.45
Nice test of the 10 day MVA on rising though still below average volume.
RGEN 04/07 Test 18 6 +0.11 4.84 7.1 383K 132K 5.45
Current. Nice recovery and now showing some volume on the way back up.
RL 04/10 Cup hdl 23.12 +0.26 23.26 27.94 238K 433K 21.63
Buy Not Issued.
SCSS 04/26 Cup hdl 14.84 +0.33 12.22 16 803K 696K 12.94
Current. Another solid move higher.
SFNT 05/12 Cup hdl 27.71 +1.94 28.11 32.35 489K 394K 26.14
New.
SHRP 05/01 Cup hdl 20.5 0 21.45 25.25 382K 293K 19.95
Buy Not Issued. Doji on the 18 day MVA as volume moved back above average. Keeping watch for the breakout.
SIGM 05/06 Cup hdl 7.81 -0.2 7.58 9.55 136K 125K 7.05
Buy Not Issued.
SINA 04/12 Cup hdl 12.45 +0.09 9.35 13.45 2.1M 2.5M 10.88
Current. Holding steady over 12 on below average volume.
SOHU 03/20 Dbl btm 19.27 +0.47 10.55 21.45 1.2M 800K 16.55
Current. Moving up again on some rising, above average volume.
SPLS 03/31 Test 50 20.9 +0.21 20.3 23.55 6.8M 5M 19.55
Current. Volume rising as SPLS does the same.
SSYS 03/01 Cup hdl 24.03 +2.03 12.25 15.45 435K 110K 21.88
Current. Nice recovery on solid volume after the late week selling.
TEVA 01/11 A Wedge 48.42 +0.75 0 0 2.1M 5M 0
THOR 04/05 Test BO 14.06 +0.8 13.5 16.26 1M 721K 12.74
Current. Big surge off the 18 day MVA test.
TNOX 04/12 Test 18 14.96 -0.24 12.96 15.75 275K 271K 14.25
Current. Could not continue the 18 day MVA bounce.
TSCO 04/24 Cup hdl 44.86 +1.25 43.75 52 701K 603K 41.94
Current. Super bounce off the 10 day MVA on volume. Excellent action.
TSCO 04/03 Rv H&S 44.86 +1.25 38.6 44.38 701K 577K 41.94
Current.
TXN 05/10 Cup hdl 19.67 -0.33 20.45 24.55 13M 16M 18.96
Buy Not Hit.
USAI 03/25 Cup hdl 34.61 +1.54 29.12 33.55 9.6M 8.3M 32.55
Current. Nice 10 day MVA bounce.
UTHR 04/30 Cup hdl 18.39 +0.53 18.12 21.75 328K 226K 17.48
Current. What a recovery, rallying now on rising, above average volume.
VIVO 05/07 BO 9.3 -0.03 9.38 11.25 56K 45K 8.72
Buy Not Issued.
VRNT 05/05 Cup hdl 21.24 +1.48 22.92 27.55 406K 245K 21.32
Current. Nice recovery off the 50 day MVA on even stronger volume.
VRTS 08/19 CCall 25 +0.41 19.76 20 7.2M 8.5M 22.05
Current.
VSTA 04/28 Cup hdl 21.25 +0.67 19.98 23.85 838K 156K 19.97
Current. Bouncing off the 18 day MVA on volume.
VTAL 04/23 Cup hdl 16.98 +0.83 14.25 17.12 525K 150K 15
Target Hit. Still moving higher on volume.
WFR 03/29 FlyPlat 13.1 +0.1 12.4 15.15 611K 200K 12.22
Current. Big volume surge as the pattern tightens. Could be a big break ahead.
WFR 02/22 Flat 13.1 +0.1 9.35 14 611K 217K 12.22
Current.
WMT 02/05 Put 56.7 +0.9 0 0 7.6M 8.2M 0
Nice gain on the retail sales for the week.
XLNX 03/20 Test BO 29.2 +0.39 28.05 34.55 8.6M 14M 26.88
Current.
XMSR 04/07 Test BO 9.99 +0.42 6.95 8.42 9.7M 6.5M 8.94
Current. Trying to bounce back up off the 18 day MVA test.
YHOO 12/11 Test 50 26.17 +1.13 17.32 25 11M 20M 23.94
Current. Nice break higher on volume.
Good Investing!
Jon L. 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.
|
us stock market
trade stock
|
