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us stock market, stock trading
Begin Part 2 of 3
Support and Resistance
Nasdaq: Closed at 1805.20.
Resistance: The January 2002 and the March 2000 down trendlines are roughly at 1835. The bottom of November consolidation at 1875. The 50 day MVA follows at 1901.41, a long haul from Friday's close.
Support: Turned at 1772 two Fridays back to start the current rally, just below some support at 1775. The November gap up point is 1745. 1743 would be a 50% retracement. Support at that level looks to be anywhere from 1700 to 1750.
S&P 500: Closed at 1104.18.
Resistance: The 50 day MVA (1123.46) and price consolidations at 1125 stopped the index cold Thursday. Then 1150 and the 200 day MVA at 1159.93.
Support: The September 2000 down trendline is at 1102, just ahead of some support at 1100. Right below that is the January 2002 down trendline at 1098. After that, 1078 to 1080 continues to hold; it has been growing as a support level with each successful test. There is a jumble of prices in a range from 1075 to 1050, perhaps the reason this 1080 level has held well for now. 1050 was tested twice in October, holding both times. That is right at the 50% retracement (1060).
Dow: Closed at 9903.04.
Resistance: The simple 50 day MVA (9925.71) may try to hold it back again on the next rally try. Could not hold over the price consolidations at 9992 to 10,000. The 200 day MVA (10,070.77) turned the index back Thursday. The January high at 10,300 level is last, but the resistance starts at 10,200 (June, July and August 2001 trading range).
Support: The exponential 50 day MVA (9849.09) may try to hold, but it is pretty porous. The January 2002 down trendline is at 9710, right above some support at the 9691 level, the bottom of the November, December and January range. 9500 was tested on the January intraday low, and it seems the level is continuing to act as good support. After 9500 there is a very congested trading range from 9125 to 9500. A 50% retracement is 9181.
Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.
2-19-02
Housing Starts, January (8:30): 1.595M versus 1.570M prior.
Building Permits, January (8:30): 1.6M versus 1.654M prior.
2-20-02
CPI, January (8:30): 0.2% versus -0.2% prior.
Core CPI, January (8:30): 0.2% versus 0.1% prior.
2-21-02
Initial Claims, 2/16 (8:30): No information.
Trade Balance, December (8:30): -28.5B versus -27.9B prior.
Leading Indicators, January (10:00): 0.6% versus 1.2% prior.
Philadelphia Fed, February (12:00): 10.0 verus 14.7 prior.
Treasury Budget, January (2:00): $52.0B versus $76.4B prior.
SUBSCRIBER QUESTIONS
Q: When the market is positive and moving up, there have been any number of days when it opens with a fast upsurge or a gap open. Because of the strong open, there may be one or more (sometimes many) of the plays hit their buy targets in the first 5-30 minutes of the open. Of course, during that time it is often hard to gauge the market and certainly near impossible to tell if it is "opening enthusiasm'" or real buying power that is moving the stocks. What do you do in such cases?
A: This is a great question and one of the most difficult parts of investing. One thing we always, always try to instill (and it took awhile to learn) is not to get impatient. You see a stock hit the buy point early and start to run higher. The urge is to avoid missing out and you jump in. Then the move dies out or it runs higher only to come back down and test before taking off again. The worse case scenario: the market gaps higher and then reverses on you and continues to fall.
A rule of thumb we have is avoiding jumping in during the first half hour unless there are some very compelling reasons to get in on particular moves (e.g., company ups its own earnings estimates in a strong market). Sometimes that goes for the first hour. There are a few reasons for this. During the opening half hour, market makers and specialists are trying to determine the price for a stock and its options. They may want to accumulate some more shares and push prices lower. They may want to get rid of shares so they push it higher. I don't like to be a guinea pig in setting the day's prices.
Another concern is the gap higher and then the crash lower. We always prefer a softer open, building as the session wears on. In choppy markets such as this one a gap open is not something to chase. Further, even if it does not lead to a reversal and a close lower, we almost always get a test of the buy points during the first couple of hours. That gives us a chance to look at the move higher, see the test, and see the stock start moving up from there. Looking at the overall market we can then get a sense of the strength of the move and we can also take a look at the volume thus far. That does not mean we have to wait around checking every five minutes, we can let a half hour go by, check with the broker, and if the market is still coming back, we can wait. We already know the buy point, support, resistance, volume, etc., so we can find out where the stock is now, the high, the low, the volume, and we have a pretty good idea of what is going on. There is also the alert service where we take a hard look at what the market is doing early before we start issuing alerts.
By waiting we will miss a few trades because they will run away from us. Still, we prefer to take as much chance out of the trading as possible because playing the percentages usually means a pullback is coming to test a move. That is the first entry point where we often take a partial position (half or our intended position on the play). Then we check in before the close and look to see if the move is looking the way we want, i.e., holding the buy point and moving toward the upper end of the range on strong volume.
THE PLAYS:
Good movers: ITT, BRCM
Targets hit Friday: BRCM (35, put play), EMLX (39, put)
Trailing Stop Advisories: VRST (16.25), NLY (16.25), IKN (12.50),
The following plays were put on a watchlist. Several still look super such as CEY, ITG, and several others are making the moves we were looking for. We give a quick summary of these so we can make room for more great plays each week:
USAI ($30.25; +0.25): Testing its recent run off the 10 day MVA, showing 2 dojis on low volume. We like it here, and after some consolidation, positions on a move back over 31 strong volume.
FAST ($70.29; -1.50): Moved up to 72.50 after breaking out of the reverse head and shoulders and is selling back to the 18 day MVA (69.39) on higher volume. Want to see a hold above the buy point of 68.80 or will sell.
GOSHA ($41.65; -0.05): Hanging in there with the ascending wedge, and we still like the pattern. Buy point is 43.10 (2-13 report).
CEY ($35.25; +0.13): Still looking really solid in the ascending wedge as the pattern continues to tighten up above the 18 day MVA. Buy point remains 35.70 for the breakout, July $30 calls (deltas unavailable). See the 2-13 report.
ITG ($43.00; -0.72): Still in the ascending wedge, falling back through the 10 day MVA Friday but holding above the 18 day. Not a bad move, and continue to expect the breakout. Buy point 44.50 (see the 2-13 report).
TROW ($38.04; -1.03): Hit the buy point in the ascending wedge (at the upper right side of the 28-week base) but pulled back below it; volume continued lower and the stock is holding above the 18 day MVA. Holding positions as long as it continues to hold above the 18 day MVA.
EAT ($31.65; -1.10): Moved up from the 50 day MVA (bounce play) but Friday the stock sold back below the 18 day MVA again. Hit the aggressive buy point at 32.25 on Thursday. Looking for a hold at the 50 day.
COTT ($17.84; -0.03): Looks ready for another pullback after failing to break out over the February high. Hit the aggressive buy point of 17.55 Tuesday, and was over 18.07 (to 18.16) Friday, our price for new entry points, but volume wasn't moving with the stock. Holding aggressive positions for now.
BVN ($25.13; +0.35): Isn't moving much on the strong volume of the last 2 days, though edging higher after testing the recent breakout (back to the 18 day MVA). Hit the aggressive buy point at 24.90 with strong volume. Will hold for now.
ATVI ($26.70; -0.31): Still decent in the 3.5-month ascending wedge, but needs to pull back again, though it may be brief. Breakout is 28.64 on strong volume (see the 2-13 report).
HOLX ($12.77; -0.27): The pennant pulled back to the 50 day MVA and may bounce back up as volume keeps shaking out to very low levels. Showed a doji below the 18 day MVA (13.09). Aggressive buys at 14.20 (see the 1-13 report).
STJ ($78.90; -0.25): 50 day MVA bounce play. Back over the 18 day MVA but Thursday strong volume could not take it over January highs. Pulled back on lower volume Friday. Holding positions taken at 78.66.
WTW ($36.00; -0.44): Still looks good in the test of the January breakout, holding above the 18 day MVA on low volume. Buy point (aggressive) 36.80. See the 2-12 report.
PLAB ($32.92; -0.78): Continues to bang around in the wedge-type handle (cup with handle) as volume remains low. Aggressive buy point on a strong bounce back over the 18 day: 33.50 on strong volume. Breakout from the cup with handle: 35.25.
DLTR ($30.85; -0.51): Slid below the 18 day MVA again in the handle (28-week cup) as volume has increased on the last two down sessions. It is holding above the up trendline and the 50 day MVA, and from here we could get a bounce. We still like it, but the volume makes us uneasy. See 2-13.
Puts (watchlist):
BRCD ($29.99; -2.65): Lost 5 points over the last 2 days and Friday was at some November support on continued above average volume. We could possibly see a rebound back up toward the 200 day MVA before it falls again toward our target at 25. Broke the 50 day MVA to kick off its downtrend earlier this month, after forming the double bottom in Dec/Jan.
UTSI ($23.20; -0.14): Still holding above the 200 day MVA, showing 2 consecutive doji on low volume. It is still in a downtrend, but we need the break of support to get the play rolling. Buy point is 21.25 on the kiss good-bye, if it can drop through.
MIMS ($15.97; +0.02): Still holding positions (buy point 15) for the move down to the 12 target. Tried to hold a move over the 18 day MVA Thursday, but fell back through and Friday showed a doji on lower volume. May try to test the 50 day MVA (16.59).
VRTS ($36.64; -1.61): Hit the buy point for the recent put play (37.50) and on stronger volume tapped at the previous February low (35.57). We are holding current positions for the move to our initial target, 30.
Best Plays:
1) ATH: Testing the breakout on low volume.
2) LMT: Defense stocks looked good Friday.
3) FULT: Breaking out and still a buy.
4) EMLX: Looks ready to break down.
5) LEH: Solid downside already started.
6) OSIS: Still testing on low volume.
7) RTN: Moving up on good volume.
8) SLGN: Ditto.
9) URS: Same story.
10) KROL: Another good ascending wedge.
11) CLS: A continued put play that is heading lower.
NEW PLAYS:
Upside:
ATH (Anthem--$56.10; -0.31; optionable): Insurance
http://biz.yahoo.com/p/a/ath.html
STATUS: A new issue (late October) that is testing its breakout off the 18 day MVA, support from which the stock has bounced twice mid-January. The last three days ATH held the 10 day MVA (55.89), tightening in the pullback with 2 dojis the last two days of the week. Volume was lower Friday at 763,500 (avg. 762,000) and has held at or above average in this pullback, spiking hugely on the last bounce when the stock gapped higher.
Looking for this consolidation to lead to another strong move up from the 10 day. ATH shows high money flow and decent buying. Target: 62
BUY POINT: Aggressive: 56.75 on volume in the range of one million. Stop advisory (7%): 52.78
POSITION: Stock and/or June $50 calls to buy (ATH FJ). Deltas unavailable.
LMT (Lockheed Martin--$54.87; +1.47; optionable): Defense
http://biz.yahoo.com/p/l/lmt.html
STATUS: Defense stocks had a decent day Friday, and LMT was up from the 10 day MVA (53.34) on strong volume, making a solid bounce after testing the breakout from a 10-week cup with handle. It moved over the previous February high of 54.70 (reached on the breakout, which constituted a good run up from the 50 day MVA starting early January). It pulled back on nicely decreased volume for the last 4 days ahead of Friday's decided change in direction (volume was strong at 4 million; avg. 2.1 million). Looking for more upside here, before the stock pulls back again to either the 10 or 18 day MVAs, continuing what we would expect to be a series of 2-3 more bounces. Target: 63
BUY POINT: 55.20 on continued strong volume. Stop advisory (7%): 51.34
POSITION: Stock and/or June $55 calls to buy (FMT FK). Deltas unavailable.
http://www.investmenthouse.com/ct/lmt.html
FULT (Fulton Financial--$23.05; +0.21; no options): Regional banks
http://biz.yahoo.com/p/f/fult.html
STATUS: Breaking out of a 6.5-month cup with handle base that is part of a 14-month base. Volume was decreasing in the handle, which was an ascending wedge type movement given the higher lows combined with upper resistance, and volume was decreasing nicely throughout. However, volume shot up Friday (163,900; avg. 88,000), with the stock clearing resistance at 22.90, and on the breakout FULT remains a buy. With money flow and relative strength looking good, our target is 28.
BUY POINT: 23.25 on continued strong volume. Remains a buy on the breakout up to 24.15. Stop advisory (7%): 21.62
POSITION: Stock.
http://www.investmenthouse.com/ct/fult.html
End Part 2 of 3
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us stock market
stock trading
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