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yahoo stock, us stock market
Begin Part 2 of 3
THIS WEEK
The big economic stories this week will be retail sales and Michigan sentiment on Friday. That gives us a whole week to start hearing earnings and more warnings to get additional selling out of the system to prepare for another move higher when improving economic news continues to hit. Again, it won't be better with each report, but the trend for all economic reports will be improvement.
Based on a historical view of the market, we still feel that we are at the turning point in the economy and the market. We have been buying stock for longer term as they move up in good patterns. That does not relieve us from exercising stop loss rules, and we had to do some of that on Friday with some positions we purchased earlier. Still, we will continue to take positions on breakouts, but we are going to remain selective. We are also going to take profits on the first run of a breakout if it starts to falter, locking in the gain. If it successfully tests the breakout and starts up, we will buy in again for the post-test run.
Once we get a high-volume reversal and subsequent follow through, we will let the positions run more. One good thing we have going for us at this point: still a lot of stocks in good patterns that are just awaiting a move back up. Serious selling could wreck some of those patterns, but unless we get a full-fledged test of the prior lows, many of the patterns will hold up just fine on some further market selling. Friday was unusual as most sectors suffered; we don't think that will continue on a daily basis if there is more selling as some sectors will be singled out for selling while money rotates into other sectors.
After Friday we still see many good sectors to the upside, and there are plays to the downside. As for downside plays, we are focusing on those that are set up properly, i.e., have broken support, tested it with a low volume rise, and are now ready to fall again. Those have the best likelihood of continuing their fall and are less susceptible to the inevitable reflex bounce after serious selling. Remember that the Nasdaq is two days ahead of the Dow and S&P on the selling, and it may be ready to bounce sooner, perhaps from the 1970 level. We need to be careful of that on further selling early in the week.
Support and Resistance Levels
Nasdaq: Closed at 2080.11.
Resistance: 2160 to 2200. Then 2250.
Support: 2100 did not try to hold. That puts us looking at 1990 (1973 on the low side), roughly where the index gapped higher in April and where it most recently turned.
S&P 500: Closed at 1219.24.
Resistance: 1240 to 1250.
Support: 1200 is where we would like to see it hold. Head and shoulders bottom and the breakout support from the double bottom pattern is right at 1182.
Dow: Closed at 10,479.86.
Resistance: 10,600 (the 200 day MVA is at 10,593.85). Still resistance at 10,700 and again it is not really clear up to 10,800. 11,000 is possible resistance after that.
Support: 10,400. Then 10,200 to 10,250.
Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.
7-9-01
Consumer Credit, May (15:00): $9.4B versus $13.9B prior.
7-10-01
Wholesale Inventories, May (10:00): 0.0% versus 0.3% prior.
7-12-01
Initial Claims, 7/7 (8:30): 391K versus 399K prior.
Export Prices ex-ag., June (8:30): -0.3% versus -0.3% prior.
Import Prices ex-oil, June (8:30): -0.2% versus -0.2% prior.
7-13-01
PPI, June (8:30): -0.1% versus 0.1% prior.
Core PPI, June (8:30): 0.1% versus 0.2% prior.
Retail Sales, June (8:30): 0.2% versus 0.1% prior.
Retail Sales ex-auto, June (8:30): 0.2% versus 0.3% prior.
Michigan Sentiment-Prel., July (9:45): 93.0 versus 92.6 prior.
SUBSCRIBER QUESTIONS
Q: I am a new subscriber and I see a great deal of information but no explanation of what are and how to use stop protection levels.
A: This is a frequent question, and we would refer anyone to the FAQ's on the Investment House home page. Basically, we have a 7% rule on new purchases where we will sell any new purchase if it drops below 7%. This is not an uncommon rule among many successful investors. That way you never let a play that is not working out turn into a big loss. We attempt to list a stop position on each play in each newsletter for that particular entry point that we are looking at. Many times we like to use a stop point just below a support level such as a breakout point, moving average, or trendline. That way if the support is broken, we know the character of the investment has changed, and we are moved to action. The protection of the support is gone, and that should get our attention. Again, we list stop points on each entry point.
After that, we use trailing stops as the position moves higher, particularly in a choppy market where we want to maintain profit that can evaporate on us if the market take a sudden, unwanted turn the other way. Setting these is much more difficult as it is more a question of individual investor comfort with where to place the trailing stop. Usually what we do is let a stock make its first run, and when it starts to show signs it is topping we will slide a stop loss in at a point that will protect the gain we have, willing to sell out at that point rather than ride it down. Also, as discussed on Thursday, we will also at times sell a call at that point if we feel good about the stock holding at support on a test of the breakout. We recently described that with BORL. Friday BORL sold down more, but then finished the day higher; if the Nasdaq catches itself at this level, BORL is primed (as are many stocks testing their breakouts) for another move higher. When the market gets choppy, we prefer to put in stops or just sell when a stock shows topping signs (doji after a good run, moving higher on lower volume, a close well off the high on lower or very high volume). Bank some profit and catch it on the move back up. Better to pick the fruit and put it in the basket than take the chance that it falls and rots.
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
800-322-1875
Office hours 6:30-3:30 PST
www.esignal.com
THE PLAYS:
Reading the Plays: Please note that when we reference the 10, 18, and 50 day moving averages (MVA), those are exponential moving averages (EMA). The 200 day moving average is always simple (SMA). We will note when we reference a particular MVA differently, e.g., a simple 50 day MVA. Please click on the Yahoo and chart links for company and charting information.
All prices reflect prices at the close on Friday.
BEST PLAYS:
Best Plays:
1) RE: Very nice test of the breakout.
2) HB: Moved higher toward a breakout in a bad market.
3) ORI: A gain on strong volume Friday; ready to breakout.
4) BZH: Sold back, but still a good pattern in a good sector.
5) JKHY: Nice, orderly pullback. Will need some volume.
6) BVF: Down Friday, but still in the pattern and solid.
7) SRZ: Beautiful pullback.
8) ROIAK: Another great pullback.
NEW PLAYS:
BVN (Compania De Minas Buena--$18.47; +0.37; no options): Gold mining
http://biz.yahoo.com/p/b/bvn.html
STATUS: Moving in an ascending wedge for the past 8 weeks as it has moved off of its bottom, formed a cup with handle, and now is ready to break out of its wedge pattern. This is one of our favorite base on base patterns. Friday it moved higher on rising, though still below average volume (97,900; average is 115,181). Money flow is outstanding and relative strength has broken out ahead of this move. Target: 22.75.
BUY POINT: 18.97 on volume of 175,000. Stop: 17.65
POSITION: Stock; no option chain.
ROIAK (Radio One--$20.80; -0.18; no options): Radio Broadcasting
http://biz.yahoo.com/p/r/roiak.html
STATUS: ROIAK has had an excellent year, and over the past seven weeks has formed a double bottom with handle pattern. The stock ran up hard two weeks ago, and last week it pulled back in its handle on extremely low volume (339,300 Friday; average is 550,000). Friday the stock showed a very tight doji as it closed just above its 10 day MVA (20.63). We are looking for the breakout on strong volume. Target: 26
BUY POINT: 21.12 on volume of 825,000. Stop: 19.65.
POSITION: Stock; no option chain.
SPF (Standard Pacific--$23.26; -0.48; optionable): Residential construction
http://biz.yahoo.com/p/s/spf.html
STATUS: After hitting an all-time high in February at 33, SPF split 'the hard way,' dropping to 16 before rebounding. It is working on a cup base, and has formed an ascending wedge over the past two months as it cleared its moving averages. Thursday and Friday it pulled back from close to the breakout point on very low volume (104,300; average is 311,727). Money flow is excellent and we are looking for a nice pop on the move higher. Ascending wedges tend to give sharp moves higher that then fizzle. We will take our 20% and bank it if it starts to slow down on the move. Target: 29
BUY POINT: 24.20 on volume of 350,000 shares or better. Stop: 22.50
POSTION: Stock and/or September $20 calls to buy (SPF ID).
SRZ (Sunrise Assisted Living--$26.94; -0.16; optionable): Long-term health care
http://biz.yahoo.com/p/s/srz.html
STATUS: SRZ is in a 7 month cup with handle base and appears to be forming the handle right now on extremely low volume (100,100; average is 226,000). It hit a high of 27.90 Monday, and has pulled back on very low volume since that time. It showed a tight doji Friday above the 10 day MVA (26.50). Looking for the breakout on a volume surge. Relative strength is at breakout levels right now. Target: 34
BUY POINT: 28.02 on volume of 340,000. Stop: 26
POSITION: Stock and/or October 22.50 calls to buy (SRZ JX).
CONTINUING PLAYS:
BREAKOUTS:
A very thinly traded stock, but we like the pattern and sector:
GSOF (Group 1--$27.14; -0.85; no options): Software
http://biz.yahoo.com/p/g/gsof.html
STATUS: Broke out of its tight handle Thursday on good volume, but the move was cut short as volume dropped back (to average, at 19,200). The low (18.57) tested support at the 10 day MVA before the stock closed higher. Is likely to retest that support on a continued pullback in volume, but we are looking for a move back up and over the breakout high of 20.25. In a 16-month base and showing huge money flow.
BUY POINT: 20.38, on volume of 34,000 or better. Stop: 18.95 (10 day MVA, 18.69).
POSITION: Stock.
UNFI (United Natural Foods--$20.69; +0.09; no options): Food wholesale
http://biz.yahoo.com/p/u/unfi.html
STATUS: The stock continues to look good, and currently is testing support again (the 10 day MVA, 20.30, and other price support at 20). Volume, too, was quite low Friday, coming in at 43,800 (avg. 177,000). Look for a strong move up from support for the stock to break over the recent high at 21.80.
UNFI tried to add to Friday's move (and it did, but we'd like to have seen it stick to the high of 21.80). Volume surged, supporting Friday's pop, coming in at 556,000 (avg. 168,409). The closing price is just under 2 recent highs at 21.15. Look for a pullback to test 20 or better; that has been the pattern, a pop up followed by 2 or more days of lateral pullback. New target: $23-24.
BUY POINT: Over 21.15 after a pullback to the 20.38-20.50 range. Stop: 19.46 (18 day MVA, 19.30.
POSITION: Stock.
TESTS OF THE BREAKOUT: Some of these stocks are moving back on low volume to test the breakout. We often take profits on option plays when they start to pullback on the breakout move and then get back in when the stock bounces up off of the breakout point. This second move is where some of the biggest gains are made.
Continued: Watching EBAY and RCGI.
ELON (Echelon--$27.14; -0.85; optionable (EUL): Software
http://biz.yahoo.com/p/e/elon.html
STATUS: Testing its breakout from the ascending wedge (that formed after the stock broke out of a cup with handle at the bottom of its 15-month base). Volume has dropped off and is below average the last three days (to 227,900; avg. 363,000) while the stock holds above the 10 day MVA (26.86), so it is a good-looking pullback to the bullish pattern series. Looking for a hold here; it is possible to see a re-test of the 18 day MVA (25.85), near the upper levels of the ascending wedge at 26. Buy point was 26.87. Target: $35.
BUY POINT: Aggressive: 29, on volume at average levels or better. Stop: 26.97 (or at or near the 10 day MVA.
POSITION: Stock and/or August $22.50 calls to buy (EUL HX).
HB (Hillenbrand--$58.10; +0.83; optionable (HB): Diversified services
http://biz.yahoo.com/p/h/hb.html
STATUS: Closed at a new high for this year as volume remained higher (325,500; avg. 133,000), but the stock still needs to take out recent highs built up near the intraday high of 58.51. HB made a strong breakout run from an ascending wedge throughout June, then pulled back in a test of the 18 day MVA (56.37); now it is trying to break the new resistance. Looking at a target on that move of 65. Money flow is huge, and relative strength broke out. 10 day MVA is at 57.05 (where the stock opened Friday).
BUY POINT: 58.64, on continued strong and rising volume. Stop: 54.53.
POSITION: Stock and/or September $55 calls to buy (HB IK).
RE (Everest Re Group--$72.40; -0.18; optionable (RE): Insurance
http://biz.yahoo.com/p/r/re.html
STATUS: Pulling back after the breakout from its 6-month base when the stock reached 75.70 as a closing high; volume was strong on the breakout but tapered off quickly, allowing the pullback. We like the below average volume shown over the last 4 days as the stock tests the 10 day MVA (72.27), and look for a move up from there or from the 18 day MVA (71.50). We would like to see a hold at the 10 day, since that would keep price above the range of the handle. Target: $82-85.
BUY POINT: Aggressive: 73, on average or better volume. Stop: 67.89
(68.87, 50 day MVA). Breakout: 75.63, on volume in the range of 300,000. Stop: 70.34.
POSITION: Stock and/or October $70 calls to buy (RE JN).
ELN (Elan--$60.00; -0.30; optionable (ELN): Drugs
http://biz.yahoo.com/p/e/eln.html
STATUS: Still testing the breakout as volume drops even further below average (slightly higher but well below average at 847,700; avg. 1.5 million). Remains above the buy point of 59.23 (from the cup with handle breakout) and showing its second doji, this one just below the 18 day MVA (60.17). We will watch for a strong move back up; the breakout high is 65. The stock shows good money flow. Target: $70.
BUY POINT: Aggressive: 61 (over the 10 day MVA at 60.56), on rising volume. Stop: 56.73.
POSITION: Stock and/or October $55 calls to buy (ELN JK).
APOG (Apogee Enterprises--$12.06; +0.11; no options): Materials & Construction
http://biz.yahoo.com/p/a/apog.html
STATUS: The stock broke out of a short consolidation a week ago, and is currently pulled back from the breakout high (12.72) and moving laterally the last 2 days. Volume is back below average, too (154,700; avg.157,000) and just higher Friday. The stock tested the 11 range on the low, and we are looking for a move up from here on strong volume. High money flow and good buying. Target: $15.
BUY POINT: Aggressive: 12.13, on above average volume. Stop: 11.28 (just under the 18 day MVA at 11.50).
POSITION: Stock.
BBY (Best Buy--$64.84; -1.94; optionable (BBY): Retail
http://biz.yahoo.com/p/b/bby.html
STATUS: Broke out of the ascending wedge Tuesday, but low volume pulled it back to a test of the 10 day MVA Friday (64.40), volume that remained below average Friday at 1.98 million (avg. 2.4 million) though just higher than the previous session. The stock tapped the 10 day on the low and closed just above the support, and is holding above upper resistance in the pattern just under 64. Huge money flow. Target: $70.
BUY POINT: New high: 68.78, on volume of 2.7 million or better. Stop: 63.97.
POSITION: Stock and/or September $55 or $60 calls to buy (BBY IK or IL).
End Part 2 of 3
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yahoo stock
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