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us stock market, trading system
Begin part 2 of 2
SUBSCRIBER QUESTIONS
Q. When you look at charts, do you prefer 3 month or 6 month charts? When you refer to a pattern, are you looking at a daily chart, hourly, other? Why do you use candlestick charting as opposed to other types like line or bar charts.
A. We look at charts from all different time frames: 1 year, 6 months, 3 months, 1 month because it keeps us from getting tunnel vision with respect to what has just recently happened. We need to put it all in the perspective of the big picture, but we also need to see the subtleties of the more recent moves. Looking at various time frames gives us the bigger picture. Sometimes you can find yourself focusing on the last two weeks, but when you back up, you see the stock is about to breakout of a base or is approaching resistance, etc. Looking at a longer term chart allows us to make a useful count of accumulation and distribution weeks, too, an important indicator that illustrates the character of institutional involvement in a stock.
As for patterns, it is important to note that whether you are looking at a daily chart, a weekly chart, or a 5-minute chart, the patterns are the same. When we are watching a stock during the day with a 5-minute interval, we look for the same type of pattern that we would look for when looking at a pattern that spans several days, weeks, months. When we see volume dry up as the trading range narrows, for example, it is a sign that the stock could be ready to break out to the upside, whether it's a pattern of weeks or just hours, or less.
We use Japanese candlestick charting because it gives us more information more quickly than other chart styles. When combined with volume and pattern, it's a powerful tool as it becomes a very accurate measure of a stock's momentum. Once one is comfortable with what these charts show, the momentum of a stock is revealed much more quickly. We like it especially with respect to helping determine when a stock may be turning up or down. Candlestick charts don't show different data from bar charts; they just show it in a way that is much clearer to see at a glance, and it is easier to see those momentum shifts.
We teach candlesticks in our seminar series and there are several good books. One of them is by Gregory Morris called 'Candlestick Charting Explained.' Another is 'Japanese Candlestick Charting Techniques' by Steve Nison.
THE PLAYS
Good movers Friday: ADCT; ALTI; CHU; CYD; JMAR; NOOF
New Plays for Monday: Some new ones and an old favorite making a strong move.
Play Date: 01/03/2004
GEB (Genetronics Biomedical--$1.39; +0.14; no options): Medical instruments
http://biz.yahoo.com/p/g/geb.html
STATUS: Cup. Making a strong volume move toward the breakout of its 11 week base showing excellent 4 to 1 accumulation (4 up price weeks on rising volume versus 1 down price week on rising volume). The accumulation shows institutions buying into the stock during the base, action that sets the foundation for a breakout and subsequent run. Friday's move is in the process of breaking GEB out of the pattern, and on a further move we are looking to get on board.
Volume: 1.056M Avg Volume: 743.211K
BUY POINT: $1.48 Volume=1M Target=$1.95 Stop=$1.28
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cd/geb.html
Play Date: 01/03/2004
JNPR (Juniper Networks--$19.68; +1; optionable): PC networking
http://biz.yahoo.com/p/j/jnpr.html
STATUS: Ascending triangle. JNPR made us some money earlier, and after a shakeout below the 50 day MVA (17.85) in mid-December JNPR is making another breakout move as it resumed its pattern after that mid-month dip. Friday volume jumped well above average as JNPR broke from its 3 month base showing solid 5 to 2 accumulation. Relative strength is ready to make the breakout as well, an indication that the stock is outperforming the broader market. Looking to move in on a further move here and then later on a test of the breakout.
Volume: 13.321M Avg Volume: 8.194M
BUY POINT: $19.92 Volume=10M Target=$23.42 Stop=$18.53
POSITION: JUX DT - Apr. $19c (62 delta) &/or Stock
http://www.investmenthouse.com/cd/jnpr.html
Play Date: 01/03/2004
NANX (Nanophase Technologies--$9.21; +1.12; optionable): Nanocrystalline materials used in sunscreens, etc.
http://biz.yahoo.com/p/n/nanx.html
STATUS: Test breakout. NANX is benefitting from mad cows. Its products are being discussed as a method to help in the fight against mad cow disease and thus it has seen some strong volume the past two weeks. Even before that, however, the stock started to show some tremendous volume to start December. Did word get out through 'unofficial' channels before the sick cow was made known to the public? In any event, it broke higher Monday from its 14 week reverse head and shoulders base, an accumulation pattern that used the 50 day MVA (6.84) as it formed the right shoulder during December. Accumulation in the pattern is a solid 5 to 3. Money flow is surging and relative strength is breaking out as well, demonstrating the stock is outperforming the overall market of late. The Friday move was a test of the Monday breakout, and we love to move in on successful breakout tests, i.e., where the stock holds near support (typically the 10 or 18 day MVA) and then resumes the breakout move on stronger volume.
Volume: 735.102K Avg Volume: 198.818K
BUY POINT: $9.54 Volume=300K Target=$11.45 Stop=$8.55
POSITION: NSY FB - June $10c (52 delta) &/or Stock
http://www.investmenthouse.com/cd/nanx.html
SUBSCRIBER PORTFOLIO: These are stocks subscribers suggest by vote that we put in a portfolio to track and move into the stocks if they set up well.
AVID, COH, DIS, GTRC, KKD, LPNT, OCR, TGT, UTSI, XMSR
LPNT: Bounced off the 50 day MVA in mid-Decembe, tested the 18 day MVA after the bounce, and now looks ready to tackle a new 52 week high on a move over 31. Over 30.50 is the next buy or add to point.
OCR: Testing the 10 day MVA after a mid-December bounce off the 50 day. Volume started to rebound Friday. On a move over 41.55 on stronger trade it is a buy as it looks to be starting another run up the short term MVA.
UTSI: Volume was up Friday as UTSI started a more definitive move off of the 18 day MVA. This comes after 5 weeks of lateral movement along that level. Looks good and a buy over 39 on much stronger trade.
SUBSCRIBER WATCHLIST
We continually receive ideas for potential plays from our subscribers. Many times they are already on our watchlists, other times not. We always take a look at them and sometimes find a few pearls. This weekend we are starting a new feature where we include some subscriber choices that could develop into plays. We are not necessarily endorsing these, but want to provide a forum for subscribers with ideas that may appeal to their portfolio. Typically we will put these on without commentary, but if we see something we really like or dislike we will point it out. That way we can maybe come up with some new plays, find some plays that may fit your style, and have another great educational tool to discuss problems or good aspects about stocks our subscribers are looking at.
BWS: Broke out of a $4 trading range in late December and surged to 38. Showing some topping signs here. What we want to see is a test of the 10 day right at 37 and then a resumption of the move on rising trade. That is a test of the breakout move and a good spot to take new positions as it 'proves up' the breakout.
Current plays ready to move: AMSC; CAMD; HL; KEI; PTNR; TXN
CONTINUING:
* * SPREADSHEET DOWNLOAD * * *
The following link is to a spreadsheet download of the continuing play table. It will allow you to sort the data for your own investment use. This is a service to our subscribers only, and no other use of the information is authorized. Simply click on the link, enter your username and password, and download the spreadsheet!
http://investmenthouse.com/daily/table.php
(You will need your password ... if you need help click on this link and our automated system will email it to you immediately once you fill in your email address:
http://www.investmenthouse.com/rescue/rescue.php3 )
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
ACO 12/29 Cup hdl 21.88 +1.58 19.99 23.85 558K 500K 19.42
Current. Recovered some of yesterday's loss on lower, but still good volume. Continues to move up the 10 day MVA.
ADCT 12/22 DB hdl 3.07 +0.1 3.01 3.88 20M 26M 2.88
Current. Continue to move up the 10 day MVA for a nice gain on strong above average volume.
AIR 12/15 BO 15.3 +0.35 12.04 14.55 436K 150K 14.94
Current. Gapped up at the open, but gave some of it back on stronger above average volume. Still in uptrend.
AIRN 12/04 Test BO 3.36 -0.14 3.22 4.18 257K 537K 3.22
Current. Pull back on low volume. Continues to move up the 10 day MVA.
ALTI 01/02 Test BO 3.19 +0.56 3.02 3.78 11M 2.3M 2.72
Current. Nice volume, nice break over recent highs, so we issued
the next alert for this solid mover.
ALTI 12/01 Dbl btm 3.19 +0.56 2.05 2.74 11M 1.2M 2.75
Current.
AMSC 12/29 Cup hdl 13.71 -0.15 13.37 16.22 243K 500K 12.88
Current. Pull back on lower, but average volume. Testing the break out.
AZPN 12/18 Flat 10.43 +0.17 9.17 11.12 631K 1M 9.74
Current. Making a lateral move above the 10 day MVA on lower volume.
CAMD 12/30 Cup hdl 9.09 -0.04 9.24 11.12 234K 456K 8.59
Buy Not Hit. Tapped 8.75 at the day's low and rallied showing a tight doji on higher, but still below average volume. Beginning to make a lateral move above the 10 day MVA.
CHU 01/02 Test 50 10.05 +0.71 10.02 12.25 2.4M 880K 9.32
Current. Nice break out on strong volume surge.
CTRA 12/10 Cup hdl 3.94 -0.01 4.25 5.44 118K 500K 3.95
Buy Not Hit. Pull back holding just above the 18 day MVA on low volume. Continue to base around 4.
CYD 01/02 Flat 32.22 +1.62 33.64 40.45 5.5M 4M 31.29
Current. Saw the volume jump again as it continued the move
off the 50 day MVA so we decided to move in and issued
the alert.
DIS 08/09 Test 50 23.67 +0.34 22.06 26.48 6.7M 9M 23
EBAY 12/12 Test 18 63 -1.61 34.72 46 9.1M 12M 61.22
Current. Pull back to test the 10 day MVA on stronger above average volume. Still in good shape.
EBAY 10/15 Test 50 63 -1.61 31.22 46 9.1M 12M 61.22
Current.
FDRY 12/29 Flat 26.7 -0.63 26.65 32 2.9M 3.5M 25.98
Current. Moved down on stronger above average volume holding above the 10 day MVA. May test the 10 day MVA.
FDRY 11/24 Flat 26.7 -0.63 24.72 29.72 2.9M 3.5M 25.98
Current.
FL 10/11 A Wedge 23.2 -0.25 17.38 20.88 861K 1.4M 22.56
Current. Gapped up at the open, but reversed on low volume. Still in good shape.
FSII 11/25 Flat 7.27 -0.11 6.54 7.98 275K 400K 6.99
Current. Gapped down at the open showing a doji on the 10 day MVA on stronger, but still below average volume. Still in good shape.
GMR 12/04 Test 18 17.62 +0.02 14.77 17.78 50K 207K 17.22
Current. Gapped up at the open and reversed on low volume. Making a lateral move above the 10 day MVA.
GNLB 12/20 Cup hdl 2.85 +0.02 2.43 3.12 694K 786K 2.45
Current. Gapped up at the open, and gave most of it back on much lower, but average volume. Still in uptrend.
HL 12/29 DB hdl 8.48 +0.19 8.52 10.65 1.4M 2.5M 7.98
Current. Tested the 10 day MVA and rallied on low volume. Moving up after testing the break out.
IBPI 11/09 A Wedge 16.32 +0.22 16.12 19.38 16K 358K 15.58
Buy Not Issued. Gapped down and rallied as stock continues to make a lateral move above the 10 day MVA on low volume. The stock has not made the move we were looking for so will drop, but will keep our eye on it.
IDT 12/09 Rv H&S 22.4 -0.73 19.79 23.82 773K 200K 22.42
Exited. Issued trailing stop as stock fell on rising volume.
INAP 12/08 Test BO 2.52 +0.07 2.47 3.05 3.9M 5.2M 2.24
Current. Gapped up at the open showing a tight doji on low volume. Moving back up after testing the break out.
INAP 11/25 Test BO 2.52 +0.07 1.95 2.58 3.9M 5.7M 2.24
Current.
IONA 12/20 Test BO 5.21 +0.2 5.56 7.15 177K 600K 5.17
Buy Not Hit. Tapped 5.48 at the high, but gave some of it back holding the 18 day MVA on low volume. Needs to continue to rebound or will look to drop.
IVIL 12/23 Flat 3.35 -0.23 3.59 4.52 177K 340K 3.48
Current. More volatile with 3.76 at the high and 3.23 (18 day MVA). Pull back to hold below the 10 day MVA on average volume. Testing the break out.
JMAR 01/02 Rv H&S 2.8 +0.45 2.69 3.51 1.7M 500K 2.38
Current. Bonus play. Entered the play as the stock made an explosive move on excellent volume surge.
KEI 12/29 A Wedge 18.65 +0.35 18.73 22.78 42K 150K 17.99
Current. Tapped 19.23 at the day's high, but gave most of it back on low volume. Still in the pattern.
LCAV 12/13 DB hdl 19.51 -1.66 19.82 23.75 419K 206K 20.04
Exited. Exited as the stock tanked on rising volume.
LPNT 08/09 Rv H&S 30 +0.55 0 0 332K 1.3M 29
Buy Not Issued. Moving up the 10 day MVA on low volume.
MNDO 12/29 Test BO 6.12 +0.12 6.18 7.81 128K 350K 5.74
Current. Beginning to move up on low volume after testing the break out. Moving up the 10 day MVA.
MTZ 12/26 Flat 15.1 +0.29 14.81 19.32 192K 300K 14.42
Current. Continue to move up the 10 day MVA on low volume.
NGAS 12/16 Cup hdl 5.3 +0.08 5.74 7.25 161K 195K 5.11
Current. Moved up off the 18 day MVA on lower volume. Still in the pattern.
NOOF 11/01 Cup hdl 10.08 +0.78 5.27 6.32 862K 319K 8.88
Current. Tested the 18 day MVA and rallied for an explosive move on excellent volume surge.
NOOF 10/25 Cup hdl 10.08 +0.78 4.78 6.21 862K 280K 8.88
Current.
OHI 12/08 Flat 9.21 -0.12 8.71 10.48 85K 200K 8.82
Current. Pull back on low volume. Still in uptrend.
ONNN 12/16 Test BO 6.35 -0.13 6.78 8.18 1.4M 3.4M 6.22
Buy Not Hit. Gapped up at the open, but gave it all back on below average volume. Making lateral move on the 10 day MVA.
PAL 12/29 Test 50 7.75 -0.18 7.96 9.54 202K 314K 7.38
Current. Low volume pull back to test the break out.
PROX 12/17 Cup hdl 1.71 +0.04 1.96 2.62 863K 3.8M 1.82
Buy Not Hit. Tapped 1.68 at the low and rallied showing a doji on the 10 day MVA on low volume. The stock has not made the move we were looking for so will drop, but will keep our eye on it.
PTNR 12/24 Cup hdl 7.77 -0.07 7.41 9.35 46K 135K 7.38
Current. Gapped down at the open and recovered some of the loss on low volume. Still in good shape.
RHAT 12/18 DB hdl 18.37 -0.4 16.51 19.58 3.4M 5.5M 17.69
Current. Pull back on low volume testing the break out.
RWY 11/04 Cup hdl 8.16 -0.03 6.24 7.85 48K 146K 7.78
Current. Tapped 8.01 at the day's low and rallied showing a doji on low volume. Continue to move up the 10 day MVA.
SBUX 07/30 Cup 32.91 -0.25 30.35 36.75 3.3M 6M 32.08
Current. Gapped up at the open and reversed on stronger above average volume. Still in uptrend.
SBUX 07/01 Cup 32.91 -0.25 26.3 30.94 3.3M 6M 32.08
Current.
TGA 12/08 A Wedge 2.52 +0.09 2.12 2.78 387K 305K 2.36
Current. Bounced up off the 10 day MVA on average volume. Still in the pattern.
TGT 08/09 Flat 37.72 -0.68 41.45 50 2.6M 5.7M 38.74
TRPH 12/11 Test BO 7.17 +0.18 6.49 7.68 710K 1.7M 6.48
Current. Moving up the 10 day MVA on stronger, but below average volume.
TRPH 12/01 Test 50 7.17 +0.18 5.58 6.94 710K 1.7M 6.48
Current.
TSAI 12/13 Flat 22.6 +0.33 22.95 27 151K 629K 21.78
Current. Continue to move up the 10 day MVA after testing the break out on low volume.
TSCO 07/29 Test BO 39.37 +0.38 28.06 31.44 340K 494K 37.94
Current. Basing around 40 on low volume. Still in good shape.
TSCO 06/03 Rv H&S 39.37 +0.38 23.42 27.62 340K 603K 37.94
Current.
TSCO 04/24 Cup hdl 39.37 +0.38 21.88 26 340K 603K 37.94
Current.
TSCO 04/03 Rv H&S 39.37 +0.38 19.3 22.19 340K 577K 37.94
Current.
TXN 12/18 Test 50 29.31 -0.07 30.06 35.12 7M 18M 28.88
Buy Not Issued. Making a lateral move above the 10 day MVA on low volume.
VLGC 12/12 Test BO 3.77 +0.01 3.24 3.92 462K 1.3M 3.47
Current. Tapped 3.66 at the day's low and rallied showing a tight doji on low volume. Continue with low volume lateral move above the 10 day MVA.
VLGC 11/10 Cup 3.77 +0.01 2.14 2.82 462K 1.3M 3.47
Current.
VOD 10/28 Cup hdl 25.31 +0.27 21.45 25.75 1.5M 2.8M 24.22
Current. Continue to move up the 10 day MVA on low volume.
VYYO 12/30 Cup 8.23 -0.3 8.88 10.65 318K 392K 8.26
Buy Not Issued. Pull back tapping the 10 day MVA and rallied on average volume. The stock has not made the move we were looking for so will drop, but will keep our eye on it.
WMS 11/21 Dbl btm 25.93 -0.27 25.83 31.22 69K 650K 25.68
Current. Eased down below the 18 day MVA holding at support on very low volume. Still in good shape.
YHOO 12/11 Rv H&S 45.4 +0.37 44.65 53.35 8.2M 17M 43.94
Current. Moving up the 10 day MVA o low volume showing a tight doji.
Downside Plays
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
LEXR 12/22 Put 17.6 +0.18 15.97 13.95 2.2M 4M 16.68
Buy Not Hit. Tested the 18 day MVA and rallied. The stock has not made the move we were looking for so will drop, but will keep our eye on it.
LNCR 12/10 Put 30.31 +0.23 30.89 28.04 1.1M 2.5M 31.01
Current. Continue with lateral move on the 10 day MVA on low volume showing a tight doji.
SMH 12/13 Put 41.4 -0.09 40.3 37.85 10M 16M 41.02
Current. Making a lateral move under the simple 50 day MVA on stronger, but below average volume.
SSTI 12/09 Put 11.16 +0.16 10.56 8.55 1.1M 2.4M 11.55
Current. Continue with low volume lateral move on the 10 day MVA.
Good Investing!
Jon L. Johnson and The Daily Staff
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 of 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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us stock market
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