|
|
us stock market, trade stock
* * * *
9/25/01 Technical Traders Report Update
* * *
Technical Traders Report Subscribers:
MARKET ALERT SERVICE
Subscribers to the current reports can sign up at the following link:
http://www.investmenthouse.com/alertdly.htm
THE PLAYS:
Continuing Plays:
PCS (Sprint--$26.00; +0.40; optionable): Telecom
http://biz.yahoo.com/p/p/pcs.html
STATUS: Moved higher and volume was stronger (at 13.7 million; avg. 8 million). The stock ran up to a high of 26.80 but pulled back; however, continued rising volume can take it back up. We are looking for a breakout over upper resistance in this ascending wedge-type base at the 27 range. Initial target: 34
BUY POINT: 27.13, on minimum breakout volume of 11 million. Stop: 25
POSITION: Stock and/or November $22.50 calls to buy (PCS KT).
SBC (Sbc Communications--$47.15; +2.09; optionable): Telecom
http://biz.yahoo.com/p/s/sbc.html
STATUS: Lunged off support on strong volume, taking out our buy point of 46.38 (volume was up to 13.6 million; avg. 5.6 million). A stock upgrade helped break SBC out of the cup with handle, and the stock remains a buy on the move up to 48.70. A fine move!
BUY POINT: A buy up to 48.70.
POSITION: Stock and/or January $40 calls to buy (SBC AH).
Flipping:
EBAY ($46.89; +0.11; optionable): Software
http://biz.yahoo.com/p/e/ebay.html
STATUS: Moved up to tap near the 10 day MVA on the intraday high of 48.26, then closed back down with a doji after the last 2 days' run from the September low (41.50). Volume decreased on the move up (down Tuesday to 7.57 million; avg. 6 million) since Friday, so we are looking for a move back down to 41.50 if the market turns back down here. The stock may try to rally again to the 10 day MVA (48.80) before falling.
BUY POINT: From the 10 day MVA: 48.35, in a market pullback. Stop: 50.50, above the 200 day MVA.
POSITION: October $55 puts to buy (QXB VK).
New or Revisited:
New:
GISX (Global Imaging Systems--$15.40; +2.33; no options): Specialty Retail
http://biz.yahoo.com/p/g/gisx.html
STATUS: Made a strong move up the last 2 days, Tuesday breaking resistance at the short term and 50 day MVAs. The stock is in a large base (starting in early 1999) but this year has been in a strong uptrend from a January low of 2.66, with volume really surging since late July. After hitting a high of 19.65 in August, GISX corrected back almost to the 200 day MVA (currently at 8.27), then began this most recent 2-day move after consolidating at the 12 level. We are looking for a trade up to the August high (19.65) as an initial target. The prior high in the entire base is 26.25. Shows good buying and relative strength that has broken out ahead of price.
BUY POINT: Aggressive: 15.50 on continued strong volume (274,500; avg. 164,227). The stock may hit resistance at the 17 range for a pullback; that would offer other entry points after a pullback.
POSITION: Stock.
New Puts:
SYK (Stryker--$49.36; +0.84; optionable): Health Services
http://biz.yahoo.com/p/s/syk.html
STATUS: From a September low of 44.78, SYK ran up for three days, the first day on strong, high volume, but Monday and Tuesday's moves were on decreasing volume (to 411,700 Tuesday; avg. 443,318). The stock closed at potential resistance, the 10 day MVA (49.78). If it cannot break that, look for a move back down to the low at 44.78.
BUY POINT: 49, on rising selling volume.
POSITION: October $55 puts to buy (SYK VK).
TKTX (Transkaryotic Therapies--$25.20; +0.70; optionable): Biotechnology
http://biz.yahoo.com/p/t/tktx.html
STATUS: The stock has had high volume the last 2 days but has been unable to move back over the 200 day MVA (25.49); volume was decreased Tuesday but still strong at 500,500 (avg. 413,000). Showing a doji today on a close just below the moving average, we are looking for a move back down if the stock loses hold in market selling. Target: 19-20
BUY POINT: 24, on rising volume in market selling. Stop: 26.60
POSITION: October $30 puts to buy (UFT VF; 0 open interests).
INDEXES: The index moves today were not strong enough to prevent us from looking for some downside. These plays are quick, for taking profits and getting out when support it hit. We may get an initial move up in the morning before a possible turn back down.
SOX (Phili Semi--$402.40; +0.42; optionable):
STATUS: Inched higher and closed with a doji as the markets showed lower volume overall. We are looking for a move back down from here, to 381 or possibly lower to the September low of 363.52, as the markets again pull back after the lower-volume move up the last 2 days. However, we may see a rise in the morning first toward the intraday high at 415.29. The SOX did not make it up to our initial target at 435.
BUY POINT: After a test of 415 fails and the market starts to sell hard. Below that, the next entry point is 401.
POSITION: October $410 puts to buy (SOY VB).
OEX (Standard & Poors--$517.92; +4.89; optionable):
STATUS: Another gain but a small one, as volume dropped back to 1.57 million (avg. 1.15 million). The index showed a loose doji on the day, and while it may trade up to the 10 day MVA at 527.38 in a continued move up early, on a failure to take out that resistance we will look at buying puts on a move down to 500 or the September low of 480.07.
BUY POINT: From the 10 day MVA: 517, in market selling. From here, 513.
POSITION: From 517: October $520 puts to buy (OEB VD).
DJX (1/100 Dj Indu--$86.60; +0.56; optionable):
STATUS: After Monday's nice bounce, the index held for a half-point gain as volume dropped back once again (to 1.57 million; avg. 1.2 million). We were looking for a possible rally to the 90 range, but it looks like the index can now pull back. We will watch for resistance at the intraday high of 86.95 where we can take positions on a failed move. On a move below 86 we will look at buying puts for a fall to the 82 range or the September low of 80.64.
BUY POINT: 86, in market selling. Rising volume is preferable for the move down.
POSITION: October $88 puts to buy (DJX VJ).
SUMMARY:
- Indexes finish positive, but that is about all.
- NYSE volume continues to wane on the move higher.
- Consumer confidence bad, home buying good.
- Team Trades
Up, down, and back up, but not with any strength.
Monday was a solid move up after the worst Dow week ever. Volume was solid, but as noted, not near the levels of the selling the prior week. Not necessarily bad, but there is the danger of a falloff or a lack of upside momentum. Still, we are awaiting some follow through of Monday's big move, and a slower session after a strong upside move is not out of character. It is just that everyone is a bit gunshy when there is any sign of weakness or transition back to the down side.
Is there some indication of transition? The market started flat and then rallied; we like softer opens followed by rallies. That turned to selling, however, and it took a late afternoon run to eke out gains. That is okay. But, all three indexes closed the session with doji's after a reversal of sorts occurred on Friday (at least they closed off of their lows that session) and a solid rally Monday. volume on the NYSE was sharply lower once again to boot. Indeed, even though Nasdaq volume moved back higher, a doji on the candlestick chart after a move up that occurs on higher volume does not give us a lot of confidence.
We were looking for a rally on into Wednesday. We may get it. The rally late in the session may spill over with a higher open tomorrow. After that, we may see the indexes turn back down for some filling in after Monday's move. That often happens when we are waiting for a follow through session. If it is on lighter volume and does NOT undercut the Friday lows (preferably the Monday lows), that could be just fine. What has happened time and again since this bear market has started, however, is a familiar pattern: selling, a big rally attempt, then the selling resumes and the pre-rally low is undercut. The sentiment indicators have hit extreme levels they have not hit in years, so there is more substance to this attempt. Now all we have to do is look for that follow through. As we said before, patience is a big ally right now.
We would prefer to see the market continue higher at this point. We are sitting in some call options on the SOX, OEX, and some stocks, and we are okay on some and underwater a bit on others. We have to be realistic, however, and with the lower volume move higher and the doji's we saw today, we need to be ready to act. If we get a rally higher tomorrow out of the gates that starts to fade, that may be our last chance until we see how far this pullback is going to be before we get another shot at unloading them. Who knows where that will be.
As for the downside action, we are in the same boat. A big downtrend the prior two weeks and just a mild upside move comparatively. On top of that, extreme investor pessimism. If the market does pullback here, is it a re-test or renewed selling? We can play the downside on this move, but we have to be nimble about it simply because the market raised some new issues with the vigor of the selling, and we have to see how they are going to be resolved: follow through session or more selling.
THE ECONOMY
Consumer confidence takes a hit.
Expectedly, consumer confidence dropped sharply this month to 97.6 after a nice 114 reading in August. This is the biggest drop since October 1990 and the lowest reading since January 1996. Current and future expectations both fell pretty hard and the vacation index was the leader to the downside. Consumers were worried about the increase to 4.9% in the unemployment rate (remember how we said two years ago consumers would not crack until they were worried over their jobs? The Fed cited that as a reason for rate hikes, but as predicted, no effect on the consumer until the pink slip) as the major worry. The market did not tank on the news; many traders we talked to were actually expecting a worse number, and that suggests the reason for the so-so market response.
Existing home sales rise, but the report covered August.
Home sales shot up 5.8% in August to 5.5 million annual units, much higher than expected (5.2 million units expected). This surprising strength was welcomed, but it was also taken in light of the September numbers that will be lower. As noted in the immediate aftermath of the attack, however, while new applications, mortgages and refinances were lower, they did not fall off a cliff. It will be down this month, but no one is sure if it will be a tanking. There have been stories of buyers just walking away, but there as many stories of deals continuing to go through.
Economic Research Institute's weekly numbers dive.
This is similar to the Leading Economic Indicators, but it is considered more of a leading indicator. This week it fell below the April lows, and that pretty much bakes a recession in the cake and puts a recovery out past this winter. The institute noted that the precursors to recovery are already in place: recognition of a recession, policy makers taking action (monetary and fiscal), and businesses and consumers pulling back. The latter is important as we have discussed before because that leads to pent up demand that acts to spring the economy back stronger and faster than it otherwise would. Still, these numbers indicate the recovery is pushed back another quarter. The also continue to show, however, that there is no worry of inflation (all-time lows on the indicators), giving the federal government plenty of room to inject needed fiscal stimulus in the system.
Oil and gas stocks rise sharply.
Oil and gasoline weekly supplies were announced after hours, and they were way up. Gasoline stocks were expected to rise 1.4 million; they were up 8.7 million barrels. Huge inventories equal lower prices, equal no pricing pressure.
End Part1 of 2
|
us stock market
trade stock
|
