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us stock market, stock watch
Begin Part 2 of 3
TEAM TRADES
PH: As we said, sexy names are not always where the money is: PH is an industrial equipment manufacturer, and that sector is doing well. Friday it broke out of a wedge early in the session, and we were looking at getting on board. The buy point was 49.50, but it gapped past that and was at 49.70 a half hour into the session. Volume was so-so, but we were seeing some good volume buys coming in so we decided to take a partial position and see where the volume came in later. The stock surged up to 50 but then fell right back to 49.80. That gave us the opportunity to get in and we did with a half position of what we had allocated to the trade. Almost immediately the stock shot up to 50.40, but there it flamed out, falling back to 50. It regrouped over a half hour and made another run at 50.40. It fell back to 50 again but held. It then drifted the rest of the afternoon, closing at 50.12. Volume was huge, so it was a good breakout; just not a lot of price movement as it works to definitively clear 50.
THE PLAYS:
WLP and PMI announced splits Thursday! The puts are popping, with five hitting targets on Friday. DHR also continued its good move, and SONC and STJ broke out!
BONUS PLAYS:
SEE (Sealed Air--$44.02; +0.16; optionable): Packaging & Containers
http://biz.yahoo.com/p/s/see.html
STATUS: We looked at SEE recently as we looked for it to break out of its double bottom with handle. It did so, and in a big way, hitting up to 46.47 last Monday and signaling with a 'star' doji that it was going to test the move. It has come back down, moving back to the 10 day MVA (43.75), where it showed a doji Friday. Volume was going in the wrong direction as it fell, but Friday it was back down at 577,600 (average 770,000). Looking for SEE to hold here and continue up to our target of 50. Excellent buying.
BUY POINT: For new or additional positions on a bounce: Over 44.50 on above average volume. Stop: 41.50.
POSITION: Stock and/or July $40 calls to buy (SEE GH).
UPS (United Parcel--$56.80; 0.00; optionable): Air Delivery & Freight
http://biz.yahoo.com/p/u/ups.html
STATUS: By December UPS had fought back to pre-September 11 levels, breaking its long-term downtrend and moving over its 200 day MVA (55.48). It has pulled laterally for the last three months in a flat base that has shaped up as an ascending wedge. In early February it dipped back to test the 200 day again, but looks to want to hold the 50 day (56.14) this time, tapping at that level at its low Friday. Volume has been steady and rather light as the stock has moved in a tight lateral range the last two weeks, and Friday checked in at 1.1 million (average 1.23 million). Looking good and set up for a good move on a breakout. Target: 66. Great money flow and relative strength.
BUY POINT: 57.60 on volume of 1.8 million. Stop: 54.
POSITION: Stock and/or July $55 calls to buy (UPS GK)
OEX (Standard & Poors--$554.04; +5.45; optionable):
STATUS: Holding support at the 549-550 range (target on recent put play) and at this point we are looking for a quick and aggressive bounce play, for a move up to the 50 day MVA (569.38), maybe even 575. With continued solid price/volume action (up Friday to 1.39 million; avg. 1.3 million) the index can give us a good move. Target: 570 (initial); 575.
BUY POINT: Aggressive: 557 (just above the 10 day MVA) on continued rising volume.
POSITION: April $540 or $550 calls to buy (OEB DH or DJ).
Quick updates prior bonus:
ROST - Still set up well
IR - Gapped over the buy point, and could come back to test 46 before proceeding up.
IDTI - Moved up to the 50 day (29), and we are watching for a drop back (200 day at 30.61).
MYGN - Weak move up after the gap down.
RMCI - Holding up after the bounce, still looking for a move up.
WTSLA - Moved out of the lateral consolidation, but there was no volume.
DRIV - Still looking for more downside toward the target at 10.25; resistance at 14.40.
ONE - Again tapped support in the 34 range at its low.
ANSI - Testing the 50 day (32) on weak volume.
JCP - Has made a great move down and hit the target Friday!
WBST - Holding up well over the 10 day after its first move.
MSM - Bounced again from the 50 day.
ATK - Good move of late, but off the doji could come back for a test of 90.
MARKET FAVORITES:
1) SRNA - Broke down
2) DPMI - Also broke down and looking to give up the 200 day
3) EMLX - Can deliver a nice bounce
SRNA (Serena Software--$19.55; -2.05; optionable): Business Software
http://biz.yahoo.com/p/s/srna.html
STATUS: SRNA fell out of a cup in December, and although it made an assault on that December high in late January, it could not hold a move higher and dropped back. It bounced from the December lows (with the 200 day MVA, at 21.04), but a move back up stalled at the 50 day (22.88), and Friday saw SRNA break down on huge volume (1.39 million; average 365,600). After the strong drop we are looking for more weakness, although we could see a relief bounce and test of the 200 day before a continued drop. Target: 14.
BUY POINT: Test: After a test up toward 21, a drop back through 19.50 on continued strong volume. From here: a drop through 19.13 on continued strong volume.
POSITION: May $25 puts to buy (NHU QE - low open interest).
DPMI (Dupont Photomasks--$42.05; -1.25; optionable): Semiconductor equipment.
http://biz.yahoo.com/p/d/dpmi.html
STATUS: Broke from an ascending wedge in early January, but promptly formed a descending wedge as it held lows in the 44 range (below the previous pattern highs) and making lower highs. This week it first gave up the 50 day MVA (45.20) and, after flirting with the pattern lows, dipped below them Friday on a volume spike (up to 443,600; average 253,200). DPMI closed just over the 200 day (41.58), but it is weak and we are looking for a breach of support and put play down to 37 (November-December lows).
BUY POINT: 41.40 on continued strong volume.
POSITION: June $50 puts to buy (DUD RJ).
EMLX (Emulex--$35.40; +0.39; optionable): Peripherals
http://biz.yahoo.com/p/e/emlx.html
STATUS: One of the big tech names looking as if it is ready to bounce higher after holding at 35 for four sessions (held that level on the Thursday bounce). This is a pretty quick play up to 40 (the 50 day MVA is at 39.56). Still we can leverage our way in with some options and even stock and grab a nice return on that move. Target: 40
BUY POINT: 35.85 on volume of 11 million or better.
POSITION: Stock or July $30 calls to buy (UMQ DF).
Quick updates of prior Market Favorites:
PMCS - Hit the put target! Still weak, and we with any remaining positions we will be wary of a market bounce that could show it a little life, but with the big volume on the selling Friday it could drop down through 15 and perhaps to 12.50.
JNPR - Hit the put target intraday and recovered slightly, and could bounce from here. The first resistance is the 10 day, at 11.25.
YHOO - Hammer doji could point to a bit of a bounce, with resistance at the 10 day up at 15.45.
AMD - Dipped through the buy point and recovered to that level, but is weak in its downtrend. If there is a market bounce, 14 is probable resistance.
PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: Looking at AZO and DHI Tuesday, and INVN Thursday.
NEW PRE-ANNOUNCEMENT PLAYS:
BER (W.R. Berkley--$53.70; 0.00; optionable): Property & Casualty Insurance. Researching a new announcement date.
http://biz.yahoo.com/p/b/ber.html
BACKGROUND: Based upon our research it does not appear that BER has ever split its stock. The annual shareholder meeting was on 5-15-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: After the rally back by insurers after September 11, BER put in an all-time high at 58.40 in December and since has formed a cup with handle. On the last run before dipping back into the handle, BER hit 56.14, and has shown the lighter volume we like as it has pulled back to the 10 day MVA (53.51). Friday BER showed a doji on volume of 93,400 (average 129,300), so we are looking for a move up that will take it back up and breakout. Target on a breakout: 64.
BUY POINT: Bounce: Over 54.50 on above average volume. Stop: 51.75 (50 day at 51.91). Breakout: 56.26 on volume of 195,000. Stop: 52.32 (7%).
POSITION: Stock and/or April or July $50 calls to buy (BER DJ or BER GJ - no open interest on the July).
MUR (Murphy Oil--$82.75; +1.64; optionable): Working on a new date.
http://biz.yahoo.com/p/m/mur.html
BACKGROUND: Based upon our research it does not appear that MUR has ever split its stock. Authorized shares were increased at the last shareholder meeting.
STATUS: MUR made triple bottoms July-November at 68, but after the last move the stock has held onto the 200 day MVA (78.09) as support. MUR formed a double bottom since the beginning of January, when it fell back for the second consecutive time from the 85 range. Friday saw MUR break out of that pattern, surging over the pattern center (82.19) on big volume (329,200; average 243,300). A good move, and we are looking for more. The high from May 2001 is at 87.85, with the next major test at the recent tops at 85. Target: 100.
BUY POINT: Aggressive: Over 83.50 on continued strong volume. Stop: 79. Over the tops: 85.08 on volume of 330,000. Stop: 79.12 (7%).
POSITION: Stock and/or July $80 calls to buy (MUR GP).
CYN (City National--$50.15; -0.35; optionable): Regional bank. Researching a split date for this stock.
http://biz.yahoo.com/p/c/cyn.html
BACKGROUND: Based upon our research it appears that CYN split its stock in 1990 in the $40 range. The company has sufficient shares for a 3 for 2 split.
STATUS: In January CYN broke from a cup formed since August, and after hitting a high of 51.65 it dropped back for a test of the 50 day (then 47, now 48.37). It has formed an ascending wedge since bouncing from the 50 day, first challenging its high but pulling back to support at its 18 day MVA (49.95). It is holding firm there, Friday dipping back to that level but continuing to move on light volume (up to 169,900; average 193,600). Looking for a breakout. Excellent relative strength. Target: 60.
BUY POINT: 51.75 on volume of 260,000. Stop: 48.13 (7%).
POSITION: Stock and/or May $45 calls to buy (CYN EI - under 100 open interest).
PDCO (Patterson Dent--$41.31; +1.02; optionable): Medical equipment wholesale. Researching a date.
http://biz.yahoo.com/p/p/pdco.html
BACKGROUND: Announced a 2:1 split on 6-14-00 at a price of $53, and announced a 3:2 split on 1-12-98 at $45.
STATUS: PDCO has been a steady, solid performer. After using its 200 day MVA for several bounces in 2001, PDCO has used the 50 day in 2002, bouncing from that level three times, including the week. Friday PDCO tapped the 50 day (39.94) at its low before surging up with a big volume spike (395,000; average 246,400). Looking for more on this bounce, with the all-time high ahead at 42.05. Target: 48.
BUY POINT: Aggressive: Over 41.50 on continued strong volume. Stop: 39.75. New high: 42.15 on continued strong volume. Stop: 39.50.
POSITION: Stock and/or July $40 calls to buy (DOU GH - low open interest).
ESI (Itt Educational Services--$43.14; +0.43; optionable): Education & Training. Working on a date.
http://biz.yahoo.com/p/e/esi.html
BACKGROUND: Based upon our research it does not appear that ESI has ever split its stock.
STATUS: Recently broke over the October-November highs at the end of January (which made the left side of a saucer), and now has moved up toward the July high (46.25), which is the left side high of something of a cup pattern (with the deep September dive preceding the saucer). Monday ESI tapped a high of 44.25, and has since pulled back into a handle. Volume was initially low, but picked up to higher levels than we would want in a handle mid-week, finally settling down again Friday (133,600; average 132,500) as ESI pushed back up from just under the 10 day MVA (42.73). We are looking for ESI to hold the 10 day (18 day at 42), and set up a breakout move. Target: 52.
BUY POINT: 44.35 on volume of 200,000. Stop: 41.75.
POSITION: Stock and/or July $40 calls to buy (ESI GH - no open interest as yet).
PRE-ANNOUNCEMENT BEST PLAYS: Still looking at DIAN, XL and STU.
1) AZO - Broke out and going toward the split
2) DHI - Looking to move out of the pennant with an announcement
3) GTK - Tightening in the pennant
4) SLM - Looks ready to move
5) XL - Looking for a bounce
AZO (Autozone--$70.01; +1.11; optionable): Auto Parts. Forecast to announce a split with earnings on 2-26-02 after the close.
http://biz.yahoo.com/p/a/azo.html
BACKGROUND: Last announced a 2:1 split in March of 1994 at a price of $58. The annual shareholder meeting was on 12-14-00 at which time no additional shares were authorized.
STATUS: Broke out of its ascending wedge this week, and continued up Friday, although the move started with a test back close to the 50 day MVA (66.44; intraday low 66.80). Volume was up, and we are wary of another test after the close with a loose 'hanging man' doji. Going toward the forecast we will see if it holds the prior pattern highs 68.30 for a continued move. The ascending wedge formed over the last month, and formed as the stock held the 50 day after a pullback from its high of 80. That is the target.
BUY POINT: From here: Still a buy up 71.72 on continued strong volume. Stop: 64.10-66.70. Test: After holding 68.30 on a lower volume dip, a move back up on big volume.
POSITION: Stock and/or June $65 calls to buy. (AZO FN).
DHI (D.R. Horton--$36.31; -0.69; optionable): Residential construction. Forecast to announce a split with a board meeting on 2-26-02.
http://biz.yahoo.com/p/d/dhi.html
BACKGROUND: Last split 7:5 in September 1995 at $15.
STATUS: Approaching the board meeting, and DHI continues to look good as it moves in a narrow pennant pattern along the short-term MVA's (18 day at 36.15). After Thursday's promising, high volume bounce from the 18 day, DHI pulled back again to the 18 day, moving on lower, but strong volume of 1.81 million (average 975,300). The pattern still looks good, and we are again watching for DHI to hold support and make a surge that will break out of the pattern. Target on a new breakout: 45.
BUY POINT: 38.09 on minimum volume of 1 million or better. Stop: 35.42.
POSITION: Stock and/or May $35 calls to buy (DHI EG).
GTK (Gtech Holdings--$50.56; +0.28; optionable): Business software. Working on a date.
http://biz.yahoo.com/p/g/gtk.html
BACKGROUND: Based upon our research it does not appear that GTK has ever split its stock. The annual shareholder meeting was on 7-9-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: Continues in a tight pennant pattern, showing another doji Friday over the short-term MVA's (10 and 18 day at 50.12 and 49.56), as volume continues to be low (156,800; average 394,000). Still looking for the breakout, and targeting 58.
BUY POINT: 51.58 on volume of 530,000. Stop: 48.
POSITION: Stock and/or June $47.50 calls to buy (GTK FW).
SLM (USA Education--$91.14; +0.30; optionable): Researching a new date, and we are looking now at a board meeting that our research shows will be in early April.
http://biz.yahoo.com/p/s/slm.html
BACKGROUND: Last announced a 7:2 split on 11-21-97 at $38. There are enough shares for a 3:2 split.
STATUS: After its strong bounce Wednesday from the 18 day MVA (90.24), SLM has drawn back to that level again. Friday it showed a loose 'shooting star' doji over that support, as volume fell to 665,800 (average 734,800). Looks like it wants to hold, and we could see a bounce off of Friday's candlestick. Price/volume action has been pretty good in the consolidation, which formed after SLM made a very strong move earlier this month on the test of a breakout from a small cup. We continue to watch for the next run. Target: 105.
BUY POINT: Breakout: 93.95 on volume of 970,000. Stop: 89. Aggressive: Over 92.26 on above average volume. Stop: 89.
POSITION: Stock and/or July $90 calls to buy (SLM GR).
XL ($92.82; -1.45): Working on an announcement date, but are looking at a board meeting the first week in April.
http://biz.yahoo.com/p/x/xl.html
BACKGROUND: Based upon our research it does not appear that XL has ever split its stock. The company has sufficient shares for a 2:1 split.
STATUS: After the big breakout move a week ago, XL topped out at 98.48 and peeled back. It has dropped back through its former highs (at 96, from its November pennant), but is now holding strong over the 18 day MVA (91.98), having tapped that support two of the last three sessions. Friday we saw a doji on increased volume (954,800; average 855,400). Looking for a bounce, although it could need to rest a bit first at this support. Target on a move over the high: 110.
BUY POINT: Over 94 on volume of 1 million or better. Stop: 90.
POSITION: Stock and/or July $90 calls to buy (XL GR).
PRE-SPLITS BEST PLAYS: Remember, we try to grab these as they break out of good patterns or as they start a run right before the split. Not looking for home runs, but looking for those $3 to $4 moves running into the split, watching for topping signs and potential resistance. Not huge money, but it can be very steady. We set our initial stops at the 7-8% range below the purchase price (or just below obvious support), and move them up on a move to preserve our profits.
1) PMI - 18 day MVA bounce in progress
2) WLP - Also looking to bounce
3) DF - A new play!
4) NJR - Another new play!
PMI (Pmi Group--$71.15; +1.24; optionable): Surety & Title Insurance. Announced a 2:1 stock split, effective date to be determined.
http://biz.yahoo.com/p/p/pmi.html
STATUS: Has been steadily trending up its 18 day MVA (70.26) as it moves up in the right side of its cup pattern (dating back to June, with the left side high at 74.50; all-time high at 74.94). After dipping back Thursday to close below the 18 day and testing our prior buy point at 69, PMI bounced back up Friday, hitting our bounce buy point and moving on strong, increased volume (360,300; average 235,000). Looking for more, with the most recent high at 73.25, and the high at 74.94. Targeting 80 on the longer term plays we are in, with 76 the quick target on this bounce before a pullback in the uptrend.
PLAY: From here: Can still catch PMI on a continued strong move over 72, with stock and/or June $70 calls to buy (PFI FN), with calls being the position of choice if just playing the bounce. Stop: 67.75.
WLP (Wellpoint Health Networks--$126.16; +0.10; optionable): Announced a 2:1 split, effective March 15!
http://biz.yahoo.com/p/w/wlp.html
STATUS: We have been looking for the elusive split, and finally got it after hours Thursday! WLP has been riding along its 18 day MVA (126.16), having recently broken out of a cup and to a new high. We were looking at a bounce play this week, and WLP has continued to hold around the 18 day with three consecutive dojis as volume dips (Friday 417,100; average 514,800). Still waiting for the move, especially now with the news of the split behind it. We are targeting our longer-term positions for 140, and on the bounce play initially targeting 134 on the quick play, but on a continued show of strength can ride up to 140.
PLAY: A move over 127.50 on above average volume, with April $120 calls to buy (WLP DD).
DF (Dean Foods--$70.19; +0.09; optionable): Dairy products. Splits 2:1 effective 4-25-02.
http://biz.yahoo.com/p/d/df.html
STATUS: The sector has been doing well, and DF made a great run in December from 58 up to its high of 72.47. It pulled back and tested its 50 day MVA (61.94) in January-February, but took off on a nice run from there in recent sessions, moving on the news of an upgrade and the split. After a big move Wednesday, DF has rested a bit, pulling back slightly and then showing a doji Friday, with volume strong but lighter (687,300; average 526,600). We will look for the further formation of a handle here to set up its next run. Target on that move: 80.
PLAY: 70.85 on volume of 790,000, with stock and/or April or May $65 calls to buy (DF DM or DBZ EM - check broker for open interest, delta etc. as not available at the time of writing). Stop: 67
End Part 2 of 3
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us stock market
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