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us stock market, trade stock
Begin part 2 of 3
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: ESPR; RETK; RHAT; SOHU
Best Plays:
1) ADVP: Ready to make the next breakout.
2) CKSW: Very nice test of the breakout.
3) ABMD: Starting to show signs of a breakout.
4) ASL: Nice test of the 10 day as volume surges.
5) MCHP: Putting the finishing touches on the very nice base.
6) RHAT: Readyt to make the next breakout from another nice lateral base.
7) TARO: Very nice orderly breakout test.
8) ODSY: Ready to resume the downtrend.
NEW PLAYS:
Upside:
Play Date: 10/25/2003
^SOXX (Philly Semiconductor Index--$457.96; +1.16; optionable): Semiconductor index
STATUS: Testing the 50 day MVA. SOX is making its second test of the 50 day MVA (445.08) this month, coming back with the rest of the market but showing a nice, tight hammer doji, tapping at the 50 day on the Friday low (448.72) and rallying back to actually close positive on the session. Very nice action at the 50 day MVA, just what you want to see. A bit aggressive, but there were many stocks showing solid action off of support Friday.
Volume: 924.569K Avg Volume: 707.382K
BUY POINT: $462.05 Volume=1.1M Target=$492 Stop=$459.74
POSITION: SXX LL - Dec. $460c (51 delta)
http://www.investmenthouse.com/ct/^soxx.html
Play Date: 10/25/2003
ADVP (AdvancePCS--$49.05; +1.73; optionable): Specialized health services
http://biz.yahoo.com/p/a/advp.html
STATUS: Ascending triangle. ADVP is trying to make the breakout from an 8 week base that has used the 50 day MVA (44.58) as support on the lows. Accumulation in the short base is 3 to 0 (3 up weeks on rising volume to 0 down weeks on rising volume). Friday ADVP reached down to the 50 day on the low and then rebounded on above average volume for a solid gain. Makign the breakout from the base, we are looking to move in and follow the money flow higher.
Volume: 2.984M Avg Volume: 2.057M
BUY POINT: $49.18 Volume=3.1M Target=$59 Stop=$46.98
POSITION: QVC DJ - Mar. $50c (51 delta) &/or Stock
http://www.investmenthouse.com/ct/advp.html
Play Date: 10/25/2003
CKSW (Clicksoftware Technologies--$2.95; +0.01; no options): Internet software and services
http://biz.yahoo.com/p/c/cksw.html
STATUS: Testing the breakout. After a strong surgin two weeks back that broke CKSW out of a 13 week flat base, CKSW is coming back to test the move, falling to the 10 day MVA (2.83) on lower volume. Accumulation in the base is a strong 3 to 0 with excellent money flow and a relative strength breakout. Nice little test back and Friday it was starting up off the 10 day on rising, average volume. Looking for another move higher on stronger volume to take positions.
Volume: 227.2K Avg Volume: 211.191K
BUY POINT: $3.08 Volume=300K Target=$4.05 Stop=$2.81
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/cksw.html
Play Date: 10/25/2003
GISX (Global Imaging Systems--$27.09; +0.39; optionable): Contract services for automated office equipment.
http://biz.yahoo.com/p/g/gisx.html
STATUS: Cup w/handle. GISX is trying to come off the bottom of the handle to an 8 week base showing strong 3 to 1 accumulation. This base has formed after a nice 3.5 month run up the short term MVA; it needed a rest. Still very solid technical indications, and we are looking for it to continue the move higher and provide the breakout this week.
Volume: 195.286K Avg Volume: 201.387K
BUY POINT: $27.62 Volume=302K Target=$33.12 Stop=$26.48
POSITION: QHJ BE - Feb. $25c (78 delta) &/or Stock
http://www.investmenthouse.com/ct/gisx.html
Play Date: 10/24/2003
NTES (Netease.com--$64.55; +5.75; optionable): Interactive online and wireless in China
http://biz.yahoo.com/p/n/ntes.html
STATUS: 50 day MVA test. After a strong move up the short term MVA sincw March, NTES needed a break. It tested the 50 day MVA (58.58) in late September and jumped up to 70. It immediately fell back, but Thursday showed a doji at the 50 day and Friday raced higher on strong volume as SOHU earnings were solid. We saw the move and issued an alert, but it is still a buy at this point on a further move higher.
Volume: 7.847M Avg Volume: 3.441M
BUY POINT: $65.05 Volume=5M Target=$75 Stop=$60.45
POSITION: NQE LM - Dec. $65c (56 delta) &/or Stock
http://www.investmenthouse.com/ct/ntes.html
CONTINUING PLAYS:
Upside:
Play Date: 10/06/2003
ABMD (Abiomed--$9.05; +0.3; optionable): Medical instruments
http://biz.yahoo.com/p/a/abmd.html
STATUS: Testing the breakout. Friday ABMD started higher Friday, showing some life on rising though still below average volume. It still looks ready to make the movefrom its three week flying plateau after the strong breakout from its 4 month cup with handle base. Accumulation in the base is a solid 4 to 2 (4 up weeks on rising volume to 2 down weeks on rising volume).
Volume: 75.957K Avg Volume: 101.728K
BUY POINT: $9.12 Volume=175K Target=$10.95 Stop=$8.48
POSITION: IBU LU - Dec. $7.50c (73 delta) &/or Stock
http://www.investmenthouse.com/ct/abmd.html
Play Date: 10/21/2003
AKAM (Akami Technologies--$5.76; -0.14; optionable): Internet software
http://biz.yahoo.com/p/a/akam.html
STATUS: Testing the breakout. AKAM shot higher to begin the week and then backed off as the market did the same late in the week. It held over the 10 day MVA (5.70) on lower volume, however, showing a doji Friday at the breakout point. A good test of the breakout and looks ready to move back up and continue the breakout from here.
Volume: 1.438M Avg Volume: 1.739M
BUY POINT: $6.42 Volume=2.4M Target=$8 Stop=$5.88
POSITION: UMU AA - Jan. $5c (77 delta) &/or Stock
http://www.investmenthouse.com/ct/akam.html
Play Date: 10/21/2003
ASL (Ashanti Goldfields--$11.25; -0.15; optionable): Gold mining
http://biz.yahoo.com/p/a/asl.html
STATUS: Cup w/handle. Has formed a better handle to the short 6 week base, edging back to tap the 10 day MVA (11.10) Thursday and Friday. Volume shot higher on the session as it traded in a tight range. Solid 2 to 0 accumulation and showing another big volume spike as it ahs done on several occassions the past week. Strong money flow and relative strength. Looks ready for the next move.
Volume: 2.472M Avg Volume: 905.677K
BUY POINT: $11.62 Volume=1.3M Target=$14.22 Stop=$10.81
POSITION: ASL CB - Mar. $10c (80 delta) &/or Stock
http://www.investmenthouse.com/ct/asl.html
Play Date: 10/21/2003
MCHP (Microchip--$27.39; -0.16; optionable): Semiconductors
http://biz.yahoo.com/p/m/mchp.html
STATUS: Reverse head and shoulders. A very nice and tight pullback to test the 18 day MVA (26.93) as it completes forming the right shoulder to its 9 week base showing strong 4 to 1 accumulation. Volume has edged higher the past week as it gets ready for the breakout. That puts us on the ready for the breakout so we can move in.
Volume: 3.029M Avg Volume: 2.634M
BUY POINT: $28.58 Volume=4M Target=$32.85 Stop=$26.58
POSITION: QMT AE - Jan. $25c (80 delta) &/or Stock
http://www.investmenthouse.com/ct/mchp.html
Play Date: 10/23/2003
PBY (Pep Boys--$17.65; -0.33; optionable): Auto parts stores
http://biz.yahoo.com/p/p/pby.html
STATUS: Cup w/handle. Continuing to form the handle to its 8 week base. After reporting strong earnings 8 sessions back, the stock has moved laterally and down to the 18 day MVA (17.39) on the to form the handle to the base. Solid accumulation in the pattern at 3 to 1 along with strong money flow and relative strength. Now we just wait for the breakout move on strong volume.
Volume: 495.8K Avg Volume: 623.495K
BUY POINT: $18.55 Volume=932K Target=$22.25 Stop=$17.25
POSITION: PBY DW - April $17.50c (60 delta) &/or Stock
http://www.investmenthouse.com/ct/pby.html
Play Date: 09/18/2003
RHAT (Red Hat--$13.47; +0.37; optionable): Internet software and services
http://biz.yahoo.com/p/r/rhat.html
STATUS: Flying plateau. RHAT provided an explosive breakout two weeks back, that move following yeat another breakout in September. It has spent the past two weeks consolidating that move, trending laterally over the 10 day MVA (12.78). The 10 day has risen to meet the stock, and in these patterns that tends to send the stock higher on its next breakout. Excellent money flow and relative strength is already breaking out again.
Volume: 2.77M Avg Volume: 3.065M
BUY POINT: New: $13.65 (orig. $10.03) Volume=2.8M Target=New positions: 15.75 (orig. $12.22) Stop=$12.35
POSITION: RCV CV - Mar. $12.50c (67 delta) &/or Stock
http://www.investmenthouse.com/ct/rhat.html
Play Date: 10/18/2003
SVNT (Savient Pharma--$5.96; +0.01; optionable): Biotechnology
http://biz.yahoo.com/p/s/svnt.html
STATUS: Testing the breakout. An excellent breakout test underway, SVNT is moving in a very narrow and tight range, holding over the 18 day MVA (5.87) as it works laterally. SVNT broke out of a 12 week cup with handle base to start the month. Solid 5 to 2 accumulation in the pattern and a relative strength breakout as well, supporting the move. Thursday SVN threw up a big volume spike as it held steady. These are what we call 'get ready' spikes, positive for the pattern. Money flow is very strong and has continued to rise ahead of price as the stock moves laterally. The breakout moves looks imminent.
Volume: 387.124K Avg Volume: 444.335K
BUY POINT: $6.38 Volume=678K Target=$7.98 Stop=$5.93
POSITION: QTG DA - April $5c (85 delta) &/or Stock
http://www.investmenthouse.com/ct/svnt.html
Play Date: 10/08/2003
TARO (Taro Pharmaceuticals--$62.89; -0.61; optionable): Drugs
http://biz.yahoo.com/p/t/taro.html
STATUS: Testing the 18 day MVA. How can it look so good and not take off? Because the market is not quite ready. TARO is as it continues its sideways move over the 18 day MVA (61.85), tapping that level on the intraday lows and rebounding. Low volume during the consolidation in a tight range. Looks ready for the next move out of the 12 week base.
Volume: 190.192K Avg Volume: 323.707K
BUY POINT: New: $65.12 (orig. $61.51) Volume=501K Target=$73 Stop=$61.32
POSITION: QTT AL - Jan. $60c (56 delta) &/or Stock
http://www.investmenthouse.com/ct/taro.html
Downside:
Play Date: 10/18/2003
ODSY (Odyssey Healthcare--$28; -0.1; optionable): Long-term care facilities
http://biz.yahoo.com/p/o/odsy.html
STATUS: Put. ODSY contnues to trade just below the 10 day MVA (28.51) which is acting as the upside resistance in the downtrend that started in early September. It gapped higher Friday but again could not hold the move. Volume was up as it churned below resistance. Looks ready to continue the move lower in the downtrend.
Volume: 364.843K Avg Volume: 426.496K
BUY POINT: $27.80 Volume=511K Target=$24.65 Stop=$29.05
POSITION: UPE MF - Jan. $30p (-59 delta)
http://www.investmenthouse.com/ct/odsy.html
Play Date: 10/22/2003
PHTN (Photon Dynamics--$29.51; +0.81; optionable): Chip equipment
http://biz.yahoo.com/p/p/phtn.html
STATUS: Double top. After gapping lower Thursday, PHTN rallied back Friday, heading back toward some resistance at 30 and the 50 day MVA (30.63) that it brlow through last Wednesday. It has double topped in September and October and broke lower, This test is what will prove the breakdown. If it continues higher on below average volume and then fails at resistance, that is where we move in.
Volume: 241.66K Avg Volume: 314.385K
BUY POINT: Test 30 to 30.50, then $29.64 on the way down. Volume=476K Target=$26.05 Stop=$30.82
POSITION: PDU XF - Dec. $30p (-47 delta)
http://www.investmenthouse.com/ct/phtn.html
Play Date: 10/22/2003
PNR (Pentair--$37.97; -0.01; optionable): Manufacturing
http://biz.yahoo.com/p/p/pnr.html
STATUS: Put. After peaking in early September, PNR fell back and tried to hold at the 50 day MVA at 40. A week ago that gave way and PNR plunged below the 200 day MVA (38.40) on earnings and subsequent downgrades. It has fought back up to the 200 day, but is struggling, unable to retake that level. It is making a good try, but looks as if it will roll on back down.
Volume: 295.9K Avg Volume: 295.511K
BUY POINT: New: $37.85 (orig. $37.98) Volume=444K Target=$35.98 Stop=$38.48
POSITION: PNR XH - Dec. $40p (-71 delta)
http://www.investmenthouse.com/ct/pnr.html
End part 2 of 3
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