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yahoo stock, us stock market
Begin Part 2 of 2
TOMORROW
Will Friday bring any relief? It may just be to the extent there is no trading on Saturday and Sunday. The CPI, industrial production and capacity, and Michigan sentiment are out in the morning. Industrial production and capacity and sentiment will be the keys as they tell us more about the state of the economy. Production and capacity will be in the tank, so we will see how sentiment is holding up.
We could easily see a bounce tomorrow after some pretty heavy selling showed a crescendo today with the strongest volume in a month. Will it be tradable? Maybe, but the key is what the indexes do at the bottoms of the trading ranges they just broke out of: break back through on good volume or turn back down? That sets the stage for next week's action. Futures are up after the drubbing and even the JDSU news; no guarantee, but it does show that there is some bounce there if the economic news comes out decent in the morning. We will look at a bounce to take positions on true breakouts of good patterns (XCAR on the Technical Trader and WMI on the Daily did that today on high volume even in this market) and some of the really good bounce plays that may be in position for some moves up off of support for short term plays, but we are not going to get too carried away. The breakdown from the trading ranges was serious. If the indexes can recover fast on stronger volume we will be impressed and surprised. But we are always open for both.
If the moves tomorrow take the indexes right back up to the bottoms of the trading ranges on lower volume, we will be looking to short the indexes for Monday. Now Friday is triple witching where options, futures, and everything else you can think of expires. That often leads to higher volume as positions are squared. That will cast some doubt on any high volume move back up into the trading ranges, and we will have to wait for Monday to see if we want to short the indexes at that time. We will forgive one close outside of the trading ranges if the next day they move back into them on higher volume. Otherwise, we get ready to play the downside if they cannot break back over those levels after testing them or trying to do so (i.e., they try to move higher but fail).
Support and Resistance Levels
Nasdaq: Closed at 2044.07.
Resistance: 2052 to 2077 is the bottom of the trading range. 2194 may be some resistance at this point. Then 2250 - 2264.
Support: 2000.
S&P 500: Closed at 1219.87.
Resistance: 1232 to 1240 are the bottoms of the trading range. Then 1250.
Support: 1200 is the next level. Head and shoulders bottom and the breakout support from the double bottom pattern is right at 1182.
Dow: Closed at 10,690.13.
Resistance: 10,800 where the down trendline between the January 2000 all-time high and the September high is currently (and the 50 day MVA is at 10,805.59 as well). 11,000 is possible resistance after that. Then 11,196.53 (the last top). After that, 11,350.
Support: The 200 day MVA at 10,635.35 bounced the index up off of its low today (10,659.47). If that does not hold, we are looking at 10,400.
Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.
6-13-01
Export Prices ex-ag., May (8:30): 0% versus 0% prior.
Import Prices ex-oil, May (8:30): -0.5% versus -0.5% prior.
Retail Sales, May (8:30): 0.1% actual versus 0.3% expected and 1.4% prior (up from 1.1%).
Retail Sales ex-auto, May (8:30): 0.3% actual versus 0.4% expected and 0.8% prior.
6-14-01
Initial Claims, 6/9 (8:30): 428,000 actual versus 425,000 expected and 440,000 prior (revised up from 432,000).
PPI, May (8:30): 0.1% actual versus 0.3% expected and 0.3% prior.
Core PPI, May (8:30): 0.2% actual versus 0.2% expected and 0.2% prior.
Business Inventories, April (8:30): 0.0% actual versus -0.1% expected and -0.4% prior (revised from -0.3%).
6-15-01
CPI, May (8:30): 0.4% versus 0.3% prior.
Core CPI, May (8:30): 0.2% versus 0.2%.
Industrial Production, May (9:15): -0.3% versus -0.3% prior.
Capacity Utilization, May (9:15): 78.0% versus 78.5% prior.
Mich Sentiment-Prel., June (10:00): 91.0% versus 92.0% prior.
SUBSCRIBER QUESTIONS
Q: If I buy the June call option on SCMR at 12.50 what will happen? If the stock reaches $12.50 or more before expiration, can I sell it? Or, do I have to wait for it to expire? How would this work?
A: You have several basic questions about options. There are many factors you have to understand about options before you can successfully add them to your investment arsenal. If you do not understand how the work and how to apply them, you can get hurt much as you can get hurt if you do not know how to drive a car or the rules of the road and jump right in the driver's seat and fire it up.
One thing to understand is the expiration period. Options expire the third Saturday of each month. That means this coming Saturday is an options expiration day. All June options, including the one you were looking at, will expire on Saturday if not exercised. As SCMR is well below $12.50 (the strike price of the option you are looking at), that option would have very little value now and would expire worthless. Why? Because you would not exercise the call option and thus buy the stock at $12.50 when you could go out on the market and buy it for about $9.50. An option's value is made up primarily of intrinsic value (the in the money portion), time value (how much time the option has left before expiration), and volatility. If the stock reaches $12.50 by Friday, the option would be 'at the money,' i.e., the stock price would equal the strike price of the option ($12.50). If it stayed at that price, the option would still expire worthless. Why? Because it has no intrinsic value, there is no time left, and thus there is no volatility. Only if the option is in the money on Friday, i.e., greater than $12.50, would the option have some value. At that point the only thing left is intrinsic value. If the stock was at $13 on Friday, the $12.50 strike option would be worth $0.50 because you could buy the stock at $12.50 and then go sell it for $13.
You can sell an option at any time. You do not have to wait until the expiration day (Friday is the last day you or I can do anything with it as the options market is closed on Saturday). If you have a profit in your option, you can sell it whenever you want and you do not have to exercise the option to buy the stock.
There is a lot to options, but they are a very important part of any investor's arsenal as we can use them to increase our returns, but do so in a safe manner using a variety of strategies. We cover these in our online seminars that will be starting back up in July for the next series.
Q: If a stock has met the buy point but has not yet hit the precise daily volume you want, should a buyer wait until the stock has met or exceeded that volume - perhaps waiting to purchase the stock on the day after the recommended daily volume has been met? Or do you suggest simply keeping tabs on the volume throughout the day as a percentage of the daily volume it is likely to achieve? Generally, is it ever wise to buy a stock when the buy point has been met but the volume has not yet entirely filled out? Thanks for your help. Thanks also for a very helpful newsletter.
A: Volume levels can be hard to gauge. Volume is heaviest in the first hour and last hour as institutions make their bets for the day and position themselves for the next session. Many times we will see volume shoot up on a breakout early in the session, and that is a clear signal to enter. Other times we see the price hit our target, but volume is on a pace that appears to be average for the day. Other times we don't see the target price hit until the afternoon when institutions buy for the close. That is always the easiest point to gauge what is going on, and one of our favorite times to buy as we can see the stock and the market action to make decisions for the next session.
If we see a breakout in the morning but are just not sure of the volume, we often just enter a partial position on the stock. That way we are not wholly committed to that move, but it gets the position started, and if the breakout proves to garner sufficient volume later in the session, we like to take the remainder of the position on a test of the breakout or at the close if the stock has not moved beyond our buy point by 5%. That way we get a better picture of what is going on without losing the first stage of the breakout. If volume is so-so, we can sit pat on our initial position and let the stock build the next session as you indicated. Many times we see that first move up one session, and then we see the institutions pile in even more the following day. At that point we go ahead and complete the position with our stock buys. We will also look at option positions the same way.
For a review of frequently asked questions, please use the link below:
http://www.investmenthouse.com/1questions.htm
Investment House subscribers are offered a special from eSignal for those
interested in a realtime service. Contact:
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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: OCLR continues to hold its pennant. For formerly covered stocks, EWBC is holding its consolidation, and we got a breakout yesterday on WMI! That's welcome in this market. Check out LNCR's strong move today.
Best Plays:
1) TTEK: Good volume today could boost it higher.
2) EBAY: Another stock that moved on higher volume.
3) NVDA: Held up well today; ready for a rally when it comes.
4) LNCR: A strong recovery move.
Updated:
TTEK (Tetra Tech--$28.92; +0.62; optionable (TQI): Diversified Services
http://biz.yahoo.com/p/t/ttek.html
STATUS: The stock is in a 6.5-month base and on a pullback from the June high of 31.32 has shaken out stockholders on shrinking volume. Today, however, volume shot above average to 629,000 (avg. 504,227), sending the stock up from support at the 28 level, established over the last week on the lows (and from early May). The high reached 29.32 before the stock pulled back down to close a couple of cents below the 10 day MVA. We are looking for the continued move up as volume indicates. TTEK shows great money flow and buying, a good-looking stock. Target: $34-36.
BUY POINT: Aggressive: Over 29.32 on continued strong volume. Stop: 27.27 (200 day MVA, 27.07). Breakout: 31.45, on volume of 756,000 or better. Stop: 29.25 (10 day MVA, 28.94).
POSITION: Stock and/or September $25 calls to buy (TQI IE).
http://www.investmenthouse.com/cd/ttek.html
EBAY (Ebay Inc--$64.06; +2.25; optionable (QXB): Internet Software
http://biz.yahoo.com/p/e/ebay.html
STATUS: Formed an ascending wedge-type pattern in the upper right side of its 9-month base. Volume rose to 6.47 million today after several days below average (5.8 million). We are looking for a breakout over the May high of 66.50. The pattern has held support above the 18 day MVA (61.74), and EBAY broke above the 10 day MVA (62.98) on today's move, tapping resistance near 65 on the high. After hours the stock was down on the JDSU news but holding above the 10 day MVA. Look for a test of that support and move back up. If the move is delayed by the market, we will watch for a hold at the 18 day MVA. Target: $77-78 (highs at the start of the base).
BUY POINT: Aggressive: On a move up from the 62-63 range on continued strong volume. Stop: 57.66. Breakout: 66.63, on volume of 7.8 million or better. Stop: 61.96.
POSITION: Aggressive: Stock and/or October $55 calls to buy (QXB JK). Breakout: Stock and/or October $60 calls to buy (QXB JL).
http://www.investmenthouse.com/cd/ebay.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:
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
ESRX pulled back slightly and looks like it wants to hold (doji), but the stronger volume hints that the pullback is nigh.
NVDA (Nvidia--$93.59; -0.20; optionable (RVU): Semiconductor
http://biz.yahoo.com/p/n/nvda.html
STATUS: Held support at the 18 day MVA (91.91) as expected, with the low of 91.25 testing that level and NVDA closing with a loose doji just under the 10 day MVA (93.72). Volume maintained at Wednesday's levels (4 million; avg. 5.5 million), so despite selling in other techs today, NVDA is performing like the leader it is. Look for a hold at this support until the market rallies. Target: $115, but for now we are going to be happy with the short term move up to 100. The stock was trading lower after hours, but holding above the 18 day MVA.
BUY POINT: Aggressive: Up from here on stronger volume. Stop: 87.04. New high: Over 100 on above average volume. Stop: 93 (10 day MVA, 93.72).
POSITION: Aggressive: Stock and/or September $85 calls to buy (RVU IQ). New high: Stock and/or September $95 calls to buy (RVU IS).
http://www.investmenthouse.com/cd/nvda.html
UP & COMERS PORTFOLIOS: Newer members of the portfolio are LNCR, BJ, ANF, LOW, HI and THQI. Currently existing members are EXDS, TQNT, BVSN, SANM, PKI and GMST.
LOW pulled back on lower volume, and is trying to form an ascending wedge. It is likely to test the 10 day MVA tomorrow.
HI (Household Internat--$64.71; -0.54; optionable (HI): Credit Services
http://biz.yahoo.com/p/h/hi.html
STATUS: Tested the 50 day MVA as expected on slightly lower volume of 1.44 million (avg. 2 million). The low tested that support (the MVA is at 64.37) only cents away. Continue to look for a move back up from this support when the market rallies back.
Target: $70.
BUY POINT: Aggressive: Over the short term MVAs (18 day MVA currently at 65.75) on average or better volume in a rally. Stop: 61.14. New high: Over the May high of 69.98 on volume in the range of 2.7 million. Stop: 65.10 (below the 10 day MVA, 65.61).
POSITION: Stock and/or October $60 calls to buy (HI JL).
http://www.investmenthouse.com/cd/hi.html
LNCR (Lincare Holdings--$62.00; +2.40; optionable (LQN): Specialized Health Services
http://biz.yahoo.com/p/l/lncr.html
STATUS: The stock was testing the recent breakout and looked good until Wednesday, when it headed south from a doji and sold to the 18 day MVA (59.67). Today the stock fell further, down to the 50 day MVA (57.51) but bounced back on a healthy shot of buying volume (1.05 million; avg. 595,272). It passed back through the 18 day and then 10 day MVAs (latter at 60.90) to close near the high of 62.40. A solid move, but we will see what the market does to it: the stock can test the 61 range, but look for a move up from here or that support on continued strength. Target: $71.
BUY POINT: Over the high on continued strong volume. Stop: 58.03.
POSITION: Stock and/or August $55 calls to buy (LQN HK).
http://www.investmenthouse.com/cd/lncr.html
MEMBER PORTFOLIO: BRCM, CHKP, CSCO, EMLX, IDTI, INTC, JDSU, MVSN, NT, PWER, SUNW, VTSS
No reports on stocks in this portfolio tonight.
Puts: Please check with your broker for deltas on the indexes, which were not available at the time of this writing.
QQQ (Nasdaq 100--$42.25; -2.30; optionable (QQQ):
STATUS: Sold down today and can drop to 40 on continued selling, before the market makes a possible bounce. Look for a move below the low of 42 on continued strong volume.
BUY POINT: On a move through 42 on market selling. Watch 40 for a bounce.
POSITION: July $45 puts to buy (QQQ SI).
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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