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us stock market, trade stock
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Tech Traders 6/19/01 Update
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Technical Traders Subscribers:
THE PLAYS: Looking at some financial stocks tonight, as they are setting up and looking better.
Continuing Plays: FISV, GDW and BBBY made good moves today. FITB, covered below, looks great in the cup with handle, and the sector looks good.
FITB (Fifth Third Bancorp--$59.44; +0.41; optionable (TTQ):
http://biz.yahoo.com/p/f/fitb.html
STATUS: Looks good in the handle of its cup base. The stock is holding above the 18 day MVA (59.09), continuing to tap at lower resistance near the high of 59.97. Volume was higher at 1.4 million (avg. 1.8 million). Looking for a breakout as the financial stocks are moving. Target: $65-68.
BUY POINT: Breakout: 61.24, on volume of 2.7 million or better. Stop: 50 day MVA, 57.09.
POSITION: Stock and/or August $55 calls to buy (TTQ HK).
GDW (Golden West--$66.50; +1.94; optionable (GDW): Savings & Loan
http://biz.yahoo.com/p/g/gdw.html
STATUS: Broke out of the ascending wedge pattern the stock formed in the middle right side of the 5.5-month base. Remains a buy from here up to 68.49, on increased volume (which was strong at 673,800; avg. 716,000). Looking at a target of $71 (highs at the start of the base).
BUY POINT: Up to 68.49 on volume in the range of 967,000. Stop: 61.85 (50 day MVA, 61.98).
POSITION: Stock and/or August $65 calls to buy (GDW HM).
New or revisited plays:
An S&P addition:
ZION (Zions Banc--$56.35; +0.45; optionable (ZNQ): Regional
http://biz.yahoo.com/p/z/zion.html
STATUS: Is being added to the S&P 500 after the close of trading on Friday, which was announced this evening. What we do in these situations is to wait for a pullback after the initial surge in the morning (the stock was trading over 59 after hours), then get in on a turn back up, or on Friday, in order to capitalize on the stock purchase by mutual funds. The stock is in a handle to a short base within a larger base, holding right at support (its 10 day MVA, 56.05). Volume jumped well above average to 720,500 (avg. 428,454) as the stock continued to squeeze down in the handle, so the addition to the index can be a strong impetus for a breakout.
BUY POINT: 57.21 (the pivot point), on continued strong volume (minimum breakout volume is 642,000). If the stock gaps over that, look for a pullback after the initial surge for taking positions.
POSITION: Stock and/or October $55 calls to buy (ZNQ JK).
NCC (National City--$29.28; +0.72; optionable (NCC): Bank
http://biz.yahoo.com/p/n/ncc.html
STATUS: Moving up in the handle to a saucer base. The stock got a spike of volume Friday while it sat on the 50 day MVA (28.19), then gapped higher on the opening price today on another volume surge (1.5 million; avg. 1 million). Looking for a breakout over the handle high of 29.49. The stock shows huge money flow and relative strength has broken out ahead of price (bullish). Target:
BUY POINT: 29.62, on continued rising volume (met minimum breakout volume today). Stop: 27.55 (50 day MVA, 28.19). A buy on the breakout up to 31.10.
POSITION: Stock and/or October $35 calls to buy (NCC JE).
On the report back in April:
SRCL (Stericycle--$48.00; +2.20; optionable (URL): Materials & Construction: Waste
http://biz.yahoo.com/p/s/srcl.html
STATUS: Making a strong move to break out of a double bottom with handle pattern. The handle pulled back to the 10 day MVA (45.68), support from which the stock bounded up today, moving over the buy point of 47.34. Volume was strong at 337,200 (avg. 248,227). The stock shows good money flow and high relative strength, and remains a buy on the breakout. The base formed after the stock topped out on a breakout from a cup with handle. Target: $52-54.
BUY POINT: A buy up to 49.71 on the breakout. Stop: 44.64 (18 day MVA, 44.85).
POSITION: Stock and/or August $40 or $45 calls to buy (URL HH or HI).
Indexes: Please check with your broker for deltas (unavailable at this time).
QQQ (Nasdaq 100--$41.82; -0.21; optionable (QQQ):
STATUS: Tapping near support on the low of 41.26. If the index breaks below that on continued selling (volume was higher at 73.3 million; avg. 69 million), we will look at the downside play. The index broke support of the 50 day MVA (46) seven days ago.
Target: 40 is the initial target making this a pretty quick play, but it could drop to 38.
BUY POINT: Below 41.26 on continued rising volume.
POSITION: September $49 puts to buy (QQQ UW).
DJX (1/100 Dj Indu--$105.97; -0.48; optionable (DJV):
STATUS: The index after several days of selling down caught itself at the 200 day MVA Friday and Monday, but Tuesday crossed below that support level on stronger volume (1.17 million; avg. 1.1 million). We are looking for a downside play here if the index breaks below 105.64, a low that nearly matches that of Friday (105.67). Target: 104.
BUY POINT: Below 105.64 on continued rising volume.
POSITION: August $112 puts to buy (DJV TH).
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:
Jeff Whitney
Account Executive
Data Broadcasting Corporation
800-322-1875
Office hours 6:30-3:30 PST
www.esignal.com
* * THE SUMMARY * * *
TONIGHT:
- ORCL was nice, but investors need more convincing.
- More positive news from other companies, but investors cannot yet look past the telecoms that continue to deflate the market.
- Market struggling to gain its feet as analysts continue to try and knock it down.
- Economic news not bad, and the FFF contract drops below 50% on 50 points.
- Team Trades
THE SUMMARY
ORCL has techs racing out of the blocks, but the bears take over.
Tech stocks were revving their engines on the open, but as soon as the Nasdaq hit the 2050 level, it topped out and spent the rest of the day heading south. There was not much gas in the tank from the ORCL positive comments, and despite the rising gasoline stores in the country, the rally attempt ran out of fuel early. The rest of the session was a wheezing, sad attempt to hang on, but it was pretty clear that was not going to happen. All indexes finished well off of their session highs, continuing the bearish market action of late.
As we indicated last night, the ORCL news was very welcome and needed, but it was not going to be enough without more heavy hitters coming to the plate. We had more good news from Best Buy (BBY) the electronics chain (it beat the street by 3 cents and raised its estimates for the full year) and QWEST (Q) expects revenue to increase 12% to 13% above last quarter's revenues. Even Tellabs (TLB) warned, but it was not a horrid outlook for the future. Still, that was not enough. Investors are so negative on telecoms right now almost no news could help. There needs to be a big, heavy hitter come out in another sector to buttress what ORCL said. As we said, MU's earnings Thursday after the close and its guidance will be huge. Will it follow through on its previous guidance and say it has hit bottom? Huge, huge report.
Moreover, as if the recent earnings fear is not enough, ORCL and the market received no help from analysts. After a 70% drop in the Nasdaq it seems they have discovered that they can actually downgrade stocks. Nice thing to figure out now that most of the tech stocks trade at $20 or lower. At least their 'hard-nosed' attitude it took a bear market to develop cannot cause too much mischief. Or can it? They were smoked by the bear market with strong buys as stocks plunged lower and lower. Now they are so gun-shy they just cannot believe things could get better. We view it as the reverse effect of the unrelenting bullishness a year ago. Joe Osha, who has been one busy negative analyst of late, was out again today railing on INTC, claiming it was stuffing the channel. Of course, his evidence was all anecdotal, but that never stopped an analyst.
The thing that bothers us the most? Not the calls. While we think they are very short sighted, if it is based on his research and his real beliefs, he certainly has the right to do it. The problem: he is continually jumping in front of the camera saying 'un uh' every time some company comes out and says something positive. At some point it will be slapped back in his face just as it was when the stocks were failing and the strong buy ratings kept coming. Right now it is very difficult for the market to overcome these analysts that are jumping in front of the camera almost as much as the Fed members were doing back in the rate hiking heyday when all they could talk about was a tight labor pool and white hot economy. It is a publicity game to them, and it hurts more than it helps because it is so short sighted and for the moment. To this day I cannot eat baloney sandwiches without gagging because I had too many as a child, and I feel the same way if I ever hear the phrase 'white hot economy' again or 'stuffing the channel.' There is no such thing as a 'white hot economy' we have found out.
THE ECONOMY
Housing starts are down but up.
In yet the latest revision to government economic numbers, housing starts came in at 1.622 million annualized units versus the 1.60 million units expected. That was great, and it was also above the 1.609 million units previously reported. But, the previous numbers were revised upward to 1.629 million, so May's number was actually a decline of 0.4%. Defeat snatched from the jaws of victory. Hold on, however; April was lower then higher, and we can bet now that May will be even higher than originally thought.
Why? Because housing permits staged a surprising rebound to 1.621 million annualized (+2.1%) in May. That is a welcome change because permits had been running lower the past two months, and the uptick is what is needed to keep this remaining positive segment of the economy strong.
Next up tomorrow at 10:00 is the LEI. We think they will show an increase of at least the 0.2% the consensus expects. That has had an impact on the FFF contract as it fell below 50% probability of a 50 basis point rate cut at next week's FOMC meeting. It is close, and it will be nip and tuck as the economic news hits this week.
End Part 1 of 2
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