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stock prices, stock market update
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1/08/02 Technical Traders Update Report
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MARKET ALERT SERVICE
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http://www.investmenthouse.com/alertttr.htm
THE PLAYS:
EMLX held support at 43.10, where it has tapped the last three days, and moved over the previous high. Volume was lower, but the stock may not make the move down we were looking for. QCOM may have hit bottom for now, tapping 46 on the low (target is 45). It bounced from there even on a downgrade. AOT failed to hold its test of the breakout from its ascending wedge, and was below the 50 day MVA on rising volume. Does not look good, though we did get a bounce off 24.46, so may hold above that support.
Good movers: Good breakout move by ASIA; beyond 5% limit for breakout buying, so looking for a test for additional positions. These happen in 50% of breakouts. MFLO was up another point but may be ready to take a rest on the breakout from the ascending wedge. KANAD won't stop - super breakout!
Index:
SOX (Phili Semi--$583.82; +3.58; optionable):
STATUS: The SOX is testing its recent strong move back over the 200 day MVA (that support is at 555), actually forming a short, 5-week cup with handle after a larger cup with handle base. That can be a bullish combination of patterns. Showing a doji Tuesday (above an intraday low at 574.22 which the index has tested the previous 2 sessions) and the small move up, the index looks like it is getting ready for what we think will be a strong upside breakout. Target will be in the 650 range.
BUY POINT: Aggressive: 590.50 (over the December high at 590.34). Breakout: Over 600.18 (Friday's high).
POSITION: Aggressive: January $590 calls to buy (SJX AR). Breakout: January or February $600 calls to buy (SJX AT or BT).
Continued Plays: DSTM, PRSF, EGOV all look ready to move up. See the Monday full report for details.
ACXM (Acxiom--$19.05; +0.84; optionable): Information Software
http://biz.yahoo.com/p/a/acxm.html
STATUS: Hit the buy point of 18.80 in the test of the breakout (handle to the 7.5-month cup). Volume was nice and strong at 2.2 million (avg. 1 million), and we look for a continued breakout here. Remains a buy on the breakout up to 19.74. Solid money flow and buying. Target: 23
BUY POINT: Ride current positions taken at 18.80. A buy up to 19.74 on the breakout. Stop: 17.72 (7%)
POSITION: Stock and/or February $17.50 calls to buy (UQA BW)
http://www.investmenthouse.com/ct/acxm.html
AWRE (Aware--$9.45; -0.03; optionable): Software
http://biz.yahoo.com/p/a/awre.html
STATUS: Nice breakout that is showing doji's on lower volume; initial move may be running out of steam. Breakout was on strong volume, so we are willing to hold the positions now and let it test and rebound for bigger gains. Volume was 273,100 (avg. 165,000).
BUY POINT: 9.40 on a continued pullback.
POSITION: January (aggressive) or February $7.50 calls to sell (WUQ AU or BU).
http://www.investmenthouse.com/ct/awre.html
AUDC (Audiocodes--$5.73; +0.10; optionable): Scientific & Technical Instr.
http://biz.yahoo.com/p/a/audc.html
STATUS: Testing the breakout from the ascending wedge, pulling back from
the breakout high of 5.97 but showing strength by holding onto support of
its 200 day MVA (5.51). Volume was even lower today in the pullback (177,100; avg. 354,000). Looking for a continued hold of support to set another breakout. Strong money flow, solid buying. Initial target: 7
BUY POINT: After holding the 200 day, a move back over 6 on above average volume. Stop: 5.58 (7%)
POSITION: April $5 calls to buy (XRD DA).
http://www.investmenthouse.com/ct/audc.html
KLAC (Kla-Tencor--$57.45; +1.85; optionable): Semiconductor
http://biz.yahoo.com/p/k/klac.html
STATUS: Like the SOX, has formed a short 5-week cup with handle-type pattern following a larger cup, and Tuesday made a solid move up from support at 55 (tapped on the low) on good volume of 8.4 million (avg. 8.6 million). The "handle", while showing lower and decreasing volume, has shown prices edging slightly higher, so is not a perfect handle but we like the overall pattern of the small cup within the larger cup with handle base (dating from the first of August), especially given the signals from the market. Looking for a continued move up in chip rally. Strong money flow and high relative strength. Target: 70
BUY POINT: 57.73 on volume of 13 million or better. Stop: 53.69 (7%)
POSITION: Stock and/or February $50 calls to buy (KCQ BJ).
http://www.investmenthouse.com/ct/klac.html
MOSY (Monolithic--$20.87; +0.87; no options): Telcom
http://biz.yahoo.com/p/m/mosy.html
STATUS: Last covered 12-27 when it was moving up after testing the November run. The stock was unable to hold a move over the December high (21.24, at the top of that previous run), instead pulling back to test the 10 and 18 day MVAs, forming an ascending wedge. Volume has been falling below average the last few days (down Tuesday to 366,100; avg. 505,000). Looking for a breakout over the recent highs. Excellent money flow and buying, but needs that volume. Target: 26
BUY POINT: 21.93 on volume of 682,000 or higher. Stop: 20.39 (7%)
POSITION: Stock and/or February $17.50 calls to buy (QST BW).
http://www.investmenthouse.com/ct/mosy.html
COST (Costco--$44.42; +0.30; optionable): Retail
http://biz.yahoo.com/p/c/cost.html
STATUS: Pulling back in a handle to a large double bottom base (developed since late January). Currently the stock is at support in the handle, at the 18 day MVA (41.84). Volume was lower Tuesday at 4.6 million (avg. 4 million). We are looking for a hold at this support, if COST continues to move in the handle for a few more days, for a move back up to breakout. Target: 55. Strong money flow.
BUY POINT: Breakout: 45.50 on volume of 6 million or higher. Stop: 42.32 (7%)
POSITION: Stock and/or April $40 calls to buy (PRQ DH).
http://www.investmenthouse.com/ct/cost.html
New: Short-term on a small stock.
IOM (Iomega--$8.76; +0.16; no options): Hardware: Data Storage
http://biz.yahoo.com/p/m/mu.html
STATUS: IOM is in an ascending wedge that could be called a handle to its 6-month cup base, which has formed below the 200 day MVA (10.32). It is a nice, tight little pattern that is holding support at the 10 day MVA (tapped down to the 18 day MVA a week ago) which is at 8.54. Looking for a breakout for a quick blast up to the 200 day MVA; IOM moved up from the 10 day Tuesday with volume jumping up to 183,000 (avg. 207,000). Good money flow and buying.
BUY POINT: For the breakout: 9.01 on volume of 279,000 or better. Stop: 8.44 (7%)
POSITION: Stock.
http://www.investmenthouse.com/cd/iom.html
SUMMARY:
- Lackluster day does just what was needed.
- Like the way the indexes are setting up.
- Factory orders down more than expected as Fed presidents lukewarm about the economy.
- Team Trades
Second day of selling has many concerned, but the market is behaving just right.
The Nasdaq was up for the session, rising 10 points in the last 10 minutes for about a 1% gain, but the Dow and S&P 500 languished, closing near their lows. The lack of a punch in the session on the heels of Monday's down session had many grousing about how the market was overbought and highlighting every possible problem. That is fine with us. Let everyone twist and worry; it is good for the market overall.
What do we mean? Well, even with the selling on the Dow and S&P, they did a pretty good job of holding where they needed to hold. The Dow did not hold the December intraday highs, but it did hold the December closing highs that marked the top of the ascending wedge it broke out of four sessions ago on big volume. The S&P 500 was unable to crawl back over the 200 day MVA, but we were not expecting it to today. It did hold right at the 1157 point we were looking at, just above the 18 day MVA on the low and the 10 day MVA on the close. 2040 held on the close for the Nasdaq, and it held above the down trendline on the low. Price-wise the indexes did what we wanted.
Volume was very favorable as well. NYSE volume was down on Monday's selling, and it backed off again today, down 7% on top of Monday's 13% drop. Nasdaq volume pared way back, down 11.5%. After running higher on the gains late last week, volume has been tapering off as the indexes consolidate those gains this week. This has been the pattern since the September bottom: accumulation days, those where the indexes increase on rising volume, have outnumbered distribution days, those where the indexes decrease on rising volume, better than 2 to 1. That is exactly how you want to see the market behave when investing in the upside.
Indexes setting up well for the next upside move.
The action described above pretty much makes the title of this section redundant. After good moves up last week breaking over some key resistance levels, the indexes are consolidating on lower volume while holding some decent patterns and price levels. In other words, as some profits are taken on last week's gains, the sellers remain in the minority and subdued.
Examples. VRSN and QCOM were downgraded today. Both gapped lower to start the session. Indeed, many stocks in specific sectors (e.g., drugs) and with specific news were down sharply at the open. Then they rallied to close well off the lows. QCOM closed up about $1. VRSN gapped down over $1 and close up $2. These are not great patterns, but it shows that you can only step on a stock for so long right now before buyers move in.
We are also looking at some interesting patterns in some of the bigger tech names. Last night in the Daily we commented on how BRCM, one of the key stocks in this recovery, was struggling at the 50 level, having made three runs at it. Today I was watching several of the big names, trying to glean a pattern for the day if there was any to bee seen. I was drawn to KLAC as it was moving up on stronger volume, overtaking its December highs. That is what we want the indexes to do, and that was what was intriguing about KLAC. Then I noticed (along with everyone else on the Team) that BRCM, BRCD, QLGC and others had the same pattern: a 4-month cup (more or less), a lackluster breakout, and then another short 4 to 5 week cup with handle following that failed breakout attempt. There is no real name for this pattern, but we are calling it a base on base. Given the condition of the indexes and the overall economic picture, we view it as bullish.
Naturally that took me next to the SOX, the semiconductor index. It has a similar pattern ongoing: a bigger cup in August through November, an attempted breakout in early December, a pullback to the 50 day MVA, and then a rally up through last week. Now it is pulling back gently on lower volume as the semiconductor names set up similarly (AMAT, XLNX, LRCX, INTC, AMD, NSM, etc.). I really like what I see in the SOX.
CSCO's CEO was in full form after hours, however, keeping the networking sector on its toes with a statement that the U.S. market continued to struggle. Mr. Chambers is known for his effusive statements either way. The networkers were taking some heat after hours, but we note that the QQQ sagged a full point at first, but then recovered that point as the late session wore on. CSCO may put a bit of a damper on the index tomorrow, but we don't think it will have much longer term effect. Networkers have been struggling, and there was no question they would. We are seeing positive talk from semiconductor and other sectors, however, that most were expecting to start to lead.
End Part 1 of 2
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stock prices
stock market update
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