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us stock market, trade stock
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11/28/03 Technical Traders Report
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Technical Traders Report Subscribers:
Happy Thanksgiving!
Thanksgiving Holiday Schedule:
The stock market will be closed Thursday November 27 and will close at 1:00ET Friday November 28. Reports will issue as usual Monday and Tuesday. Barring any major market event, the following is the report schedule for that week:
Monday and Tuesday: Normal reports issue
Wednesday: Market update, play tables
Saturday: Market update, highlight best plays for Monday, play tables
Alerts: Will issue as normal.
MARKET ALERTS
Targets hit alerts issued Friday: CPHD; SCKT
Buy alerts issued: MRVC (bonus)
Trailing stops issued: None issued
Stop alerts issued: None issued
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the Daily alert service you can sign up at the following link:
http://www.investmenthouse.com/alertttr.htm
SUMMARY:
- Lazy drift higher continues but stifled at SP500 near resistance.
- Chips and small caps still in position to lead?
- Dollar worries, weekend retail sales, jobs report focus for next week.
- Subscriber Question
Market manages modest advance in face of dollar fall, weak overseas markets.
Futures were soft as the overseas markets were down as well. The dollar hit another all-time low versus the euro. The economic bears hit the airwaves given there was no economic data to be released to refute their stance. They talked about the 'twin' deficits of trade and budget as being the undoing of the dollar, the economy and of course the market.
Those worries put the market under pressure early, but after a brief test lower it spent most of the shortened session in the green. The action was stalled, however, when SP500 hit resistance at 1060ish and faltered. That did not tank the market, however, as it hung onto the gain to the close. Nothing spectacular, but by the close only the SP500 was negative. Modest volume, modest breadth, modest gains. There were some strong individual moves of course, but they were of course the exception to an otherwise slow session.
THE MARKET
Chip stocks were in the lead Friday (+1.2%), though that is hardly a glowing endorsement. They were helped by a report of 23% year over year October sales growth and a 6% month over month increase. With that in the back pocket, chips led the way higher though the rest of the market only reluctantly followed, drifting higher in a typical holiday season rally.
The SOX will be an important focal point this week. It has already managed to reach up toward the top of its uptrend channel that formed off of the March, June and September highs. It is not there yet, but it did not hit the 50 day MVA on the last dip, starting up from the 18 day MVA while the rest of the indexes tested deeper. How it handles that upper trendline at 540 will be important for the rest of the market. If it holds the current trend, chips should start to fade back within the trend. They have been leading the rest of the market, forecasting the moves a session ahead. When they stumble and then continue to struggle the next session, the rest of the market will probably start to struggle as well.
In addition, the other leading indexes, the small and mid-caps (SP400, SP600), are approaching the upper channel in their uptrends as well as they too avoided a 50 day MVA test before they turned higher on the last bounce as well. When SP600 tests 275 and SP400 tests 575 they should test back in their uptrends just as the SOX if they continue the same trend.
Thus if those trends hold and these leading indexes continue their trends, they should fall back after a further rise. That natural ebb and flow will be lost in the daily microanalysis of the market and there will calls that the market has lost its momentum, is now selling off, etc. It may indeed do that, but that will show up in volume selling and leaders crashing down through support. Those are the things we have to keep in mind as we look at the day to day action. Just because they pullback does not mean the uptrend is over.
Market Sentiment
Unavailable at time of writing.
NASDAQ
Techs were pretty solid Friday, topping the other large cap indexes with a modest but decent gains. Nasdaq is right in the middle of its uptrend channel after coming off of a 50 day MVA test two weeks back. It is in an area once again where it needs to clear the October high (1967) then the November high (1992) to avoid a toppish pattern, but that is something it has done all during this uptrend. It may test back to the 18 day MVA (1931) before continuing the move, but if it does make that test and rebounds again, that is a good sign for a continued run up in the channel.
Stats: +6.95 points (+0.36%) to close at 1960.26
Volume: 704.008M (-53.83%). Too low to indicate anything.
Up Volume: 518M (-527M)
Down Volume: 178M (-260M)
A/D and Hi/Lo: Advancers led 1.42 to 1. Same modest breadth.
Previous Session: Advancers led 1.36 to 1
New Highs: 219 (-67)
New Lows: 9 (+4)
The Chart: http://www.investmenthouse.com/cd/^ixq.html
S&P 500/NYSE
The large caps ran into the November highs (1062 - 1064) and stalled, showing a tight doji Friday. After a higher low at the 50 day MVA hit last week, SP500 needs to clear those November highs to keep the uptrend in the large caps alive. Another 18 day MVA test (1048) may be in the cards, and as with Nasdaq, a test and rebound from that level actually strengthens the index for a break over the November highs.
Stats: -0.25 points (-0.02%) to close at 1058.20
NYSE Volume: 485.728M (-56.05%)
Up Volume: 280M (-518M)
Down Volume: 193M (-102M)
A/D and Hi/Lo: Advancers led 1.53 to 1. Breadth fell off as the large caps did not participate as they did on Wednesday.
Previous Session: Advancers led 2.02 to 1
New Highs: 305 (-45)
New Lows: 3 (-2)
The Chart: http://www.investmenthouse.com/cd/^spx.html
DJ30:
Stats: +2.89 points (+0.03%) to close at 9782.46
Volume: 79M versus 162M
Went nowhere, showing a tight doji over the 10 day MVA (9740). It remains below the October high (9850) and the November high (9903), levels it will have to clear to avoid another potential head and shoulders pattern, a pattern it has threatened several times during this rally, but always failed. Still it is something we have to stay aware of, particularly as the uptrend line coincides with the November highs. We note that it did make a higher low again as it held the 50 day MVA last week, a technical positive for the index as it tries to make a breakout after a 6 week lateral move over the 50 day MVA (9662).
THIS WEEK
Big economic week yet again with the national ISM, services, productivity, and the employment report. On top of that there is the continued decline in the dollar that is putting some pressure on the indexes as they continue to rise within their uptrends. The dollar/economy battle will continue, and with continued strengthening economic numbers, the key is the perception as to how much the falling dollar will impact the economic growth and the foreign investment in the US. It is again something for the market to worry about. With the continued strong economy continuing its expansion, some more worry for the market to climb over is good. It can make for some choppy action, however, as it continues that climb.
As noted, we will be watching the SOX and smaller cap indexes. Chips received good news in the form of October sales, and NSM reports earnings on Thursday. They have the fuel, but they also have to deal with the upper channel line.
Outside of technical matters, there will be the continued guessing regarding the holiday retail season's early returns and how the November jobs report will turn out. We have seen the market rally ahead of big economic reports, and we could thus see a rally earlier in the week ahead of those numbers, putting the SOX and smaller cap indexes at their upper channels where the market will naturally find the going tougher.
Support and Resistance
Nasdaq: Closed at 1960.26
Resistance: 1975 is some resistance. November high (1992). The January 2002 double top (2044 to 2099).
Support: The 18 day MVA (1931). The March/August up trendline (1928). The September high (1913). The 50 day MVA (1901). 1875 to 1880 is the bottom of the week's range.
S&P 500: Closed at 1058.20
Resistance: November high (1062-1064). The December to June upper channel line at 1080. 1080 from February 2002 lows. 1100 represents some early 2001 lows. 1150 to 1175, the early 2002 double top.
Support: The 18 day MVA (1048) and the 10 day MVA (1050). The exponential 50 day MVA (1038). 1030 to 1032 (early September highs). The top of the summer range at 1015. 1010 the early September highs. 975 (December 1997 peak).
Dow: Closed at 9782.46
Resistance: The October high (9850). The November high (9903). The March/September up trendline (9910). 10,000.
Support: The 18 day MVA (9737). 9686 (September high; 9659 intraday). The exponential 50 day MVA (9662). 9588 the early September highs. 9500 (June 2002 lows) is the top of the summer range.
Economic Calendar
12-01-03
ISM, November (10:00): 57.0 expected, 57.0 October.
Construction spending, October (10:00): 0.5% expected, 1.3% September.
12-03-03
Productivity, Q3 revised (8:30): 8.3% expected, 8.1% prior.
ISM Services, November (10:00): 64.0 expected, 64.7 October.
12-04-03
Initial jobless claims (8:30): 355K expected, 351K prior.
12-05-03
Non-farm payrolls, November (8:30): 150K expected, 126K October.
Hourly earnings, November (8:30): 0.3% expected, 0.1% October.
Average workweek: 33.9 expected, 33.8 October.
Factory orders, October (10:00): 0.6% expected, 0.5% September.
Consumer credit, October (2:00): $5.0B expected, $15.1B September.
SUBSCRIBER QUESTIONS
Q: I am having trouble setting a price target when I set out on my own. I have been following MRVC through its 50ema test because I liked the price volume action. I bought it . . . when it broke above 3.5 on huge volume. The move was excellent and the weekly chart looks great. It has old 2001 overhead starting at 4 running up to 6. Would you set your price target based on the old overhead or would you look for a certain percentage gain? It seems to be easier to figure out when to buy them than is to know when to sell them. Your help would be appreciated.
A: That is always the hardest part, knowing when to hold and when to fold. A gain seems to burn a hole in your pocket so to speak as your emotions prompt you to take a gain even when the move is still strong. We overcome this urge by taking part of the game when the stock hits our initial target. If it is surging when it hits the initial target we will often let it continue the move until it starts to slow, then we will take part of the gain. If it comes back and holds near support and then bounces, that is a point we can use some of that money to move back in with additional positions. We treat it as a whole new play at that point, one we want to be back in becase the stock is moving well and showing the next move higher is starting.
That way we avoid getting too emotional as we have put some gain in our pocket. But where do we set that first target? We always look at the resistance levels. Often our buy points coincide with a move through that near resistance, a breakout to put it another way. That leaves the stock with room to the upside. If there is more resistance ahead, we will use that as our target, but of course, we want to see enough room to give us a return before it hits that next point where it will, even in a strong upside move, at least pause. A strong move will often generate a quick 20% gain. That is often an area we shoot for, but that has a lot of flex in it. If a stock is $80, we often play options and thus we can get a 10% move and still have a great option return. On stocks in the $3 range, a 25% or 30% move is not that hard to achieve on a strong break higher.
As for MRVC, it is somewhat of a sweet spot as its major peak ahead of it was at 6 hit back in late 2002. Even though that was a year ago, it can still exert some resistance on the stock as it is the first major peak it will encounter in its recovery. From $4 that is still a nice 50% move, a great position to be in when looking at the initial target. If it runs hard to there you can bank some gain, let it test, then ride it higher if it will. If it falters, you still have a nice gain locked in for the rest of the position by using a trailing stop below the short term MVA.
We look for stocks that can give us a nice 15% to 20% return on a breakout or rebound off support in a relatively short time, though we won't cut off a good move just because it is taking a week or two longer than we wanted. Good technical underpinnings sometimes take a bit longer to germinate, but when they do the move typically works out if the market maintains its overall trend.
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:
These look ready for Monday: ATML; CRA; FALC; FLDR; NEOF; PISX; TQNT; VSH. Full write-ups resume this week after short holiday break.
WATCHLIST/ CONTINUING:
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.
Upside Plays
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
^OEX 11/06 A Wedge 520.74 -0.47 523.15 545 89K 650K 518.55
Current.
ADVP 10/25 A Wedge 55.66 +0.98 49.59 59.38 308K 3.1M 53.22
Current.
AMXC 11/05 Cup hdl 6.76 +0.22 6.27 8.12 65K 151K 6.05
Current.
ANT 11/10 A Wedge 38.16 +0.37 35.58 42.45 56K 561K 35.97
Current.
AOT 11/24 Flat 23.13 -0.18 23.28 27.95 97K 405K 22.32
Buy Not Hit.
ASF 11/17 Test BO 14.96 -0.02 14.52 17.85 76K 400K 13.72
Buy Not Issued.
ATML 11/25 Flat 6.73 +0.06 6.78 8.48 2.1M 11M 6.29
Buy Not Issued.
BRCM 10/04 Cup hdl 36.39 +0.51 29.91 35.88 2.9M 20M 34.75
Current.
CAI 11/09 Test BO 49.77 -0.66 50.88 51 98K 581K 49.08
Buy Not Issued.
CASY 11/06 Rv H&S 17.47 +0.08 16.37 20.12 97K 200K 16.78
Current.
CKSW 10/25 Test BO 4.7 +0.3 3.61 4.58 121K 300K 4.02
Current.
CPHD 11/05 A Wedge 7.73 +0.38 6.15 7.52 324K 338K 6.95
Target Hit. Nice continued move. Took part of the gain, letting
the rest run.
CRA 11/24 Cup hdl 13.57 -0.04 14.12 16.95 124K 809K 13.13
Buy Not Hit.
CYD 11/24 Test 50 29.65 +0.35 30.58 38 836K 3.5M 28.22
Current.
EGHT 10/30 Cup 7.52 +0.76 2.15 2.91 23M 823K 6.25
Current.
EMBT 10/06 Flat 14.36 -0.05 11.24 13.38 67K 350K 14.27
Current.
EMBT 07/26 Cup hdl 14.36 -0.05 9.33 11.12 67K 400K 14.27
Current.
EQIX 11/20 Cup hdl 26.71 +0.66 23.12 27.75 22K 200K 20.79
Buy Not Issued.
EVCI 10/20 Cup hdl 5.34 +0.09 3.4 4.38 33K 125K 5.05
Current.
FALC 10/30 Cup hdl 7.95 -0.04 8.04 9.65 83K 230K 7.81
Current.
FLDR 11/25 DB hdl 5.59 0 6.05 7.85 22K 150K 5.57
Buy Not Hit.
GBN 10/22 Cup 2.32 +0.01 1.86 2.42 300K 300K 2.14
Current.
GGAL 11/22 Test 50 6.19 +0.1 6.25 8 171K 424K 5.81
Buy Not Hit.
GISX 10/25 Cup hdl 29.31 -0.25 27.88 33.32 73K 302K 28.32
Current.
IDTI 10/29 Rv H&S 18.85 +0.31 16.45 19.75 401K 3.3M 17.98
Current.
JNPR 11/22 A Wedge 18.87 +0.2 18.23 21.85 2M 12M 17.99
Current.
KEYN 11/17 Flat 12.34 +0.08 12.52 15 23K 200K 11.98
Current.
KVHI 11/15 DB hdl 31.58 +1.05 33 40 174K 536K 30.42
Current.
LTXX 11/11 DB hdl 16.49 +0.03 16.68 19.85 237K 1.2M 15.35
Current.
MANU 10/11 Test BO 6.66 +0.01 6.77 8.15 174K 1.4M 6.44
Current.
MCLD 11/12 DB hdl 1.6 -0.01 1.78 2.32 234K 3M 1.57
Buy Not Hit.
MRVC 11/28 A Wedge 4.02 +0.21 4.05 5.12 1.6M 2M 3.77
Current. Saw a decent move continuing and stepped in with a
bonus alert.
MVSN 11/24 Cup hdl 22.96 +0.15 23.33 27.69 121K 891K 22.32
Current.
NANO 11/26 Pennant 14.6 +0.1 13.93 16.75 256K 450K 12.88
Current.
NEOF 11/03 A Wedge 15.98 +0.27 16.58 19.95 40K 151K 15.42
Buy Not Hit.
NKE 11/22 Cup hdl 67.25 -0.1 64.55 75 341K 2M 64.64
Current.
NOVL 11/22 Test BO 9.62 +0.16 8.88 10.68 4.9M 10M 8.82
Current.
NVLS 11/19 Test BO 43.76 +0.46 44.44 52 1.6M 10M 42.28
Current.
PLXS 11/03 DB hdl 17.94 -0.22 19.06 22.75 81K 528K 17.38
Current.
PTSX 11/15 A Wedge 4.95 -0.05 5.22 6.55 11K 144K 4.85
Buy Not Hit.
SCKT 11/03 Cup hdl 4.56 +0.68 3.61 4.55 1.4M 526K 3.81
Target Hit. Surged off the 18 day MVA on huge volume. Took part
of the gain on the target, letting the lest run on
this strong move.
SERO 11/22 Cup hdl 17.25 -0.02 17.72 21.25 133K 700K 16.32
Buy Not Issued.
SNDK 11/24 Test 50 80.82 +1.02 81.2 93.35 796K 3.5M 77.88
Current.
SOHU 10/24 Dbl btm 34.7 +0.3 37.69 45 694K 9M 34.85
Current.
SQNM 11/18 Cup hdl 3.61 +0.05 3.88 4.95 97K 561K 3.58
Buy Not Hit.
TEO 10/27 Cup hdl 7.85 -0.15 7.26 9 110K 511K 7.76
Current.
TLAB 11/10 DB hdl 8.01 -0.14 8.27 9.88 1.9M 6M 7.86
Current.
TMWD 11/19 BO 8.37 +0.17 8.15 8.78 134K 900K 7.41
Current.
TQNT 11/19 Test 18 8.14 +0.02 8.04 9.75 514K 3M 7.68
Buy Not Issued.
TRFX 11/19 Test BO 5 0 5.19 6.54 20K 135K 4.83
Current.
TTEC 11/19 Test BO 10.14 +0.07 10.25 12.27 270K 660K 9.28
Current.
VSH 11/12 Flat 21.01 +0.15 20.78 24.88 594K 3.2M 19.78
Current.
WMS 11/21 Dbl btm 26.7 -0.17 25.83 31.22 149K 650K 25.25
Current.
ZILA 11/15 Cup hdl 3.98 +0.03 4.19 5.35 22K 185K 3.87
Buy Not Hit.
Downside Plays
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
ARDI 11/10 Put 12.58 -0.05 11.95 10.06 65K 1M 12.62
Current.
PFGC 11/15 Put 39.31 +0.03 38.58 36.05 122K 450K 38.88
Buy Not Issued. Dropping.
SFNT 11/11 Put 33.27 +0.06 34.05 30.55 114K 461K 33.22
Good Investing!
Jon L. Johnson and your Technical Traders Report Team
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 in 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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