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Begin Part 2 of 4
Support and Resistance Levels
Nasdaq: Closed at 2264.00.
Resistance: Today it made the break over 2232 and 2250, and now the May High at 2328 is the next important level.
Support: 2250 is possible support. The 18 day MVA is at 2187.20.
S&P 500: Closed at 1276.96.
Resistance: Some resistance at 1300, but 1315.93 is the recent high it needs to plow back through.
Support: 1270. Then 1250. The 50 day MVA is at 1253.02.
Dow: Closed at 11,090.74.
Resistance: Has to clear 11,196.53 (Tuesday's high) first, and then 11,350. 11,450 is after that. The old high at 11,750.28 is looking pretty far away.
Support: 11,000. Down trendline and the 50 day MVA are converging at 10,789.93.
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): 432,000 actual versus 430,000 expected and 419,000 prior.
Wholesale inventories for April (10:00): -0.3% actual versus -0.1% expected and +0.1% prior.
Consumer Credit for April (3:00): $13.9 billion versus $8.6 billion expected and $6.1 billion prior.
SUBSCRIBER QUESTIONS
Q: I have some burning questions for a long time, and wonder if you please could answer it for me. 1. When I hear: to go 'long', or 'short', is that used for options only, or can that be applied for stocks as well? 2. What time frame is considered to go 'short', or 'long'? 3. When one goes 'short' (if that word is applied for stocks), are all the shares sold, or only part of it?
A: The terms apply to both stock and options. You can go 'long' either, i.e., buy them. Or you can go short, i.e., sell them without owning them. If you go long you come out of pocket with cash to buy. If you go short you are selling, that is putting money into your account. When looking at time frames, on stock it does not matter. On options, the expiration period is the key. Options expire the third Saturday of each month and both your long and short option trades are keyed off of this. If you buy or go long an option, time is your enemy; if you sell or go short an option, time is your friend because time decay reduces the value of the option you sold and you can buy it back cheaper. There is much more to these different strategies and we cover buying and selling options in the Options You can Use seminar.
Seminar information:
To sign up or for more details, visit the following link:
http://www.investmenthouse.com/signup1.htm
TEAM TRADES
NVDA was in a very bullish pattern: a breakout of a cup with handle base followed by an ascending wedge. Stocks often start major runs from this combination pattern. The stock started lower as expected, but then ran up to hit our buy point of 96.68, setting off an early alert (9:13CT), with volume at 753,000. Average volume is 5.5 million, and the stock had pulled in about 3 million the day before. After hitting a high of 96.95, it pulled back to test the range of the breakout point. It had run up from the open (93.19), and had soared up. Volume was up to 761,000 by 9:15 and looked to be moving pretty well, confirmed by climbing to 787,000 by 9:18. The stock jumped up from 96 but volume was tapering off intraday. The options (September $85) were trading at 22.10 by 21.30. We put in a bid at 21.60 on the test of 96, got the fill as the options pulled back as well. The stock took off to move over the previous high, at 97.08. We put in a stop loss on the options at 17. Volume was up to 933,000, with the Nasdaq rallying to +21.
NVDA hit 98.64 just before 10 am then pulled back to test 96 again by noon, where it had tested early in the morning, then bounced back up to begin consolidating up and down between 97.50 and 98 between 1:00 and 2:00. The stock broke out of that and popped back up to 98.50. Volume was now up to 3.47 million, now over Wednesday's closing volume, and with the Nasdaq rallying to +46, the stock closed at 99.33 on volume of 4.71 million. A great breakout move, and is likely to continue up from here as the stock was up to 101 after hours on the INTC news.
For a review of frequently asked questions, please use the link below:
http://www.investmenthouse.com/1questions.htm
THE PLAYS: Lots of solid patterns and solid moves on the report!
PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: No announcements scheduled for this week, but there are some more exciting ones coming up.
BEST PLAYS: Besides the plays set forth below best plays, there are some other stocks that also look good. These include Pre-Announcements FISV, ADVP, and FDC, and Post-Splits BRCD, GENZ, PKI and FIC.
PRE-ANNOUNCEMENT BEST PLAYS:
1) FITB - Test of the breakout
2) CEFT - Breakout, but needs volume
3) CHV - A doji at support in its ascending wedge
FITB (Fifth Third Bancorp--$60.22; -0.07; optionable): Forecast to announce a split on 6-21-01 in conjunction with earnings. At this time the company cannot confirm the date.
http://biz.yahoo.com/p/f/fitb.html
BACKGROUND: Last announced a 3:1 split on 6-20-00 at a stock price of $61. The annual shareholder meeting was on 3-20-01 at which time authorized shares were increased.
STATUS: Testing its breakout from a cup with handle, tapping its 10 day MVA at its low today of 60.22 before closing with a doji. After easing back Wednesday the stock looks solid, and could be poised to make a move back up after this test. The stock is holding above its pivot point and the high in the left side of the cup (59.23 and 59.50, respectively). The stock shows excellent relative strength and money flow, with solid buying.
BUY POINT: A move up from here on increased volume (down to 866,900 today; average 1.77 million). The breakout high was 61.11.
POSITION: Earnings play. Stock and/or July and August $55 calls to buy (FTQ GK and FTQ HK).
CEFT (Concord EFS--$52.33; +1.58; optionable): NEW INFORMATION Forecast to announce a split on 7-25-01 in conjunction with earnings. At this time the company cannot confirm this date, but based upon our research this is the date for the release.
http://biz.yahoo.com/p/c/ceft.html
BACKGROUND: Last announced a 3:2 split on 8-26-99 at a stock price of $37. Prior to that announced a 3:2 split on 5-14-98 in conjunction with its annual shareholder meeting. The annual shareholder meeting is scheduled for 5-24-01 at 9:30 am CST at which time additional shares will be authorized.
STATUS: Broke out today from a lateral consolidation it had formed after breaking from an ascending wedge and then a larger cup pattern (from early March, with highs at 50). Volume was up but not of the breakout strength we like, below the average at 3.35 million (average 3.8 million). Still, not a bad move, but on a continued run we will need to see better volume. Relative strength has broken out, and buying is solid.
BUY POINT: A move up, looking for volume better than the average.
POSITION: Stock and/or September $50 calls to buy (EQF IJ).
CHV (Chevron--$96.01; -0.15; optionable): Forecast to announce a split on 7-25-01 before the open in conjunction with earnings. At this time the company cannot confirm the date.
http://biz.yahoo.com/p/c/chv.html
BACKGROUND: The annual shareholder meeting was on 4-25-01 at which time authorized shares were increased.
STATUS: With Exxon-Mobil announcing, we are looking at some other of the big oils to follow suit, and CHV looks prime. The stock has pulled back to its 18 day MVA (95.81) and the up trendline of its ascending wedge, showing consecutive dojis (today a bullish shooting star) after gapping down yesterday. That means we will look for CHV to hold here, continuing to make higher lows in its ascending wedge pattern, and looking for a move up and breakout over the pattern high at 98.49. The stock shows good money flow.
BUY POINT: A move over 98.59 on continued strong volume (down to 2.63 million; average 2.44 million).
POSITION: Stock and/or September $95 calls to buy (CHV IS).
PRE-SPLIT BEST PLAYS: Remember, we try to grab these as they break out of good patterns or as they start a run right before the split. Not looking for home runs, but looking for those $3 to $4 moves running into the split. Not huge money, but it can be very steady.
1) ESRX - Will not stop
2) SHFL - Rebounding nicely
3) LOW - Good move to another new high
ESRX (Express Scripts--$107.42; +2.52; optionable): Splits 2:1 effective on or about June 22.
http://biz.yahoo.com/p/e/esrx.html
STATUS: ESRX has been relentless since its split announcement, and today continued up after a strong move Thursday. Today's move had more volume behind it, coming in at 840,300 (average 795,200), and it took the stock beyond its December high of 107. We will carefully protect positions with stops as ESRX has made quite a move, but it still shows strength, with the volume and closing near its high.
PLAY: A continued strong move, with stock and/or August $100 calls to buy (XTQ HT).
SHFL (Shuffle Master--$31.75; +2.45; optionable): Manufacturing. Splits 2:1 effective June 19.
http://biz.yahoo.com/p/s/shfl.html
STATUS: Asserting itself again after testing and holding its 50 day MVA (27.98), thestock took off today, closing back over its 10 day MVA (31.17). It is not unusual for a stock that has been trending up along its short-term MVA's to come back and test its 50 day MVA, and indeed SHFL has done this several times the past year. From here we will see if the pre-split momentum can continue, looking for the stock to continue moving up toward the high of 34.95. Money flow and relative strength are making recoveries.
PLAY: A continued move on strong volume (down to 517,600 today; average 271,000), with stock and/or July $25 calls to buy (SFQ GE low open interest).
LOW (Lowe's--$74.00; +1.92): Splits 2:1 on or about June 29.
http://biz.yahoo.com/p/l/low.html
STATUS: LOW continued the move, turning up the juice as it moved to a new high Thursday (former high 73.70, on its breakout from a cup with handle). Volume was not very solid, however, coming in at 2.32 million (average is 3.37 million). We will want to see a continued move with more volume behind it. Relative strength broke out as well, and money flow is very strong.
BUY POINT: A continued move, looking for increased volume, with stock and/or July $70 calls to buy (LOW GN).
CONTINUING CANDIDATE BEST PLAYS: Some puts in here.
1) ACF - Waiting for the move
2) NVDA - Broke out
3) MIKE - Still looking good
4) KMP - Might have shaken out the sellers
5) GNTX - Shotting star doji on the test
ACF (Americredit--$51.16; -0.29; optionable): Credit Services.
http://biz.yahoo.com/p/a/acf.html
BACKGROUND: Last announced a 2 for 1 split on 8-18-98 at a stock price of $35. The annual shareholder meeting was on 11-7-00 at which time no authorized shares were increased. The company does not have sufficient shares for a 2 for 1 split, but does have sufficient shares for a 3 for 2 split.
STATUS: ACF is one of the stocks that have made a very strong run for us on the report, making a great move mid-May. From the high established at 55 the stock has gradually pulled back, giving up its 10 day MVA (51.72), but it is still holding the 18 day MVA at 50.86. Volume dipped back on today's doji pattern, at 713,800 (average 962,500), and we are waiting for ACF to make a strong move out of this consolidation.
BUY POINT: A move over 52.50 on above average volume.
POSITION: Stock and/or August $50 calls to buy (ACF HJ).
NVDA (Nvidia--$99.33; +5.31; optionable): Semiconductor.
http://biz.yahoo.com/p/n/nvda.html
BACKGROUND: The company last announced 5-16-00 after the close with earnings. Price was at $94, but the stock rose $8.74 that day in anticipation.
STATUS: NVDA has formed a bullish pattern, an ascending wedge formed after its recent breakout from a cup with handle, and today the stock broke out. It made a new closing high, closing just below the intraday high at 100. Volume was up, coming in at 4.78 million, but below the average of 5.6 million). Looking for a continued move but on continued volume. Initial target on the move: $107-110.
BUY POINT: A continued move on above average volume.
POSITION: Stock and/or September $95 calls to buy (RVU IS).
KMP (Kinder Morgan--$70.05; -0.95):
http://biz.yahoo.com/p/k/kmp.html
BACKGROUND: Based upon our research it does not appear that KMP has ever split its stock. KMP is a master limited partnership and therefore does not have annual shareholder meetings.
STATUS: The stock has been in a tight, lateral consolidation over its 18 day MVA (71), but dropped below that support today. It closed in the lows of its consolidation, but volume, although a bit higher today, remained below the average at 95,600 (average 137,500). This could be a shakeout before a move up, so we will look for the stock to make a run back up, and we will look for the stock to move back up and out of the consolidation.
BUY POINT: Aggressive A move back over 72 on above average volume.
POSITION: Stock and/or September $70 calls (KMP FN).
GNTX (Gentex--$30.70; +0.10): No announcement, but the stock broke out.
http://biz.yahoo.com/p/g/gntx.html
BACKGROUND: Last announced a 2:1 split on 5-21-98 in conjunction with its annual shareholder meeting (the company has announced three splits with shareholder meetings). The stock price was $35. The annual shareholder meeting is scheduled for 5-16-01 at 4:30 ET at which time no additional shares will be authorized. The company has sufficient shares for a 2 for 1 split.
STATUS: GNTX has been powerful, breaking out of a cup with handle and then, after a bit of a test, blasting back up again last week. It has pulled back on below average volume (236,900 today; average 442,000), today showing a shooting star doji over its 10 day MVA (30.40). The stock is steadily making its way back up into split range; the recent high is 31.84.
BUY POINT: Aggressive A move up from here on increased volume. Breakout Over 31.84 on above average volume.
POSITION: Aggressive Stock and/or September $25 calls to buy (GXQ IE). Breakout Stock and/or September $30 calls to buy (GXQ IF).
MIKE (Michaels Stores--$40.05; +0.25; optionable): No announcement this week, but broke out.
http://biz.yahoo.com/p/m/mike.html
BACKGROUND: Based upon our research it does not appear that MIKE has ever split its stock. The annual shareholder meeting was on 9-13-00 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: MIKE has made a nice breakout move (pivot point 38.22), and the last couple of sessions has pulled back to rest a bit. It hit a high of 40.62, and after peeling back on low volume yesterday the stock showed a tight doji on increased volume (227,200; average 248,800). Off of the doji we will look for the stock to break out again over its recent high, keeping our eyes on the 41.19 level (the high in the left side of the former cup) as possible resistance. We have a target of about 46 on this one.
BUY POINT: A move up on increased volume.
POSITION: Stock and/or September $35 calls to buy (IKQ IF).
POST-SPLIT BEST PLAYS:
1) BAX - Doji on support
2) DGX - Looking solid post-split with a nice pullback
3) STZ - Solid bounce
BAX (Baxter International--$49.78; +0.07; optionable): Health Services. Split 2:1 effective 5-30-01.
http://biz.yahoo.com/p/b/bax.html
STATUS: Has been really strong, breaking from an ascending wedge and then making another move up the past week after testing that breakout. It has since pulled back again, but is holding support at its 10 day MVA (49.50), today showing a tight doji on that level. Volume was up at 3.11 million (average 1.52 million), so the stock could be poised to make another strong move up. The high on the move was 51.10.
PLAY: A strong move up from here, with stock and/or August $45 calls to buy (BAX HI).
BRCD (Brocade--$46.80; +3.64; optionable (UBF): Telecom
http://biz.yahoo.com/p/b/brcd.html
STATUS: BRCD continued up, gapping down a bit but holding its 50 day MVA (41.91). It managed to break back over that resistance Tuesday, and after resting a bit the stock made the move today on increased volume of 14 million (average 14.45 million). Can move in a good market, and we will see if it can continue, keeping careful stops in place to protect profits. The May high is ahead at 55.25.
BUY POINT: In a strong market, a move up on increased volume, with stock and/or October $40 calls to buy (UBF JH).
DGX (Quest Diagnostics--$64.70; +1.24; optionable): Health services. Splits 2:1 effective June 1.
http://biz.yahoo.com/p/d/dgx.html
STATUS: After hitting an intraday high of 70.15 the day after the split, the stock has held on very well. It found the 10 day MVA (63.53) yesterday, and today showed a doji over that level after hitting up to 66.55 at its high. Volume has dipped back to 517,900 but is still quite strong (average 377,500), and the stock could be ready to continue its move. It has made strong moves up from its 18 day MVA (62.29) twice in the last month.
PLAY: Aggressive A move up from here on continued strong volume, with stock and/or August $60 calls to buy (DGX HL). Safer A move over 67.50 on continued strong volume, with stock and/or August $65 calls to buy (DGX HM under 100 open interest).
STZ (Constellation Brands--$39.95; +0.82; optionable): Wineries. Split 2:1 May 15.
http://biz.yahoo.com/p/s/stz.html
STATUS: A great post-split move, and it might not be over. The stock pulled back after showing topping signs Tuesday (tombstone doji), but caught its 10 day MVA (39.11) and made a strong move back up today (volume up to 363,200; average 192,200). It hit a high of tuesday of 41.20, and we will watch that level on a move up from here.
PLAY: A continued strong move up, with stock and/or July $35 calls to buy (STZ GG).
* * *
PRE-ANNOUNCEMENTS REMAINING PLAYS
* * *
CHBS (Christopher & Banks--$38.31; -0.64; optionable): Forecast to announce a split on 6-21-01 in conjunction with earnings.
http://biz.yahoo.com/p/c/chbs.html
BACKGROUND: Last announced a 3:2 stock split on 1-17-01 at a price of $34. Before that CHBS also had 3:2 splits in July of 2000 at $35 and in December 1999 at $26.
STATUS: CHBS is just trying to hold onto its 50 day MVA (38.06), today gapping down and hitting as low at 35.36 before rallying to close just over support. Volume was huge (2.17 million; average 460,200) as retailers had a rough day, but the recovery is encouraging, so we will see if the stock can try to recover going into the split. Still not a play for Friday.
BMET (Biomet--$46.70; +0.46; optionable): Medical equipment. Forecast to announce a split with a board meeting 6-29-01.
http://biz.yahoo.com/p/b/bmet.html
BACKGROUND: Last announced a 3:2 split on 7-6-00 at a stock price of $29. The annual shareholder meeting was on 9-16-00 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: After breaking out again Tuesday and testing back to its 10 day MVA (45.48) yesterday, the stock ran up intraday to 48.75 before pulling back to show a loose doji. The close well off of the intraday high suggests a pullback as sellers caught up with buyers (and on big volume, 2.19 million versus the 1.83 million average), so we will see where it catches support. The recent highs in its small ascending wedge (which formed over a larger such pattern), are at 46, with the 18 day MVA below that at 44.63.
BUY POINT: We will see where it catches support; if it can hold the 10 day MVA, we will look for a move back over 47 on continued strong volume.
POSITION: Stock and/or October $45 calls to buy (BIQ JI).
End Part 2 of 4
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