us stock market, stock prices

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1/03/01 Technical Traders Update Report
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Technical Traders Report Subscribers:

THE PLAYS:

Good movers: TUNE, BRCD, ALOY. KLAC broke over the short term down trendline, moving over the peak in the left shoulder of the head and shoulders pattern. It is approaching the down trendline (connects June, August and December highs) with volume stronger but still below average. TXN (put play) was back over its 50 day MVA on very strong volume; 200 day is about a point away to the upside.

Continued Plays:

KANAD (Kana Communications--$19.30; +0.59; no options): Internet Software
http://biz.yahoo.com/p/k/kanad.html
STATUS: Strong volume Thursday in the ascending wedge pattern; KANAD opened at the up trendline that supports the pattern and headed higher. Volume was sharply up and nicely above average (480,400; avg. 3.4 million). Looking for the breakout with KANAD continuing to show excellent money flow and buying. Target: 27
BUY POINT: Aggressive: Over 20 on 3.4 million or higher volume. Stop: 18.60 (7%). Breakout: 22.26 on volume of 4.5 million or higher. Stop: 20.70 (7%)
POSITION: Stock.

http://www.investmenthouse.com/ct/kanad.html

DSTM (Datastream--$6.10; +0.10; optionable): Technical Systems Software
http://biz.yahoo.com/p/d/dstm.html
STATUS: Continuing the pullback on lower volume (95,500; avg. 82,000), DSTM tested 2 support levels Thursday, the lower 10 day MVA (5.88 level) and the 200 day MVA (5.90). It held with a doji after pulling off an intraday high at 6.35, but we like the hold above support and continue to look for a breakout over the December high at 6.61. DSTM gapped up on a strong move in late December, following up with a break over the 200 day MVA. It has been testing that move with this 6-day pullback. Still showing strong money flow and buying. Target: 8.
BUY POINT: Aggressive: Over 6.20 on rising volume. Breakout: 6.65 on continued strong volume. Stop: 6.18 (7%)
POSITION: Stock and/or February $5 calls to buy (DQK BA).

http://www.investmenthouse.com/ct/dstm.html

AWRE (Aware--$8.42; +0.28; optionable): Business Software
http://biz.yahoo.com/p/a/awre.html
STATUS: AWRE moved up after opening above 8 (support tested on Wednesday's low), boosted by strong volume in the handle to its 7-month cup base (304,000; avg. 154,409). We are looking for the higher volume to push the stock into its breakout. Money flow and buying remain excellent. Target: 11. Handle high is 8.63.
BUY POINT: Breakout: 8.76 on volume of 250,000 or higher. Stop: 8.15 (7%)
POSITION: Stock and/or April $7.50 calls to buy (WUQ DU).

http://www.investmenthouse.com/ct/awre.html

BLDP (Ballard Power--$31.00; +1.16; optionable): Manufacturing
http://biz.yahoo.com/p/b/bldp.html
STATUS: A move up in the ascending wedge (which is deep in the 22-month base) as volume rose to 716,400 (avg. 931,000), up nicely from lower numbers on Wednesday. BLDP hit our aggressive buy point of 30.25 on what could be the breakout move, so look for higher volume to continue pushing price higher. Target: 200 day MVA at 36. Very strong money flow.
BUY POINT: Breakout: 32.76. Stop: 30.47 (7%)
POSITION: Stock and/or February $25 calls to buy (DUJ BE).

http://www.investmenthouse.com/ct/bldp.html

COHU (Cohu Inc--$21.28; +1.29; optionable): Semiconductor
http://biz.yahoo.com/p/c/cohu.html
STATUS: Fine move up in the handle, the stock hitting support at the 200 day MVA and using strong volume for the vault (177,500; avg. 64,000). The company announced management changes today, though the news was out after hours and the stock surged up at the opening bell and was generally up all day long. We will see if this is enough impetus for a breakout from the cup with handle. Big money flow and buying, and relative strength breaking out. Target: 26
BUY POINT: Aggressive buy point of 20.25 was hit on the move. Breakout: 22.06 on continued rising volume. Stop: 20.52 (7%).
POSITION: Stock and/or February $17.50 calls to buy (QCH BW).

http://www.investmenthouse.com/ct/cohu.html

Back on:

PKI (Perkinelmer--$35.83; +0.84; optionable): Technical Services
http://biz.yahoo.com/p/p/pki.html
STATUS: In a 14-month base with highs near 60 but since early June is in a 7-month saucer base that was completed on the last run up (a breakout from a smaller cup/saucer with handle inside the current pattern). Peaking at 36.29 and dropping back to test the short term MVAs Wednesday and Thursday, PKI popped higher from the 10 day today with volume on the move (to 864,900; avg. 784,000). This was a short handle pullback, but we are looking for a move over the December high for a breakout. Money flow is strong, and relative strength is out ahead of price. Target: 44
BUY POINT: Breakout: 36.42 on volume of 1.2 million or higher. Stop: 33.87 (7%)
POSITION: Stock and/or March $30 calls to buy (PKI CF).

http://www.investmenthouse.com/ct/pki.html

Good action from the semiconductors today:

KLIC (Kulicke & Soffa--$20.04; +2.10; optionable): Semiconductor
http://biz.yahoo.com/p/k/klic.html
STATUS: KLIC broke out of an ascending wedge today with volume flying to 3.3 million (avg. 1.2 million). The stock is at our limit for buying on a breakout, but it was a strong move and if price pulls back slightly in the morning, we may get a better entry point on a continuing breakout. A strong move, in which KLIC moved over important resistance that dates back to last fall as it makes its way up the right side of its big, 22-month base. Showing strong money flow, and relative strength breaking out. Initial target: 25
BUY POINT: After a slight pullback to test the 19.90 range, on a move back over 20 on continued strong volume.
POSITION: Stock and/or April $17.50 calls to buy (KQS DW).

http://www.investmenthouse.com/ct/klic.html

BRKS (Brooks Automation--$45.50; +3.50; optionable): Semiconductor
http://biz.yahoo.com/p/b/brks.html
STATUS: BRKS broke out of a pennant pattern, slicing through resistance at the 200 day MVA (42.92) and the pivot point at 44.33. The pattern formed just below the mid-point in the right side of BRKS' 8-month cup base. Volume on the breakout was strong at 1 million (avg. 663,000). Remains a buy on the move, and has good money flow and relative strength breaking out. The stock closed right at its high, so looks ready for more. Target: 53
BUY POINT: Over 45.50 on continued strong volume. Stop: 42.32 (7%). A buy on the move up to 46.55.
POSITION: Stock and/or February or April $40 calls to buy (BQE BH or DH). February options have no open interests.

http://www.investmenthouse.com/ct/brks.html

Put:

IVGN (Invitrogen--$59.06; -2.79; optionable): Biotechnology
http://biz.yahoo.com/p/i/ivgn.html
STATUS: Not a good day for biotechs, which have shown poorer performance with recent news from Amgen and Imclone. IVGN tumbled Thursday, breaking out of a head and shoulders pattern (neckline at 60) with volume climbing to 1.8 million (avg. 1.1 million). The stock fought with its 50 day MVA (currently at 63.84) the month of December (peak at the shoulders), and has lost the battle for now. Initial target: 55, September low.
BUY POINT: 59 on continued rising volume.
POSITION: February $70 or $65 puts to buy (IUV NN or NL).

http://www.investmenthouse.com/ct/ivgn.html

SUMMARY:
- Techs lead higher with authority.
- Dow breaks 200 day MVA on volume while Nasdaq beats March 2000 down trendline.
- Not just tech news helps rally.
- Economic numbers mixed
- Team Trades

2002 starts well with strong rally.

The tech news has shifted from negative to positive with respect to forecasts. For the past several months and with increasing intensity into October, the forecasts for the future were bad and getting worse. They reached a pessimism peak at that time, and now that the market has started forecasting better times and the economic reports continue to show improvement, the tune has changed. Now positive comments and 'buy' recommendations are being dangled out there. Time to get concerned?

Sentiment is important, and there is no question that analyst forecasts and ratings are part of the sentiment mix. It is most important, however, at the extremes. The few buy recommendations issued of late hardly represent an extreme. Though dwindling, there are still those out there that believe the market is lying to us about the recovery. That could be true, but we do not think we are smarter than the market. The big money moves the market, and the big money was speaking today once again.

Techs continue to lead the market.

It took some good tech news to get shake the market out of the lateral move it has been making. EMC was upgraded to a buy; JPM said to buy INTC now before earnings are announced because there was a surge in PC maker demand during December and the server business looks good going into the first quarter. Then there was word yet again that semiconductor prices were up overnight in Asia; that is becoming a common occurrence. Prices do not rise unless the demand is there; OPEC has taught us that lesson with its failed attempts to raise prices in a global recession.

That was enough to do the trick. Techs exploded higher with a 3.3% move. The Dow was a bit reluctant, but it too joined in later. The big caps also rallied, though both they and the Dow brought up the rear by a ways. A very important stock, Intel, broke resistance on very strong volume. It was a very good consolidation above the summertime tops, blasting off with authority. More and more tech stocks, though many still way off of their former highs, are completing interim bases and moving ahead.

Dow moves over 200 day MVA on solid volume.

The Dow won out over the 200 day MVA, ready to breakout of the ascending wedge it has formed over the past month, a bullish pattern that can lead to strong upward moves. Volume was back above average for the first time in seven sessions. Not huge volume, but the first indication it is going to try and head north to take on the summertime consolidation levels at 10,200 to 10,500.

The Nasdaq did a bit of its own work on resistance, bolting past 2000 and just clearing the closing price down trendline from March 2000. After clearing the 200 day MVA four weeks ago, this was a very important second step. It has not broken free and clear of the trendline yet or cleared the December high, however, so it still has work to do.

Close eye is on the S&P; it rallied as well, but the big caps were the weakest of the group, moving up off of 1150 but still below the 200 day MVA. This time things are a bit different, as volume is up and the indexes have had a chance to regroup, consolidate, and take another stab at this key resistance point.

Some of the action was short covering as the Dow recaptured the 200 day MVA and the good upgrades and other news moved the indexes higher. That move was assisted by some institutional buying that was also occurring on the news. Shorts were surprised by the surge in buying, getting somewhat caught with their shorts down. Hey, while we still believed the reasons for the rally to continue were still in place, we also saw signs of some problems arising. Today does not wipe all of those away, but it helped turn the tide to positive short term.

The Economy: More than tech news helps the rally.

PIR (Pier 1) again upped its December sales figures, raising it to a 14% gain. It also raised its guidance for the quarter. The stock is showing that not all retailers were faced the 'worst Christmas in 10 years.' After hours Starbucks (SBUX) said its December sales were up 22% year over year. Seems coffee drinkers felt good enough about their situation this holiday season to enjoy a $4+ cup of brew.

Auto sales surprised big to the upside. Most had expected sales to come back down to earth after the big sales earlier on the 0% financing. Despite down expectations, Chrysler jumped in with a 6% gain, GM with 7%, and Ford with 2%. Sure they are selling at lower prices (the financing is a big part of profits), but as we have said before, it shows a bigger picture than just what auto profits would be. Consumers are ready to buy value; look at the big business the discounters did over the holidays at the expense of the other forms of retail. They are buying 0% cars. Buying cars means falling inventories and the need for more cars. We noted two weeks ago how auto plants were cranking up to produce more inventory to sell. The need for more cars means those plants are running and that means workers are working. That is very good for the economy even if it is not the best news for auto profits.

Jobless claims were the disappointment, rising 36K to 447K after the prior week was revised from 392K to 411K. Countering that was the decline in the 4-week average to 409K from 419K prior. That smoothes out the trend a bit. Then, more downer news as continuing claims rose, reversing its recent trend, up 42K for a total of 3.715 million still looking for work. That is the real pain in the economy and what hurts the demand side. Those people need jobs! Job losses as reported by Challenger fell 11% for December; that helps, but near term we will continue to see employment lag economic recovery. It always does lag.

Construction spending was a bright spot of sorts, up 0.8% versus expectations of a flat showing. The previous month, however, was revised down to +0.8% from a +1.9% reading. Thus, over the 2-month period construction was more or less flat.

Thus the economic side showed some negatives, but overall it continues to improve. Weekly jobless claims still lag the economic moves a bit, and one week bump higher does not make a reversal of the steady improvement seen week in and week out of late.

End Part 1 of 2

us stock market
stock prices