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yahoo stock, us stock market
Begin Part 2 of 2
TOMORROW
Jobless claims for the week, personal income, and personal spending are out before the open tomorrow. The market has been very much economic news driven this week. Good numbers could help turn the selling. The market is really oversold right now. Again, we are looking for a run down in the Nasdaq and S&P based on its technology components early tomorrow as a result of the SUNW news, but better than expected jobless claims and consumption could help turn the tide. The market is looking for excuses to do anything, and it is oversold and ready to bounce.
Now we don't think it will be too much of a bounce. The Dow and the S&P may run back over the recent lows in an attempt to recover, and they may do so tomorrow. That is why we are going to use an early downdraft on the SUNW news to take some profits on our downside plays. Even if the indexes close higher tomorrow, we are not convinced they will hold up before the long weekend. Last year the indexes ran up into Labor Day and then were torched. We bet that many will be gunshy to hold positions fearing the same type of problems again this year. Again, the situation is different, but emotions rule investors.
In any event, if the indexes run up and stall near the recent lows on the Dow and S&P (10,120.89 and 1153, respectively) or the next level of resistance (10,200 and 1170) and stall out, we will look at that as a shorting position once again. Again, it may take a day to develop as the indexes are oversold and are ready to bounce, but it may be ready to do so on Friday.
Upside plays are really requiring a lot of care right now. Recent plays RMD and PII for example, broke out on good volume, but then turned right back down on us. PII was up on strong volume Tuesday, but then today sold back down on even higher volume. That is very bad action when breakouts are automatically the target of selling the day after they break higher. WFMI, ROST, ADVP, ASW, ATK have managed to hold up well, but the numbers have been shrinking. With a market bounce, however, the good patterns will jump up and give us good runs that we can take our 10% to 15% and move on.
Support and Resistance Levels
Nasdaq: Closed at 1843.17.
Resistance: 1935 to 1940 stopped the last move higher. Much higher in the range, 1985 to 2013 is pretty congested.
Support: 1820 and 1785 are potential support or at least a bounce level. The low is 1619.58.
S&P 500: Closed at 1148.56.
Resistance: 1165 to 1170. 1183 is next, then 1200.
Support: 1150 was breached and is still trying to hold; we will see. The low is 1081.19.
Dow: Closed at 10,090.90
Resistance: 10, 120 and 10,200. After that, 10,400. The 50 day MVA is at 10,431.86. 10,500 is stronger. 10,600 is strong resistance.
Support: 10,000 to 9992, the middle of its smaller double bottom pattern in March and April.
Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.
8-27-01
Existing Home Sales, July (10:00): -3.0% from June.
8-28-01
Consumer Confidence, August (10:00): 114.3 actual versus 117.5 expected and 116.3 prior (revised form 116.5).
8-29-01
GDP-Prel., Q2 (8:30): 0.2% actual versus 0.0% expected and 0.7% prior.
Chain Deflator-Prel., Q2 (8:30): 2.2% actual versus 2.3% expected and 2.3% prior.
8-30-01
Initial Claims, 8/25 (8:30): 400K versus 393K prior.
Personal Income, July (8:30): 0.3% versus 0.3% prior.
PCE, July (8:30): 0.1% versus 0.4% prior.
Help-Wanted Index, July (10:00): 58 versus 58 prior.
8-31-01
Michigan Sentiment-Rev., August (9:45): 93.3 versus 93.5 prior.
Chicago PMI, August (10:00): 40.5% versus 38.0% prior.
Factory Orders, July (10:00): -0.5% versus -2.4 % prior.
TEAM TRADES
SOX: The rest of the market was rallying on the GDP, but we were watching the SOX fall from the open. It did not take long to hit the first buy point at 588. The September $600 options were trading at 32.50 bid by 35.50 ask. We jumped in with two orders to see which would get hit, 35 and 35.50. We got some action on both of them surprisingly. We anticipated a strong downdraft, so we were okay with having both positions taken. Well, the SOX tanked to 570 in the first hour. We anticipated an attempted bounce; that always happens. We were not ready to sell on just that first bounce. It then made a series of lower highs all afternoon, tanking to the low at 566 in the last hour. On the low in the index we saw the options in the 45 range. The index bounced at the close, but not a lot. We anticipate some more downside tomorrow morning, and with that we will look at taking some profits on this position. Downside positions tend to accumulate profits fast if taken when there is a turn down from resistance. That was the case today, and we will look to bank some profits tomorrow and look at the other indexes form some more action.
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: ROST found higher support at 29 and headed up on stronger volume in a solid move.
Other stocks covered in Tuesday's report:
PATH: A slight move up in the handle on rising volume.
MCHP: Dropped to a low of 34.43 that tested the 18 day MVA; it bounced back up though volume was higher. Can still give us the move down.
AMAT: Gave us the move down on slightly higher volume to kick off the put play.
LOW: Closed at the 18 day MVA on rising volume. It can drop to 37 and still hold the ascending wedge pattern.
Previous plays:
WMI: Trying something here, on low volume.
FDO: Formed an ascending wedge on low volume.
MHK: Up on stronger volume after having crossed back above the short term MVAs Monday; it is back in the range of the former pennant now.
IMCL: Tapped the 50 support on the low as volume dropped off below average, and showing a doji. Getting ready for a move back up.
AZO: Continuing the lower-volume pullback to support.
MME: A tight doji at support in its steady pullback, and volume dropped back well below average.
SCRI: Showing a doji above the 18 day MVA on continued decreasing volume.
FRED: Holding support above the 18 day MVA; may be ready to move up soon.
SCOR: Forming a handle.
APA: Sold back to support at 47.50 on rising volume. It bounced back a bit, so we will look for it to hold here until it can move back up in the rolling pattern.
RI: After breaking through the 50 day MVA Monday and holding that position yesterday, RI gapped above the 18 day MVA to open today, and tapped 19.50 on the high before selling back down to 19. A surprising move.
RAIL: Popped back over the short term MVAs at 13 on higher volume.
ACTN: Looks ready to top out after today.
MRBK: As of Monday, the handle was lost.
TTWO: Stopped out today; the stock tanked after an unfavorable earnings report.
PMCS: Broke support (short terms and 50 day MVAs) on stronger volume. Will try to hold support at 30.
Best Plays:
1) ANSS: A nice pattern.
2) QQQ: Looking for a bounce back up after some early selling.
3) KG: A low-volume consolidation.
Updates:
ANSS (Ansys--$19.00; +0.20; no options): Technical Systems Software
http://biz.yahoo.com/p/a/anss.html
STATUS: In a flat base/ascending wedge pattern that is holding support at the 18 day MVA (18.64). The stock threw a volume spike Tuesday, but that dropped back down below average Wednesday (66,900; avg. 135,000) and showing another doji. Looking for a breakout over the pattern's high price at 19.57. ANSS had a good run up since early May, and this consolidation is readying it for another leg up. The stock shows strong money flow and high relative strength. Target: 23-24
BUY POINT: 19.70, on minimum breakout volume of 182,000. A buy on the breakout up to 20.69. Stop: 18.50
POSITION: Stock only.
http://www.investmenthouse.com/cd/anss.html
APPB (Applebee's--$30.50; +0.19; optionable (AYP): Leisure
http://biz.yahoo.com/p/a/appb.html
STATUS: This stock has formed an ascending wedge of sorts after dropping off its July high at 32.51, and is currently in the tighter tail of the pattern and holding above the 18 day MVA (29.83). Volume is low as the stock tested the 10 day MVA on the low of 30.15, showing a high doji (and volume remained well below average at 152,000; avg. is 464,000). The stock just may drop back to test the 30 support again, but we are looking for a breakout from the pattern, that will propel the stock up the right side of the 5-week base. In June APPB broke out of double bottom-type base, running up on that move to a high of 32 that month. We like the overall decreasing volume in the current pattern, and relative strength has moved out ahead of price. Target: 36-37.
BUY POINT: 31.08, on minimum breakout volume of 626,000. Stop: 29.50 A buy on the breakout up to 32.63 (just over the July high).
POSITION: Stock and/or November $26.63 calls to buy (AYP KY).
http://www.investmenthouse.com/cd/appb.html
Puts/Shorts:
From the member portfolio:
Indexes: On the other indexes (SOX, DJX, OEX), since they broke to new lows, we are looking for more downside in light of SUNW's news that the company is not likely to meet earlier revenue estimates. That will give us a chance to take some more profit on downside plays before a bounce. Upon hitting support, we will look for that bounce, perhaps back up to resistance levels. From there, we can play them back down if they fail to break through to the upside. The QQQ has room to play up from its lower support levels, however:
QQQ (Nasdaq 100--$37.56; -0.56; optionable (QQQ):
STATUS: Moved down on lower volume of 59 million (avg. 58 million), bouncing back slightly from a tap (on the low) at 37.13. In light of more possible downside in the morning on the SUNW news, we will look for a move back down to that low, or even to the August low of 36.54. From there and on a bounce back up, we will look at upside positions to possible resistance at the 18 day MVA (39.41) or up to the 40 range. We like that the index did not break to a lower low and did the other indexes recently covered.
BUY POINT: After a move down to the 36.50 or 37 range, aggressive positions on a move back up from there, on rising volume. Stop: 36
POSITION: October $35 calls to buy (QQQ JI). Deltas unavailable at the time of this writing. Please check with your broker in the morning.
OEX (Standard & Poors--$586.34; -7.79; optionable (OEY):
STATUS: Headed down for the second day, and posting a new low for the month at 585.63. We are looking for more selling in the morning (due to the SUNW report), and are looking for support in the 578-582 range where we would take profits on existing plays. From there the index can bounce back up to resistance at 590 to 594 and once there, we will look at playing the index back down when the move stalls. Look for rising volume on the move back down to the previous support. Volume 966,200 (avg. 1.1 million).
BUY POINT: On a move back down from resistance at 590-594, on preferably rising volume.
POSITION: September $600 puts to buy (OEY UT). Deltas unavailable at the time of this writing; please check with your broker in the morning.
DJX (1/100 Dj Indu--$100.91; -1.31; optionable (DJV):
STATUS: Dropped to a new August low of 100.76. We are looking for another drop on some early selling Thursday morning, which could take the index to 99-100. From there we will look for a bounce back up to the previous low at 101.21 or on up to 102 or today's intraday high at 102.57. If it stalls at either level we will look at playing the index back down to 99-100 again. Volume was lower at 966,200 (avg. 1.1 million).
BUY POINT: After a bounce back up to resistance at 101.21 or 102-102.50 and stalling there, on a move back down on renewed selling.
POSITION: October $104 puts to buy (DJV VZ). Deltas unavailable at the time of this writing; please check with your broker in the morning.
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
NVDA: Sold today, and wasn't doing any better after hours (at the time of this writing).
PSFT: Broke 35 on high (but slightly lower) volume. Can be a put down to 30 on rising volume.
ACS: May not move lower than 84.40 (intraday low) after today's test of that support on low volume.
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: Holding with a doji just above the 18 day MVA; volume remains below average.
VRSN: Yesterday's break below the 18 day MVA on rising volume just paved the way for today's selling.
ADVS: Threatening a break of its 200 day MVA.
UP & COMERS PORTFOLIOS:
LNCR, BJ, LOW, HI, THQI, BBBY, IGT, CHS, KG
THQI: Holding steady above the 18 day MVA.
LNCR: If it breaks the 200 day MVA here, look for initial support at 26.
BJ: Held at 50 again.
HI: Flirting with fire at the 200 day MVA.
CHS: Instead of topping out with yesterday's doji, the stock popped higher on a volume surge today. We have a buy point at 37.50 for clearance of the recent double-bottom type base.
KG (King Pharmaceuticals--$44.87; +0.37; optionable (KG): Drug Manufacturers
http://biz.yahoo.com/p/k/kg.html
STATUS: Recently forming a kind of ascending wedge pattern, but while it is posting higher lows, resistance at the upper levels of the pattern is at slightly different levels, so not a true ascending wedge. However, we like the higher lows, and the previous 2 days showing dojis on below average and today, decreasing volume (828,800; avg. 1.5 million) in the overall pattern. The lows are tapping near 44, level of the 10 day MVA, so we are looking for a hold at this support for a strong move over the July high (at the start of the 6-week base. KG is showing strong money flow, and relative strength is out ahead of price, a bullish indicator. Target: 53
BUY POINT: 46.18, on volume of 2 million or higher. Stop: 45
POSITION: Stock and/or October $37.50 or $41.25 calls to buy (LOW JU or JY).
http://www.investmenthouse.com/cd/kg.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
JNJ: Sitting on the 50 day MVA; volume still below average and a bit higher.
MSFT: Holding at 60 for now.
BRCM: A doji on lower volume here; may hold above the August low of 31.59.
AOL: Selling off; may test the April low at 33.46 if it cannot catch support at 37-37.50.
PXLW: A doji today; may stop the freefall for now.
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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