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yahoo stock, us stock market
Begin Part 2 of 2
SUBSCRIBER QUESTONS
Q: Over the last week or so my girlfriend and I have made a ton of money based on your [plays] on the SOX and OEX. Thank you so much. It appears they pretty much move with the NASDAQ only with great price swings. Which leads me to believe (for the most part) that as long as we have handle on the direction of the [Nasdaq] then we can play the indexes accordingly. My questions are these, since you don't always include the indexes in your reports are their some rule of thumbs for playing them, i.e., resistance levels, open interest, etc.?
A: First, we are trying to cover the indexes more and more for all of our subscribers. In this market, the indexes can give some of the best payoffs for the very reason you have pointed out: if you figure out the market direction, you win with the indexes and are not as subject to individual news stories on any particular stock. The S&P tends to follow the Nasdaq, just a bit delayed. Note how the Nasdaq broke down first below the July lows, and now it has dragged the S&P with it. The Dow is more of a different animal, but with the S&P down, the Dow is fighting for its life to hold onto the July lows. So the OEX is one of our favorite plays because it gives more moves than the QQQ, though we can play the MNX, or the mini NDX (Nasdaq 100). This is one we plan to cover more in the future in addition to the QQQ.
The SOX is a part of the tech world. Indeed, it is one of the most if not the most important pillar of tech; after all, semiconductors are the foundation of practically all technology. It tends to influence the Nasdaq up or down, but it does not always move lockstep with the Nasdaq. Case in point on Monday when the Nasdaq was down but the SOX was up. It is great to play as well because it gives super moves and sets up great patterns. It is also great because it does tend to lead up or down and gives a signal for the Nasdaq and the OEX.
What do we look for? We love to play the downtrends or uptrends when an index runs into the downtrend or sells down to the up trendline. Those are just great entry points. We also love to play when an index rams its head into resistance such as the SOX with the 200 day MVA on Monday. On the other side, we like to play the upside when an index sells down to solid support and bounces; this is best in an uptrend, but it also works in a trading range (e.g., the Dow earlier in the year between 10,500 and 11,000). The SOX and indexes also set up head and shoulders patterns, double bottoms, double tops - - signature patterns of upside and downside moves to come. The SOX is very good for these. Moreover, they do it intraday as well, and we can play the day and the trend over several days. Talk about flexibility in a choppy market!
Playing the indexes for the most part means playing options. But index options are so liquid you usually have no trouble getting in and out of them. Indeed, even if there are very few open interests (something we are seeing in the recently issued October options on several of the indexes), you don't have as much market maker shenanigans because there is such a ready market. We can get good, fast trades pretty much when we want them.
There are many things to like about playing the indexes. We cover this strategy in detail in our seminar series. As this writer indicates, there is a lot of money to be made in the market even in these times. The key is knowing what to play and how to play it. We teach you this in our seminars.
TEAM TRADES
PII, makers of Polaris 4-wheelers and waverunners, was in the handle of a cup base and after making a good move Friday, took a break Monday but today made its breakout move. The stock hit an early high (50.16) after opening at 49.50, right at its 10 day MVA. It had dropped back to 50 where it was crawling laterally on decent volume (as yet below the average of 76,000, coming in at 60,000). The previous day's volume had closed at 51,000, so that was looking pretty good. Breakout volume was in the range of 114,000.
At 11:25 CT the stock made a move, gapping higher to 50.20 and running to 50.35 on a surge in volume; it tested 50.20 and then bounced. It then raced up to the buy point at 50.63 while volume was very heavy. The alert was issued, and we watched the stock run to 50.80. It stalled a bit there and we put in a buy limit at that level as volume dropped off the map (good for a lateral movement). That did the trick. About 20 minutes later the stock jumped up and ran go 51.36. That did not last and it sold back down to close at 50.90 on a great volume day. Not bad at all. Now we see if we can capture that move to 56 to 58.
THE PLAYS:
Reading the Plays: Please note that when we reference the 10, 18, and 50 day moving averages (MVA), those are exponential moving averages (EMA). The 200 day moving average is always simple (SMA). We will note when we reference a particular MVA differently, e.g., a simple 50 day MVA. Please click on the Yahoo and chart links for company and charting information.
New note for reading plays: A "prior high" refers to the high at the start of a base.
BEST PLAYS: ACTN moved another point and then some today; the QQQ gave us the put play on a move down to 38 on rising volume, so looks like it can hit our target near the 36 level. TTWO looked good today, moving up to resistance on stronger volume and completing this next run up in its ascending wedge pattern. Buy point is 21.75 on volume of 2.6 million.
Other stocks covered in Tuesday's report:
ACTN: Added to the breakout move.
MCK: Still holding in the pennant.
ITRI: The move was cut short; bounced back from a low of 18.76 and test of support.
Previous plays:
WEN: Looks good and ready to move up after testing the recent breakout attempt.
IMCL: Pulling back. Support possible at 50.
AZO: A low-volume pullback to support.
TIER: Topping.
IXX: Tapped 20.25 for the second day but can't break it despite heavier volume again Monday. Showing 2 consecutive and is still above support, so we will see what it does from here. The 18 day MVA is at 19.16; 50 day MVA at 18.54.
BLL: Headed out and gained over a point, but volume dropped back below average. PMCS: Pulling back on lower volume; support at 33.
MME: Looks ready to move to a new high.
RAIL: Still holding its 50 day MVA.
Indexes: The OEX dropped back over 10 points on selling, and the DJX dropped to support at 102 on rising (but still below average) volume. The QQQ gave us the start of a move down on strong volume (broke above average); looking for a move down to the range of the August low at 36.54.
Best Plays:
1) ROST: Building support.
2) PATH: A nice pullback.
3) AMAT: Looks ready to fall further.
Updates:
ROST (Ross Stores--$29.18; -0.07; optionable (REQ): Apparel Stores
http://biz.yahoo.com/p/r/rost.html
STATUS: The stock broke out earlier this month from a short base, tested back to the 18 day MVA then headed up again. It is currently pulling back again on decreasing volume (741,500; avg. 867,000), showing a doji Tuesday. That formed on a bounce back from the low of 28.82, a price level the stock has hit at or near over the last three days, so is developing into a possible support level above the 10 day MVA (28.21). Thus, we can get a move back to that level ahead of a break to a new high. ROST shows outstanding money flow and buying. Initial target: 33.
BUY POINT: 29.80, on average or better volume. Stop: 28
POSITION: Stock and/or November $25 calls to buy (REQ KE).
http://www.investmenthouse.com/cd/rost.html
PATH (Ameripath--$33.81; +0.22; optionable (AQE): Health Services
http://biz.yahoo.com/p/p/path.html
STATUS: In a 5-week cup with handle base (the third such base it's developed since February), and pulling back nicely on decreasing volume in the handle. The pattern formed after PATH broke out of an earlier cup with handle base in July and had a nice run, but forming the current cup on a retracement of most of that July run. We like the gradual price pullback and lower volume here (down to 39,400 Tuesday; avg. 216,700), and are looking for a strong move up from support (the 10 and 18 day MVAs at 33.46, 33.04, respectively). Strong money flow, and relative strength is out ahead of price, a bullish indicator. Target: 40-42.
BUY POINT: 35.13, on minimum breakout volume of 325,000 or higher. Stop: 33 A buy on the breakout up to 36.89.
POSITION: Stock and/or December $30 calls to buy (AQE LF).
http://www.investmenthouse.com/cd/path.html
Puts/Shorts:
A previously covered stock:
MCHP (Microchip Tech--$35.60; -0.86; optionable (QMT): Specialized Semiconductor
http://biz.yahoo.com/p/m/mchp.html
STATUS: After crossing back over resistance (50 day and 18 day MVAs, the latter at 34), MCHP is topping out at upper resistance (36.75), heading down Tuesday on lower, below average volume of 1.9 million (avg. 2.18 million). We are looking for a move down to the August lows at 30 on continued selling in the sector. Watch the 50 day MVA at 32.64 as the stock approaches that support level. Nothing against the stock; it just looks ready to give some back.
BUY POINT: 35, on rising volume. Watch the 18 and 50 day MVAs on the move down.
Stop: 36.50
POSITION: October $45 puts to buy (QMT VI).
http://www.investmenthouse.com/cd/mchp.html
From the member portfolio:
AMAT (Applied Materials--$45.22; -2.03; optionable (ANQ): Chip Equipment
http://biz.yahoo.com/p/a/amat.html
STATUS: AMAT crossed back below the 200 and 50 day MVAs on stronger volume. It closed just above its 18 day MVA (45.08), but if it breaks that support in continued sector selling, we will look at playing it down to the July low (39.87). Prices are thick down to 42, so look for the move down on heavy volume. Volume today was up to 12.5 million (avg. 15.5 million).
BUY POINT: 45, on continued rising volume in market selling. Stop: 46.35 (just above the 50 day MVA, which is at 46.29).
POSITION: October $55 puts to buy (ANQ VK).
http://www.investmenthouse.com/cd/amat.html
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).
THE PORTFOLIOS: Each report, we look at these to see which is in a buy position. We don't cover them all each time, just the ones that look ready to pick up a few shares.
THE LEADERS:
New Leaders: ESRX, ACS, NVDA, DGX, EBAY, FRX, PSFT, ADVS, BMET.
Previous Leaders in which we are still interested: ADBE, SEBL, VRSN, VRTS
EBAY: Broke 55 on decreasing volume (still above average, however).
NVDA: Pulled back on lower volume to show a doji above support; look for a test of at least the 10 day MVA at 85.53.
PSFT: On a move below 35 (hit 34.96 on the low before a slight bounce back), a possible downside play to the July low (30).
FRX: Back below the 50 day MVA, but volume continues to decrease. Want to see a quick move back over that level.
BMET: Not in a good position here, trying to hold support above 26 and just under the 200 day MVA.
ACS: Topping out on the recent run.
DGX: Fell back below its 50 day MVA and the 18 day MVA, too. Volume, however, was lower, so the stock may be able to hold above 64.
ESRX: The 18 day MVA is holding it today, as expected. Volume was a little higher, but the stock bounced from its low of 54.95. The 50 day MVA is at 54.
VRSN: Moved down from the 18 day MVA on rising volume.
UP & COMERS PORTFOLIOS:
LNCR, BJ, LOW, HI, THQI, BBBY, IGT, CHS, KG
THQI: Trying to form an ascending wedge as it holds the position above the 50 day and short term MVAs. Upper resistance at 55.
BBBY: Selling off on higher volume. Can drop to 27 for an initial target; a little tight for a put play, but if retail stocks continue to sell off on the lower consumer confidence, it can be a put play below that level as well.
BJ: Can't get back over 52 for now; 50 may hold it judging from the current low volume levels, but retail is looking shaky here.
HI: Tapped 60 on the low and bounced, but this one is in need of repair.
CHS: Topping on this three-day run; look for a test of the 10 or 18 day MVAs just above 34.
LOW (Lowe's--$38.56; -0.64; optionable (LOW): Retail: Home Stores
http://biz.yahoo.com/p/l/low.html
STATUS: In the ascending wedge and holding nicely above support at 38 (10 day MVA; the 18 day MVA is just below that at 37.62). LOW tapped that support on the intraday low of 38.12, then bounced. It has been held back by low volume and upper resistance just above 39 for the last 6 days, and now the lower support levels (10 day MVA most immediately) are climbing and squeezing the stock. If LOW holds together, we continue to look for the breakout. Volume was up to 3.6 million Tuesday (avg. 3.4 million). Target:
BUY POINT: 40, on minimum breakout volume of 4.5 million. Stop: 39
POSITION: Stock and/or October $35 calls to buy (LOW JG).
http://www.investmenthouse.com/cd/low.html
MEMBER PORTFOLIO: New portfolio as selected by the subscribers. Some of these stocks are still struggling to move higher in their bases, and will likely continue to trade in close ranges just like the market. We'll be ready to catch them when they are ready to move. The new list: BRCM, CHKP, AMAT, JNJ, MSFT, AOL, HGSI, BUD, PXLW.
Old members: BRCM, CHKP, CSCO, EMLX, IDTI, INTC, JDSU, MVSN, NT, PWER, SUNW, VTSS
AMAT: Covered in the puts section tonight (above).
JNJ: Will test the 50 day MVA after falling below 54 on slightly higher volume.
MSFT: Turned down from its 200 day MVA on stronger volume; is still above the August lows at 59.
BRCM: May sell back down to the August low of 31.59 after today's higher volume move down.
BUD: Still on top of its down trendline.
PXLW: This stock has been falling for 4 days, and is in bad shape. Down to 13.92 today, selling off on huge volume.
Good Investing!
Jon L. Johnson and The Daily Staff
All of the foregoing is commentary for informational purposes only. All statements and expressions are the opinion of Online Investment Services, LP or its paid consultants and are not meant to be a solicitation or recommendation to buy, sell, or hold securities. We are not licensed or registered in the securities industry. The information presented herein and on our related web site has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. The security portfolio of Partners of Online Investment Services, LP or its paid consultants may, in some instances, include securities mentioned herein and on our web site. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future developments may differ materially due to many factors.
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yahoo stock
us stock market
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