world stock market, us stock market

Begin part 2 of 3

Economic Calendar

These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.

June 24
Durable Orders, May (08:30): 1.6% expected and -3.2% prior
Initial Claims, 06/19 (08:30): 340K expected and 336K prior
Help-Wanted Index, May (10:00): 40 expected and 38 prior
New Home Sales, May (10:00): 1120K expected and 1093K prior

June 25
GDP-Final, Q1 (08:30): 4.5% expected and 4.4% prior
Chain Deflator-Final, Q1 (08:30): 2.6% expected and 2.6% prior
Michigan Sentiment-Rev., June (09:45): 95.0 expected and 95.2 prior
Existing Home Sales, May (10:00): 6.50M expected and 6.64M prior

SUBSCRIBER QUESTIONS

Q: In the Economy section you refer to the "ECRI" that comes out every Friday. What do the letters stand for and where is it reported? Thanks for the discussions on "supply side economics", its making some sense to me now.

A: ECRI is the acronym for Economic Cycle Research Institute. It is a private entity that studies various aspects of the US and other world economies such as acceleration and deceleration and inflation prospects. The Conference Board puts out the LEI (Leading Economic Indicators) made up of a basket of 10 indicators. ECRI looks at several more indicators it has determined, after extensive study, give a faster and more accurate indication than other similar methods. By faster we mean it provides a more timely indication. The accuracy is historically proven with accurate calls of the 2001 recession, the end of the 'Goldilocks' economy back in June 1999, and the Japanese recovery.

It has an impressive track record looking back, but it has a lot of the same problems of other indicators during the heat of battle. It gives indications, but you have to put them in context and figure out why they are showing what they are showing. Back in 2002 we were seeing an upturn in many points in the economy, but the ECRI was overstating some continuing slowdown. While it was picking up some of the same signs of improvement, they were overweighted by some continuing problems that were still worsening. Thus it blurred the potential recovery that was developing. ECRI was still pessimistic as we were turning optimistic. We received a subscriber question at the time regarding that discrepancy, and our answer was the same: ECRI offset the improved indicators with some that were still declining though they may have been a bit more lagging.

Nonetheless, it is a good indicator, particularly when looking at the trend. Right now it still shows a continuing decline in the annualized 4-week growth rate. It was down for the fifth straight week to 3.6% from 4.1%, a 13 month low. That is forecasting continued expansion, but at a slower pace in the second half. If the economy is not growing as fast, that puts pressure on stocks to advance their prices.

THE PLAYS

Good movers Friday: AXCA; BID; PVN

Thursday night play results:
ALAN: Showed another doji at the 50 day EMA on low volume. Still solid.
STNR: Gapped higher but volume was not there and it gave the move back. Still a good pattern.
RVI: Volume was still up but it held flat for the session.

New plays for Monday:

Upside:

Play Date: 06/19/2004
DPTR (Delta Petroleum--$13.38; +0.44; optionable): Independent oil and gas
http://biz.yahoo.com/p/d/dptr.html
STATUS: Double bottom w/handle. A breakout in January and a march higher since, peaking at 14 in early May. That started the current base, a 7 week pattern holding the 50 day EMA (12.18) on the lows, a sign that the big money is supporting it, buying more shares as it tests that level. Accumulation in the base is an excellent 4 to 0 (4 up price weeks on rising volume to 0 down price weeks on rising volume), another indication that money has moved into the stock during the base. Volume surged Wednesday as it jumped off the 50 day EMA. Money flow is very strong, rising ahead of price. Looking solid here.
Volume: 292.194K Avg Volume: 422.988K
BUY POINT: $13.75 Volume=634K Target=$16.55 Stop=$12.79
POSITION: QHR LV - Dece. $12.50c (66 delta) &/or Stock
http://www.investmenthouse.com/cd/dptr.html

Play Date: 06/19/2004
ORB (Orbital Sciences--$13.65; +0.55; optionable): Aerospace/defense
http://biz.yahoo.com/p/o/orb.html
STATUS: Cup. A very shallow 17 week pattern that mostly formed along the 50 day EMA (12.70), a sign of good institutional support. Accumulation is a strong 6 to 3, and volume jumped higher as the stock surged Friday along with a few other defense stocks. Strong money flow moving higher ahead of price, and the stock is now starting to follow it. Hitting a multiyear high, so not going to have a lot of overhead supply to push it back down.
Volume: 618.7K Avg Volume: 291.089K
BUY POINT: $13.78 Volume=437K Target=$16.55 Stop=$12.82
POSITION: ORB LV - Dec. $12.50c (76 delta) &/or Stock
http://www.investmenthouse.com/cd/orb.html

Play Date: 06/19/2004
RSTO (Restoration Hardware--$7.81; +0.33; optionable): Upscale home furnishings, hardware
http://biz.yahoo.com/p/r/rsto.html
STATUS: Cup w/handle. Retail is still solid as the consumer is far from finished. RSTO is ready to make the breakout move from an 8 month base sporting solid 7 to 5 accumulation. Volume has been very solid the past month, showing great price/volume action (up on up sessions, down on down sessions). Friday volume was back up as RSTO moved toward the highs in the handle, following that surging money flow. Just needs to make the break on continued strong trade.
Volume: 747.831K Avg Volume: 545.093K
BUY POINT: $7.96 Volume=818K Target=$9.68 Stop=$7.37
POSITION: URF KU - Nov. $7.50c (62 delta) &/or Stock
http://www.investmenthouse.com/cd/rsto.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 perform well. If you have any suggestions for additions or deletions, email us. We don't cover them all each report, just when something interesting is developing.

ALDN, BRCM, CECO, COH, DNA, EBAY, GTRC, LPNT, TGT

BRCM: Continues to outperform the semiconductor sector as it sets up for the next break higher. Friday volume was back well above average. Just waiting for the market to make the move with it.

EBAY: Nice lateral test over the 18 day EMA.

SUBSCRIBER WATCHLIST

We continually receive ideas for potential plays from subscribers. Many times they are already on our watchlists, other times not. We always take a look and sometimes find a gem or two, or more. We don't necessarily endorse these, but want to provide a forum for subscribers with ideas that may appeal to other subscribers. We may just put on the ticker or we might describe our thoughts as to why or why not we think it is a buy or sell. This is a way we can all learn a bit more and maybe find a few more candidates to make us some good money.

Upside:

ALVR: Coming off the bottom of the current 3.5 month base, surging on stronger volume the past week as it tested then jumped off the 200 day SMA. Ready to form the right side of its base.

PROX: In a continuing downtrend since March. It has rallied back to the 50 day EMA on a huge volume surge Friday, but then started back down again on Friday. Has a lot of work to do yet.

End part 2 of 3

world stock market
us stock market