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us stock market, trade stock
Begin part 2 of 3
THIS WEEK
The market has its work cut out for it again given the inability to hold the gains late Friday. It is still predominantly in a downtrend in the correction though NASDAQ and DJ30 have tapped at support intraday last week, held, bounced, and then paused on lighter trade. With the sentiment indicators we saw ahead of the move (put/call ratio, TRIN, rising volatility, increased talk of the bear continuing) as well as some slight improvement in NASDAQ price/volume action, we anticipate the bounce will continue even if it takes a slight pause and pullback early in the week.
Then there may be some hesitation ahead of the Friday jobs report. Moreover, the quarter ends on Wednesday, and that will add to some volatility to the market as positions are shuffled to take some gains or put some prettier faces in the portfolio for those quarterly reports. There is no lack of events for the market to deal with this week, but just as it used any news as a reason to sell the prior thus far this month, it will use some decent news to continue the rebound.
We are going to keep an eye out primarily for three play types this week. The first as always deals with stocks in good patterns and set up to make the move higher. In addition, after the Friday action there may be some strong stocks that started a rebound, pulled back some, and are still in position to take advantage of a continued move higher. Third, as stocks continue to rebound we will watch for those moving on lower and lower trade that reach resistance and stall. Those will provide opportunity as the market bounce stalls and the second test begins.
Again, if the bounce can continue into Thursday we will probably some hedging ahead of the jobs report. Stocks have moved higher ahead of previous reports in hope of better news only to get burned. Expectations are set lower this time and we feel that is good because we don't believe this will be the breakout month. Grand if it is, but we are not hopeful. It depends upon where the market is at that time, but if it has managed to continue its bounce it will most likely give some of the move up ahead of the report. If the jobs report fails to show a breakout and just meets expectations or, for shame, fails to meet the 100K expected, that will be a downer that most like starts another test. We would prefer the move to last longer as that makes for a better test.
We cannot forget earnings either. YHOO kicks them off in two weeks. First Call is indicating that the warnings are at quite a low pace even with required disclosure; if there is anything bad to say companies will air it and usually as early as possible to provide a window of forgetfulness before the actual results are released. A rally into the jobs report followed by some selling after the results sets up the market for a bounce as earnings start. If this is all wet and the jobs report is very strong stocks then rally further, set up a better test, and then come back a bit further down the road to make the bottom. Either way we look for it to continue the move higher then run out of steam for the next test that will set the bottom.
Support and Resistance
NASDAQ: Closed at 1960.02
Resistance: 1966 (18 day MVA) stalled it Friday. 1990 to 2000, the top of the late 2003 base. The exponential 50 day MVA (1999). The simple 50 day MVA (2035).
Support: Looking to see if the 10 day MVA (1948) and some prices from the recent March consolidation attempt (1943). Mixed tops and bottoms at 1900. The 200 day MVA (1890).
S&P 500: Closed at 1108.06
Resistance: The 10 day MVA (1109). The 18 day MVA (1116). The exponential 50 day MVA (1122) and price resistance at 1125. The simple 50 day MVA (1135). The January high (1155). Next is 1159 (February highs) and 1160 to 1175 the highs in that double top that spanned late 2001, early 2002.
Support: 1106 is a May 2002 top and represents some early 2001 lows. 1096 to 1100 may also try to hold. 1075 to 1070 from the December consolidation.
Dow: Closed at 10,212.97
Resistance: The 18 day MVA (10,267). The exponential 50 day MVA (10,359). The simple 50 day MVA (10,482). September/November up trendline (10,515).
Support: 10,000 to 9900-9850. 9859-9855 is the next real support
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
3-30-04
Consumer Confidence, March (10:00): 86.0 expected, 87.3 February.
3-31-04
Factory Orders, February (10:00): 1.4% expected, -0.5% January.
Chicago PMI, March (10:00): 61.0 expected, 63.6 February.
4-01-04
Initial jobless claims (8:30): 340K expected, 339K prior.
Construction spending, February (10:00): -0.1% expected, -0.3% January.
ISM (manufacturing sentiment), March (10:00): 59.8 expected, 61.4 February.
4-02-04
Non-farm payrolls, March (8:30): 100K expected, 21K February.
Unemployment rate, March (8:30): 5.6% expected, 5.6% February.
Average hourly earnings, March (8:30): 0.2% expected, 0.2% February.
Aerage workweek, March (8:30): 33.8 expected, 33.8 February.
THE PLAYS
Good movers Friday: MBG, TASR, CMRG, IDSA, INTV, KFY, FINL
In each report we prepare full write-ups for those plays that look ready to move. Those that have made the move or are still setting up are discussed in the continuing play table. The purpose is to focus on those stocks that are set to move.
NEW PLAYS: This section includes plays from all sections other than pre-announcements. Those are contained in the pre-announcement section.
New Pre-Splits: Our goal is to catch these as they start to rebound, grab the move, and then move on if it falters. Sometimes they keep going and going, other times they give us a small gain and stall. We like to bank the initial move and let it work for us further if it will.
Current pre-split looking ready:
Play Date: 03/27/2004
CALM (Cal-Maine Foods--$40.05; +0.74; no options): Eggs & other farm products that play a big role in the Atkins diet. Splits 2:1 on a date yet announced.
http://biz.yahoo.com/p/c/calm.html
STATUS: Ascending triangle. Volume has started to jump again this past week as CALM continues to move over the 50 day MVA (36.17) in its 12 week pattern. Solid 5 to 1 accumulation in the base. The volume looks to be tipping off another breakout attempt. Will be patient and let it make the breakout move if it will.
Volume: 417.994K Avg Volume: 612.318K
BUY POINT: $41.38 Volume=650K Target=$48.25 Stop=$38.45
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/calm.html
New:
Play Date: 03/27/2004
MRVL (Marvell Technology--$42.67; +1.50; optionable): Semiconductor integrated circuits. Splits 2:1 on a date to be announced.
http://biz.yahoo.com/p/m/mrvl.html
STATUS: Test 200 day MVA. Showing some momentum as it comes off the 200 day MVA (39.69) on stronger, above average volume. The pattern is all over the place though significantly better than most chips. It has moved more or less sideways for the past three months between 40 and 46. We are trying to capture the move up to that prior high on this bounce; if it goes further and makes the breakout, great. If not we capture the 35% or so on the option play and be happy. Given the move we are looking for we are using options.
Volume: 3.741M Avg Volume: 2.633M
BUY POINT: $42.88 Volume=4M Target=$46.25 Stop=$41.64
POSITION: UVM HT - Aug. $42.50c (59 delta)
http://www.investmenthouse.com/cs/mrvl.html
Play Date: 03/27/2004
UNFI (United Natural Foods--$47.63; -0.22; no options): Wholesale natural foods. Splits 2:1 on 4-20-04
http://biz.yahoo.com/p/u/unfi.html
STATUS: Flying plateau. UNFI broke out from a 13 week cup with handle base in early February and then rallied up the short term MVA (10 and 18 day MVA) to early March, hitting 50 on the high. In the market selling it has come back to test the move; indeed, it needed a rest after a nice breakout and run. As the market sold it came back to the 18 day MVA (46.90) and then bounced on good volume and now moving laterally over the 10 day MVA (47.40) on lower trade. It is taking a breather and setting up the next run. It may take several more sessions to completely set up, but with money flow surging ahead of price we want to be ready to move in when it makes its breakout move.
Volume: 116.869K Avg Volume: 173.59K
BUY POINT: $48.88 Volume=260K Target=$56.22 Stop=$46.78
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/unfi.html
New Post-Splits:
Play Date: 03/27/2004
APPX (American Pharmaceutical--$41.07; +0.44; optionable): Drugs
http://biz.yahoo.com/p/a/appx.html
STATUS: Ascending triangle. Split back in September and has since formed a narrowing triangle, using the 50 day MVA 37.45) on the lows below a constant top at 40. Accumulation in the base is a solid 8 to 3 (8 up price weeks on rising volume to 3 down price weeks on rising volume), indicating that money moved into the stock on the buy side as it based. That is exactly what you want to see to set up the foundation for the breakout. Two weeks back APPX moved out of the pattern on strong volume. In the selling it has come back to test the break, holding over 40 and the 18 day MVA (39.72) on lower trade. We are looking for it to hold this move and then rebound again on even stronger volume.
Volume: 381.628K Avg Volume: 910.954K
BUY POINT: $42.68 Volume=1.4M Target=$42.72 Stop=$40.55
POSITION: AQO GH - July $40c (60 delta) &/or Stock
http://www.investmenthouse.com/cs/appx.html
New leader plays: May not be in position to split yet, but solid stocks ready to move.
Play Date: 03/27/2004
CACH (Cache--$30.61; +0.36; no options): Retail apparel stores
http://biz.yahoo.com/p/c/cach.html
STATUS: Flying plateau. A top rated stock as far as earnings and sales growth combined with a solid pattern. That is a combination you want to see. CACH broke out from a 13 week cup w/handle base in early February and rallied to 32. It has spent the past three weeks moving laterally between 29 and 31 on mostly lower volume but showing volume spikes on up sessions. Accumulation is a solid 5 to 1 in the cup base, setting the stage for the breakout and run as money moved in all the while the stock was pulling back. In other words, institutions were using the pullback to quietly accumulation positions. The good price/volume action continues in this lateral move, and money flow is surging higher ahead of price. The stock looks ready to continue its breakout run. This is one that will be moving into split range on the next breakout as well, and we will start looking for a date at that time.
Volume: 129.78K Avg Volume: 95.709K
BUY POINT: $31.58 Volume=165K Target=$37.95 Stop=$29.48
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/cach.html
Continuing Leader Plays:
Play Date: 03/20/2004
RVI (Retail Ventures--$6.82; +0.13; no options): Retail department stores
http://biz.yahoo.com/p/r/rvi.html
STATUS: Breakout test. RVI exploded out of a 4 month base to start the month, rallying to 7.40 on the high as volume surged. As usual, it has come back to test the breakout, pulling back to hold 6.50 on the lows. Volume started to edge higher Thursday and then broke sharply higher Friday as the stock edged off the 18 day MVA (6.75). Excellent accumulation, and money flow, already strong, has turned higher ahead of the stock. Looking for RVI to continue the breakout from here.
Volume: 198.2K Avg Volume: 100.227K
BUY POINT: $7.12 Volume=155K Target=$8.98 Stop=$6.72
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/rvi.html
Play Date: 03/20/2004
UHCO (Universal American Finl.--$11.67; -0.06; no options): Life insurance
http://biz.yahoo.com/p/u/uhco.html
STATUS: Breakout test. Volume was up back above average Friday as it looks as if UHCO is going to try a move out of this 3 week lateral move over the 18 day MVA (11.50). This is a test of the breakout from its 16 week cup base sporting accumulation of 5 to 1. Money flow is solid and ahead of the price. Looks ready, but we want to see the strong breakaway move.
Volume: 205.523K Avg Volume: 196.181K
BUY POINT: $12.25 Volume=315K Target=$14.72 Stop=$11.39
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/uhco.html
PRE-ANNOUNCEMENT PLAYS
Current Pre-Announcement Plays: In each report we look at the candidates that are in the best patterns ahead of their potential announcements. This focus on leaders in good patterns allows us to make good money even if companies do not announce the split, something that they are still gun-shy of as the market and economy recovers.
AGN: Forecast 4-26-04.
APOL: Forecast 6-21-04
APPB: Forecast 4-28-04.
BCR: Forecast 4/13 with earnings or 4/14 with its board meeting.
CHS: Forecast 5-27-04 after the close
DGX: Forecast 4-22-04 before the open.
ELAB: Researching next date.
GTK: Forecast 4-15-04 before the open.
HUG: Forecast 5-25-04 after the close.
IDXX: Forecast 4-19-04.
LM: Researching next possible date.
LXK: Forecast 4-19-04 or 4-22-04 with its shareholder meeting.
MBG: Looking for next date as MBG continues to rally higher.
MBT: Forecast 3-30-04.
NCEN: Forecast 4-15. Trying to recover after dumping below the 50 day MVA.
OSI: Forecast 4-15-04.
SONC: Forecast 6-21-04.
STJ: Forecast 4-12-04 in conjunction with earnings.
STN: Forecast 4-20-04 before the open.
TOL: Researching the next date.
UOPX: Forecast 6-21-04.
VAR: VAR is calling a special shareholder meeting to increase authorized shares. Date has not been released yet and VAR will file a proxy statement to that effect.
VIP: Forecast 3-26-04. No split announced, but record results shot it higher. Beautiful.
WFMI: Forecast 5-5-04 after the close.
Full Write-ups: We do not cover all candidates in full in each report, but focus on those ready to make a move or are right at their forecast announcement date. This way we are focused on those stocks ready to make moves.
New Pre-Announcement Plays:
Play Date: 03/27/2004
MTH (Meritage--$73.9; +1.7; optionable): Residential construction. Forecast to announce a split on 4-22-04 in conjunction with earnings. The company has not confirmed this date, but based upon our research this is the date for the release.
BACKGROUND: Last announced a 2 for 1 split on 4-2-02 in conjunction with a board meeting. The stock price was $63. The annual shareholder meeting was on 5-21-03 at which time no additional shares were increased. The company has sufficient shares for a 2 for 1 split.
http://biz.yahoo.com/p/m/mth.html
STATUS: Breakout test. MTH broke from a 9 week ascending triangle in late February and ran to 79.65. During the market selling the stock eased back on lower, mostly below average volume to test the 50 day MVA (70.97). It has held that level, and Friday started to bounce though volume backed off well below average as it did. Building stocks have been holding up very well, making orderly tests of the 50 day MVA as a group. We are looking for these stocks to hold and make a break higher near term.
Volume: 70.8K Avg Volume: 149.318K
BUY POINT: $74.55 Volume=224K Target=$85.75 Stop=$73.22
POSITION: MTH FO - June $75c (47 delta) &/or Stock
http://www.investmenthouse.com/cs/mth.html
Continuing Pre-Announcement Plays:
Play Date: 03/13/2004
APPB (Applebees Intl.--$40.34; +0.49; optionable): Fern bar restaurant. Forecast to announce a split on 4-28-04 after the market closes in conjunction with earnings or in the alternative in May in conjunction with its shareholder meeting.
BACKGROUND: Last announced a 3 for 2 split on 5-9-02 in conjunction with its shareholder meeting at a stock price at $39.84. The shareholder meeting was on 5-8-03 at which time no additional shares were authorized. The company has sufficient shares for a 2 for 1 split.
http://biz.yahoo.com/p/a/appb.html
STATUS: Test 50 day MVA. APPB made a volume jump off the 50 day MVA (39.20) Tuesday, took a rest, and then was moving higher Friday on stronger volume. After the breakout from its 4 month base it took a breather to start the month and is now starting back up on some improving volume. It held the breakout, and now we look to pick it up as volume continues to improve as it breaks through the buy point.
Volume: 418.027K Avg Volume: 470.454K
BUY POINT: $40.55 Volume=739K Target=$46.78 Stop=$39.35
POSITION: AQB HH - Aug. $40c (56 delta) &/or Stock
http://www.investmenthouse.com/cs/appb.html
Play Date: 03/20/2004
DGX (Quest Diagnostics--$82.10; +1.09; optionable): Medical Laboratories. Researching the exact date, but a nice pattern has formed up.
BACKGROUND. Announced a 2:1 split on 2-22-01 at a price of $101.
http://biz.yahoo.com/p/d/dgx.html
STATUS: Cup w/handle. DGX continues to form the handle to its 2 year base. Working laterally on below average volume as it moves through the handle. 24 to 20 accumulation in the long base, setting up the foundation for a breakout. Volume was picking up early in the week but then faded as the week wound down. It remains in good position for the breakout with relative strength ready to make the breakout. Just being patient with this one and letting it set up for the breakout.
Volume: 359.2K Avg Volume: 629.909K
BUY POINT: $85.97 Volume=973K Target=$100 Stop=$81.72
POSITION: DGX HQ - Aug. $85c (42 delta) &/or Stock
http://www.investmenthouse.com/cs/dgx.html
Play Date: 02/07/2004
OSI (Outback Steakhouse--$48.60; -0.05; optionable): Home of the bloomin' onion. Forecast to announce a split on 4-15-04 in conjunction with earnings. The company has not confirmed this date, but base upon our research this is the date for the announcement.
BACKGROUND: Last announced a 3 for 2 split in November 1991 at approximately $26. The annual shareholder meeting was on 4-23-03 at which time no additional shares were authorized. The company has sufficient shares for a 2 for 1 split.
http://biz.yahoo.com/p/o/osi.html
STATUS: Breakout test. Broke out from an 11 week cup with handle base in late February, rallied to 49.58 and then started this lateral move to test the breakout. It has held the breakout on the test, tapping intraday one session to the 50 day MVA (46.48) but rebounding and recovering nicely. It is near the top of the recent range as it moves laterally on mostly below average volume. Relative strength is ready to break out and we are looking for OSI to follow that breakout.
Volume: 375.5K Avg Volume: 488K
BUY POINT: $48.68 Volume=650K Target=$51.96 Stop=$47.72
POSITION: OSI HI - Aug. $45c (46 delta) &/or Stock
http://www.investmenthouse.com/cs/osi.html
Play Date: 03/25/2004
POOL (SCP Pool--$35.81; -0.21; optionable): Basic materials. Forecast to announce a split on 4-22-04 before the market opens in conjunction with earnings or on 5-6-04 in conjunction with its annual shareholder meeting.
BACKGROUND: Last announced a 3 for 2 split on 8-8-03 in conjunction with a board meeting. The stock price was $37.50. Prior to this last announced the following 3 for 2 splits: 7-30-01 in conjunction with a board meeting at a stock price of 38.60; on 5-11-00 in conjunction with the annual shareholder meeting at a stock price of $34. 3 for 2 splits were also announced in July 1998 and September 1997. The annual shareholder meeting is scheduled for 5-6-04 at 10:00 CT at which time authorized shares will be increased.
http://biz.yahoo.com/p/p/pool.html
STATUS: Cup w/handle. Unable to attract any volume to end the week after a strong, above average volume session off the 50 day MVA (34.58) Wednesday. Showed a doji Friday as it tested 36; that indicates it is not yet ready to make the breakout move. Still solid in its 20 week base showing solid 5 to 3 accumulation (5 up price weeks on rising volume to 3 down price weeks on rising volume). It may test back to 35 and then be ready for the move. Be patient and let it set up. It is very strong here.
Volume: 98.594K Avg Volume: 155.045K
BUY POINT: $36.62 Volume=227K Target=$43 Stop=$34.06
POSITION: QCL GG - July $35c (60 delta) &/or Stock
http://www.investmenthouse.com/cs/pool.html
Play Date: 03/06/2004
ZBRA (Zebra Technologies--$69.03; -0.35; optionable): PC peripherals. Forecast to announce a split on 4-27-04 in conjunction with a board of director meeting or on 4-28-04 in conjunction with earnings.
BACKGROUND: Last announced a 3 for 2 split on 7-24-03 at a stock price of $76.5. The annual shareholder meeting will be on 6-3-04. Information on the time is not available at this time. The company has sufficient shares for a 3 for 2 split.
http://biz.yahoo.com/p/z/zbra.html
STATUS: 50 day MVA test. Nice move Thursday, hardly impressive Friday as ZBRA rallied to 70 but gave the move back as volume failed. It managed to hold the 18 day MVA (68.94) on low volume, so the day was a wash. Looking for it to continue the move higher from here, but want to see more volume as it does. Money flow is surging higher ahead of the price, and we are looking for ZBRA to follow the money flow higher.
Volume: 209.676K Avg Volume: 330.59K
BUY POINT: $70.88 Volume=517K Target=$84 Stop=$69.42
POSITION: ZBQ HN - Aug. $70c (57 delta) &/or Stock
http://www.investmenthouse.com/cs/zbra.html
End part 2 of 3
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