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9/10/01 Technical Traders Report
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Technical Traders Report Subscribers:
Market Alert:
ALERT SERVICE
Subscribers to the current reports can sign up at the following link:
http://www.investmenthouse.com/alertttr.htm
ONLINE SEMINARS:
Time for the Market Basics class is just about out. The series kicks off with Basics on Wednesday, September 12 and Saturday, September 15. Order now to learn the basics to get ready for the technical analysis classes and specific strategies in the later courses. Know the market, know your stocks.
To sign up or learn more click on the following link:
https://w1407.securedweb.net/investmenthouse/wk/ordercrs.php
* * THE SUMMARY * * *
Jon Johnson is vacationing in the mountains this week, but because no amount of urging can keep him away, you will find him checking in with his insights from above Tuesday and Wednesday. And yes, he will be presenting at our seminars this week.
Overall market stats:
VIX: 33.87; -0.39. A bit of a drop after the heavy recent selling, but not a big move back.
VXN: 63.84; -1.61.
Put/Call ratio (CBOE): 1.01; +0.17. Got that spike that took the indicator barely over the threshold.
Sentiment indicators are secondary. They can show signals of what to expect when they reach extremes. They do not replace primary indicators such as price and volume, especially when the sentiment indicators are mixed as they are now.
NASDAQ:
Stats: +7.68 (+0.46%) to close at 1695.38
Volume: 1.614 billion shares (-0.57%). Volume picked up with the onset of September, but has been dipping back steadily the last four sessions. With the move up in the index we saw 800 million shares to upside, with 791 million to the upside.
A/D and Hi/Lo: Decliners still led advancers by a solid margin, 1.58 to 1 (1.97 to 1 Friday), and new highs continued to be low at 33 (+4) while new lows continued up to 276 (+16).
The Chart: http://www.investmenthouse.com/cd/$compq.html
Dow/NYSE:
Dipped down intraday to 94.93, but closed with a doji.
Stats: -0.34 points (-0.0%) to close at 9605.51.
NYSE Volume: 1.239 billion shares (-13.96%). Volume continued at above average levels, but dipped well back from the recent selling levels. Down volume was still in control at 670 million to 574 million.
A/D and Hi/Lo: NYSE declining issues still held a 1.72 to 1 advantage (2.43 to 1 Friday). New highs dipped to 67 (-13) as new lows rose to 205 (+26).
The Chart: http://www.investmenthouse.com/cd/$indu.html
S&P 500:
Stats: +6.76 points (+0.62%) to close at 1092.54.
Volume: NYSE volume was down at 1.239 million (-13.96%).
The Chart: http://www.investmenthouse.com/cd/$spx.html
Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.
9-10-01
Consumer Credit, July (15:00): $3.8B versus -1.5B prior.
9-12-01
Current Account, Q2 (10:00): -$106.0B versus -$109.6B prior.
9-13-01
Initial Claim, 9/8 (8:30): 405K versus 402K prior.
Export Prices ex-ag., August (8:30): -0.5% versus -0.5% prior.
Import Prices ex-oil, August (8:30): -1.0% versus -1.0% prior.
9-14-01
PPI, August (8:30): 0.1% versus -0.9% prior.
Core PPI, August (8:30): 0.1% versus 0.2% prior.
Retail Sales, August (8:30): 0.4% versus 0.2% prior.
Retail sales ex-auto, August (8:30): 0.4% versus 0.2% prior.
Industrial Production, August (9:15): -0.1% versus -0.1% prior.
Capacity Utilization, August (9:15): 75.8% versus 77.0% prior.
Mich. Sentiment-Prel., September (9:45): 92.0 versus 91.5 prior.
THE PLAYS: Over the weekend we removed several stocks that still look good in their patterns: BYD, UCOR, ESCM, BPRX, SCTC, AMGN and BGEN. We are making room for new plays, but will keep a close watch on these stocks throughout the week. Please refer to buy points from last week's reports. Other stocks removed from the report: ART, KR, AOC, KNDL, DSPG, BBI, TARO, ENZN.
Note for reading plays: A "prior high" refers to the high at the start of a base.
All prices are current as of the close of trading Monday.
BEST PLAYS: SMTL bounced from support, but volume was lower (still above average, however, and strong); a nice move in the wedge pattern. Stronger volume popped SMTC over its 10 day MVA, NBP bounced slightly from the 10 day MVA, and SLE surged off its 18 day MVA. BBY dropped just under 2 points on the put play.
Best Plays:
1) AOT: A solid move up in its base.
2) ESCM: At support in the handle.
3) SMTC: Broke resistance on stronger volume.
4) RFMD: Look for a bounce after the company reaffirmed guidance.
5) SMTL: Trying to make a breakout move.
NEW PLAYS:
AOT (Apogent Tech--$25.00; +0.49; optionable): Health Services.
http://biz.yahoo.com/p/g/gis.html
STATUS: Since pulling back from a June high of 25.80, the stock has pulled into something of an ascending wedge. After a low volume drop back that saw it hold the 10 day MVA (24.57) to close Friday, AOT gapped down to open Monday but surged back up to close near pattern highs. Volume was up on the move at 386,200 (average 339,000), and relative strength has broken out. We will look at positions on a break over the recent highs at 25.25, watching the 25.80 level for resistance. Target: 30.
BUY POINT: 25.37 on volume of 450,000. Stop: 24.
POSITION: Stock and/or October $22.50 calls to buy (AOT JX).
A trading play:
CL (Colgate-Palmolive--$57.26; +1.26; optionable): Cons Non-durables: Personal Prod
http://biz.yahoo.com/p/c/cl.html
STATUS: Making a breakout move from an ascending wedge pattern with a buy point of 56.86. That means the stock is still a buy on this move up to 59.70, and we especially like the break of resistance at the 200 day MVA (56.91). That is a good move, since volume was lower at 2.2 million (avg. 1.7 million). We are not discounting the continued breakout on one day of lower volume (market volume was lower throughout), and look at a target at 61. That is at the level of highs at the start of CL's 11-week cup base, part of a much larger base with highs around 65-66.
BUY POINT: 57.45 on rising volume (minimum breakout volume is 2.3 million). A buy up to 59.70. Stop: 55 (just under the 50 day MVA at 55.51). Watch for potential resistance at the 58 range.
POSITION: Stock and/or November $50 calls to buy (CL KJ).
Back on:
ESCM (Esc Medical--$28.65; -0.36; optionable): Wholesale Medical Equipment
http://biz.yahoo.com/p/e/escm.html
STATUS: In a cup with handle base of 11 weeks. The stock is off the handle high of 30.59 on decreasing volume (down to 314,600; avg. 647,272), and tapped the 10 day MVA on the low of 28.50. Showing a doji, ESCM is looking ready for a move back up. Good buy and strong money flow. Relative strength has broken out well ahead of price.
Target: 35-37
BUY POINT: Breakout: 30.72, on minimum breakout volume of 970,000. Stop: 27.50 (just below the 18 day MVA).
POSITION: Stock and/or October $25 calls to buy (QFC JE).
|mkttt|Pivot=30.72 Cup w/handle Tgt vol=970K Tgt $=35 Stop=27.50
New Plays (from the weekend):
Semiconductors: Could be bottoming and we are looking to be ready if it turns this week.
SMTC (Semtech--$36.71; +0.62; optionable): Integrated Circuits
http://biz.yahoo.com/p/s/smtc.html
STATUS: Is in the year-long base, and recently has bounced twice from the 50 day MVA (currently at the 34 range). The stock popped from the support Friday, and Monday continued the move, crossing over both the 18 day and 10 day MVA s on rising volume (1.7 million; avg. 1.1 million). It pulled off the high of 37.36, hitting the buy point of 36.50. We will continue to watch for the run up to the August high of 41.70, our initial target. The pullback from 37.36 is an opportunity to get back in on a move up from here, in a chip sector rebound.
BUY POINT: Aggressive: 36.75 on continued rising volume. Stop: 33.80
POSITION: Stock and/or October or December $35 calls to buy (QTU JG or LG).
LSCC (Lattice--$22.51; -0.01; optionable): Specialized
http://biz.yahoo.com/p/l/lscc.html
STATUS: In a large base but recently in a trading range since earlier June. LSCC moved up from the 200 day MVA support Friday, and held Monday at the level of that day's closing price, with volume dropping back to 2.1 million (avg. 1.5 million). The doji suggests the stock can retest the 200 day before making a move over the short term and 50 day MVAs (the 10 day MVA was tapped on the high of 22.83, and the 50 day MVA is at 23.37). We are looking for a roll back up to the 25-26 range in a chip sector rally; in a more sustained rally we'd like to see a breakout from the pattern and move to the May high at 29.65. Target on that move: 29-30.
BUY POINT: Aggressive: 23, on continued strong volume. Watch for resistance at the 50 day MVA (23.41). Stop: 20.80
POSITION: Stock and/or December $20 calls to buy (LQT LD).
TRID (Trident Microsystems--$6.04; -0.06; no options): Specialized
http://biz.yahoo.com/p/t/trid.html
STATUS: In a cup with handle base of 7.5 months that is part of the stock's larger, year-long base. The pullback in the handle has been steeper than what is normally preferred, but the stock may have found a good place to turn around after testing the 50 day MVA (5.96) for the last three days. It tried again to hit the 18 day MVA Monday, but lower volume (81,900; avg. 104,409) pulled it back down to the 50 day MVA (5.96). We are looking for a strong move back up in a chip rally. Target on a breakout from the base: 10
BUY POINT: Aggressive: 6.20, on rising volume. Stop: 5.40. Breakout: 7.88, on minimum breakout volume of 185,000. Stop: 5.50
POSITION: Stock only.
Two previously covered stocks:
RFMD (Rf Micro--$22.31; +1.22; optionable): Integrated Circuits
http://biz.yahoo.com/p/r/rfmd.html
STATUS: After the bell the company revised guidance upward, and the stock was trading higher to 22.91 (just above the 200 day MVA, 22.70, and below the 10 day MVA at 23.62). In regular trading RFMD gapped higher, opening at 24.94 at the 50 day MVA (25.07) but then selling back down to the 200 day on stronger volume (selling) of 15.8 million (avg. 8.2 million). Thus, after hours it bounced. That does not mean the stock will do that tomorrow, but we will look for a that move if RFMD does not break the 200 day MVA on this strong volume. Initial target: 32.50 (August high).
BUY POINT: Aggressive: Over 23 (intraday high it 3 times in the base) on continued rising volume. Stop: 18.50
POSITION: Stock and/or November $17.50 calls to buy (RFZ KQ).
SAGI (Sage--$15.35; -0.06; optionable): Integrated Circuits
http://biz.yahoo.com/p/s/sagi.html
STATUS: Formerly in a cup with handle. The stock sold off pretty hard below the 50 day MVA on Wednesday, fell to a low near 14 then bounced, and Friday on strong volume rallied back to the 50 day MVA (15.54). Monday SAGI held just under the resistance, showing a doji on lower volume of 215,500 (avg. 220,318). Looking for more strength and a move over the 50 day MVA (15.53) for a trade up to the August high at 18.87. Good money flow.
BUY POINT: Aggressive: 16, on strong volume (350,000). Stop: 12.75
POSITION: Stock and/or October $15 calls to buy (UEJ JC).
Continued play (bunched with the chip stocks this week):
SMTL (Semitool--$14.18; +0.43; optionable): Chip Equipment
http://biz.yahoo.com/p/s/smtl.html
STATUS: In a 7-month base that is inside of much larger base of 18 months, and has formed an ascending wedge in the upper right side of the smaller base (prior high 15).
SMTL moved up Monday from support (18 day MVA, 13.53) on continued strong but decreased volume of 62,300 (avg. 51,409). We will see if volume can kick back up and break the stock out starting with this nice bounce up in the ascending wedge pattern. Target: 17-18.
BUY POINT: 14.63, on minimum breakout volume of 73,000. Stop: 12.75. A buy on a breakout up to 15.36.
POSITION: Stock only.
End Part 1 of 2
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