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yahoo stock, us stock market
Begin Part 2 of 2
Dow/NYSE
The Dow took the hardest hit, taking the torch from the Nasdaq from Tuesday as the Dow plays catch up on the selling side.
Stats: -382.92 (-4.4%) to close at 8376.21.
NYSE Volume: 1.942 billion shares (-9.7%). NYSE volume was lower on today's new low in the Dow, a potential sign that the selling is letting up, but not a lock. Note how NYSE volume still remains very high vis a vis the Nasdaq. Again, this is a sign that the speculation is almost wrung out. Down volume was a whopping 1.642 billion shares versus 289 million to the upside. The sellers were really in control.
A/D and Hi/Lo: Decliners clobbered advancers 4.8 to 1 (3.25 to 1 Wednesday and 4.4 to 1 Monday). Extreme once again. New highs were 21 (-2) as new lows rose to 591 (+47). We need to see those new lows start reversing to give us the next signal that the selling on the NYSE is finally nearing an end.
The Chart: http://www.investmenthouse.com/cd/$indu.html
8500 was unable to hold today as the Dow tried to make a stand in that area but gave it up in the last half hour. Unlike Wednesday, the index closed on its low and many were in absolute despair at the action. We did not like it, but it is one of those necessary evils we have to endure as the market cleanses itself for the next move higher. It is not water torture, at least not drip by drip; it is more like getting deluged with gallons at a time, again and again. With 8500 unable to hold, we really think the Dow is going to find support at some point above 7500. A thousand point range for sure, but the Dow started its selling late.
S&P 500: The S&P ever so slightly undercut Wednesday's low (984.62) with an intraday low at 984.49 and a close at 984.54. As with the Nasdaq, however, we like that it did close right at Wednesday's low on lower volume. It is not a certain support level by any stretch as 960 and 925 market the lows in the 1998 double bottom, but this type of action is how it starts to find the point at which to rally.
Stats: -31.56 points (-3.1%) to close at 984.54.
Volume: NYSE volume tapered off to 1.942 billion shares (-9.7%).
The Chart: http://www.investmenthouse.com/cd/$spx.html
TOMORROW
Friday and a triple witch option expiration day. That means there will be more volatility, particularly with the heightened volatility this week in any respect. When there are international events ongoing, investors tend to be uncomfortable with short term positions carried over a weekend. To be perfectly honest, about all we can say about tomorrow is that we think most of the positioning ahead of the expiration has already occurred (meaning the day may not be as volatile as one would normally anticipate) and that any rally may run into some pressure toward the afternoon as traders and short term investors square positions for the weekend.
We are going to watch what the President has to say tonight as some are looking for hints of economic stimulus. Our sources tell us not to expect any words on that other than maybe the most cursory 'we will do what it takes, carefully examining all options' type of language. The purpose of the address is more geared toward the upcoming campaign against terrorism and what to expect. In that sense, some may be disappointed tomorrow.
That means we are not looking for a whole lot with respect to tomorrow. While we continue to believe we are getting within days of a final bottom or at least one heck of an upside move, much of the story depends upon some catalyst, e.g., good news on Bin Laden or economic stimulus. When the market is in this position, i.e., unclear, we won't commit too much. The news is so extremely negative, however, things will be getting better: weak before the attack and even weaker after the attack; recession now or in the next two quarters; consumer going down the tubes; market just keeps selling. You can pretty much pick the topic and you will get a bad view of it.
The Dow has undercut its rally attempt of Wednesday, but the Nasdaq and S&P are trying to hold. We will watch how that plays out tomorrow, we will be looking at some intraday plays if they unfold and we will issue alerts on them, and we will be careful. We are now sending forces overseas, and anything can happen over the weekend. That is going to keep many investors on the sidelines or they will be heading that way Friday afternoon. The indicators are lining up for a reversal; now all we need to see is that follow through next week on the Nasdaq or S&P 500. Even with that it may take a while to get a lot of stocks in a good buy point, but stocks such as IMCL, ACS, BLL, BAX, CTEC, THC, and ADVP are ready to rock and roll.
Support and Resistance
Nasdaq: Closed at 1470.93.
Resistance: 1619 and 1638 are the prior lows that have been undercut and are the nearest potential resistance.
Support: 1500 has not totally given up, but it is tenuous. The next levels are the lows of the 1998 bear market, 1419 closing and 1357 intraday.
S&P 500: Closed at 984.54.
Resistance: 1075 to 1081.
Support: Minor support at 1000 was just that as it gave way a bit today. 960 looks better, then 925 (lows in the 1998 double bottom).
Dow: Closed at 8376.21.
Resistance: 9106, then 9500.
Support: 8500 gave way, and 8100 (former price tops) looks the best next support. 8000 is next (the middle of the 1998 double bottom) and then 7500 (the lows of the 1998 double bottom).
Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.
9-17-01
Business Inventories, July (8:30): -0.4% actual versus -0.4% expected and -0.6 prior (revised from -0.4%).
9-18-01
CPI, August (8:30): +0.1% versus +0.2% expected and-0.3% prior.
Core CPI, August (8:30): +0.2% actual versus +0.2% expected and 0.2% prior.
9-19-01
Fed's Beige Book (14:00)
Trade Balance, July (8:30): -29.6B versus -29.4B prior.
9-20-01
Initial Claims, 9/15 (8:30): 387,000 actual versus 420K expected and 431K prior.
Housing Starts, August (8:30): -6.9% (1.533M actual versus 1.633M expected and 1.64M in July (revised from 1.672M).
Building Permits, September (8:30): 1.56M actual versus 1.584M expected and 1.57M prior (revised from 558M).
Philadelphia Fed, September (12:00): -7.3% actual versus -14.6 expected and -23.5 prior.
9-21-01
Treasury Budget, August (14:00): -44.7B versus -10.4B prior.
SUBSCRIBER QUESTIONS
Q: Could you explain the trading curbs that I am now hearing about? Are they triggered electronically; are they for individual stocks or indices as a whole? Thank you.
A: Trading curbs apply to the NYSE. It restricts program trading when there is an abrupt move in the Dow Jones Industrial Average. When the Dow moves 200 points higher or lower than the previous session's closing price, the restrictions kick in. They stay in place until the Dow returns to within 100 points of the prior close or the session itself closes.
What it means to trading. The curbs prevent buying unless on a downtick in the market, and they prevent selling until there is an uptick in the market. In other words, you cannot buy unless the current trade on whatever you want to buy is at a lower price than the prior trade, and to the downside, you cannot sell unless the current trade is at a higher price than the preceding trade.
There can be a time when trading is stopped altogether. Generally this occurs when the Dow drops by 10% (trading halted for an hour); 20% (trading is halted for two hours); and 30% (trading is halted for the day).
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: CTEC broke out! Strong volume resolved the ascending wedge to the upside, for a point gain. IMCL followed through on Wednesday's breakout move; we will look for additional positions on a test of the breakout. CFFN made a move up on stronger volume and looks ready to try to break resistance at the short term MVAs (19.30).
Stocks/Indexes from Wednesday's report:
CTEC: Nice breakout for nearly a point gain. Hit our target of 5% above the buy point then pulled back slightly (14.31; the stock closed at 14.24), so we will look for a pullback for additional entry points.
ACS: Showed a doji after Wednesday's strong move; may pull back to test the 85 range before moving up again; watch short term positions!
VRSN: Moved back below the 18 day and even the 10 day MVA (40.40), testing support at 40 as volume decreased. Can test the 37.75 range ahead of a rally.
DJX: See below.
QQQ: Ditto.
Previous plays:
MCO: Broke support of its 50 day MVA on stronger volume, but bounced back.
BLL: Fell back below the 18 day MVA but bounced back to close above that support; volume was lower.
GIS: Another pullback, another doji, the stock closing higher off an intraday test of the 18 day MVA on the low (45.10). Looks good as volume decreases.
BJCT: Looked like it was trying to hang in there until today when it broke support of the 50 day MVA.
SMTC: Down to and just below the 200 day MVA to close Wednesday, with volume dropping back below average. Want to see it hold this support level.
BAX: A doji just under the 18 day MVA as volume dropped back below average. Looks like it can hold up here or at least above the 50 day MVA at about 51.
SLNK: Pulled back from the new closing high the stock posted on Wednesday. Volume decreased but still strong; the stock is testing the 18 day MVA at 17.75.
DP: Closed on top of the 18 day MVA (40.30) on volume that decreased sharply; look for a hold here.
Best Plays:
1) RMCI: A breakout move and still a buy.
2) Indexes: QQQ, DJX are in good position for a rally.
3) BRCM: Ditto for the chip stock.
New:
RMCI (Right Mgmt Consultants--$24.70; +2.05; no options)
http://biz.yahoo.com/p/r/rmci.html
STATUS: This stock is making a breakout move from an ascending wedge-type pattern that formed at the bottom of its 8-week base. On big volume (319,500; avg. 77,500) the stock broke out (buy point was 24.62) and remains a buy on this move. We are looking at a target at the July high of 29.49. RMCI shows strong money flow, good buying, and relative strength has broken out ahead of price, which is bullish.
BUY POINT: Over 25; remains a buy on this strong move up to 28.85, though the momentum looks strong and aggressive players can look at riding the stock until it looks ready to top out. We will keep you posted on that. Stop: 22.50 (under the 50 day MVA).
POSITION: Stock only.
http://www.investmenthouse.com/cd/rmci.html
PEP (Pepsico--$48.76; -0.83; optionable (PEP): Food & Beverage
http://biz.yahoo.com/p/p/pep.html
STATUS: Is in a 9-month cup base (prior high 49.94 and currently pulling back in a handle. The stock is showing high volume that is pulling back from its recent high-volume breakout move which completed the cup base, and the current volume levels will likely decrease further before the stock heads back up. Look for another test of the 10 day MVA (tapped on the low today of 48.05), then a move back up into a breakout over the handle high of 49.90 (the recent breakout high). Volume was lower at 13.6 million (avg. 5.1 million). PEP shows strong money flow and good buying. Target: 58-60
BUY POINT: Aggressive: On a strong bounce from the 48 range, on rising volume. Breakout: 50.03, on minimum breakout volume of 7.6 million. Stop: 47.50.
POSITION: Stock and/or January $45 calls to buy (PEP AI).
http://www.investmenthouse.com/cd/pep.html
Indexes:
QQQ (Nasdaq 100--$28.97; -1.00; optionable (QAV):
STATUS: Hit a low of 28.80 but held above Wednesday's low of 28.26 and is showing a doji on decreasing volume (still strong at 90.8 million; avg. 63 million). We are looking for a move up, and this action looks like it could offer the move. On a bounce back, our near-term target is at the 10 day MVA (32.37).
BUY POINT: Aggressive: 30, on continued strong volume. Stop: 27.75
POSITION: October $25 (aggressive) calls to buy (QAV JY), or December $23 calls to buy (QAV LW; 0 open interests).
DJX (1/100 Dj Indu--$83.76; -5.79; optionable):
STATUS: Was not finished with the selling as the index opened near yesterday's closing price and fell again; volume was lower at least, dropping back to a still-high 1.94 million (avg. 1.1 million). We are looking for continued selling to potential support at the 81-81.50 range, and on a bounce back will consider the upside play to, initially, 89. Previous target was 94.32, in the range of the 10 day MVA (now at 92.50).
BUY POINT: Aggressive: 82, on a strong bounce from support, on rising volume.
POSITION: November $80 calls to buy (DJX KB). Deltas were unavailable at the time of this writing.
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: Removing BMET, which sold below the 200 day MVA once again, and EBAY, which did the same, capping off its month-long+ downtrend. As the market bottoms we will be putting new stocks in the portfolio that emerge as strong leaders.
New Leaders: ESRX, ACS, NVDA, DGX, FRX
Previous Leaders in which we are still interested: VRSN
NVDA: Down again, but showing a doji on lower volume, and today's low did not reach as low at Wednesday's low of 27.06.
ESRX: Heaved back over the 200 day MVA; volume was lower but the stock rallied well from a low of 44 (closed at 47.83).
FRX: Holding at the 200 day MVA and showing a doji on falling volume. We are looking for he stock to hold this support.
LLL, a former leader, continues to look good as it surged up again on stronger volume. It can run into resistance at the 90 range.
UP & COMERS PORTFOLIOS: THQI, KG
As with the New Leader portfolio, recently some Up & Comers stocks have been hard hit. Removing CHS, as is is not at this point able to recover back over the 200 day MVA. We will put it back on as with other removed stocks when and if they make strong recovery moves.
THQI: Just below 200 day MVA with a doji, on sharply lower, below average volume. We will look for the stock to hold here for a move back over the support level.
KG: Bounced after moving back down to test the 200 day MVA. Volume decreased but was still above average on $1.53 gain. We look for it to hold the 200 day MVA until a rally, if it even drops back that far. The 50 day MVA is at 41.47.
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
BUD: Made a positive move after hitting 40 on the low. Volume was stronger on the bounce back up; the stock still has a way to go to get back into the range of the ascending wedge (44). If we get a bottom soon, it could make a nice recovery.
PXLW: May have bottomed at about 10.
JNJ: Holding above support at 52, showing a doji on the $52.65 closing price with volume dropping back to average levels.
BRCM (Broadcom--$23.85; +0.41; optionable (RCQ): Semiconductor, Int. Circuits
http://biz.yahoo.com/p/b/brcm.html
STATUS: May have bottomed on Wednesday's low of 21.65; the stock was up slightly, and volume was on the rise to 13 million (avg. 9.7 million). If the stock can rally from here, we are looking for a quick upside play to the resistance level at 30 (initial target), level of former support the stock broke Monday in the market sell-off. We are looking for a chip sector rally at some point, and BRCM is in good position for one here, with this doji.
BUY POINT: Aggressive: 23.70, on continued rising volume. Stop: 20.50, just below the April low of 20.88.
POSITION: Stock and/or November $20 calls to buy (RCQ KD).
http://www.investmenthouse.com/cd/brcm.html
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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