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yahoo stock, trend trading stock
Begin Part 2 of 2
SUBSCRIBER QUESTIONS
Q: Thanks for noting stop loss parameters. I'm not clear about how or if to apply stop loss prices when you've written covered calls. Keep up the good and conscientious work!
A: Very good question. This is one of the downsides of covered call writing: a stock that looks good starts to fall on you due to market conditions or bad news. You have those calls out there that require you to hold the stock in order to cover. In non-retirement accounts we go ahead and set a stop loss below support. If the stock breaks it, the calls will be lower in price anyway, and we don't want to break our stop rules because we are using a different strategy. If it is normal action in the trading range, we don't worry as long as price/volume action remains overall healthy. It is when it breaks below the range we are playing or the trend we are playing that we have to be ready to enforce stop rules. At that point we can let the calls ride because the stock has broken its pattern that we were playing, and they will most likely continue to lose value. This is a subject covered in detail in the Covered Calls seminar.
TEAM TRADES
THQI: We have been watching THQI for about two weeks. We have said you need to let the plays come to you. It takes patience. We had an alarm set on THQI on eSignal, so we were set. The breakout we had set was 40.95. The stock hit that an hour into the session and before we could do anything (did not have a buy stop order in), it jumped up to 41.75. But, it fell back to 41.25 on the bid. With the volume we were seeing, it was the opening we were looking for: a test of 40.95, but we were not going to wait around to see if it would test exactly the 40.95 level and miss the move. This is an important point; when we see a powerful move we don't want to quibble over a quarter point or half point necessarily. If the volume was there (and it was this morning), we want to be in on the breakout. The stock was moving back up and bids and asks were flying all around. We saw 41.25 by 41.28 to 41.34. We put in a limit order at 41.30 and that was good enough. The stock rose to 42 and then stalled. It traded in a very tight, flat range for the next three hours on practically no volume. False breakout? We put a stop order at 39.88, just below the breakout. The stock then exploded on huge volume at 1:30 and shot higher, closing at 44.84. Another great breakout.
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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: THQI, one of our Up & Comers stocks, broke out today, as did TTWO, a new play from last night. ACS moved higher but looks ready to pull back. Several portfolio stocks look good, and we are looking at the indexes again.
Best Plays:
1) MSFT: Moving up and looks ready for a breakout.
2) GSB: The pattern still looks good.
3) KEI: Ready to move in a rally.
4) NVDA: Blasting off from a test of its breakout.
5) SEBL: Watch this one in a rally.
6) VRTS: Moving up on strong volume.
7) BRCD: Ditto.
New:
MSFT (Microsoft--$70.17; +2.42; optionable (MSQ): Software
http://biz.yahoo.com/p/m/msft.html
STATUS: The stock is in a 10-month base that is part of a much larger base, but currently has pulled back to support (10 day MVA, 67.24) and today popped up from there on slightly stronger volume (41.8 million; avg. 42.8 million). Looks ready for a breakout over the April high (71.10) as the stock continues to rally. Showing strong money flow and relative strength that has moved out ahead of price, a bullish sign. May not go tomorrow or the next day, but lets keep it on the radar.
Target: $80.
BUY POINT: 71.23, on volume of 64 million or better. Stop loss: 66.24.
POSITION: Stock and/or July $70 calls to buy (MSQ GN).
http://www.investmenthouse.com/cd/msft.html
Updates:
GSB (Golden State--$29.60; -0.20; optionable (GSB): Savings & Loan
http://biz.yahoo.com/p/g/gsb.html
STATUS: Continues in its 4-month base, pulling back toward support (10 day MVA, 29.31) in the ascending wedge pattern the stock formed in the mid-to-upper right side of the base. Volume dropped back right along with price, to 325,400 (avg. 686,363), and we are looking for a bounce back up once price hits the moving average. For the breakout, look for a move over the pattern high of 30.30. Initial target: $33-35.
BUY POINT: 30.43, on volume of 927,000 or better. Stop loss: 28.30 (just above the 50 day MVA, 28.21).
POSITION: Stock and/or July $30 calls to buy (GSB GF).
http://www.investmenthouse.com/cd/gsb.html
KEI (Keithley Instr--$28.59; +2.04; optionable (KEI): Scientific & Techn Instr
http://biz.yahoo.com/p/k/kei.html
STATUS: The stock is a former portfolio stock and was recently featured as a subscriber's choice. Continues the consolidation above the 50 day MVA (24.77) on low volume, which indicates a good shakeout of stockholders. The low Tuesday tapped the 10 day MVA (25.97) and the stock moved up from here on even lower volume (296,400; avg. 557,272), but on a volume surge in a rally, the stock can continue this incipient move out of the pennant-type pattern. Initial target: $32-33.
BUY POINT: Over the high of 28.95 on volume of 752,000 or better. Stop loss: 26.92.
POSITION: Stock and/or July $25 calls to buy (KEI GE).
http://www.investmenthouse.com/cd/kei.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 (LLL, NATI, ESRX). We continue to look to stocks like ACS, CPN, SGR, NVDA and BRKS as the new leaders. 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 be considered largely 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, NVDA, BRKS
Previous Leaders: ADBE, AMCC, ARBA, BEAS, BRCD, CIEN, EMC, EXTR, GLW, JNPR, NEWP, NTAP, PMCS, SCMR, SEBL, VRSN, VRTS
NVDA (Nvidia--$91.08; +7.78; optionable (RVU): Semiconductor
http://biz.yahoo.com/p/n/nvda.html
STATUS: Broke back to a new high after testing its breakout (previous high is 88) on strong volume (7.8 million; avg. 4.5 million) and closing just under the intraday high of 91.30. The stock is in a 3-day run off the 10 day MVA (currently at 80.28), and looks ready to tack more onto this strong move. Initial target: Reached it when it hit 90, but as stated previously, we are letting this one run. Strong money flow and good buying.
BUY POINT: A buy on the breakout up to 94.63 on continued strong volume. Stop loss: 84.70.
POSITION: Stock and/or June $85 calls to buy (RVU FQ).
http://www.investmenthouse.com/cd/nvda.html
Previous Leaders: We like the continued consolidations seen in some of these stocks.
SEBL (Siebel--$47.49; +1.91; optionable (SGW): Application Software
http://biz.yahoo.com/p/s/sebl.html
STATUS: The stock is moving up gradually after testing the 50 day MVA (40.89) last week. Volume remains below average, but was up again Tuesday (16.2 million; avg. 18 million) as the stock inched up to close just under the April high of 47.80. On the stronger volume, however, and up from a test of the 10 day MVA (42.64), the stock looks ready to take that out. Ready to go; just needs the volume to back it up. Initial target on that move: $53-55.
BUY POINT: Aggressive: Up from here on continued rising volume. Stop loss: 44.17.
POSITION: Stock and/or August $40 calls to buy (SGW HH).
http://www.investmenthouse.com/cd/sebl.html
VRTS (Veritas--$66.01; +6.40; optionable (VIV): Application Software
http://biz.yahoo.com/p/v/vrts.html
STATUS: Broke over the 50 day MVA (61.56) on stronger volume (16 million; avg. 17.6 million). the stock coming closer on the move to breaking over the April high of 67.95. Beyond that VRTS has overhead supply enough to slow it down unless the market rolls in the volume. The stock sliced through a good bit of it today, however. Looking for an initial target of $79.
BUY POINT: Aggressive: Up from here on continued strong volume. Watch the April high (67.95) for potential resistance. Stop loss: 61.
POSITION: Stock and/or August $60 calls to buy (VIV HL).
http://www.investmenthouse.com/cd/vrts.html
BRCD (Brocade--$42.96; optionable (UBF): Computer Hardware
http://biz.yahoo.com/p/b/brcd.html
STATUS: Trying to make a breakout move from the ascending wedge, the stock beating the buy point of 40.23 but still needing stronger volume to quality as a true breakout. The stock is over our limit for buying on a breakout, but we like the gap up to the open and the close near the high (43) on stronger volume (which brok just over average levels to 17.1 million). Look for volume to ratchet up to support the breakout. Initial target: $50.
BUY POINT: Aggressive: Up from here on volume of 21 million or better. Stop loss: 39.95. Pullback: On a move back up from a test of 40.23 (buy point), on rising volume.
Stop loss: 37.41 (just below the 50 day MVA).
POSITION: Stock and/or July $30 calls to buy (UBF GF). July $35 calls were not listed at the time of this writing; check with your broker in the morning.
http://www.investmenthouse.com/cd/brcd.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 watchlist we will continue to monitor for recovery when the market finally emerges from the bear market. TQNT and GMST were covered earlier this week and are showing improvement.
LOW (Lowe's Companies Inc--$64.72; +1.72; optionable (LOW): Retail: Home Stores
http://biz.yahoo.com/p/l/low.html
STATUS: The stock has run up from its test of the 50 day MVA (57.11) over the last 4 days, and looked ready to pull back Monday as volume dropped back and the stock showed a slightly higher doji. However, LOW moved up on stronger volume (4.6 million; avg. 3.6 million). That was a nice pop for investors, putting the stock over the March high of 64.59 (LOW is still below its all-time closing high of 65.13 hit back in early 1999). The stock can continue up from here, but after the run, look for the inevitable pullback. Trailing stops and stop losses can help preserve gains.
BUY POINT: Aggressive: Up from here on continued rising volume. Stop loss: 60.07 (10 day MVA). Pullback: On a move back up from 62-63 on rising volume.
POSITION: Both positions: Stock and/or July $55 calls to buy (LOW GK).
http://www.investmenthouse.com/cd/low.html
MEMBER PORTFOLIO: BRCM, CHKP, CSCO, EMLX, IDTI, INTC, JDSU, MVSN, NT, PWER, SUNW, VTSS
CHKP (Check Point--$65.50; +2.77; optionable (KEQ): Security Software
http://biz.yahoo.com/p/c/chkp.html
STATUS: The stock is consolidating tucked under the 50 day MVA (65.77), its upper resistance for the last 6 days, and the low tapped at the 60 range, a level that's supported the stock since mid-April. Volume was higher at 11.3 million (avg. 12.7 million). We like today's action, as the stock came off the low and closed 10 cents under the high on stronger volume. We will look for a strong move over the 50 day MVA from here. Pressure looks to be building. Target: $80.
BUY POINT: Aggressive: Over 66 (50 day MVA) on volume of 15 million or better. Stop loss: 61.
POSITION: Stock and/or July $65 calls to buy (KEQ GM).
http://www.investmenthouse.com/cd/chkp.html
Either way: These indexes are at resistance and can offer an aggressive downside play should the market begin to sell; conversely, if they break out, we can play that as well.
DJX (1/100 Dj Indu--$108.98; +1.63; optionable (DJV):
STATUS: At resistance (just over 109), moving up on lower volume ((1.16 million; avg. 1.2 million). On a move back down from 109 in market selling, the stock can drop back to 106 for a quick and aggressive play. Below that is the 50 day MVA at the 103 level for a target in strong selling.
BUY POINT: Upside: Over 110 on volume in the range of 1.6 million or better. Stop loss: 102.30. Downside: On a move down from here (or 109) on stronger, selling volume.
POSITION: Upside: June $108 calls to buy (DJV FD); check with your broker for deltas in the morning. Put: June $110 puts to buy (DJV RF). Deltas unavailable at the time of this writing. Please check with your broker in the morning.
OEX (Standard & Poors 100--$655.55; +10.08; optionable ( ):
STATUS: At resistance (April high is 657.26) on lower volume, 1.16 million (avg. 1.2 million). That's a classic signal of a weak move, and if the market begins to sell, we will look at playing the index on a move down to the 50 day MVA (628.10). Otherwise, on a move over the April high on stronger volume, the stock is a potential upside play.
BUY POINT: Upside: Over 657.26 on average or better volume. Stop loss: 611.25.
Downside: Aggressive: On a move down from here (or from 657) on strong market selling.
BUY POINT: Upside: June $560 calls to buy (OEY FJ). Put: May $660 puts to buy (OEY QL); please check with your broker for deltas.
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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yahoo stock
trend trading stock
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