world stock market, us stock market

* * * *
8/28/01 Technical Traders Report
* * *
Technical Traders Report Subscribers:

ALERT SERVICE
Subscribers to the current reports can sign up at the following link:
http://www.investmenthouse.com/alertttr.htm

ONLINE SEMINARS:

"Your experience and knowledge of the markets is not only evident in your daily newsletters, but in your discussions in the seminars as well. The slides and demonstrations of your points along with the written materials are excellent."
- Gene R.

Starts September 12 with Market Basics, covering the basics on reading the market, individual stocks, volatility, futures, options, and a lot more. Then we jump to Technical Analysis to get you in on the ground floor to understanding why the market and stocks move the way they do. This information will knock the scales from your eyes.

To sign up or learn more click on the following link:
https://w1407.securedweb.net/investmenthouse/wk/ordercrs.php

THE PLAYS:

Continuing Plays: SCTC got a stronger shot of volume today, showing a doji at resistance in its pattern. It may test near 12.50-12.60 before a breakout. VZ was unable to hold the lows in its rolling pattern and tested near lower support on its low. It may head back up from the 50 range. SEM is topping out and will likely test 13. AOC looks like it can hold its 18 day MVA in the test of the breakout, and CHRW is still in play, tapping the up trendline )that supports its large ascending wedge pattern) on today's low. GOTO broke resistance and may give us a bounce from the 50 day MVA at 22. Puts: QQQ moved, IFIN looks like it is going to stop here, and MSCC may have more downside.

UCOR (Urocor--$17.36; -0.10; no options):
http://biz.yahoo.com/p/u/ucor.html
STATUS: Volume dropped much lower in the tight lateral consolidation the stock's formed over the last several days (20,000; avg. 168,000). UCOR opened higher today than it has most recently (at 17.64), closer to the buy point. We'll continue to look for a breakout. Target: 20-21.
BUY POINT: 17.81 on volume of 227,000. Stop: 16.90.
POSITION: Stock.

PII (Polaris--$50.90; +1.60; optionable): Automotive
http://biz.yahoo.com/p/p/pii.html
STATUS: Made the buy point of 50.63 on good volume (177,300; avg. 76,000), and remains a buy on the breakout from its cup with handle pattern up to 53.16, 5% above the buy points of 50.63. A solid move. Target: 58-61.
BUY POINT: Remains a buy on the breakout up to 53.16 on rising volume.
POSITION: Stock and/or December $45 calls to buy (PII LI; low open interests).

KNDL (Kendle Intl--$20.21; -0.09; optionable): Drug Manufacturers
http://biz.yahoo.com/p/k/kndl.html
STATUS: In a pullback and moving laterally above the 18 day MVA (19.93) after reaching a breakout high in August at 21.35. Tuesday the stock held the pattern with another doji as volume dropped back to a low 32,000 (avg. 75,000). We are looking for a breakout move over 21.35. Excellent money flow and buying. Initial target: 25
BUY POINT: Over 21.35 on volume of 100,000 or higher. May pull back to test 21.35 once it gets over it; entry points on a move up from there. Stop: 20.
POSITION: Stock and/or November $17.50 calls to buy (KQR KW; 79 open interest).

New or Revisited:

Revisited:

CPC (Central Parking--$19.91; -0.08; optionable): Diversified services
http://biz.yahoo.com/p/c/cpc.html
STATUS: This stock is still holding the ascending wedge pattern above its 18 day MVA. Volume has remained below average overall except for a moderate spike Friday. Continued to look for the breakout over the 20.15 high. Strong money flow and good buying. The pattern is in the lower right side of a 7-month cup-type base. Initial target: 23
BUY POINT: 20.28, on volume of 147,000 or better. Stop: 19.50 A buy on the breakout up to 21.29
POSITION: Stock and/or December $17.50 calls to buy (CPC LW).

Revisited:

APC (Anadarko Petroleum--$53.49; -0.31; optionable): Oil and gas
http://biz.yahoo.com/p/a/apc.html
STATUS: In a rolling pattern/trading range between 60 and 53. Currently the stock is just off the 53 range and showing a doji on below average volume of 1.7 million (avg. 3 million). We are looking for a run back up from here up to the 60 range. On the move up, we can look at either buying stock or options, and when the move tops out, sell covered calls on the purchase, or simply sell the stock and/or options. When and if the stock bottoms once again around 53, the process can be begun again if the pattern cooperates.
BUY POINT: Over 54 on rising volume. Stop: 52
POSITION: Stock (for a covered call or straight stock sale at the top of the run) and/or October or November $50 calls to buy (APC JJ or KJ).

PUTS:

A revisited stock:

JCP (J.C.Penney--$24.59; -0.39; optionable): Department stores
http://biz.yahoo.com/p/j/jcp.html
STATUS: Has been holding up below the 50 day MVA (25.75) after crossing back below it last Wednesday. Today the stock tapped that resistance on the high, then dropped to a new low for the month (24.45). Volume was sharply higher at 2 million (average), so we are looking for the stock to sell down further. Support may emerge at 24. JCP can drop to 20, or the 200 day MVA at the 18 range.
BUY POINT: Below 24 on continued rising volume. The stock may try to test that price once it breaks below it. Entry point on a move down from there. Stop: 25.75
POSITION: October $30 puts to buy (JCP VF).

Index (continued play):

SOX (Phili Semi--$589.19; -17.23; optionable):
STATUS: After hitting the 200 day MVA on the high of 612.16, the index sold back below the 50 day MVA (593.67). On continued market selling it can take out the 18 day MVA at 584.17 for a move down to 558. Watch the 575 level for support on the move down. Look for a test of the broken 18 day MVA and a move down from there for possible entry points.
BUY POINT: Aggressive: 588, on rising volume and market selling. Break below the 18 day MVA: 584 on rising volume. Stop loss: 594
POSITION: September $600 puts to buy (SJX UT).

SUMMARY:
- Market reverses on lower consumer confidence.
- No good news to bounce indexes over resistance, and they fall on higher volume once again.
- GDP tomorrow most likely will not help the mood.
- Dollar still trying to improve.
- Subscriber Questions
- Team Trades

Market has no confidence in consumer confidence.

There are a few things holding the economy and the market up: housing, retail consumption, and consumer confidence. While they continue at decent levels, they are showing signs of weakening. Existing home sales are down for two straight months as are building permits. That is not really unexpected after several years of strength. Periodic up and down cycles in any area of the economy are normal. Problem is, every economic policy in the U.S. and indeed the world has placed all of the chips in a massive bet on these areas. The other problem? Each one of these economic keys lives or dies on the consumer. Today the consumer showed a few cracks, and the market did not like it.

As we have said before, you cannot get a better gauge of the health of any economy than from its financial markets. While the confidence numbers were not as bad as they appear on the surface, the significance of any weakness in the consumer was demonstrated by the market response today. The market knows that the policy makers are pinning all hopes on the consumer to stretch out the weakness long enough to let the capital side of the economy recover. Years of spending, massive job losses, and a weakening dollar (higher import prices) are having their impact. The big question is whether consumers will keep spending enough, even at a lower level, to make it to recovery. In any event, the course taken is a longer road to recovery, a recovery that would not be an issue but for foolish actions over the past two years.

Indexes turn and fall on the news in faster trade.

The indexes were not the picture of strength the first thirty minutes, but they were sorting it out, starting weak and then moving into positive territory. Immediately upon the release of the consumer confidence data the indexes reversed. They were already at resistance, but they were making an attempt to move higher. The news pushed them down and then the sellers stepped on them with higher volume. In other words, the slight turn at resistance that we saw on Monday did just what we did not want, i.e., turned into heavier selling on higher volume.

Institutions were selling a lot more shares today than they were on Monday. Still, volume was lighter than the buying on Friday, a silver lining, but a faint one. When you are waiting for a follow through day to a reversal, you want to see any selling on lighter volume. You do not want to see selling increase with share dumping. It should be a time where the last profit takers are getting out of the way, and there should not be a lot of them. When volume swells on selling, that shows more sellers are coming into the market to dump instead of buyers coming in and accumulating shares. That can kill a rally in a hurry.

The turn down continued the downtrends in the Nasdaq and the S&P 500. The Dow sold down triple digits and fell to its down trendline, holding just above that level. Trade on the Dow has been very volatile both up and down. That can be good or it can be bad. Looking at the overall pattern, we are no longer seeing that series of higher lows, but now we are seeing a series of lower highs as it continues to re-test support at 10,200 and 10,120. The falling Nasdaq and S&P 500 are pulling it lower as well.

THE ECONOMY

As noted, the headline confidence number was lower and July was revised lower as well. That never helps. August confidence slipped to 114.3 (118 expected) while July was lowered to 116.3 from 117. The big drag was the present situation that fell to 55 points in August. Dreadful. That put the hammer on the market. But, the numbers were not all that bad.

Future expectations rose, the third month in a row above 90. According to the Conference Board, the 90 level is a critical level, and the three months in a row above that number in future expectations is a positive signal as they tend to build on one another. Problem is, will the consumer continue to say 'wait until next year', or will it eventually say, we WILL just wait until next year? For now the numbers are still very good if looked at in isolation. They are weakening a bit, and that is some concern. Not as much as the market made of it, but you cannot ignore the market's response. It is the final arbitrator.

Retail sales for the week higher than expected. Redbook measured sales for the week at +0.4%, up 2.7% year over year. That was much better than expected, and it gives some support to the camp that believes the consumer is going to carry us all to safety in this economic wreck. The Mitsubishi survey measured just a 0.1% rise in sales for the week, but that too was better than expected. Hanging in there for now.

GDP out in the morning. It measures 0.7% growth in the early Q2 readings, but since then inventories have weakened, the dollar has weakened, and the economic picture has clouded a bit. Many are fearing a slip into the first negative quarter, step on in the textbook definition of the recession two-step. Compare that to a 5.7% growth rate in Q2 2000, however, and you see that we really are already in a de facto recession. Even though the actual GDP figures many not meet the technical definition, the job losses, manufacturing implosion, etc. all demonstrate recession-like pain. Thus, we don't think we will get any pop to the upside out of the number; if the number is negative, it may just help usher in a bit more selling.

The dollar index tried to make another move out of its recent range, but it folded and sold back. As noted, it is trying to firm up here for a move higher; it has not been able to put it together thus far, and these false starts do not help. What is going to happen? The rest of the world is into recession already; they are not lagging the U.S. slowdown but they are in there right with us. There are no pockets of economic strength in the world, no economies to look toward for help. In 1998 it was the U.S. As we have been saying for 2 years, this time the U.S. won't be the backstop and that is a problem.

Central banks are worried about the dollar as well. A weaker dollar means fewer exports to the U.S. and that will prolong their slumps. So, expect a lot of rate cuts around the world over the next month. It has already started, and it will pick up speed. Interest rate cuts will weaken their currencies vis- -vis the dollar and keep their good relatively cheaper. Also, if the dollar continues to fall, other countries will step in to support the dollar even if the U.S. does not. That will help the dollar despite the laissez faire attitude of the current administration if the other countries act when they want to and don't get bullied by the U.S. As the dollar is the de facto world currency, it actually stands to benefit from some weakness as global fear sends global investors to the dollar. With all of the other economies tanking, are they better investments? No. So, that is why we have been seeing some strength in the dollar even as it has been weakening. It is telling us that other economies are getting scared about their own situation, and they are looking for quality.

End Part 1 of 2

world stock market
us stock market