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Begin part 2 of 3
Support and Resistance
NASDAQ: Closed at 1986.74
Resistance: 1990 to 2000, the top of the late 2003 base. 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: The simple 50 day MA (1972) and 50 day EMA (1966). The 200 day SMA (1956). 1900 to 1890. The April lows (1880, 1878). 1850 below that. Some price tops at 1777, 1750.
S&P 500: Closed at 1120.68
Resistance: 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 exponential 50 day MA (1114), and the simple 50 day MA (1117). The 18 day EMA (1107). 1106 is a May 2002 top and represents some early 2001 lows. 1096 to 1100. The 200 day SMA (1085). April lows (1079, 1076). 1075 to 1070 from the December consolidation. 1058 - 1060 from November tops.
Dow: Closed at 10,188.45
Resistance: The 50 day EMA (10,214). The simple 50 day MA (10,247) and price resistance at 10,250. 10,570 is the April high. Price consolidation at 10,600 level. 10,747 is the February high.
Support: The 18 day EMA (10,104). The 200 day SMA (10,064). March low (10,007). 9900-9850.
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
6-01-04
Construction spending, April (10:00): 0.4% expected, 1.5% March.
ISM Index, May (10:00): 61.5 expected, 62.4 April.
6-03-04
Productivity, rev. Q1 (8:30): 3.7% expected, 3.5% prior.
Initial jobless claims (8:30): 337K expected, 344K prior.
Factory orders, April (10:00): -1.0% expected, 4.3% March.
ISM Services, May (10:00): 66.0 expected, 68.4 April.
6-04-04
Non-farm payrolls, May (8:30): 215K expected, 288K April.
Unemployment rate, May (8:30): 5.6% expected, 5.6% April.
Hourly earnings (8:30): 0.2% expected, 0.3% April.
Average workweek (8:30): 33.8 expected, 33.7 April.
THE PLAYS
Good movers Friday: URBN; WFMI; WITS
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: 05/29/2004
NOC (Northrop Grumman--$103.13; -0.87; optionable): Aerospace/defense. Splits 2:1 on 6-22-04
http://biz.yahoo.com/p/n/noc.html
STATUS: Cup. Nice 14 week cup base has formed roughly over the 50 day EMA (99.80), holding up well as the market came under pressure. It has rallied up to the prior high near 104 on mostly above average volume. Positive 3 to 2 accumulation (3 up price weeks on rising volume to 2 down price weeks on rising volume) in the base and money flow running higher ahead of price. It hit 104 Thursday then backed off some Friday. May take a few more days to ease laterally before making the move. Looks solid and we want to see strong volume as it moves through the buy point.
Volume: 715.9K Avg Volume: 786.454K
BUY POINT: $104.12 Volume=1M Target=$112.25 Stop=$101.32
POSITION: NOC HA - Aug. $105c (42 delta)
http://www.investmenthouse.com/cs/noc.html
New Post-Split Plays:
Play Date: 05/29/2004
NSM (National Semiconductor--$21.67; +0.71; optionable): Semiconductors
http://biz.yahoo.com/p/n/nsm.html
STATUS: Double bottom. NSM is trying to set up a double bottom the past 7 weeks, using the 200 day SMA (19.57) as support. It was leading higher in April but with the market struggling, it has slid back into a second base. Accumulation is solid already at 3 to 1 as it comes off the 200 day and is rallying to make a break through the low 'hump' in the pattern at 21.81. This is a semiconductor leader, and if it can muster some volume on the breakout it could be a portent for a further summer rally.
Volume: 8.194M Avg Volume: 9.364M
BUY POINT: $22.12 Volume=11M Target=$26 Stop=$20.68
POSITION: NSM KD - Nov. $20c (71 delta) &/or Stock
http://www.investmenthouse.com/cs/nsm.html
New Leader Plays: These are solid stocks in good patterns that may develop into a split play, but they also are just good stocks ready to make good moves.
Play Date: 05/29/2004
ARTC (Arthrocare--$24.48; +0.06; optionable): Medical appliances
http://biz.yahoo.com/p/a/artc.html
STATUS: Double bottom w/handle. ARTC ended the week starting a handle to its 11 week base. It exploded higher to start the week, rallying on tremendous volume. It spent the last three days of the week easing back on much lower volume. Money flow is surging ahead of price, and we are looking for ARTC to follow that money flow higher. Solid 5 to 3 accumulation in the base.
Volume: 396.022K Avg Volume: 297.181K
BUY POINT: $25.32 Volume=446K Target=$30 Stop=$23.55
POSITION: ARU IE - Sept. $25c (49 delta) &/or Stock
http://www.investmenthouse.com/cs/artc.html
Play Date: 05/29/2004
TUNE (Microtune--$3.44; +0.34; no options): Semiconductor integrated circuits
http://biz.yahoo.com/p/t/tune.html
STATUS: Breakout test. This one looks fun. TUNE broke out of a 10.5 month cup with handle base in mid-April, surged to 3.75 and then came back to test the breakout in the market selling. It fell rather sharply , but managed to hold the 50 day EMA (2.93), a support level that also held the breakout. Accumulation in the base was a solid 9 to 4, setting up the breakout. After a four week latterly move TUNE shot higher Friday on a nice above average volume surge. Indeed, volume improved the last part of the week leading up to this move. Looks supper with strong money flow leading the way higher.
Volume: 624.266K Avg Volume: 324.09K
BUY POINT: $3.54 Volume=486K Target=$4.64 Stop=$3.29
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cd/tune.html
Continuing Leader Plays: May turn into a split, but a solid stock ready to move.
Play Date: 05/23/2004
NMSS (Natural Microsystems--$8.60; 0.00; optionable): Telecom processing systems
http://biz.yahoo.com/p/n/nmss.html
STATUS: Breakout test. NMSS has moved up off the 50 day EMA (7.93) test. Volume was decent Wednesday, but not blowout. NMSS eased back to tap the 10 day EMA (8.38) on the Friday low and rebounded some. This higher low often indicates the breakout is coming. NMSS broke out from a 12 week cup with handle in mid-April, then moved back to test the 50 day in the market selling. It has held and looks ready to make a break higher. Now it just needs to show some volume on the move.
Volume: 343.88K Avg Volume: 433.59K
BUY POINT: $8.95 Volume=624K Target=$10.68 Stop=$8.32
POSITION: QNM IU - Sept. $7.50c (68 delta) &/or Stock
http://www.investmenthouse.com/cs/nmss.html
Play Date: 05/04/2004
OCLR (Ocular Sciences--$33.41; -0.26; optionable): Medical instruments
http://biz.yahoo.com/p/o/oclr.html
STATUS: Breakout test. Continues to tantalize, holding the 10 day EMA (33.35) on the lows and banging on the highs into 34. Volume has been tremendous, and then fell below average Friday as the stock held the 10 day with a tight doji in a narrow range. Strong money flow as OCLR stubbornly holds its gains from the breakout of its 16 week base. That is a sign of real strength in the stock. Now we just want to see a breakaway move over 34 on renewed above average volume.
Volume: 143.513K Avg Volume: 151.5K
BUY POINT: New: $34.42 (orig. $30.22) Volume=160K Target=New positions: $40 (orig. positions $34.65) Stop=$32.32
POSITION: QLO JG - Oct. $35c (51 delta) &/or Stock
http://www.investmenthouse.com/cs/oclr.html
Play Date: 05/20/2004
PLT (Plantronics--$39.75; +0.09; optionable): Telecom products (headsets)
http://biz.yahoo.com/p/p/plt.html
STATUS: Double bottom w/handle. Very low volume continues as PLT moves laterally below 50, completing the handle to its 18 week base. Low volume in the handle is exactly what you want to see as it shows few sellers as it shakes out the final weaker holders. Excellent 5 to 2 accumulation (5 up price weeks on rising volume to 2 down price weeks on rising volume), and money flow continues to surge higher ahead of the price even as it moves laterally. Looks solid.
Volume: 239.5K Avg Volume: 426.636K
BUY POINT: New: $40.12 (orig. $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
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.
CECO: Forecast 7-20-04.
CHS: No announced on 5-27-04, but looking for an announcement in mid-June in conjunction with a board meeting. Still attempting to ascertain the date of that meeting.
CRL: No announcement 4-28-04. Holding the 50 day EMA, but requiring a great deal of patience.
CWTR: Forecast 5-26-04 or on 6-12-04 with its shareholder meeting. No split announcement 5-26, so looking at 6-12.04.
DGX: Forecast 7-22-04 before the open.
ESRX: No split announced 5-26-04 with its shareholder meeting, but still holding up very well.
FLIR: Forecast 7-21-04
GD: Forecast 6-3-04
HUG: Forecast 5-25-04 after the close. No split announced but holding well at the 50 day EMA and looking ready to bounce.
IDXX: Forecast 7-22-04.
ITW: Forecast 7-20-04
LXK: Forecast 7-22-04.
POOL: Forecast 7-22-04
QCOM: Forecast 7-22-04
RNT: Forecast 7-28-04.
TRBS: Forecast 7-15-04
UOPX: Forecast 6-24-04 before the open.
URBN: Forecast 6-1-04 at its shareholder meeting. Blasting higher to end the week, and now we look to the shareholder meeting next week to see if it can add some more fuel to this run.
WFMI: Forecast 7-28-94.
XRAY: Researching the next date. Nice recovery over the 18 day EMA.
ZBRA: Forecast 6-3-04 at annual shareholder meeting.
ZMH: Forecast 7-21-04.
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: 05/29/2004
STJ (St. Jude Medical--$76.26; -0.07; optionable): Medical appliances. Forecast to announce 7-22-04 before the open.
BACKGROUND: Last announced a 2:1 split in April 2002 at a price of $75.
http://biz.yahoo.com/p/s/stj.html
STATUS: Ascending triangle. We are looking at STJ again. It gave us a very nice gain in its late 2003 run, and then we took the gains as it slid back from its high in March. It has continued to work through its next basing period, a 16 week base making higher lows up the 50 day EMA (74.22) below a constant high near 79. Accumulation in the pattern is a strong 3 to 1, showing money is moving into the stock as it sets up for the next move. A solid leader, and we are waiting for it to provide the next entry point on a strong volume move.
Volume: 1.162M Avg Volume: 1.442M
BUY POINT: $77.32 Volume=2.2M Target=$89 Stop=$74.08
POSITION: STJ JP - Oct. $75c (61 delta) &/or Stock
http://www.investmenthouse.com/cs/stj.html
Continuing Pre-Announcement Plays:
Play Date: 05/27/2004
CECO (Career Education--$67.97; +1.56; optionable): Forecast to announce a split on 7-20-04 in conjunction with earnings. The company has not confirmed this date, but based upon our research this is the date for the event
BACKGROUND: Last announced a 2 for 1 split on 7-22-03 in conjunction with earnings. The stock price was $75. Prior to that announced a 2 for 1 split on 7-31-01 in conjunction with earnings. The stock price was $63. Prior to that announced a 2 for 1 split in July 2000 at a stock price of approximately $52. The annual shareholder meeting was on 5-21-04 at which time additional shares were authorized.
http://biz.yahoo.com/p/c/ceco.html
STATUS: 50 day EMA test. Rallied on some above average volume Friday, and we thought long about moving in. We did not though the volume was not bad for a very low overall volume session for the market. Still within the buy zone if it continues its move higher. If it does we will look at starting a partial position, then see how it handles a test of 70. If it fades back but makes a higher low, then we add to positions as it clears 70.
Volume: 2.591M Avg Volume: 1.884M
BUY POINT: New: $68.15 on a continued move (1/2 position) (orig. $66.88) Volume=2M Target=$76.95 Stop=$63.45
POSITION: CUY JM - Oct. $65c (62 delta) &/or Stock
http://www.investmenthouse.com/cs/ceco.html
Play Date: 05/17/2004
GD (General Dynamics--$95.63; -0.09; optionable): Aerospace/defense. Forecast to announce a split on 6-3-04 in conjunction with a board meeting or on 7-21-04 in conjunction with earnings.
BACKGROUND: Last announced a 2 for 1 split on 3-4-98 in conjunction with a board meeting at a stock price of $85. The annual shareholder meeting was on 5-5-04 at which time no additional shares were authorized. The company has sufficient shares for a 2 for 1 split.
http://biz.yahoo.com/p/g/gd.html
STATUS: Cup w/handle. After tremendous volume Wednesday and Thursday, we could not resist entering some positions Friday even though volume was lower. We viewed that as an opportunity to move into positions ahead of next week before more volume moved into the stock and rallied it higher. Nice 16 week base, ready for the breakout. Still a buy on a further break higher, preferable on rising volume. That should not bee too much trouble given the lower trade Friday.
Volume: 818.2K Avg Volume: 837.409K
BUY POINT: $95.74 Volume=1.2M Target=$108 Stop=$91.95
POSITION: GD KS - Nov. $95c (53 delta)
http://www.investmenthouse.com/cs/gd.html
Play Date: 05/11/2004
LXK (Lexmark Intl.--$94.32; +0.69; optionable): Printers. Forecast to announce a split 7-22-04 in conjunction with earnings.
BACKGROUND: Last announce a 2 for 1 split on 4-29-99 at a stock price of $110. The annual shareholder meeting was on 4-30-03 at which time no additional shares were authorized. The company has sufficient shares for a 2 for 1 split.
http://biz.yahoo.com/p/l/lxk.html
STATUS: Flying plateau. LXK has spent the past 7 weeks moving laterally between 90 and 95, using the 50 day EMA (91.32) as the low of the range. This comes after a nice run up through mid-April, holding up its move longer than the rest of the market. In the market selling, it has held up better than most as well. It is truly a market leader. Accumulation in this short consolidation is a solid 3 to 1. A break over 95 is the next good buy point.
Volume: 624.1K Avg Volume: 1.136M
BUY POINT: New: 95.22 Volume=1.6M Target=$105 Stop=$91.68
POSITION: LXK JS - Oct. $95c (64 delta) &/or Stock
http://www.investmenthouse.com/cs/lxk.html
Play Date: 04/17/2004
QCOM (Qualcom--$67.07; +0.27; 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. Setting up a very nice 8 week base forming mostly over the 50 day EMA (64.46). That is a sign of solid institutional support of this market leading stock. Accumulation in this short base is a solid 2 to 0. It surged early in the week, then spent the last half of the week working laterally in a narrow range, holding its gains. This type of action often precedes the next break higher. QCOM is just waiting for some volume to push back into it.
Volume: 4.909M Avg Volume: 8.984M
BUY POINT: New: $67.22 (orig. $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
POST SPLIT PLAYS:
Play Date: 05/27/2004
BKST (Brookstone--$19.31; -0.05; no options): Specialty item stores
http://biz.yahoo.com/p/b/bkst.html
STATUS: 50 day EMA test. Still working laterally over the 18 day EMA (19) after a very good bounce off the 50 day EMA (18.41) a week back. A low volume lateral move over near support is good action. We are just waiting for it to resume the move on a good shot of above average volume.
Volume: 54.347K Avg Volume: 147.954K
BUY POINT: $19.65 Volume=175K Target=$22.75 Stop=$18.36
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/bkst.html
Play Date: 05/27/2004
SCSC (Scansource--$53.25; +0.15; optionable): Wholesale computers
http://biz.yahoo.com/p/s/scsc.html
STATUS: Cup w/handle. Basically no movement Friday as that solid Wednesday and Thursday volume backed off. Holding over the 18 day EMA (52.26) on the lows after bouncing off the 50 day EMA (51.16) at the lows of the handle. That test in the handle is a good shakeout of the last sellers. Now we just look for the stock to jump through they buy point on a resumption of that strong, above average volume to show us that the buyers have taken control of the stock once more. Outstanding money flow is running higher even as the stock moves laterally. That often precedes the stock jumping higher to follow it, particularly out of these low volume lateral moves.
Volume: 150.823K Avg Volume: 134.772K
BUY POINT: $53.77 Volume=200K Target=$61 Stop=$50.88
POSITION: UHI IK - Sept. $55c (45 delta) &/or Stock
http://www.investmenthouse.com/cs/scsc.html
Play Date: 05/15/2004
SHFL (Shuffle Master--$33.49; -0.58; optionable): Gaming machines
http://biz.yahoo.com/p/s/shfl.html
STATUS: 50 day EMA test. Volume surged Thursday and Friday as SHFL continues to hold its gains and the 10 day EMA (33.29) on the close. This 5 week pullback to test key support is typical after a good run up the 10 and 18 day EMA. Money flow remains strong, and now we want SHFL to put that good volume to use and beak higher after making this higher low.
Volume: 1.521M Avg Volume: 693.318K
BUY POINT: New: $34.62 (orig. $32.72) Volume=800K Target=$39.85 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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