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us stock market, trade stock
Begin Part 2 of 2
THE MARKET
Tuesday's move did not give any push to today's action as many stocks showed some topping action after trying to move higher initially. We might see a pullback to near-term support levels (e.g., 10 or 18 day MVA, up trendlines, tests of breakouts) before moving higher again. Nothing really changed for us today.
Overall market stats:
VIX: 22.38; +1.16. Much has been made of this the past two sessions, and it is at the lower end of the range. But you cannot toss out everything else and fixate on this. Short interest is at a high and the put/call ratio is at least as strong in the fear category as the VIX is in the apathy category. The other indicators are in step; the VIX is not.
VXN: 54.34; +0.44. The VXN continues to flat line in the low fifties. That is low, but not as low as the mid-thirties it has been at in years past.
Put/Call ratio (CBOE): 0.73; +0.05. This ratio has continued to climb to levels that show high anxiety among option traders, and that is usually a sign that investors are overall queasy about the market and its chances to move higher. That continued fear is what we like to see. Short interest dipped slightly on Tuesday's rise, but was back up today. It is still at highs not seen in over 1.5 years just before the Nasdaq took off to the upside. Option activity rose to 1.037 million on the CBOE (1.015 million Tuesday).
NASDAQ: No follow through today, but volume was lower.
Stats: Down 15.93 points (-0.7%) to close at 2217.73.
Volume: 1.772 billion shares (-4%). Below average again and lower on some mild selling overall. Down volume led, but not by much, at 948 million to 801 million shares. This is what we like to see on pullbacks.
A/D and Hi/Lo: Declining issues moved back in front after four sessions, 1.36 to 1 (advancers led 1.8 to 1 on Tuesday). New highs fell to 124 (-44) as new lows also fell to 30 (-8).
The Chart: http://www.investmenthouse.com/cd/$compq.html
Gapped higher and ran to 2249.72, but sold back. Some rally attempts were unable to hold and the index closed in the lower half of the day's range. It was not the kind of day anyone was really looking for on the upside, but then again, after four days of gains the market has tended to pullback. We do not, however, think this pullback will be back down to the bottom of the range at 2050 to 2077. We think what we are seeing here is a pullback to the 50 day MVA at 2147.87 or higher, and then a move up from there. Today did not change our position on a run up to 2300 and perhaps beyond. We view today as a head fake. We may end up being the ones faked out, but the charts we see look like a pullback to support and then a move higher. Volumes will tell the ultimate tale, however, and we cannot ignore them. Another thing we watch tomorrow: how is BRCM treated. It lowered earnings estimates but sees stabilization in the second half. Half empty or half full?
Dow/NYSE: The Dow gave back almost all of its Tuesday gains. It held over 11,000, volume was lower, and JNJ continued its pre-split run. Those are about the only positives we could find today.
Stats: Down 105.60 points (-0.9%) to close at 11,070.24.
Volume: NYSE volume edged down to 1.062 billion (-4.8%). Below average with down volume leading 759 million to 259 million shares. If we have selling, at least it was on lower volume and did not indicate dumping of shares by the institutions.
A/D and Hi/Lo: Declining issues moved ahead 1.52 to 1 (advancers led 1.82 to 1 Tuesday). New highs fell to 173 (-27) as new lows rose to 20 (+7).
The Chart: http://www.investmenthouse.com/cd/$dja.html
The Dow turned back without every giving its recent high at 11,350.05 a run for its money. That would have been the second attempt at breaking that level, and we were looking forward to that. The quick reversal was not even a moderate pullback, but gave back Tuesday's gain. We need to see it bounce at 11,000 (the 18 day MVA is at 11,015.91) if it is going to make a run at it this leg. If not, looks like another test of 10,800 to 10,750 (the down trendline it recently tested is converging with the 50 day MVA at 10,777.54).
S&P 500: So much for looking good. The big caps reversed and they too gave up almost all of Tuesday's move, coming to rest on potential support at 1270. This would be the optimal point to hold for another move higher, but the futures are down a bit, and we anticipate a test lower before a move back up. Still, the selling was on lower volume today, making Tuesday's buying a bit more powerful. It was no hands down winner, however, and we need to see the index bounce back after some early weakness and close higher in true bull fashion. Otherwise it is down to 1250 again (the 50 day MVA is at 1252.04, giving some added support at that level). We still like the overall look, but it may just have to trade in this range for a rotation or two. We are going to look for some lower action on the open and a recovery.
Stats: Down 13.54 points (-1.1%) to close at 1270.03. The worst loser of the day.
Volume: NYSE volume slipped to 1.062 billion (-4.8%).
The Chart: http://www.investmenthouse.com/cd/$spx.html
TOMORROW
BRCM holds its conference call at 8:45 am ET. INTC has its mid-quarter conference call after the close. Sounds like a good day to keep the mute button handy when watching the financial shows. We will see how BRCM is treated. Again, we knew that earnings would not be stellar for anyone this quarter, but the 'stabilization' term is good; half empty or half full? Jobless claims out before the open, wholesale inventories at 10:00, and we also start seeing retail sales numbers start coming in. Thus far FTUS has reported a 4.5% increase in same store sales.
We are expecting a weaker open and then a move higher. We are going to be looking at support levels to hold as buy points for our plays or as add-to points. Again we may get head-faked, but late tonight AMD reiterated its modest revenue growth this year and that there is increasing reason to believe that the personal computer market is stabilizing and will return to 'normal' in the fourth quarter. Another indication that the economy is going to return; what a shock. We all know that, but we have to go through this process of building back up. That is why we are going to continue our same game plan of sticking with the stocks breaking out of sound patterns for our longer term plays and picking up shorter term action on pre-splits and covered calls.
Support and Resistance Levels
Nasdaq: Closed at 2217.73.
Resistance: Could not break 2232. Still needs to take that out and then 2250. Then the May high at 2328.
Support: The 50 day MVA is at 2147.87. After that 2050 and then 1995 - 2005.
S&P 500: Closed at 1270.03.
Resistance: Some resistance at 1300, but 1315.93 is the recent high it needs to plow back through.
Support: 1270, right where it closed. Then 1250. The 50 day MVA is at 1252.04.
Dow: Closed at 11,070.24.
Resistance: Next stop is 11,350 from the looks of it, and then there is 11,450. The old high at 11,750.28 is looking pretty far away.
Support: 11,000. Down trendline at 10,800 to 10,750 where the 50 day MVA is at 10,777.54. Pretty good support in that area.
Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.
6-04-01
Auto sales for May: 6.2M expected versus 6.4M priorl
Truck sales for May: 6.9M versus 7.0M.
6-05-01
Productivity, Q1, revised (8:30): -1.2% actual versus -0.7% expected and -0.1% prior.
Factory orders for April (10:00): -3.0% actual versus -2.7% expected and +1.4% prior.
NAPM Services for May (10:00): 46.6% versus 48% expected and 47.1% prior.
6-07-01
Initial jobless claims (8:30): 430,000 expected versus 419,000 prior.
Wholesale inventories for April (10:00): -0.1% versus +0.1% prior.
Consumer Credit for April (3:00): $8.6 billion versus $6.1 billion prior.
SUBSCRIBER QUESTIONS
Q: Some previous leaders such as AMCC and JNPR seem to be basing. Should I sell these previous leaders and buy into NVDA?
A: Yes, AMCC and JNPR are at the bottom of some serious bases that started back in October 2000. They are deep at the bottom and will take a long, long time to ever return to their highs. Still, that does not mean they cannot produce good returns. JNPR doubled in April, but it has since given up a good chunk of that move as it fell below its 50 day MVA. The pattern has deteriorated, and AMCC's pattern is similar. Should you sell? We are not allowed to give advice on specific stocks. Moreover, without knowing where someone bought at stock, the rest of the portfolio, etc., it is very difficult to give such advice even if we could. At this point we are not looking at either stock from a long term perspective. We will look at them for short term plays if we see the pattern form up well, and if we see a bullish pattern develop we know they both can give us some fast moves. We are also looking at NVDA right now with interest. It broke out of a cup with handle patern in April, and it has now formed and ascending wedge on top of that. As discussed in our Technical Analysis seminars, these are some of our favorite patterns, and we are looking to add more NVDA when it breaks out of this pattern if the market is still looking overall bullish to us as it is now.
If you are interested in the online Covered Calls and Protecting Your Downside Seminar that is to be given next week on three dates (June 13 at 8:00 pm ET, 15 at 11:00 am ET, and 16 at 10:00 am ET). The cost is $300 and you get a top-quality reference manual that will be your covered call source for years to come. To sign up or for more details, visit the following link:
http://www.investmenthouse.com/signup1.htm
TEAM TRADES
No trades to report today. We were trying to get into some LNCR, but the stock gapped higher and never hit our buy point on the pullback. We will look for it to come back to us around 61-62 on a test of the breakout, and then we will try to get in on the move higher.
Good Investing!
Jon Johnson and the Stock Split Report 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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us stock market
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