|
|
us stock market, understanding the stock market
Begin Part 2 of 2
Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.
1-15-02
Retail Sales, December (8:30): -0.1% actual versus -1.1% expected and -3.7% prior.
Retail Sales ex-auto, December (8:30): -0.1% actual versus 0.0% expected and -0.5% prior.
1-16-02
CPI, December (8:30): 0.1% versus 0.0% prior.
Core CPI, December (8:30): 0.2% versus 0.4% prior.
Business Inventories, November (8:30): -0.5% versus -1.6% prior.
Industrial Production, December (9:15): 0.0% versus -0.3% prior.
Capacity Utilization, December (9:15): 74.6% versus 74.7% prior
Fed's Beige Book (2:00)
1-17-02
Initial Claims, (8:30): 395K versus 395K prior.
Housing Starts, December (8:30): 1.610M versus 1.645M prior.
Building Permits, December (8:30): 1.570M versus 1.595M prior.
Philadelphia Fed, January (12:00): 0.0 versus -12.6 prior.
1-18-02
Trade Balance, November (8:30): -$28.5B versus -$29.4B prior.
Michigan Sentiment-Preliminary, January (9:45): 89.6 versus 88.8 prior.
SUBSCRIBER QUESTSIONS
Q: I've heard mention of "Bellwether" stocks. How do you tell which stock is the bellwether for it's Sector/Industry? Are there technical criteria (like the highest average volume) or is it more of the ones that get the most press? Another publication just referred to AMAT as the Semiconductor Bellwether, but I hardly ever hear of it. Or, is there just a generally accepted list of Bellwethers for each sector/industry that more experienced traders know about?
A: There are key sectors in the economy. Within each such sector there are leaders in market share and innovation. When these companies experience increases or decreases in business, that can be read as having an impact on the sector and the greater economy as well. That would move those stocks as well as related stocks. Thus there are certain stocks that analysts and traders watch to glean information as to how the overall sector or market will perform. AMAT is a bellwether in the chip equipment manufacturing sector because it is the biggest in an important group. INTC is the bellwether in the chip sector. GE is a bellwether for the general economy. MSFT is one for software. There is no list of bellwethers that I know of (at least not an 'official' list; personal lists abound). Usually you look at the companies with the biggest market share and strength in an important economic sector.
Don't get too carried away with this. There are bellwethers after this bear market that are not leading the market. Indeed many of the bellwether stocks remain well off of their highs while a new group of stocks (e.g., NVDA, though not so new to us anymore) has led the market and is still charging ahead. Don't let an understanding of bellwethers make you abandon true leaders in good patterns. That is where you make the tremendous runs.
TEAM TRADES
Today there was a lot of wild action, but early on we were looking at how certain stocks such as WMT and NVDA would handle their 50 day MVA. When we heard that NVDA had received two touts from established analysts after falling to its 50 day MVA Monday, we were ready to get in on the first dip, and we sent an alert regarding same. After about 10 minutes of trading it had dipped lower, tested the gap up point, and was starting to bounce. We fired off the alert saying we were covering (i.e., buying back) our covered calls sold and, sticking to our plan laid out in the earlier alert, picking up some shares. The stock was recovering, at 62.80. We put in a limit order at the ask, but we were missed at that point. However, the trades were bouncing back and forth, and we were partially filled in the next 5 minutes. After that we modified the order and picked up the remaining shares at 63.25. The stock was off and running. It rang to 64.75, but dipped back to 63.50 on the afternoon selling. Volume was super, however, and it held well. In the last hour it rallied $1.50 to close at 65.50. It sold off about $1 on the INTC news, but this stock had institutional buying today, classic support at the 50 day MVA as noted in the alerts.
THE PLAYS:
Good movers: GSLI made a breakout move but volume was lower and below average. We will see if that kicks up and supports the move tomorrow. One of our puts, FLR, hit the buy point as it moved below the January low on high volume.
Previously covered and looking good: PRSF, IOM, EMLX, EDSN, MONE, DSTM.
Continued plays that look good: MROI, LXK, WW, FORG, AUDC, VAST, RECN. LNOP continued to pull back below the buy point in the test of its ascending wedge breakout, but volume was very low and the stock closed above the 18 day MVA. Could give a move up if it holds here. Buy points from Monday night's report are still good on these plays.
New:
ORI (Old Republic--$28.05; +0.55; optionable): Insurance
http://biz.yahoo.com/o/ori.html
STATUS: A 4-month ascending wedge, tightening up since the first of the month, the last week on overall low volume (down Tuesday to 282,800; avg. 359,000). The stock moved up from the 18 day MVA (support for a week) on the lower volume, but we are looking for a hold at least at that support until volume ramps the stock up to a breakout. Recent resistance pretty consistent at the 28.25 level for the week. Money flow is high. We are looking for a possible resurgence in the insurance sector. Target: 34. ORI is in a year-long base with highs at 32.
BUY POINT: 28.58 on volume of 485,000 or higher. Stop: 26.58 (7%)
POSITION: Stock and/or April $25 calls to buy (ORI DE).
http://www.investmenthouse.com/ct/ori.html
IONA (Iona Tech--$25.04; +0.46; optionable): Internet software
http://biz.yahoo.com/i/iona.html
STATUS: We don't think EBAY's after hours action (down despite beating the street on earnings news) will necessarily effect other internets, especially those that are in good patterns like IONA. EBAYS's news was actually good. The stock recently broke out over its 200 day MVA (24.21) and has pulled back on decreasing volume, down Tuesday to 419,100 (avg. 386,000). Now holding there with its second consecutive doji, the 18 day MVA is just below at 23.33 and just about ready to cross the 200 day, a bullish intersection of support levels. IONA has bounced twice since crossing back over the 50 day MVA in November, and looks ready to make another such move. Good money flow and buying. Earnings out January 23.
Target: 32
BUY POINT: Aggressive: Over 25.30 on volume of 390,000 or higher. Stop: 23.53 (7%)
POSITION: Stock and/or March $22.50 or $25 calls to buy (YWQ CX or CE).
http://www.investmenthouse.com/ct/iona.html
Back on:
PRSE (Precise Software--$25.50; +1.93; optionable):
http://biz.yahoo.com/p/prse.html
STATUS: Pulled back in a handle to the 6+-month cup base, and upon hitting support at the 18 day MVA shot up Tuesday with volume sharply higher and strong at 886,300 (avg. 581,000). Looking for a breakout, and taking positions on a move over 26.65, hit twice at the same time as the actual monthly high at 27.98; the lower price can pose stronger resistance. Good money flow and buying. Target: 32. Part of a larger, 16-month base.
BUY POINT: Aggressive: 25.70 on continued strong volume (minimum breakout volume is 872,000). Stop: 23.90 (7%). Breakout: 26.78 on volume of 872,000 or higher. Stop: 24.91 (7%)
POSITION: Stock and/or May $25 calls to buy (PUI EE). Check with broker for deltas.
http://www.investmenthouse.com/ct/prse.html
SKIL (Skillsoft--$28.75; +0.31; optionable): Internet Software
http://biz.yahoo.com/p/s/skil.html
STATUS: In a 7+-month cup with handle and pulling back in the handle on low volume except for a volume spike Monday (volume down Tuesday to 141,100; avg. 164,000). While volume has been low though creeping higher, prices in the handle have been pulling back gradually exactly the way we like. We like the volume spike, too, and look for a breakout over the handle high at 29.64. Target: 36
BUY POINT: 29.77 on volume of 246,000 or higher. Stop: 27.69 (7%)
POSITION: Stock and/or April $25 calls to buy (QKT DE).
http://www.investmenthouse.com/ct/skil.html
ACXM (Acxiom--$19.15; +0.90; optionable): Software
http://biz.yahoo.com/p/a/acxm.html
STATUS: Made the buy point (18.80) in a 7.5-month saucer/cup with handle base back on January 8 but pulled back again to the 18 day MVA with volume falling. Tuesday, after Monday's tap at the 18 day (at 17.90), ACXM was up on a leap in volume to 1.18 million (avg. 1 million). Look for another try and breakout over the January high at 19.50 with volume rising. Solid money flow and buying. Target: 24
BUY POINT: Breakout: 19.60 on volume of 1.5 million or higher. Stop: 18.23 (7%)
POSITION: Stock and/or May $15 calls to buy (UQA EC)
http://www.investmenthouse.com/ct/acxm.html
New Puts:
MMM (Minnesota Mining--$110.01; -1.75; optionable: Conglomerates
http://biz.yahoo.com/p/m/mmm.html
STATUS: Broke below the 200 day MVA (111.63) on strong volume of 2.97 million (avg. 1.6 million). The stock tried to hold above the level for three days, but it had already broken the 50 day MVA and was weak, making a stronger move down Monday. From here, look for a continued drop to the 105 range for an initial target. Below that, 100. The stock can gap lower as the futures are headed that way tonight, so if it does that initially, look for a move back up and test of the opening price then move back down.
BUY POINT: From here, 109 on continued strong volume.
POSITION: February $120 puts to buy (MMM ND).
http://www.investmenthouse.com/ct/mmm.html
Continued Puts: KBH was back over the 18 day MVA but on lower volume. Can hold that support on continued low volume. PPG held 48, support we were keeping an eye on though we are looking for a move down to 46.
QCOM (Qualcomm--$46.55; -0.60; optionable): Telecom
http://biz.yahoo.com/p/q/qcom.html
STATUS: Moving laterally after halting its fall from the 18 day MVA (currently at 50). Volume shot up to 18.4 million Tuesday (avg. 14 million); if QCOM can move up from here we will look for a move back down from the 18 day, but there is a chance it will tank from here once it hits the 10 day MVA (48.03). The stock tested that resistance on yesterday's high, and the 10 day has turned QCOM down more than twice since the first of the month. If we get a gap down, look for a bounce back up to test the opening price (or today's closing price); entry points on a move down from there. Target: 40-38
BUY POINT: On a move down from here: 45.25 on continued strong volume.
POSITION: April $55 puts to buy (AAO PK).
http://www.investmenthouse.com/ct/qcom.html
For a review of frequently asked questions, please use the link below:
http://www.investmenthouse.com/1questions.htm
Investment House subscribers are offered a special from eSignal for those interested in a realtime service. Contact:
Ray Fitzgerald
Account Executive
800-322-0940
Office hours 6:30-3:30 PST
rfitzgerald@esignal.com
Good Investing!
Jon L. Johnson and the Technical Traders Team
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.
|
us stock market
understanding the stock market
|
