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us stock market, stock prices
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Tech Traders 7/05/01 Update
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Technical Traders Subscribers:
The Alert service is up and running! Subscribers to the current reports can sign up at the following link:
http://www.investmenthouse.com/alertttr.htm
What you get: An alert sent to your computer, handheld, pager, or email cellular that gives you the ticker, the price, the volume, the percent of average volume for that session at that time, the pivot point (buy point), target volume, target price gain, stop point, and any other pertinent details for the play. The cost is $75 per month. That gets you onto the plays when they are happening and the information you need at your fingertips to get in at the right time!
Seminars: Second series starting August 1!
We had a great response to the first round of seminars, and we have now set up the second series starting August 1. We cover the basics, to technical analysis, to options, splits and covered calls, and we do it all from the convenience of your own home via the internet. Put technology to work as you learn why stocks and the market move up and down, and then how to use the tools to implement that understanding. It will change how you think about the stock market and make you a better investor so you can get where you want to be: doing what you want when you want.
Sign up at:
https://w1407.securedweb.net/investmenthouse/wk/ordercrs.php
THE PLAYS:
Continuing Plays: From Tuesday's update report, JKHY and SLC pulled back lightly on lower volume, and BVF (covered below) looks ready to make a breakout move. From the long report, CPJ, EFII and KEA look good. GSOF broke out!
BVF (Biovail--$44.48; +1.06; optionable (BVF): Drug delivery
http://biz.yahoo.com/p/b/bvf.html
STATUS: The stock moved up on stronger volume (605,900; avg. 637,045), up from the 10 day MVA (43.42), current support in the handle to the 4-month cup base (prior high 47.72). We are looking for a breakout on continued strong volume. Solid money flow, and relative strength is breaking out ahead of price. Target: $52-54.
BUY POINT: Breakout: 45.23, on volume of 956,000 or better. Stop: 42.06 (7% below the buy point and under 42.60, the 18 day MVA).
POSITION: Stock and/or October $40 calls to buy (BVF JH).
GSOF (Group 1 Software--$19.65; +0.90; no options):
http://biz.yahoo.com/p/g/gsof.html
STATUS: Made the buy point of 19.13 on good volume (34,000; avg. 16,000). The stock remains a buy on the breakout from its 8-month cup with (a very tight) handle. It pulled off the high of 20.63, perhaps since the sector struggled today, but we will see what this small stock can do on the momentum. Target: $22. Huge money flow, and relative strength broke out.
BUY POINT: A buy up to 20.09 on the breakout, on continued strong volume. Moving the stop up to 18.27 (18 day MVA is at 18.16).
POSITION: Stock.
New or revisited plays: ROOM gave us a strong breakout last week, and is now testing. Look for it to test 45 or its 10 day MVA (44.27 range), then head back up.
New:
BMS (Bemis Co--$40.64; +0.59; optionable (BMS): Packaging
http://biz.yahoo.com/p/b/bms.html
STATUS: The stock is approaching the buy point in its pennant pattern (that formed above its 50 day MVA, currently at 38.53) after getting a strong shot of volume Thursday (231,600; avg. 141,636). Looking good in the pattern, and the stock shows huge money flow and high relative strength as well. The pattern formed after the stock broke out of a lengthier base (it is testing that breakout). Initial target: $46.
BUY POINT: 41, on continued strong volume (minimum breakout volume is 191,000). Stop: 38.13 (just under the 50 day MVA).
POSITION: Stock and/or October $35 or $40 calls to buy (BMS JG or JH).
COTT (Cott Corp--$11.34; +0.25; no options): Food and beverage
http://biz.yahoo.com/p/c/cott.html
STATUS: Moving up from a lateral-moving handle to a 14-week cup with handle base, with a buy point just above the handle high at 11.74. This stock is in a huge base, but off the lows (March 1999) around $2. Volume on today's move was 97,500 (avg. 199,590); we want to see it much higher on a breakout. Target: $14.
BUY POINT: 11.87, on volume in the range of 299,000. Stop: 10.92 (just under the 10 day MVA, 11.07).
POSITION: Stock.
Revisited plays: From the last update report, HB sold back mildly (holding support at the 10 day MVA Thursday), ELON is holding at Tuesday's levels and keeping the volume low, too. Additionally, we are looking at other previous plays that look good:
BORL (Borland Software--$13.97; -0.46; optionable (BLQ): Applications
http://biz.yahoo.com/p/b/borl.html
STATUS: Still looking at BORL. The stock broke out of a pennant pattern at the end of June, then pulled back the last three days (from the breakout high of 15.75) until showing a doji Thursday above its 18 day MVA (13.77). Volume was higher and at average levels (1.2 million), up nicely from Tuesday's volume. We are looking for a strong rebound from the doji and the support. Strong money flow and buying. Target: $18.
BUY POINT: Over 14.45 (a June high, and over today's high and the 10 day MVA at 14.30) on volume of 1.6 million or better. Stop: 13.44 (18 day MVA, 13.77).
POSITION: Stock and/or October $10 or $12.50 calls to buy (BLQ JB or JV).
RE (Everest Re--$72.58; +0.10; optionable (RE): Insurance
http://biz.yahoo.com/p/r/re.html
STATUS: The stock hit a new all-time closing high three days ago on a breakout from its 6-month base, and has pulled back on lower volume since (volume remained below average but was higher Thursday at 188,900; avg. 304,272). The intraday low tested support at 72; the 10 day MVA is just higher (72.24). We are looking for a move up from today's doji (the stock may test the 10 day MVA before heading up). Target: $82-85.
BUY POINT: Aggressive: 73, on volume of average or better. Stop: 67.89 (68.87, 50 day MVA).
POSITION: Stock and/or October $70 calls to buy (RE JN).
EDMC (Education Management--$39.00; -0.02; no options): Education and training
http://biz.yahoo.com/p/e/edmc .html
STATUS: Education still looks good! Covered last on June 27. Testing the recent breakout from its 15-week cup with handle base (inside a larger 6-month base), finding support at the 10 day MVA (38.42) as volume was very low for the second day (66,600 Thursday; avg. 198,000). That is very nice price/volume action, and we are looking for a move up from this doji. Breakout high is 41.15. Big money flow and buying looks good. Target: $45.
BUY POINT: Aggressive: Over 41 on a strong volume surge. Stop: 38.13 (below the 10 day MVA, 38.42).
POSITION: Stock and/or September $35 calls to buy (UKN IG).
THE SUMMARY
TONIGHT:
- Another post-holiday slump as investors prepare for earnings.
- No good news today to drive stocks higher.
- Warnings after bell will not help the mood Friday.
- Employment report will rattle some even though it is really old news.
- Keep an eye on the longer term as markets get volatile right before earnings.
- Subscriber Questions
- Team Trades
No festive mood on the street.
Investors came back from the fourth and were ready to sell stocks. This is a pattern that has developed since last Labor Day, and something that appears to be associated with overall negative sentiment with respect to the stock market. We said the markets were 'poised' to move, and they sure were - - to the downside. Tech and biotech were just about the worst performers. Tech winners in this market are so specific; staying with the older names can be tough as they are subject to selling each time warnings or earnings fears hit. We were looking at possible positions with BRCD and BRCM, but never saw anything today that made us want to jump in. BRCM looked good for coming sessions at the close (a shooting star doji above the 50 day MVA), but the AMD warning after hours lopped $1.50 off of its closing price. That still leaves it above its 50 day MVA, but the old-line, big names continue to be risky around earnings time. Heck, leader NVDA was hammered today as it tried to regain its feet but then failed. It is not a good sign for techs when leaders fall.
No good news.
While things were looking somewhat promising on the Nasdaq on Tuesday though iffy on the Dow and S&P 500, the mood was somber from the outset and only got worse. A $7 networking stock (Marconi, MONI) warned its earnings were going to stink. This could not have been a surprise to many though the company did say a while back that things were improving. That set the tone. Jobless claims were up for the week, and though nothing sinister was in the report, that of course did not help matters. Then all session long it was simply depressing hearing the continued parade of negative comments on the market and on the economy.
Indeed, commentary about the networking and telecom recovery started the bidding at 2003 for the 'recovery' in the sectors, and then 2004 was bandied about. Anyone for 2005? The news has to report the juiciest piece of information, so MONI got the headlines for the day. Again, however, a networker warning on earnings was not really a surprise. It just is hard for investors who are already gunshy to deal with the warnings when they actually come. The action shows that investors are still not ready to believe in an economic recovery at this point and we will have to weather the start of earnings before investors get sold out enough.
After hours warnings from big guns AMD and EMC.
AMD reported earlier it was going to miss its number but that it was seeing some stabilization in its business. Tonight it announced it would not come close to the 27 cents expected but would only make 3 to 5 cents. Note, however, that AMD still says that it is having record unit sales (its business is picking up), but it is in a price war with Intel, and that is slicing into its profits. No pricing power is a familiar theme. Chips and practically all of the 'guts' of a computer and other tech devices are dropping dramatically in price. Thus prices continue to fall. The lack of pricing power touches on all industries, so we do not believe we have any inflation worries for now, and that allows the government more room to work on the economy (like a capital gains tax elimination to get corporate investment up).
EMC also warned big, saying expect 4 to 6 cents versus 17 cents. Storage is tech, and tech has no pricing power. You can buy equipment for at least 30% of what it was just a few months ago. Look at PC prices; we have been monitoring Dell desktop pricing. You can get a 1 gig chip with 128 megs of RAM, CD-RW, etc. for under $700 - $800. Unreal.
These stocks and others were getting crushed after hours. Again, investors are looking not necessarily for improvement, but as we saw with XLNX, maybe just not as bad as thought. AMD and EMC announced the opposite, and they are being hammered.
What to take from this: A few industry experts stated that this is simply as bad as it is going to get. Remember, it appears that the economy is on the upswing once again. Sure no one believes it or at least they did not seem to do so today (but look at the future expectations of the consumer and the non-tech business sectors), but the numbers indicate there is the belief in better times ahead. That, however, won't help tomorrow as the indexes will head lower if something dramatic does not happen overnight. Don't count on it.
THE ECONOMY
The economic news was either good or not really bad at all, but the reporting gives it the worst possible spin. We need to get back to the future.
Example: 'Jobless Claims Soar in June' announced one headline. Yes, jobless claims were up to 399,000 from 392,000 prior. That is a 7,000 job loss or a 1.8% gain in jobless claims. Last week the number fell to 392,000 from 404,000. That is a 3% drop in jobless claims. That news was well-received, but it did not get the same degree of positive treatment as the rising claims number received negative treatment. Another big plus that was hardly mentioned? The 4-week average fell to 407,500, down from 416,000 and continuing the trend lower. The trend has started to be downward as the economy starts to recover. We said we would get up and down numbers, but the trend would be the story. The trend is tossed out when it makes better news to report otherwise. It is a negative climate out there in the reporting business right now.
NAPM Services report shows expansion once again.
Another report that was swept under the rug: the NAPM services index moved back over 50, coming in at 52.1% from 46.6% in May. It was a sharp reversal and was the first close over 50 since the 61.1% reading in December 2000. Much was made of the event when services started contracting, but now it has reversed course and looks to be heading higher with the NAPM, the manufacturing report.
Boat show sales higher, big ticket software orders up.
Here in Houston there are two boat shows a year, one in the spring and one in the summer. This is one of the indicators we throw into the mix to determine just how the economy is performing. Through the spring show in late January/early February, things were still grim. The lower end boats that make up most of the market were not selling. The higher end boats were holding their ground. That is usual for economic downturns. Overall boat sales were way down. The recent summer boat show marked a change in results. Several area dealers beat last summer's results and noted much more optimism. Indeed, while bad weather kept attendance down through the week, the weekend sunshine brought out the buyers with their checkbooks. Sales were good across the board.
Talking with some local software salesmen we have also learned that orders for the big ticket software packages are just now starting to pick up steam. A lot more activity is how it was described to us. We have believed that software would be one of the areas to pick back up in technology as companies had to stay competitive and efficient. New software is one of the best ways to do that.
These are still very much positives for the economy as they continue to show the continued improvement across the board. This is not just housing holding up in the face of weakness across the board as it was before; this is now some real improvement. It keeps us looking to the future, but we have to deal with the current refusal to look beyond earnings that are really going to stink.
End Part 1 of 2
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us stock market
stock prices
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