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us stock market, trend trading stock
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11/14/01 Stock Split Report Market Summary
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Stock Split Report Subscribers:
MARKET ALERT SERVICE
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PLAYS TO LOOK AT:
BONUS PLAYS:
SOX (Phili Semi--$538.51; -2.78; optionable):
STATUS: The index moved the last 2 of 3 days from its 10 day MVA (511.36 currently) but with a doji and pull off the high of 553.60 (a tap near resistance from July and August), looks ready to head back down barring any war related news. In the context of a market pullback, we are looking for a move down to 500 or the 50 day MVA, 484.68 for the potential put play. Nothing grand; we are not banking on a tanking.
BUY POINT: 537 in a market pullback.
POSITION: December $540 puts to buy (SJX XH). Deltas unavailable.
OEX (Standard & Poors--$589.16; +2.12; optionable):
STATUS: Showing a doji after Tuesday's pop up from the 575 level. Volume was higher at 1.4 million (avg. 1.36 million) and with the small move and pull off the high the index appears to be churning, so we are looking for a move back down to 578 for an initial target. Below that, the 50 day MVA at 566.72.
BUY POINT: 586 on continued rising volume (preferably).
POSITION: December $590 puts to buy (OEB XR).
GMST (Gemstar-TV Guide--$24.10; +1.69; optionable): Consumer Durables
http://biz.yahoo.com/p/g/gmst.html
STATUS: The stock has been moving up from the September low around 16, posting higher lows as it makes a gradual climb up to the 50 day MVA (23.50) above which it broke today on strong volume. The intraday high of 24.88 tapped at resistance at that level, so we will look for a move over that level for a breakout. We like the improvement in the stock, which is showing uptrending money flow and improved buying, and buying volume is looking very good. Target: Initially, 30. The 200 day MVA is at 35.
BUY POINT: Aggressive: Over 24.88 on continued strong volume (7.2 million; 4.4 million). Stop: 23.14 (7%)
POSITION: Stock and/or December $20 calls to buy (QLF LD).
PRE-ANNOUNCEMENTS: SONC tested the 50 day MVA again on low volume, so could be just setting up another fall.
MI ($61.02; +0.45): We are researching a forecast date. Trying to move up from the breakout test. MI tested up to a new high today (61.49), but despite volume surging to 312,700 (average 224,200), MI fell back to close at the recent resistance of 61. The candlestick pattern indicates a possible pullback, and falling back to support at the 10 day MVA (60.16) would be consistent with the formation of a small ascending wedge pattern. From here or from the 10 day, the breakout is 61.60 on continued strong volume with stock and/or December $55 calls to buy (MI LK).
PEP ($50.28; +0.84): Forecast to announce a split on 11-15-01 in conjunction with a board meeting. Trying to breakout. PEP initially tested back down to the 10 day MVA (49.18) but reversed itself there and pushed up over the former high (50) to close. Volume increased to 4.92 million (average 5.4 million), but it was still lighter than what we wanted to see. With the forecast tomorrow, we will look for an announcement to give it a boost, and on increased strength on a move up over today's high of 50.43, we will look at additional positions with stock and/or January $45 calls to buy (PEP AI). If we get an initial test back on low volume that holds near 50, we can catch a strong move back over 50 on above average volume, and an announcement could give it more of a boost.
TRDO ($24.95; -1.79): Forecast to announce a split in the beginning of December in conjunction with a board meeting. Could not hold support. After gapping up to open at the 50 day MVA (27.05), the selling took over and TRDO fell back hard on the strongest volume we have seen since the reopen (up to 778,900, average 317,700). We may see a slight relief bounce from here, but we are looking for it to fail. With continued strong selling through today's low of 24.60, we will look at put positions with December $30 puts to buy (UNC XF). Targeting recent lows at 20 initially.
EASI ($43.01; -2.49): Forecast to announce a split on 12-10-01 in conjunction with earnings. The selling continued today, and now we are looking at a put play. EASI sold through the 50 day MVA (46.14) Tuesday, and continued down today to close in the range of the October lows on increased, above average volume of 501,400 (average 456,900). We may see a weak relief bounce here to test the 50 day, but from here or after a test toward the 50 stalls, we want to see stronger selling through today's low of 42.05 to trigger a put play with December $50 puts to buy (UFE XJ).
FLO ($42.00; +0.60): Forecast to announce a split on 11-16-01 in conjunction with a board meeting. The company will not confirm this date, but based upon our research this is the date for the next board meeting. After catching support on the breakout test at the 10 day MVA (41.46), FLO pushed back up from that level today, but on weak volume (61,800; average 70,700). Still could get a solid move, and on increased volume we will look for strength going into the forecast, with the recent high at 43.44. On a move over 42.25 on above average volume, stock and/or January $40 calls to buy (FLO AH).
PRE-SPLITS: MIKE made yet another strong move going into the split, and FULL continued up as well.
ITG ($65.15; +0.32): Announced a 3:2 stock split yesterday, effective December 10! The pattern over support is holding. Volume increased just slightly today to 213,800 (average 236,300) as ITG moved in a shallow trading range and closed with a loose doji over the 10 day MVA (64.36). Still looks poised to move, although it could test support again first, which would be fine. We are just looking for volume of 310,000 to carry a move to a buy point of 65.92 with stock and/or January $60 calls to buy (ITG AO).
PSC ($29.27; -0.20): Splits 5:4 effective 12-3-01. Still holding a brief lateral consolidation over support. Volume fell sharply to 71,500 (average 81,900) as PSC tested down to the 10 day MVA (28.95) before pulling up to close with a small loss on the day. We are looking for support to continue to hold while we look a volume surge to sustain a move over the pattern high. From here the buy point is 29.75 on increased, above average volume, stock only.
BRO ($58.43; +0.35): Splits 2:1 effective 11-21-01. Continuing to consolidate at the lows of the rolling pattern, and there was little change today. BRO traded in shallow range and closed just over the 10 day MVA (58.35) with a small gain on the day as volume fell a bit to 92,400 (average 141,600). This lateral consolidation along the short-term MVA's (18 day at 57.90) is looking good, and we are just waiting for BRO to turn back up. The aggressive can play a move over 58.75 (10 day MVA at 58.33) on increased volume, and the breakout of range play is 60.72 on volume of 180,000. Stock only.
CONTINUING CANDIDATES: JEC continues to rise on weak volume, and CBH continues to consolidate.
ACS ($93.57; +2.28): Nice move today! Volume picked up considerably to 696,400 (average 727,100), as ACS bounced up from the 10 day MVA (91.17, 18 day at 90.70) and took out our buy point as it made a strong push up to the recent highs before falling back a bit to close just under the upper channel line dating back to August 2000. From here we are looking for increased strength to carry a move over resistance and break to a new high. On a move over 94.14 on increased, above average volume, we will look at additional positions with stock and/or January $85 calls to buy (ACS AQ).
APPB ($32.95; +0.55): Setting up for a breakout. APPB followed Tuesday's weaker bounce up from the 10 day MVA (31.77) with today's much stronger move that pushed the stock up to the recent highs (33) at the close. Great momentum, and we want to see it continue. The breakout move is 33.13 on continued strong volume (up to 679,200 today, average 411,300), but because it is close we need to be careful of a gap over that level that reverses. In that scenario we might see if it tests back to 30 and holds, and we can look for a strong move back up from there for positions. Stock and/or December $25 (AQB LE; 0 open interests) or February $25 calls to buy (AQB BE; low open interests thus far).
SUI ($37.93; -0.01): Continuing to hold over support. SUI traded in a very shallow range today before closing with a tight doji over the 10 day MVA (37.83) as volume held steady and light at 39,800 (average 47,200). This consolidation (a handle to a small 'flying w') is shaping up into a pennant, and with that pattern we could see some stronger "shakeout selling" that could test the 18 day (37.68). From either here or after holding the 18 day, we are looking at a buy point of 38.37 on above average volume, with stock.
POST-SPLITS: RMCI looks like it is in for more of a pullback and possible breakout test. ATK made the weak bounce and could be ready for the put.
PDLI ($36.05; -0.79): Split 2:1 effective October 12. Tested back today, but still looking good. PDLI followed Tuesday's nice bounce with a weaker test of the 10 day MVA (34.93) as volume fell to 2.58 million (average 2.21 million). This consolidation (handle to a cup) is shaping into something of an ascending wedge and today's lower volume test is consistent with that pattern. Still riding positions as long as support holds, and after another possible test of the 10 day, watching for a move up off that level with a buy point at 35 on volume of 3.3 million, and we are looking at stock and/or December or February $30 calls to buy (PQI KF or PQI BF).
SUMMARY:
- Futures improve on news that building potentially holding Al Qaeda leaders and perhaps Ben Laden has been rubblized.
- Another move up, but showing some cracks already.
- HWP surprises to the upside, AMAT earnings pressure techs after hours, and DELL reports Thursday.
- Retail sales at record pace, led by auto sales.
- Team Trades
The end could be very near for our enemies.
We had prepared tonight's summary looking at the indexes starting again to slow just below support. That is still the big picture, but a report that key Al Qaeda leaders, possibly including Ben Laden, may have been killed in a bombing run on a building the U.S. had learned may hold those people may change the picture in a big way. We will have to see how the news plays overseas tonight and issue a note in the morning, but if it has some truth to it, the market could rally just as it appears to be preparing for the next pullback to support. If the information is not borne out, we could get a pop higher and then the selling down to support. If it appears it could be true, the market could explode over the next resistance.
Decent gains on solid volume, but may already be preparing for the next pullback.
The indexes were all revved up again before the open and once again gapped higher. Same action as Tuesday, even down to the test of the lows. Buyers came back in and drove prices back up on solid volume. Another day of good gains on above average volume. Buyers were in the majority.
Still, the indexes were running on less octane today. Tuesday we saw many stocks unable to recapture their opening price even though they still logged good days. Today we saw many recent leaders, e.g., NVDA and SMTC, actually finish negative. BRCM again showed a doji, its third in a row. You have not wanted to bet against BRCM, but it sure seems to be running out of steam as it hits resistance at 47 to 49.
That was the picture: overall up, but not a lot of momentum. We were looking at about 2 more days of rallying this week. Today does not change that projection necessarily. Indeed, we were looking for a move higher again tomorrow up to actual resistance at 1950 to 2000 on the Nasdaq before a pullback on Friday. AMAT's earnings after hours may shorten the timeframe, however. It missed its earnings numbers and was selling hard after hours. This market has not turned on the reports of one stock, but when the rally is losing momentum, a miss from a big name can speed up the downturn.
Still two steps forward, one back in a continued building process.
This market, however, does not give up easily. It may start softer and then try resistance one more time. If that move up to 1950 to 2000 on the Nasdaq fails, we are looking for the pullback on this move: two steps forward, one back; repeat. That is how this has been working. Is that bad? Look at the charts off the September bottom. Does not look bad.
This is a building process. The indexes never get too far ahead of themselves before coming back and setting another consolidation level for the next move higher. When stocks or indexes run too far too fast up or down, we know they tend to come back harder. It is a version of the what goes up must come down theory, and the farther up you go in a short time, the harder the fall. By logging steady gains over 2 to 4 sessions, never racing ahead 100 points on the Nasdaq as in days of yore, they can slide back down gently, form another floor, and then move back up off of that floor.
That makes us hard pressed to bet against the market. Sure are going to look at grabbing some money on the downturn back to support, but the market is not telling us to load up for a big downside move. As we have said several times over the past couple of weeks, it has not been a perfect scenario what with some distribution and churning days sprinkled over the past three weeks, but it has not given up. It is thus far not broadcasting a test down to the September low as the indexes build gains in a stair step fashion. We continue to build positions when we get the buy signals with the idea that the market has put in a bottom, broken some major resistance, and continues in an accumulative trend (in other words, institutions are still net buyers of stocks as opposed to net sellers).
Earnings are not over just yet.
HWP surprised most everyone with stronger than expected revenues. After the close AMAT missed its earnings number and its revenue number. Of course, earnings down a penny to 3 cents versus 77 cents a year ago is splitting some already thin hairs. Nonetheless, for a semiconductor sector that has been on a rampage and is right at resistance, this news is some cold water and may prompt a needed pullback and consolidation for the next run at resistance. Then there is Dell announcing after the close Thursday. HWP's earnings are raising a ray of hope here. We have heard that chip shortages are delaying delivery on some computers. Dell may be gaining market share, but we are not sure how strong its margins will be.
End Part 1 of 2
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