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us stock market, trade stock
Begin Part 2 of 2
THE MARKETS
Tried to rally and almost made it. Volume was high, surprisingly so. There is a lot of money out there ready to be put to work. The time is coming. In the interim, we think we get a Santa Claus rally tomorrow. One day, but better than no day.
Overall market stats:
VIX: 34.42; -1.28. 37.50 on its high. The VIX is showing us it is time for a short term rally. Be ready tomorrow.
Put/Call ratio: 0.72; -0.08. Any rally, and the put buyers subside. That is to be expected, however, and the ratio has climbed back to the high-side of its range of the past two months. Nervousness, but not enough. We may have an interim rally tomorrow that may last to next week, but we feel there is another plunge coming that could drop the Nasdaq to the teens and thus spike fear to all-time highs. Hate it, but almost have to have it at this point.
NASDAQ: Down, a rally, then selling into the rally. Another day on the Nasdaq. Tomorrow we see another good point gain even if just intraday. Keep the stops in and hit some singles.
Stats: Up 7.34 points (+0.3%) to close at 2340.12, breaking the 7-day losing streak.
Volume: 2.694 billion shares (-5.2%). Rising on lower volume, but this is huge volume nonetheless. Down volume came in at 1.485 billion shares, and up volume shot up to 1.128 billion shares. Much better, but not great.
A/D and Hi/Lo: Declining issues still leading, but down to 1.25 to 1 versus the 3.98 to 1 ratio on Wednesday. New highs rose to 57 (+4) while new lows fell (get this, fell) to 692 (-234). The new lows are interesting. They show another sign that a crescendo is building (is that redundant?).
The Chart: http://www.investmenthouse.com/ch/nasdaq.html
2888.16 was the lose that was tested. We were looking for a test of the 2880 to 2890 level, and that is what we got. That sent the index up 135 points to its high (2423.71) before the sellers came in. On the close it held above the 2300 level again, and with the doji on the candlestick chart today, it looks to us as if we get a continuation move tomorrow.
Dow/NYSE: After Wednesday's carnage, the Dow snapped back nicely above 10,400 on just slightly lower volume. Not bad at all as 10,300 held nicely this time around.
Stats: Up 168.36 points ((+1.6%) to close at 10,487.29.
Volume: NYSE volume fell slightly to 1.419 billion shares (-1.3%). Up volume was 760 million versus 608 million to the downside.
A/D and Hi/Lo: NYSE advancing issues overtook decliners once again in their seesaw battle, 1.37 to 1. New highs rose to 208 (+16) while new lows fell to 196 (-13).
The Chart: http://www.investmenthouse.com/ch/djia.html
As noted, 10,300 held, and the Dow, after starting lower on the session, turned stronger and posted a nice gain. A very solid turn off of support, and we expect the Dow to rise again tomorrow. Still, this may be short-lived, and we feel that we will get another test of 10,300, more likely 10,000 before it is done. That is good in the big picture. If the Fed is coming with rate cuts, a selloff that spikes fear higher sets the table for a better move up.
S&P 500: Wednesday the S&P 500 gave us its worst performance in over a year. Today it jumped right back into the game, tapping 1254.07 on its low and then moving up 20 points to close back over 1270. 1270 is considered support, and a one-day violation of support can be forgiven. For now that is okay as we anticipate another rise tomorrow in anticipation of Santa Clause. After that, we will just have to see how low the S&P will go on the next, and hopefully last, test of the lows before the Fed acts.
Stats: Up 10.12 points (+0.8%) to close at 1274.86.
Volume: NYSE volume fell ever so slightly on the rise to 1.419 billion shares (-1.3%).
The Chart: http://www.investmenthouse.com/ch/sp500.html
TOMORROW
Today tested the waters, and we feel tomorrow will move ahead for a nice pre-holiday rally. The VIX spiked, the Nasdaq closed on a doji, Nasdaq futures are up 58 points, and we see several stocks once again showing us that doji at the end of a long string of selloff days. We have to treat this like a bear market rally, exactly what it would be, and that means we are going to get some gains and move on. A few thousand extra bucks before Christmas would help keep the Grinch at bay a bit more.
We think we will see an up open tomorrow, not like the picture-perfect lower open and test of 2885 before moving up to the high on the session. That means we are going to let the market open, wait for the pullback, and then when we see the move start back up, we will start with positions on those tech stocks we want to play to the upside for a quick gain. If the first pullback takes the index below its open price, the safer play is to let it and the stocks break back over their open price as that can act as resistance. If it just tests the open price, but does not breach it, the play is to enter when the bounce up of the open occurs.
For other plays, we do as always: let them breakout over resistance and out of their patterns and take positions. On some tech plays, we are watching for them to break over their down trendlines to enter; that is a bullish sign for the day.
Keep it simple, keep it safe. Follow gains with trailing stop losses; don't let gains get away from you. Bank some money for the holidays. If the rally continues next week, we will do it again. Don't try to hit home runs. Swing to make contact, and the home runs will be coming sooner than we think.
Support and Resistance Levels
Nasdaq:
Resistance: 2750 represents some resistance. The down trendline is around 28500 at this point.
Support: 2288 was the low today. After that 2200 down to 2000.
S&P 500:
Resistance: 1335 is acting as some resistance. 1370 is the down trendline.
Support: Jumped right back over 1270 after testing 1250 on the low.
Dow:
Resistance: 10,800 to 10,900.
Support: 10,300 held again. After that, 10,000.
Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.
12-21-00
Third quarter GDP final revision (8:30): 2.4% versus 2.4%
Third quarter GDP deflator (8:30): 1.9% versus 1.9%
Initial jobless claims (10:00): 340,000 expected versus 320,000 prior
Philadelphia Fed survey (10:00): 4.0% versus 5.2% prior
12-22-00
Durable goods orders for November (8:30): 1.3% versus -5.5% prior
Personal income for November (8:30): 0.4% versus -0.2% prior
Personal Consumption Expenditures (8:30): 0.3% versus 0.2% prior.
TEAM TRADES
SEBL: SEBL gave us a loose doji on Wednesday, and we were looking for a move up today. We had a real interest in SEBL as it was approaching a level where it touched back in late November and then shot up almost $50 the next week. That kind of move in a bear market can make you rich. I know, no home runs, but if we use trailing stop losses and it still happens, we can handle that.
The stock opened higher and then turned down sharply after 20 minutes, tapping right at 55.75 on its low. Its previous low was 59.75. The trade down to 55 gave us some pause, but we immediately saw a shift in the buy/sell pressure when it hit that point. We decided to jump in with half a position. The stock was trading all over the map and we saw 56.25 by 56.44. We put in a limit order for 56.38 and the fill was made. The stock then moved up to 59 and pulled right back to 57.50 over 15 minutes from 9:30 to 9:45 CT. When it held and moved back up from that point, we put in another limit order at 57.88. The stock was trading 57.81 by 57.88. No point in shaving the spread. The fill was pretty fast.
The stock ran to just over 64 on the high. At 1:00 CT the 5 minute MVA crossed over the 15 minute MVA. We had moved up our stop loss on half of our position to 62.50. We were taken out on that stop loss. We watched the stock fall to 59 and we were getting itchy and feeling foolish for not selling the whole position. We put in a stop loss on the remaining of the position at 58. Kind of lost our nerve, but did not want to take a loss. The stock turned and ran up again to 64. We tried to sell, but were missed. The stock closed at 61 and we were feeling lucky. After hours it ran back up to 64. We like what we see. We are looking for more positions tomorrow.
Good Investing!
Jon Johnson and the Tech Traders Report 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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