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Begin part 2 of 2
THIS WEEK
Earnings will continue though at a lesser pace, economic data returns with Q3 GDP looming big, and the FOMC meeting on Tuesday. GDP is important as 5.8% expected, but many are saying anywhere from 6% to 7% is possible. As with earnings, a number that does not beat expectations may disappoint. That is out Thursday, so the market will have some time to test the 50 day MVA a bit more and then be set to move up of the GDP number is well up into the 6% range.
That remains the biggest question right now for us, i.e., when the market will make a move up from this level. It could still roll over and tank, but Thursday and Friday showed buyers still willing to step into the breach even when companies were offering lower to little or no 2004 guidance. While some will argue that indicates future economic weakness, to us that only means companies are being conservative and that this pullback based on that conservative approach after testing the upper end of the range is an opportunity for leading stocks that have come back. Friday we issued some alerts to take advantage of that pullback and rebound when some internet leaders started to take off. After the rest of the market finds its footing here the overall market may be ready to advance once again as well.
The leaders tend to lead, and we will be looking for those starting similar moves ahead of the market as a whole. We are also going to look at some index plays as the 50 day MVA is a good entry point for those and we saw some action on Friday that we liked. Again, it may take another session or two before the indexes get their upside legs under them, but we will be looking for them to rally after some leaders start up off of their support to pave the way.
Support and Resistance
Nasdaq: Closed at 1865.59
Resistance: The 18 day MVA (1897). The September high (1913). The near top of the channel (1955). The second, higher channel hit in September is at 1975ish. Then 2000 to 2050, the early January 2002 double top.
Support: 1860 to 1865. The 50 day MVA (1848). The March/August up trendline (1844).
S&P 500: Closed at 1028.91
Resistance: The 18 day MVA (1034) and 10 day MVA (1036). 1040, the September highs. 1054 (October highs) and 1060 (the August/September up trendline). 1050 and 1080 from February 2002 lows. 1100 to 1150, the early 2002 double top.
Support: 1030 to 1032 (early September highs) is not totally broken. The exponential 50 day MVA (1021). The top of the summer range at 1015. 1010 the early September highs. 975 (December 1997 peak).
Dow: Closed at 9582.46
Resistance: The 18 day MVA (9646) and the 10 day MVA (9665). 9686 (September high) may act as some resistance. 9800 (April and May 2002 lows) pushed it back again. 10,000 is the candle that attracts the moth.
Support: 9588 the early September highs are trying to hold. The exponential 50 day MVA (9516). 9500 (June 2002 lows) is the top of the recent summer range. 9353 (top of summer range). 9250 to 9236, the early June intraday high.
Economic Calendar
10-27-03
Existing Home sales, September (10:00): 6.30M expected, 6.47M August.
New home sales, September (10:00): 1.113M expected, 1.150M August.
10-28-03
Durable goods orders, September (8:30): 1.2% expected, -1.1% August.
FOMC meeting (2:15): Results typically at 2:15ET. No change in interest rates expected. Fed will see continued improvement in econmic activity.
10-30-03
Initial jobless claims (8:30): 385K expected, 386K prior.
Employment Cost Index, Q3 (8:30): 0.9% expected, 0.9% prior.
GDP, Advanced, Q3 (8:30): 5.8% expected, 3.3% Q2.
Help wanted index, September (10:00): 38 expected, 37 August.
FOMC minutes (2:00)
10-31-03
Personal income, September (8:30): 0.2% expected, 0.2% August.
Personal spending, September (8:30): -0.1% expected, 0.8% August.
Michigan sentiment, revised for October (9:45): 89.5 expected, 89.4 in September.
Chicago PMI, October (10:00): 54.5 expected, 51.2 September.
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.
THE PLAYS
Good movers Friday: CYPB; GEMS; GNSC; SINA; IDT
Thursday night play results:
AMSWA: Still testing the breakout move on very low volume.
INTC: Nice doji at the 18 day MVA on rising, average volume. Looks ready.
DKS: Thumped back down to the 10 day MVA but on continued below average volume.
New Plays for Monday:
Upside:
Play Date: 10/25/2003
NOOF (New Frontier Media--$4.5; +0.17; no options): Pay per view television and internet
http://biz.yahoo.com/p/n/noof.html
STATUS: Cup w/handle. After surging from March to September, NOOF has eased back into the current 7 week base and is now forming the handle over the 18 day MVA (4.26). The handle is where the last sellers are shaken out, and that then allows the stock to move higher. Accumulation in the short base is a solid 3 to 0 (3 up price weeks on rising volume to 0 down price weeks on rising volume). Money flow is solid and leading higher. Friday NOOF was up off the 18 day MVA on a solid shot of rising, above average volume. It looks ready to make the breakout.
Volume: 220.7K Avg Volume: 196.436K
BUY POINT: $4.69 Volume=280K Target=$6.09 Stop=$4.32
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cd/noof.html
Play Date: 10/24/2003
SINA (Sina.com--$42; +4.72; optionable): Chinese internet services
http://biz.yahoo.com/p/s/sina.html
STATUS: Test 50 day MVA. After peaking at 45 in late September, SINA and the other foreign internets fell hard back to the 50 day MVA (36.83), in need of a rest after a strong run. SINA has moved laterally the past 4 weeks, and looks to be forming a double bottom over the 50 day. It sold down to that level Thursday, showing a tight doji. Friday it shot higher, spurred by SOHU's big earnings numbers. We issued an alert to alert subscribers on that move as it shot higher on big volume. Still a buy on this move.
Volume: 17.839M Avg Volume: 10.416M
BUY POINT: New: 42.22 Volume=15M Target=$50 (initial) Stop=$39.42
POSITION: NOQ CH - Mar. $40c (64 delta) &/or Stock
http://www.investmenthouse.com/cd/sina.html
Play Date: 10/25/2003
QQQ (QQQ Options--$34.2; +0.03; optionable): Nasdaq 100 Trust
http://biz.yahoo.com/p/q/qqq.html
STATUS: Test 50 day MVA. While Nasdaq was suffering from the MSFT effect, the interesting aspect was the top 100 largest cap tech stocks actually finished the session positive even with MSFT's gap lower. The index undercut the 50 day MVA (33.68) intraday and then rallied on strong, rising volume to take back the losses, hold the 50 day, and post a gain. Not exactly a picture perfect, clean pattern, but we like the action at the key support and the fact that in times of uncertainty about what the future holds, stocks can move very well. Somewhat aggressive, but again, we like the action coming off the 50 day MVA.
Volume: 101.845M Avg Volume: 80.102M
BUY POINT: $34.38 Volume=100M Target=$36 Stop=$33.64
POSITION: QAV AG - Jan. $33c (72 delta)
http://www.investmenthouse.com/cd/qqq.html
Continuing that look solid: AMSWA; GIGM; INTL; QLGC; SOFO; TLGD; TTP
* * *
SUBSCRIBER PORTFOLIO: These are stocks subscribers suggest by vote that we put in a portfolio to track and move into the stocks if they set up well.
AVID, DIS, GTRC, KKD, LPNT, OCR, TGT, UTSI
DIS 08/09 Test 50 21.8 -0.05 22.06 26.48 4.6M 9M 21.12
Still in the quiet lateral move over the 18 day MVA, forming the handle to its 11 week cup base.
* * *
SUBSCRIBER WATCHLIST
We continually receive ideas for potential plays from our subscribers. Many times they are already on our watchlists, other times not. We always take a look at them and sometimes find a few pearls. This weekend we are starting a new feature where we include some subscriber choices that could develop into plays. We are not necessarily endorsing these, but want to provide a forum for subscribers with ideas that may appeal to their portfolio. Typically we will put these on without commentary, but if we see something we really like or dislike we will point it out. That way we can maybe come up with some new plays, find some plays that may fit your style, and have another great educational tool to discuss problems or good aspects about stocks our subscribers are looking at.
ASCL: Based after a June split and broke out in September. After falling hard Thursday it reversed on huge Friday trade.
TYC: Testing the 50 day MVA after an August breakout. Potential head and shoulder action developing, but held over the early September high on this test, and if it can recover on volume over 22 it will be in good shape.
SSTI; TMWD
CONTINUING/WATCHLIST:
LEGEND
DATE: date play first appeared on report.
PLAY: Denotes the type of pattern or play.
Upside play types: A Wedge=Ascending triangle/wedge; BO=Breakout; Cup=Cup base; Cup hdl=Cup w/handle; DB hdl=Double bottom w/handle; Dbl btm=Double bottom; Flat=Flat base; FlyPlat=Flying Plateau; Pennant=Pennant; Rv H&S=Reverse head & shoulders; Saucer=Saucer base; Test 18=Testing 18 day MVA; Test 50=Testing 50 day MVA; Test BO=Testing the breakout (could be 10 day MVA test, etc.)
Downside play types: CCall=Covered Call; DWedge=Descending triangle/wedge; Dbl Top=Double top; H&S=Head & shoulders; Put (generic downside);
PIVOT=Buy point
Tgt=Target stock price for the play. Applies to stock and options.
Vol=Volume for the most recent session.
TgtV=Target volume to enter the play.
Stop=Stop advisory point. This is advisory and we may or may not exit a play if it hits this level depending upon market conditions.
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
AGRB 08/28 Rv H&S 3.32 +0.07 3.02 3.95 2.2M 6.7M 3.18
AMSWA 10/23 Test BO 5.88 -0.07 6.12 7.45 97K 150K 5.62
Buy Not Hit. Gapped up at the open, but lost the gain on very low volume. Testing the breakout. Managed to retain most of Tuesday's great move.
AMZN 05/03 BO 54.5 +0.18 30.3 35.45 10M 12M 54.94
Current. Tapped 53 at the low and rallied showing a tight doji on average volume. Strong stock giving it time to recover.
AVID 08/09 Test 18 49 -2.4 0 0 1.1M 0 0
BCON 10/16 A Wedge 0.8 -0.01 0.96 1.25 1.2M 6.6M 0.83
Buy Not Issued. Tested the simple 50 day MVA and rallied to close below the 18 day MVA on very low volume. Tapped 0.92 at the high, but could not hold the gain. Stock needs to hold here or we will look to drop.
BXS 10/13 Cup hdl 22.8 -0.15 23.52 28.25 39K 104K 22.35
Buy Not Hit. Tested support at 22.50 and rallied to close on the 18 day MVA on higher, but still below average volume. Still in the pattern.
CHS 10/04 Dbl btm 34.81 -0.67 34.62 41.53 1.2M 1.8M 34.92
Current. Pull back to close on the 18 day MVA on higher, but still only average volume. In a strong sector needs to hold here.
CYPB 09/24 Test 18 9.78 +0.56 8.61 10.65 192K 294K 9.02
Current. Tested the 10 day MVA and rallied for a great move on slightly lower, but below average volume.
DKS 10/13 Cup 43.87 -1.81 44.68 55.38 236K 603K 42.32
Current. Gapped up at the open, but lost the gain on very low volume. Testing the breakout. Managed to retain most of Tuesday's great move.
EBAY 12/12 Test 18 54.94 +0.66 34.72 46 7.8M 12M 57.25
Current. Gapped down to open at support at 54 and rallied on below average volume. Strong stock giving it time to recover.
EBAY 10/15 Test 50 54.94 +0.66 31.22 46 7.8M 12M 57.25
Current.
EGOV 10/07 Test BO 5 0 5.07 6.35 121K 264K 4.96
Current. Volatile session with 5.10 at the day's high and 4.85 at the low showing a tight doji on the 18 day MVA on very low volume. Needs to hold here.
EGOV 09/20 Cup hdl 5 0 4.8 5.68 121K 264K 4.96
Current.
ESV 10/18 Put 25.68 -0.37 26.08 24 1.2M 2M 26.62
Continued to move down on below average volume. There is support at 25.
FL 10/11 A Wedge 17.05 -0.15 17.38 20.88 673K 1.4M 16.95
Current. Tested below the 18 day MVA and rallied showing a doji on 18 day MVA on higher, but below average volume. Still in good shape, but needs to hold here. Stock is making higher lows.
GEMS 10/22 Test BO 2.99 +0.1 2.87 3.72 650K 487K 2.61
Current. Continue to move up the 10 day MVA for a nice gain on much lower, but still above average volume.
GIGM 10/01 Cup hdl 2.79 -0.04 3.12 4.05 1.7M 2.7M 2.74
Current. More volatile with 3.07 at the high and 2.76 at the low. Stock continues to move up the 10 day MVA on much lower, but still very strong volume.
GNSC 10/09 Test BO 2.66 +0.23 2.65 3.47 368K 175K 2.43
Current. Entered the play as the stock shot up on very strong volume.
IDT 10/18 Test BO 19.56 +0.44 19.51 23.28 406K 175K 18.74
Current. Entered the play as the stock makes a great move on strong volume surge.
INTC 10/23 Test 18 31.08 -0.14 31.75 38 56M 65M 30.54
Buy Not Hit. Tested below the 18 day MVA and rallied closing above the 18 day MVA on stronger, but average volume. Beginning to make a lateral move between the 10 and 18 day MVA. Making a higher low.
IRM 09/10 Put 37.14 +0.86 34.55 32 394K 500K 36.12
Current. Moved up off the 50 day MVA to close over the 200 day MVA on much higher, but below average volume. Waiting for stock to pull back.
JNPR 10/04 Test 50 16.49 0 17.1 20.48 8.1M 17M 16.19
Current. Narrow trading range. Tested the 50 day MVA and rallied showing a tight doji on the simple 50 day MVA on slightly higher, but below average volume. Tapped 16.75 at the day's high, but could not hold the gain. May be ready for next move up.
LCCI 10/08 Cup hdl 6.38 +0.16 6.08 7.62 60K 111K 5.85
Current. Tested 5.54 at the day's low and made a fierce rally to close above the 10 day MVA. Continue to moves up the 10 day MVA.
LPNT 08/09 Rv H&S 24.01 +0.77 0 0 496K 1.3M 0
Buy Not Issued. Moved up over the 200 day MVA on higher, but still below average volume. Tested the 18 day MVA at the day's high, but could not hold the gain.
NXG 10/15 Cup 1.92 +0.02 1.89 2.48 673K 684K 1.78
Current. Continue lateral move above the 10 day MVA on slightly above average volume.
NXTL 10/02 Cup hdl 22.09 +0.2 20.76 24.95 13M 27M 21.48
Current. Gapped down below the 18 day MVA at the open and rallied to close on the 10 day MVA on below average volume. Still in good shape.
NXTL 09/17 Cup hdl 22.09 +0.2 20.64 24.75 13M 24M 21.48
Current.
ONNN 10/08 Test 50 4.19 -0.11 4.58 5.75 926K 1.7M 4.22
Buy Not Issued. Gapped down at the open and rallied up to the 50 day MVA intraday on below average volume. Needs to hold here or will look to drop.
OSIS 10/11 Cup hdl 17.79 -0.52 19.25 22.95 130K 547K 18.38
Exited. Exited the play as stock tanked well below the 18 day MVA.
PARS 10/11 Cup hdl 3.63 -0.33 2.94 3.88 2.1M 1.2M 3.55
Current. Thudded down to close just below the 10 day MVA on lower, but average volume. Still in good shape.
PDYN 09/29 DB hdl 3.35 -0.02 2.55 3.24 86K 450K 3.15
Current. Tested below the 10 day MVA and rallied on below average volume. Still in good shape. Testing the breakout.
QLGC 10/14 Rv H&S 52.44 +0.54 52.88 63.38 3.6M 7M 51.32
Current. Gapped down to open on the 18 day MVA and rallied to close on the 10 day MVA on lower, below average volume. Still in the pattern.
RIC 10/21 Cup hdl 4.95 0 5.25 6.78 143K 140K 4.73
Current. Gapped down to open on the 10 day MVA and rallied on much lower, but above average volume. Still in good shape.
SBUX 07/30 Cup 30.28 +0.26 30.35 36.75 2.2M 6M 29.25
Current. Tested below the 18 day MVA and rallied to close over the 10 day MVA on higher, but still below average volume. Ready for next move up.
SBUX 07/01 Cup 30.28 +0.26 26.3 30.94 2.2M 6M 29.25
Current.
SINA 10/24 Test 50 42 +4.72 41.55 50 18M 15M 39.42
Current. Entered the play as the stock made explosive move on excellent volume surge.
SINA 09/09 Cup 42 +4.72 36.15 41 18M 12M 39.42
Current.
SINA 08/18 Test 50 42 +4.72 32.2 38.25 18M 10M 39.42
Current.
SIRI 10/16 Cup hdl 2.38 -0.12 2.56 3.17 127M 8M 2.36
Current. More volatile session with 2.50 at the high and 2.19 at the low showing a doji just under the 10 day MVA on very strong volume. Needs to hold here. Doji could indicate that stock is ready to move up.
SOFO 10/02 Test BO 2.25 -0.08 2.05 2.74 251K 395K 2.11
Current. Bounced off the 10 day MVA and moved up to 2.35 at the day's high, but could not hold the gain. Tested the breakout.
TELM 09/30 Test BO 1.53 +0.01 1.51 2.04 2.5M 7M 1.48
Current. Gapped down at the open and rallied up to 1.62 at the day's high, but could not hold the gain on below average volume.
TGT 08/09 Flat 38.38 -0.65 41.45 50 3.8M 5.7M 38.74
TLCV 09/23 Cup hdl 6.97 +0.02 7.16 8.62 275K 1.1M 6.79
Current. Gapped down and moved up to close on the 10 day MVA on below average volume.
TLGD 10/22 Put 14.8 -0.69 14.98 13 96K 200K 15.82
Buy Not Issued. Gapped down at the open and moved lower on lower, but still average volume. Needs to bounce and then roll over on higher volume before we will enter.
TRA 10/18 A Wedge 2.42 +0.05 2.39 2.98 66K 205K 2.18
Current. Gapped up at the open showing a tight doji on below average volume. Continue to move up the 10 day MVA on very low volume.
TSCO 07/29 Test BO 40.55 +0.25 28.06 31.44 356K 494K 37.96
Current. Continue to move up the 10 day MVA on low volume.
TSCO 06/03 Rv H&S 40.55 +0.25 23.42 27.62 356K 603K 37.96
Current.
TSCO 04/24 Cup hdl 40.55 +0.25 21.88 26 356K 603K 37.96
Current.
TSCO 04/03 Rv H&S 40.55 +0.25 19.3 22.19 356K 577K 37.96
Current.
TTP 10/07 Cup 3.49 -0.03 2.87 3.68 237K 221K 3.18
Current. Tested below the 10 day MVA and rallied on average volume. Still in good shape.
WMGI 09/10 Flat 27.38 +0.04 26.26 31.48 128K 400K 26.26
Current. Tested below the 10 day MVA and rallied on below average volume. Still in good shape.
YHOO 10/20 Test BO 40.52 +0.12 43.03 51.75 14M 15M 41.22
Buy Not Issued.
YHOO 09/22 Test BO 40.52 +0.12 37.95 45.25 14M 15M 41.04
Current. Gapped down at the open and moved up to close on the 18 day MVA on lower, but still above average volume. Needs to hold here.
YHOO 09/04 Rv H&S 40.52 +0.12 34.9 42 14M 20M 41.04
Current.
Good Investing!
Jon L. 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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