|
|
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
Thursday night play results:
IP: Still struggling at the 200 day SMA on very low volume.
NTT: Gapped over the 200 day.
PLT: Still a very nice handle forming to the base.
ZILA: Moved higher but volume did not. Needs much more trade.
New Plays:
Good movers Friday: RIMM; ULGX; BRL; MCO
Downside:
Play Date: 05/23/2004
SEM (Select Medical--$13.39; +0.19; optionable): Specialized health services
http://biz.yahoo.com/p/s/sem.html
STATUS: Put. SEM broke out in mid-April, rallied a bit, then imploded with a massive move below the 200 day SMA (16.15). After that sharp sell off, the stocks has made a lower and lower volume rally back toward the 10 day EMA (13.93), filling the gap down. The gap is filled, volume is low, and SEM has lost momentum on the weak rebound. Looks crappy and ready to roll back over.
Volume: 1.354M Avg Volume: 1.8M
BUY POINT: $13.11 Volume=2M Target=$11.05 Stop=$14.02
POSITION: SEM SC - July $15p (-63 delta)
http://www.investmenthouse.com/cI/sem.html
Upside:
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/ci/brcm.html
Play Date: 05/22/2004
DJO (DJ Orthopedics--$25.14; +0.64; no options): Medical appliances
http://biz.yahoo.com/p/d/djo.html
STATUS: Cup w/handle. Volume is rallying the past three sessions as DJO starts to move higher off the 50 day EMA (23.61) that marks the bottom of the 7 week handle to the stock's 21 week base. Money flow is surging higher ahead of price it has tracked sideways, shaking out the last sellers in this long, low volume, lateral move that bored investors out. Looking for that strong volume to continued as DJO moves through the buy point.
Volume: 297.6K Avg Volume: 310.681K
BUY POINT: $26.22 Volume=466K Target=$30.24 Stop=$24.38
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ci/djo.html
Play Date: 05/22/2004
IMCL (Imclone--$70.24; +1.03; optionable): Biotechnology
http://biz.yahoo.com/p/i/imcl.html
STATUS: Breakout test. Holding over the 18 day EMA (68.70) on a test of a super breakout run that started in late April. We watched the base form and let it breakout without acting; cardinal sin. It rallied to 80, only almost doubling. Now it is testing that move. It can gobble up ground quickly, and on a volume move off of 70 we will look to enter. Initial target is at the prior high, but if it looks strong heading ot that number we will let it run, maybe taking part of the gain. Strong money flow continues to lead.
Volume: 1.552M Avg Volume: 3.067M
BUY POINT: $71.25 Volume=4M Target=$80 Stop=$68.55
POSITION: QCI HN - Aug. $70c (55 delta) &/or Stock
http://www.investmenthouse.com/ci/imcl.html
Play Date: 05/22/2004
MANT (Mantech Intl.--$25.60; +0.61; optionable): Business software
http://biz.yahoo.com/p/m/mant.html
STATUS: Cup w/handle. Volume was up and above average Friday as MANT moved off the 18 day EMA (24.80), the support that held in the handle. Strong 9 to 5 accumulation (9 up price weeks on rising volume to 5 down price weeks on rising volume) shows money moving into the stock during this base. Indeed, money flow is turning higher ahead of price, and it looks as if MANT is ready to follow it on up.
Volume: 379.779K Avg Volume: 295.045K
BUY POINT: $26.12 Volume=443K Target=$30.22 Stop=$24.55
POSITION: UUU NE - Aug. $25c (60 delta) &/or Stock
http://www.investmenthouse.com/ci/mant.html
End part 2 of 3
|
us stock market
trend trading stock
|
