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us stock market, trend trading stock
Begin part 2 of 3
THIS WEEK
Expiration is gone but the same near term influences remain. They are closer to resolution with OPEC members individually or OPEC as a whole ready to take action to calm nerves with respect to supply. Refining and speculation are other issues that the US will have to step up to address, but the impact of the Saudi position is already starting to be felt. The Iraq issue is more one of time; the market has to get comfortable with the actual handover, and that was not helped by another car bomb that targeted members of the current interim ruling body and new FBI warnings regarding threats against railways in the U.S.
As for inflation, the Fed is trying a new tactic, saying it will defend against inflation as it tries to calm the speculation in the financial markets. That is, however, even more frightening to us because it always seems to be a chemotherapy way of curing the ills: the economy just got on its feet and now we are going to get rid of what ails it by almost killing it and then letting it revive. The Fed cannot address the problem that exists: supply does not equal demand that easy money has created. Supply needs more incentives to meet demand other than enjoying jacking up prices in response to tighter demand. Suppliers have not been able to do that for years, and much as with employment, they are putting off ramping up supply until absolutely necessary, causing problems with demand. The cure is not to crush demand (and that is what happens because the Fed has to quell consumer spending, and that only happens when jobs are again at risk) but to coax more supply to meet demand. You want an expanding economy as that creates jobs and wealth; you do not want to artificially tamp it out just as it has had a bit of recovery.
That is bigger picture. Near term we remain cautious as to how the market will respond to the Wednesday reversal ahead of expiration. Expiration went out like a mouse, but Wednesday indicated some serious downside positioning occurring, and now that expiration is over we will see if that is still in command. The market remains at the crossroads, the large caps trying to transition to the upside while holding over key support (SP500 and QQQ) but NASDAQ and DJ30 still in near term downtrends. We continue to see some excellent patterns set up both upside and downside. Some were moving Friday, others still holding solid patterns, ready to make the move. As many, even more, are struggling, with many rolling back over after failed tests of earlier breakdowns below support. That points out the mixed character of the market, and we are ready to take advantage of these stocks while the market decides direction and then move toward the primary trend when it makes that decision.
Support and Resistance
NASDAQ: Closed at 1912.09
Resistance: The MA in a near term downtrend are always a resistance level. 18 day EMA (1928); 200 day MA (1949). The April closing low at 1978. 1990 to 2000, the top of the late 2003 base. The simple 50 day MA (1972) and 50 day EMA (1966). 2050 represents some prior price points and has stopped NASDAQ the last time it tried that level. Breakout from the pattern is 2080. 2089 is the February closing high. 2112 is the early January high.
Support: 1900 acted as support Friday as NASDAQ tapped at that level on the low and held. 1890, the gap up high at on Tuesday. The April lows (1880, 1878) trying to hold. 1850 below that. Some price tops at 1777, 1750.
S&P 500: Closed at 1093.56
Resistance: The 10 day EMA (1095). 1096 to 1100. The 18 day EMA (1102). 1106 is a May 2002 top and represents some early 2001 lows. The exponential 50 day MA (1114) and the simple 50 day MA (1117). 1125 stalled the last bounce attempt. The April and January highs (1150 to 1155). Next is 1159 (February highs) and 1160 to 1175 the highs in that double top that spanned late 2001, early 2002.
Support: The 200 day SMA (1082). April lows (1079, 1076). 1075 to 1070 from the December consolidation. 1058 - 1060 from November tops.
Dow: Closed at 9966.74
Resistance: The 10 day EMA (10,008). The 200 day SMA (10,042). The 18 day EMA (10,087) and 10,250. The exponential 50 day MA (10,235) and simple 50 day MA (10,257). 10,570 is the April high. Price consolidation at 10,600 level. 10,747 is the February high.
Support: 9900-9850. 9650; 9585.
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
5-25-04
Consumer confidence, May (10:00): 94.0 expected, 92.9 April.
Existing home sales, April (10:00): 6.48M expected, 6.48M March.
5-26-04
Durable goods orders, April (8:30): -0.8% expected, 5% March.
New homes sales, April, (10:00): 1.2M expected, 1.228M March.
5-27-04
GDP, Q1 second revision (8:30): 4.5% expected, 4.2% prior.
GDP chain deflator (8:30): 2.5% expected, 2.5% prior.
Initial jobless claims (8:30): 334K expected, 345K prior.
5-28-04
Personal income, April (8:30): 0.5% expected, 0.4% March.
Personal spending, April (8:30): 0.2% expected, 0.4% March.
Michigan revised sentiment, May (9:45): 94.6 expected, 94.2 prior.
Chicago PMI, May (10:00): 62.4 expected, 63.9 April.
THE PLAYS
Good movers Friday: EPIX; IDEV; RIMM; BRL
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-Split Plays:
Play Date: 05/22/2004
MRVL (Marvell Technology--$44.08; +4.25; optionable): Semiconductor integrated circuits. Splits 2:1 on a date to be announced.
http://biz.yahoo.com/p/m/mrvl.html
STATUS: Double bottom. Taking another shot at MRVL. It ran to 48 in early April and then collapsed. It broke the 200 day SMA (41.24), bottomed at 38, and then formed the rest of the 6 week base. Friday it gapped over the 200 day on its second session of huge volume after reversing sharply Thursday. Lots of momentum here, and we are looking to grab onto it as that is what rep-split plays are all about.
Volume: 11.591M Avg Volume: 3M
BUY POINT: $44.65 Volume=4.5M Target=$49.25 Stop=$41.68
POSITION: UVM HI - Aug. $45c (46 delta)
http://www.investmenthouse.com/cs/mrvl.html
New Leader Plays: May turn into a split, but a solid stock ready to move.
Play Date: 05/22/2004
BRCM (Broadcom--$40.75; +2.42; optionable): Semiconductor integrated circuits
http://biz.yahoo.com/p/b/brcm.html
STATUS: Flat base. Not at the $180 price where BRCM announced splits in the past, but a nice pattern, and now that prices have ratcheted back down, BRCM should lower its split price. Looking very nice. BRCM jumped over the 50 day EMA (39.29) Friday on a dramatic volume surge. This move sets it up nicely in its 18 week flat base sporting excellent 7 to 2 accumulation (7 up price weeks on rising volume to 3 down price weeks on rising volume). That accumulation shows us that money moved into the stock during this nice lateral move to consolidate its 2003 run. Unlike many stocks, BRCM ahs not given up its gains, trading in a range from 37 to 43. Moving and well and ready to start a position on a further volume move through the buy point and then again on a clean breakout from the top of the base over 43.
Volume: 17.639M Avg Volume: 8.358M
BUY POINT: $41.25 Volume=13M Target=$47.42 Stop=$38.88
POSITION: RCQ HH - Aug. $40c (59 delta) or RCQ KS - Nov. $42.50c &/or Stock
http://www.investmenthouse.com/cs/brcm.html
Play Date: 05/23/2004
NMSS (Natural Microsystems--$8.18; +0.26; optionable): Telecom processing systems
http://biz.yahoo.com/p/n/nmss.html
STATUS: Breakout test. A nice test of the breakout from its 13 week cup with handle base, NMSS has come back to test the 50 day EMA (7.78) on low, below average volume. That low volume test shows few sellers as it comes back, just weeding out the short term profit takers. Excellent 7 to 2 accumulation in the base and money flow is surging higher ahead of price. Excellent action, excellent pattern that money has flowed into as it consolidated.
Volume: 308.761K Avg Volume: 416.318K
BUY POINT: $8.62 Volume=624K Target=$10.35 Stop=$8.02
POSITION: QNM IU - Sept. $7.50c (68 delta) &/or Stock
http://www.investmenthouse.com/cs/nmss.html
Continuing Leader Plays:
Play Date: 04/19/2004
EPIX (Epix Medical--$23.62; +1.11; no options): Diagnostic substances
http://biz.yahoo.com/p/e/epix.html
STATUS: 50 day EMA test. After breaking out in April, EPIX looks to have finally completed the test, holding at the 50 day EMA (22.54) the past two weeks on very low volume. Friday it jumped off that level on rising, average volume. Money flow remains very solid. Holding at the 50 day EMA is a very good sign of support. The jump off the 50 day EMA on volume is a great place to enter.
Volume: 215.892K Avg Volume: 216.272K
BUY POINT: $24.58 Volume=300K Target=$29.52 Stop=$23.19
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/epix.html
Play Date: 05/20/2004
PLT (Plantronics--$38.36; +0.40; optionable): Telecom products (headsets)
http://biz.yahoo.com/p/p/plt.html
STATUS: Double bottom w/handle. Still working on the handle to the very nice 17 week base that is consolidating the strong 2003 run. Excellent 5 to 2 accumulation in the base (5 up price weeks on rising volume to 2 down price weeks on rising volume) as money continues to move into the stock even as it consolidates. Solid 3 week handle forming over the 50 day EMA (37.05). Money flow is surging ahead of price and we are looking for the stock to follow it higher.
Volume: 238.2K Avg Volume: 462.909K
BUY POINT: $39.05 Volume=694K Target=$45 Stop=$36.88
POSITION: PLT HH - Aug. $40c (38 delta) or PLT HG - Aug. $35c (79 delta) &/or Stock
http://www.investmenthouse.com/cs/plt.html
Play Date: 05/13/2004
WITS (Witness Systems--$13.62; +0.27; no options): Application software
http://biz.yahoo.com/p/w/wits.html
STATUS: Ascending triangle. Still in the solid 11 week base. Last week it tested the 50 day EMA (12.96), working laterally until volume bumped higher Thursday though still below average. Friday even that volume died off. Again, still solid with money flow rallying ahead of price. Now all it needs is some volume on the move through the buy point to show us the big money is moving into the stock once more.
Volume: 171.776K Avg Volume: 373.818K
BUY POINT: $14.32 Volume=510K Target=$17.25 Stop=$13.48
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/wits.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 even after the market has made a good recovery as well as the economy. The key with splits now is in the pattern; yes there is a positive move on the announcement, but stocks in this market need to have a good pattern of accumulation to really benefit from a split announcement.
APOL: Forecast 6-12-04 before the open.
CHS: Forecast 5-27-04 after the close. Has held the 200 day SMA, now we see if it can continue the move.
CRL: No announcement 4-28-04. Still trying to hold the 50 day EMA.
CWTR: Forecast 5-26-04. Nice gap higher this week on strong volume.
DGX: Forecast 7-22-04 before the open.
ESRX: Forecast 5-26-04 with its shareholder meeting.
FLIR: Still researching date. Continuing up the 10 day EMA.
GD: Forecast 6-3-04
HUG: Forecast 5-25-04 after the close.
IDXX: Researching next date.
ITW: Forecast 7-20-04
LXK: Forecast 7-22-04.
POOL: Nice 50 day EMA test continues.
QCOM: No split announcement on 5-3. Back over the 50 day EMA. One of those large cap NASDAQ stocks performing better than the market.
RENT: Forecast 7-28-04.
RS: Forecast 5-19-04. No split announcement but good volume move back over the 50 day EMA.
UOPX: Forecast 6-24-04 before the open.
URBN: Forecast 6-1-04 at its shareholder meeting.
WFMI: No split announced 5-5-04. Still moving up off the 50 day EMA after some decent mid-week volume.
XRAY: Researching the next date. So far holding that support at 48.
ZBRA: Continues nice break higher.
ZMH: Forecast 7-26-04. Working laterally over the 50 and 18 day EMA.
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: 05/22/2004
RNT (Aaron Rents--$28.07; +0.51; no options): Rent to own. Forecast to announce a split on 7-28-04 in conjunction with earnings. The company has not confirmed this date, but based upon our research this was the date for the release.
BACKGROUND: Last announced a 3 for 2 split in conjunction with a board meeting on 7-21-03 at a stock price of $27.23. The annual shareholder meeting was on 4-27-04 at which time no additional shares were authorized, but company has sufficient shares for a 2 for 1 split.
http://biz.yahoo.com/p/r/rnt.html
STATUS: Breakout test. RNT blasted out of a 12 week base in late April, racing higher on tremendous volume. It dropped fairly hard to the 18 day EMA (27.66) shortly after the breakout, but held that level on low volume, moving laterally in a narrow range. Volume was up Friday, and though still below average, we watch this closely on these pullbacks as the volume is a window to see if the stock is preparing for its next move.
Volume: 105.6K Avg Volume: 112.09K
BUY POINT: $28.72 Volume=234K Target=$33 Stop=$27.45
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/rnt.html
Continuing Pre-Announcement Plays:
Play Date: 05/11/2004
APOL (Apollo Group--$89.67; +1.42; optionable): Education and training. Forecast to announce a split in 6-12-2004 before the open in conjunction with earnings.
BACKGROUND: Last announced a 3 for 2 split on 4-5-02 at a stock price of $34.50. The company has sufficient shares for a 2 for 1 split.
http://biz.yahoo.com/p/a/apol.html
STATUS: 50 day EMA. Way overdue for a split, we are still looking for APOL to make a strong move off the 50 day EMA (88.83) after a nice, orderly test of that level following a strong run up the 10 and 18 day EMA through late April. After such a run a solid stock will come back to consolidate at the 50 day EMA, then rebound from there as volume moves back in at this key support level. Money flow continues to run higher head of the stock price, even as the stock price falls back. Very bullish and a very strong stock. Looking for that volume to jump back up on the move higher.
Volume: 1.331M Avg Volume: 1.719M
BUY POINT: $91.72 Volume=3M Target=$105 Stop=$87.95
POSITION: OAQ HR - Aug. $90c (55 delta) &/or Stock
http://www.investmenthouse.com/cs/apol.html
Play Date: 05/04/2004
FLIR (Flir Systems--$47.91; +0.07; optionable): Scientific & technical instruments. Still trying to pinpoint a date, but a solid technical pattern.
BACKGROUND: Last split 2:1 in May 2003 at a price near $50.
http://biz.yahoo.com/p/f/flir.html
STATUS: Test breakout. Blasted out of a 13 week base in late April, surging to 50. Tested the move with a pullback on lower volume to the 18 day EMA (45.95). It held, has started higher, and volume has kicked higher. Money flow is rising and continuing to lead the stock higher. Relative strength is ready for the breakout once more. Looking for it to clear the recent highs on strong trade.
Volume: 414.224K Avg Volume: 360.045K
BUY POINT: New: $48.38 (orig. $46.96) Volume=577K Target=$53.94 Stop=$45.78
POSITION: FFQ GI - July $45c (61 delta) &/or Stock
http://www.investmenthouse.com/cs/flir.html
Play Date: 04/17/2004
QCOM (Qualcom--$65.40; +1.20; optionable): Telecom equipment. Forecast to announce a split July 22 in conjunction with earnings. Earnings date has not been confirmed by the company.
BACKGROUND: Last announced a 4 for 1 split on 11-22-99 at a stock price of $224.
Also announced a 2 for1 split on 4-14-99 at a stock price of $150. Prior to that announced a 2 for 1 split on 2-10-94 at a stock price of $47. The annual shareholder meeting was on 3-2-04 at which time no additional shares were authorized, but company has sufficient shares for a 2 for 1 split.
http://biz.yahoo.com/p/q/qcom.html
STATUS: 50 day EMA test. One of those NASDAQ 100 stocks that is a reason the NASDAQ 100 is holding up well. It peaked in early April and has come back to test the 50 day EMA (63.99). Three weeks of a lateral move and it has now retaken that level. Now we want to see volume jump through average as it continues the move higher.
Volume: 7.645M Avg Volume: 9.161M
BUY POINT: $66.35 Volume=14M Target=$79 Stop=$64.05
POSITION: AAO GM - July $65c (52 delta) &/or Stock
http://www.investmenthouse.com/cs/qcom.html
Play Date: 05/08/2004
URBN (Urban Outfitters--$47.31; +1.28; optionable): Apparel stores. Forecast to announce a split on 6-01-04 at its annual shareholder meeting.
BACKGROUND: Last announced a 2 for 1 split on 8-14-03 in conjunction with a board meeting. The stock price was $46.50. The annual shareholder meeting is scheduled for 6-1-04 at 10:30 ET at which time additional shares will be authorized.
http://biz.yahoo.com/p/u/urbn.html
STATUS: Flat base. Continues its 7 week lateral move that has come back to test and hold the 50 day EMA (46.04), working laterally along that key support level, breaking over it the second half of last week. Tried the move Wednesday on some solid volume, but pulled back to close. Just waiting for that big break higher on strong trade.
Volume: 474.506K Avg Volume: 635.681K
BUY POINT: $48.72 Volume=972K Target=$56 Stop=$45.55
POSITION: URQ IJ - Sept. $50c (52 delta) &/or Stock
http://www.investmenthouse.com/cs/urbn.html
PRE-SPLITS
Play Date: 04/29/2004
ERES (Eresearch Tech--$33.3; +0.5; optionable): Medical labs. Splits 3:2 on 5-28.
http://biz.yahoo.com/p/e/eres.html
STATUS: Cup w/handle. The week before the split and ERES is showing more life to close out last week. Looking for the momentum to kick in and push ERES toward the breakout from its 16 week base. Has been toying with the breakout, but need to see that volume.
Volume: 416.325K Avg Volume: 894.545K
BUY POINT: New: $33.15 (orig. $32.95) Volume=1.3M Target=$37.92 Stop=$31.18
POSITION: UDB IZ - Sept. $32.50c (55 delta) &/or Stock
http://www.investmenthouse.com/cs/eres.html
Play Date: 05/20/2004
IEX (Idex--$45; +0.27; optionable): Machinery. Splits 3:2 on 6-1-04
http://biz.yahoo.com/p/i/iex.html
STATUS: Test 50 day EMA. Up off the 50 day EMA (44.61) to end the week, but no volume to go with the move. It thus did not make the break over the 10 or 18 day EMA (45.11, 45.32). Money flow is moving higher ahead of price, and if it can get some volume off the 50 day, it will be a buy on a move through those resistance points. Good low volume pullback, now it needs volume on the way back up.
Volume: 68.6K Avg Volume: 137.772K
BUY POINT: $45.68 Volume=200K Target=$48 Stop=$43.96
POSITION: IEX JI - Oct. $45c (52 delta)
http://www.investmenthouse.com/cs/iex.html
Play Date: 05/11/2004
MOGN (MGI Pharmaceuticals--$62; +0.82; optionable): Drugs. Splits 2:1 on 6-10-04
http://biz.yahoo.com/p/m/mogn.html
STATUS: 50 day EMA test. Volume jumped Thursday and Friday as MOGN held just over the 50 day EMA (60.51). A nice, easy pullback to test a strong run, and now volume is really jumping. That is telling us to get ready for a stronger move off of this level.
Volume: 1.028M Avg Volume: 730.681K
BUY POINT: $63.92 Volume=900K Target=$70 Stop=$59.88
POSITION: QOG GL - July $60c (58 delta)
http://www.investmenthouse.com/cs/mogn.html
Play Date: 05/18/2004
PNR (Pentair--$59.76; +0.71; optionable): Machinery. Splits 2:1 on 6-9-04
http://biz.yahoo.com/p/p/pnr.html
STATUS: 50 day EMA test. Jumped off the 50 day EMA (57.22) Tuesday on strong volume, clearing the short term MA and then taking a breather to close out the week. Excellent money flow leading higher ahead of price, and relative strength is already making the breakout ahead of the stock, a very bullish indicator. Just not enough volume Friday to push it higher to hold the breakout. Still looks ready.
Volume: 260.2K Avg Volume: 310.863K
BUY POINT: $60.06 Volume=466K Target=$64 Stop=$58.28
POSITION: PNR HL - Aug. $60c (46 delta)
http://www.investmenthouse.com/cs/pnr.html
POST-SPLIT PLAYS:
Play Date: 05/17/2004
JBHT (JB Hunt Transportation--$31.20; +0.88; optionable): Trucking.
http://biz.yahoo.com/p/j/jbht.html
STATUS: Breakout test. After surging out of a 7 month flat base, JBHT is testing the 50 day EMA (30.23). Got a bit wilder late in the week, but held the 50 day and bounced Friday on solid average trade. Money flow continues to rally solidly higher even as price probes the 50 day EMA support. Friday looked like a good start. Now we see if the volume can continue and send it on the second run on this breakout move.
Volume: 786.219K Avg Volume: 690.909K
BUY POINT: $31.88 Volume=1.1M Target=$36.75 Stop=$29.88
POSITION: JHQ KF - Nov. $30c (63 delta) &/or Stock
http://www.investmenthouse.com/cs/jbht.html
Play Date: 05/15/2004
SHFL (Shuffle Master--$33.17; +0.61; optionable): Gaming devices
http://biz.yahoo.com/p/s/shfl.html
STATUS: 50 day EMA test. Continued the move off the 50 day EMA (31.24) Friday, but volume fell off, coming in well below average. Want to see a bit more volume as it moves to follow the money flow higher.
Volume: 482.004K Avg Volume: 697.136K
BUY POINT: New: $33.55 (orig. $32.72) Volume=800K Target=$38.62 Stop=$31.12
POSITION: SVF HF - Aug. $30c (69 delta) &/or Stock
http://www.investmenthouse.com/cs/shfl.html
End part 2 of 3
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us stock market
trend trading stock
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