stock watch, stock split

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7/22/03 Stock Split Report
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Stock Split Report Subscribers:

MARKET ALERTS
Targets hit alerts issued Tuesday: None issued
Buy alerts issued: CELL; DSPG; ACV
Trailing stops issued: XINGE
Stop alerts issued: None issued

The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. You can sign up for Stock Split Report alerts at the following link:
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SUMMARY:
- International intrigue drives market gains.
- Market again does what it has to do to hold support.
- Strong earnings pace after hours action.

Up and down action at support. Not bad in the bigger picture.

Once again stocks managed to find footing at the recent lows with DJ30 and SP500 tapping support after the Monday selling and bouncing as they continue to work laterally in narrow 5 week consolidations. Techs managed to stop the slide as well helped early by some decent TXN earnings and a LEH upgrade of the chip equipment sector.

That was not enough to push stocks higher. They started up but then sold off. Techs managed to hold positive but they too were well off the highs until rumor hit that Saddam Hussein's nasty sons had bee killed. That started the market back up with a decent bid. Then smoke was seen billowing from the top floor of the Eiffel Tower and that had stocks pulling back from the gains made on the rumors of the Hussein progeny's demise. When it was learned that the Paris fire had nothing to do with terrorism and that the rumor of the murder boys' death was true, the market started to rally once again. The actual confirmation of the death did not come until right at the close, so the full extend of the move on the news may have yet to be reflected.

Volume was up on the session indicating that there was some accumulation underway and also indicating that the price/volume action was improving over the past two sessions. It was still not a powerful volume session as volume remained well below average. Hardly a call to arms by the buyers. The action was up but it is still in the lateral move, indicating the consolidation has not ended. There were some solid though scattered solid volume moves as we anticipated, but with modestly positive breadth, most stocks were just milling around, another indication that the consolidation did not end Tuesday. It is also very nice, however, to see stocks continue the lateral consolidation and price/volume action improve.

THE ECONOMY

Weekly retail sales on plan to slightly higher.

Redbook reported chain store sales gained 2.6% year over year for the week ended July 19, that on top of a 2.8% gain year over year the prior week. Month over month sales were up 1.0%. This report compiles sales data from 9000 retailers. The BTM report was less upbeat, showing a 0.3% gain in the week ended 7-19 versus a 0.9% gain in the prior week. Year over year sales were on par with the Redbook report with a 2.2% gain for the week that followed a 2.3% gain the prior week.

This is pretty big news for those worried lest the consumer cave in. Many retailers such as Wal-Mart are on the high end or even ahead of plan. July sales are thus tracking to be the strongest since April when sales rose 3.1% year over year due to a late Easter. From the retail sales numbers we have seen and the continued auto sales and home sales, consumers remain confident enough to continue spending. That is basically what consumers do; they either spend or they don't because they fear for their jobs. We always look at actions versus words. With spending on a growth path consumers are in the consumption mode even before the tax refund checks are issued.

That helps keep the economy propped up while businesses try to get on the spending track. There are signs that is starting given the tax incentives, but there were signs last fall as well, and they did not foretell a glowing recovery. This time around corporate earnings are up and there is some top line growth (i.e., revenue growth). There are signs of what the stock market has been predicting by its solid advance. As we have noted before, stocks improve long before the questions about the economy are answered. We discuss this more in the 'Market Sentiment' section.

THE MARKET

Once again the market tapped at support after a selling session and managed to bounce. It had help on the international front, but the prospect of an Iraq quagmire was hanging over the market in part, not to mention higher oil prices. The former worry was relieved at the deaths of these two evil sons, and oil prices fell $1.30 on the view that the Iraq resistance that is dogging the production enhancement efforts will diminish as a result.

The action was on rising volume but as noted, it did not turn the consolidation into a huge rally. The action was relatively subdued given the news though we do note that the confirmation did not come until very late in the session. Basically the indexes did what was needed, holding support and rallying back. It was a nice bonus that the action was on rising volume and that there were several stocks that broke higher out of sound patterns on strong trade.

In addition there were more good earnings reports after the close as more and more stocks are starting to show better than expected results. AMZN blew out expectations, CECO did the same and announced a split, ASKJ beat the street handily. Earnings are looking better though hardly changing the outlook of value investors. Right now the market is in more of a growth mode as far as investing. What it has to do before any of this really matters is to finish the consolidation, allow the majority of stocks to set up, and then break higher.

Market Sentiment

Much talk still about sentiment with the low VIX and high bullish investment advisor readings. While advisors are predominantly bullish, there are as many market analysts saying this rally is doomed as those saying it is the real thing. Regardless of what we hear on the financial stations, we feel that investors for the large part have not bought into the market recovery. Some sideline money continues to flow into stock funds but many investors have just become used to investing in bonds and have not even had bad dreams about getting back into the market. We still come across former investors in the market before and during the bear who watched the market every day, made good money and lost good money, and then got out because they kept trying to play the upside in a down market. The one question they always ask: 'So, how's the stock market doing?' That happened again this past weekend. They were burned and are not ready to even look at stocks. In short, they are not even back in the market to be bullish or bearish. Thus we look upon the

VIX: 20.98; -1.14
VXN: 32.45; -0.62

Put/Call Ratio (CBOE): 0.79; -0.02

Nasdaq

Tapped the June highs and then rallied to recover 1700 on some rising volume as semiconductor stocks came back to life.

Stats: +24.69 points (+1.47%) to close at 1706.1
Volume: 1.757B (+19.77%). Volume was up on the session as techs recovered from near support. Good to see volume rise as stocks recovered from support.

Up Volume: 1.263B (+900M)
Down Volume: 478M (-615M)

A/D and Hi/Lo: Advancers led 1.92 to 1. Decent upside breadth though no match for the recent downside action.
Previous Session: Decliners led 1.97 to 1

New Highs: 123 (-1)
New Lows: 7 (-4)

The Chart: http://www.investmenthouse.com/cd/$compq.html

Techs managed to hold the mid-June intraday high (1685) and closing high (1677) and rebound over 1700. The June highs are a good place to hold as Nasdaq does not then have to deal with another level of resistance on the road back up. Some were ready to call this a bottom on the pullback, and maybe the good results from AMZN and others will power Nasdaq right back up. As we have stated before, Nasdaq needs more of a lateral move along the lines of SP500 and DJ30 to absorb the gains, get rid of the sellers, and set the foundation for a move higher. A bounce right back up from here is plausible after a 50% pullback from the early July run, but a nice lateral move for a few weeks would be the best action. What do we do? We keep looking for the best stocks to play a continuing uptrend, those that are in good patterns. If they give the buy signal we will participate in the moves.

S&P 500/NYSE

The action is getting better as SP500 again holds support and price/volume action improves.

Stats: +9.31 points (+0.95%) to close at 988.11
NYSE Volume: 1.431B (+18.45%). Back to average as the large caps held near support and bounced back up.

Up Volume: 1.056B (+803M)
Down Volume: 359M (-596M)

A/D and Hi/Lo: Advancers led 1.36 to 1. Very modest breadth as smaller caps lagged somewhat.
Previous Session: Decliners led 2.92 to 1

New Highs: 73 (+10)
New Lows: 30 (+4)

The Chart: http://www.investmenthouse.com/cd/$spx.html

Continuing its 6 week lateral consolidation between 975 and 1015, holding the former on the Tuesday low on an intraday tap and then a bounce back up to midrange on rising, average volume. Very steady, building action that is working to set up the next move in the rally. This is exactly what we want Nasdaq to do to digest its big gains. Again, the improving price/volume action is good to see. This is the second 50 day MVA test during this lateral move, and while we doubt that the index is ready to break higher yet, the action is setting the foundation for future gains.

DJ30:

Stats: +61.76 points (+0.68%) to close at 9158.45
Volume: 1.431B (+18.45%)

Blue chips continue in their 6 week lateral consolidation as well, holding that very tight range between 9000 and 9352. All the while the 50 day MVA (8962) is moving up to meet it. Several Dow cyclical stocks have come to life (e.g., MMM, CAT, UTX), and when the technology portions of the Dow complete their consolidation the Dow will be ready to make its next move.

WEDNESDAY

Again earnings are the main focus Wednesday with AMZN, CECO and others reports stellar after hours results. More will be out before the open to fill the void in economic data. There are earnings positives and international positives to drive the action. The only question is if the market is ready.

We do not think the market is ready to make a breakout at this point. Nasdaq has pulled back to the June tops, a likely support level, and the other indexes have been working on 6 week consolidations. They could definitely use good earnings news and improving international scenarios to start the next leg. We don't think stocks have consolidated enough to support or sustain another push higher, but we also do not control the market. If it takes off on volume we can either sit and watch or participate.

Thus we continue to seek the stocks that have already set up good patterns and are trying to be the early frontrunners in a next leg higher. Those eager to make the moves can grow into the next market leaders s we saw out of the October low and again at the March bottom. That is why if they have the patterns and make the moves we are willing to enter. We were doing it conservatively today, but we will do it again Wednesday if the opportunities present themselves again.

Support and Resistance

Nasdaq: Closed at 1706.10
Resistance: 1760 (May 2002). 1800.
Support: 1700 (Feb 2002 low). The 18 day MVA (1698). 1685 (June intraday high) and June closing highs (1677 to 1645). The exponential 50 day MVA (1630). 1600 to 1595 (June 2002 closing high). The mid-May high (1554).

S&P 500: Closed at 988.11
Resistance: The 18 day MVA (990). 1003, the early June closing high. June closing high at 1011. The June intraday high at 1015. Then 1050.
Support: 975 (December 1997 peak). The 50 day MVA (972) and 965 (August 2002 peak). The mid-May high (948) and 935 (November and January peaks).

Dow: Closed at 9158.45
Resistance: 9236, the early June intraday high to 9250. 9352, the June high. 9500 (June 2002 lows).
Support: The 18 day MVA (9113). 9000 is some psychological and price support that has held previously. 8980 is the neckline in the short head and shoulders pattern. The 50 day MVA (8962). January high (8870). The mid-May high at 8743

Economic Calendar

7-21-03
Leading economic indicators, June (10:00): 0.1% actual, 0.2% expected, 1.1% May.

7-24-03
Intial jobless claims (8:30): 415K expected, 412K prior.

7-25-03
Durable goods orders, June (8:30): 1.2% expected, -0.4% May.
Existing home sales, June (10:00): 6.00M expected, 5.92M May.
New home sales, June (10:00): 1.111M expected, 1.157M May.

SEMINARS ON CD

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.

End part 1 of 3

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