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yahoo stock, us stock market
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Many are still calling for a steeper correction, saying it has to be before the market can really cast of its bonds and move higher. Two weeks ago the market was looking weaker, then we had the holiday rally and then last week's strong upside move. Perhaps the indexes need to correct again, but they are not showing signs of doing that right now. They hit a low in April, rallied, hit another lower low in September, and are now rallying after sentiment indicators spiked to all-time highs. For now the market has shown and is showing it is heading higher. It will without a doubt suffer corrections again, but we cannot say it will happen in a week, a month, or longer. What we can say is that the market has shown all signs of a reversal and good stocks have been and are moving out of good patterns on strong volume. You cannot ask for a whole lot more.
Support and Resistance
Nasdaq: Closed at 2059.38.
Resistance: The December intraday highs still stands in the way (2065.69). After that the up trendline at 2090. Then 2250 to 2300.
Support: We are looking for 2000 to hold on any test, though the March 2000 down trendline (now at 2025) would be a very good place to hold. After that 1934 to 1941 (tops of prior consolidation) have been the best support since the early December gap higher. 1980 has tried to hold, but it has pretty much been pushed around and has lost its edge. The 200 day MVA is next at 1927.41.
S&P 500: Closed at 1172.51.
Resistance: Jumped over the 200 day MVA (1166.71) and now looking at the December high at 1173.62. Then the hump in the March double bottom at 1183.35.
Support: The 200 day MVA would be the level to hold (1166.71). After that, 1150 is a level of some support, but it has been broke back and forth may times. The 50 day MVA (1136.20) follows and held last week. It is backed up by price consolidations at 1125. After that, 1100 is next (top of the October consolidation range).
Dow: Closed at 10,259.74.
Resistance: Took out the 200 day and the December high. Now 10,200 to 10,500 is the trading range from June to August 2001. The down trendline from January 2000, the all-time high, is right at 10,500. The up trendline is at 10,400.
Support: The December high at 10,169.44 or 10,184.45 could hold. Still looking for the 200 day MVA (10,092.21) to hold this time given the higher volume move over that level. 9992 has acted before as support, but it is weaker. Below that is the 50 day MVA (9865.76).
Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.
1-8-02
Factory Orders, November (10:00): -2.6% versus 7.1% prior.
Consumer Credit, November (3:00): $4.7B versus $7.0B prior.
1-10-02
Export Prices ex-ag.; December (8:30): -0.4% versus -0.4% prior.
Import Prices ex-oil; December (8:30): -0.6% versus -0.6% prior.
Initial Claims; 1-5-02 (8:30): 447K versus 447K prior.
Wholesale Inventories; November (10:00): -0.3% versus -1.0% prior.
1-11-02
PPI; December (8:30): -0.2% versus -0.6% prior.
Core PPI; December (8:30): 0.1% versus 0.2% prior.
SUBSCRIBER QUESTIONS
Q: Wondering if you could shed some light on managing positions, especially during this time of market acceleration. I'm finding that I constantly am holding more positions than I can truly effectively manage. So many good stocks are breaking with good patterns that I find I want to take advantage of way too many of these... then I end up with two or three times the number of positions I can really keep my eye on. How do you keep this under control and manage a portfolio. I feel that holding 5 or 6 positions should be plenty and my intentions are fine, then I keep ending up with 15 positions! Any rules for behavior management?
A: Ah the problems of an improving market. I fully agree that most investors should avoid investing in a lot of positions; you get to where you are having to compute too many variables at once and you end up making bad decisions because you miss something. What happens is you are like a small mutual fund and you start getting those mutual fund returns - - mediocre. You start missing sell points or covered call sales on your positions because you have too much to monitor.
There are two ways to approach this. Fist, keep your short list short. Pick the plays that you like the best and then invest in those when they make their moves. As long as they perform as you want or do not turn on you, keep them open and working for you. The problem with that as you have noticed is there are a lot of other plays out there that look good as well, and when one makes a move, you want to run with it. It is very similar to my early days of fishing. I would get in some good-looking water and start to work it; then I would see a fish hit the surface 100 yards away. The impulse is to leave that water you chose as the best and run over to that other area and chase that fish. Problem is, the fish is either long gone or was a carp. Always looking for that greener pasture or better water can take your eye off of what you actually have. That can hurt you just as too many can hurt you.
Focus is the key. Here is what I often do. You recall from many of the Team Trades that we discuss that I often take only partial positions on what I want to own. I don't dump 100% of my allocated funds for an investment right in unless I plan on this being a short trade all along and want to capture a specific move. What I do is take a third or so of a position, maybe half, and then see how it performs. If I have a few that look good, I can get in to all three of them, but spreading my money between them and not using up all of my funds. Then if one outperforms the others, showing good appreciation on good volume, etc., I can close the others and then put more money into that position at the next logical buy point, e.g., a pullback to near term support on lower volume, the break over the next resistance point on strong volume, etc. That way I end up FOCUSING my assets on winners. You cannot pick the one stock that will appreciate the most each time you invest. Cast a bit wider net over some very solid stocks, and then let them run the race for you. Let them show you which is the one stock you want to focus on. That way you concentrate on a winner and you improve your success percentages.
Now many will say this is lunacy, that you are not properly diversified. Well, you picked a handful of promising stocks, and you let them show you which had the bloodline you wanted. You then bought more of that. Averaging up into a stock is how smart mutual funds buy and how nearly ALL of the successful investors I know have made their fortunes. That does not mean you hang onto it forever. You learn when a stock is topping, when it is flashing danger signals: the blow-off top, the double top on low volume, the broken trendline you are investing in. We teach these in the online seminars that are coming up again soon, and when you see them, start taking money off the table. Sometimes it might be all of it, other times you might want to start lightening up on the position just as you were buying into it as it moved higher and hit new buy points. This way it does not matter if you have your assets concentrated in one, two, three or five stocks. If you have them in two stocks and one shows signs of topping, take the gain off the table and slap yourself on the back for a job well done. If it was a false alarm and you still like the stock, you can always start over, taking partial positions at the right time, putting your money in piecemeal when it hits the buy points. It is your money, and it deserves this kind of attention. You give it this kind of attention, and you will do very, very well in this bull market.
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. A "prior high" refers to the high at the start of a base.
For conserving space on listings of stop losses, the symbol (7%) indicates that the stop is 7% below the buy point.
Good Movers: Breakout from SGI! SBUX exploded on the earnings news, gapping up over a point to open Friday and running to a high near 23 before pulling back to close with a doji. Volume was huge, of course.
Stocks/Indexes from the Thursday report:
LRCX: Held for a small gain after Thursday's strong move over resistance.
ITWO: Another small move up on lower but still above average volume.
SBUX: Noted above.
NOK: Looked good Thursday, but pulled back Friday, holding at 26, still above the breakout but a whipsaw.
MSFT: A lower volume pullback.
Continuing plays:
AV: Previously a subscriber's choice. Trying to make a move up in a handle to its 7-month base. Got strong volume Friday for the first time in the handle. Pivot for the breakout is 13.83.
BEAS: Broke out of the flat base and remains a buy up to 19.56 on the breakout. Buy point: 18.90 on continued strong volume. Stock and/or February or March $15 calls to buy.
CBR: Strong move! Ready to break out over the December high (10.95) but it has moved for three days. Can look at taking positions with stock and/or February $10 calls to buy.
EUNI: A good move Friday on strong volume in the test of the breakout. Stock buys on a move over 7, and that is the level it needs to clear on this move.
KEA: Another day of strong volume; a spike but the stock didn't move much. That could be a darned good sign for a strong move soon. Buy point for a breakout is 20.18.
RI: Broke out of an ascending wedge Friday on good volume! Remains a buy up to 22.87 on the move, and looks good with the strong volume (new all-time closing high).
Best Plays:
1) WB: Breaking out and still a buy.
2) RHAT: Looks ready for the breakout!
3) CFLO: And this one looks ready for a strong move, too.
4) CHKP: Broke out of the cup with handle base for a move over the 200 day MVA! Nice gap up.
New:
Looking at financials again as some of these stocks are starting to show better-looking patterns with the drop in interest rates.
WB (Wachovia--$32.60; +1.00; optionable): Money Center Banks
http://biz.yahoo.com/p/w/wb.html
STATUS: WB is in quite a large base of over three years (lows near 24), but more recently is in a shorter, 18-week base. The September events caused a sharp downturn and start to the pattern but WB has made a steady trend back up. Friday the stock broke out over its 200 day MVA (32) with volume backing it as it flew up to 4 million (avg. 2.6 million). WB was in a kind of flat, ascending wedge-type pattern below the major resistance, supported on the lower end by the 18 and 50 day MVAs. On this breakout, the stock remains a buy up to 33.74 before hitting the 5% limit for buying on breakouts.
Showing good money flow. Target: 39
BUY POINT: 32.70 on continued strong volume. Stop: 30.41 (7%)
POSITION: Stock and/or April $30 calls to buy (WB DF).
http://www.investmenthouse.com/cd/wb.html
HAND (Handspring--$6.49; +0.22; optionable): Personal Computers
http://biz.yahoo.com/p/h/hand.html
STATUS: Deep in its 15-month base but off the lows in the $1.15 range. More recently HAND is in an 8-month base and consolidating now in an ascending wedge pattern where the handle should be. This immediate pattern is holding support at the 18 day MVA (6.32) with volume falling overall, except for a huge volume spike mid-December when PALM said it was making more money that thought. Showing 2 dojis the last 2 days of the week and Friday moving back over the 200 day MVA (6.46), HAND looks ready to try for a move up and breakout. We are not wild about wedges and pennants as handles, but the pattern is tightening up nicely. Volume was lower at 3.06 million (avg. 3.7 million). And, the stock shows huge money flow and buying. Target: 9.50
BUY POINT: Breakout: 7.10 on volume of 5 million or higher. Stop: 6.20 (below 18 day MVA)
POSITION: Stock and/or February $5 calls to buy (HQA BA).
http://www.investmenthouse.com/cd/hand.html
RHAT (Red Hat--$8.25; +1.15; optionable): Internet Software
http://biz.yahoo.com/p/r/rhat.html
STATUS: A year-long saucer with handle base (that is part of the stock's big 2-year base with highs near $150!) and looking ready for the breakout. RHAT's handle has not been as gradual as we would like, suffering some volatility with 2 days of selling in December, but volume dropped off nicely as price consolidated more or less laterally at the end of the handle. Friday volume soared to 4.17 million (avg. 1.7 million) and the stock broke out over the 18 day MVA (7.31), and from here looks ready to move over the handle high (8.60). Huge money flow, good buying. Target: 11
BUY POINT: Breakout: 8.73 on continued strong volume (minimum required is in the range of 2.6 million). Stop: 8.12 (7%)
POSITION: Stock and/or February or March $7.50 calls to buy (RCV BU or CU).
http://www.investmenthouse.com/cd/rhat.html
Update:
An updated subscriber's choice that looks good and may give us some cash flow.
CFLO (Cacheflow--$2.96; +0.22; optionable): Internet Software
http://biz.yahoo.com/p/c/cflo.html
STATUS: Covered on request from a subscriber back on 12-20. At the time CFLO was moving in a pennant that has now formed into a more bullish ascending wedge, from which Friday the stock made the aggressive buy point of 1.84. Volume exploded above average (1.1 million; avg. 698,000) on the breakout, and we are looking for a trade up to the range of the 200 day MVA (3.86), initial target. Huge money flow.
BUY POINT: 3 on continued strong volume (minimum required for the breakout is 942,00). Stop: 2.79 (7%). Remains a technical buy on the breakout up to 3.12 (5% above the buy point of 2.84), but a strong move could pop it up closer to our target.
POSITION: Stock; options are currently out of the money.
http://www.investmenthouse.com/cd/cflo.html
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: New Leaders (new list): ACS, NVDA, DGX, FRX, LLL, CACI, AJG, KRON, MIK, BMET, APPB, LOW, IDPH, TARO, MYL, IGT, VRSN
ACS: Bounced from the 18 day MVA and we closed the covered call play. May have pulled the trigger too early as it is still above its upper channel (about 101.50), but if it shows more weakness we will run the call play again. What a workhorse for us this one has been.
APPB: Made the bounce from the 50 day MVA on solid volume, as expected. Closed just above the 18 day MVA, and it looks as if it is on another good run here with the restaurants.
CACI: Held the 18 day MVA, surging back up on strong volume after hitting a low of 37.78, making a higher low above that 18 day. December high is 43.50, and it looks to be building for the next run.
DGX: Is looking pretty good after a pullback to the 18 day MVA, where it held Friday. Volume is decreasing steadily. A bit of an abrupt drop, so we will watch it Monday; looking like a handle to a 6-month cup.
IGT: Holding the 18 day MVA. Time to buy back the calls sold.
UP & COMERS PORTFOLIOS: Here is the new portfolio list: BBBY, EPIQ, KKD, MMS, NDN, SRCL, CPRT, EBAY, THQI, KG. Removed BJ, as it is well below the 200 day MVA and failing to move up in the double bottom.
KKD: Tapped on the low (41.05) the up trendline connecting its August and November lows. Volume was high as the stock continued selling off the December high of 46.90. May be tight for some covered sales, but we might sell some January or February $40 calls and then buy them back on the hold at the 50 day MVA (just under 40).
NDN: Holding at the 50 day MVA where it likes to bounce. Looking to take new positions on a move over 38 for a ride back over 40.
EPIQ: Signs of life! Stronger volume and a pop off the 50 day MVA. Not strong buying, and the stock has some potential resistance from October congestion, but things are looking better here.
THQI: Heavy profit-taking on a stock that had been performing very well up to early December. Broke out of a cup with handle but sold back to the 200 day MVA (even broke that support Wednesday), but institutions have stepped in and started buying by Friday (volume was strong and the stock gained over 2 points). Still at resistance, the 18 and 50 day MVAs (the latter at 52.83), so we will want to see THQI get back over that level.
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
CHKP (Checkpoint Software--$45.37; +2.20; optionable):
http://biz.yahoo.com/p/c/chkp.html
STATUS: Broke out of the cup with (double) handle base of sorts; buy point was 45.08 and volume was up and strong at 9.87 million (avg. 9 million). The move took the stock through its 200 day MVA (43.49) and since it is well within the 5% limit for buying on this move, and remains a buy here. CHKP gapped up on Friday's opening price; if the market settles back Monday the stock just might try to fill the gap on a pullback to the 200 day MVA. Just a better entry point, that's all. Target: 50.
BUY POINT: From here: Over 46 on increased volume. Stop: 42.89 (7%). Test of 200 day: After holding the 200 day, a move back over 45 on continued strong volume. Stop: 41.96 (7%).
POSITION: Stock and/or April $40 calls to buy (KEQ DH).
http://www.investmenthouse.com/cd/chkp.html
AMAT: Tested the 200 day MVA as expected Friday, tapping that support on the low and closing with just a slight loss. However, AMAT may end up at the support again, depending upon Monday's market action. Most likely it will test it early and then we may get tha tmove higher.
AOL: Is in a descending wedge, but volume spiked very high as it tested near the 30 level, a point where it found support in September and October. Maybe it can here as well.
BRCM: Popped higher after the nice moves of the previous 2 days. Look for a pullback to test 45 or higher. We are going to take profits on our option play we started Wednesday if it does start to fall further.
JNJ: At the 50 day MVA on low volume after making a lower high in late December. Do not like the look of this one and will wait to see how it resolves the 50 day MVA for any new positions. If it breaks below this level again, we will sell positions and wait for something better.
BUD: Popped up again as volume keeps moving higher. Next buy point is over the December highs at 46.63.
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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