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world stock market, us stock market
Begin Part 2 of 2
TOMORROW
Retail sales are out before the open, the first of the consumer oriented news of the week. They were an upside surprise last month and are expected to gain slightly this month. The market is getting to an interesting point. Economic news has been very good, but it is coming to the nut crunching time: earnings are coming and there has to be some performance. There will be more warnings; as we saw, telecom is not recovering and more telecoms will warn. Remember, chip stocks are claiming that this is the bottom; that does not necessarily mean there will be real improvement. We are seeing spotty improvement in earnings; that is a signal of change as the former trend was all bad. As the market showed today, it is not immune to disappointment though it did recover somewhat.
We still like many patterns we see and feel we can take 20% gains on stock trades and even better on option trades. We are not, however, going to push things too far. We will take money off the table when upside targets are hit just as we close them out when the downside stops are hit. With the looming earnings warnings and the actual numbers, the technology sector in particular is subject to quick upset. If price/volume action starts to deteriorate, we will view that as a signal of uncertainty about the upcoming earnings and we will start lightening up on upside positions and preparing form more downside.
We don't anticipate that change this week necessarily. We continue to see good action on the indexes that is a nice consolidation of the recent move higher. As long as the price/volume action continues to show that there is not dumping but continued holding of the shares recently purchased on the move up, the potential for another breakout is there. As that occurs, individual stocks continue to move higher and give us solid returns without overstaying our welcome.
Support and Resistance
Nasdaq: Closed at 1897.12
Resistance: The 200 day MVA (1902.52. The top of the November consolidation at 1934 to 1941. After that is 1980 (the December gap up point) and some minor resistance at 2000. Then the January top at 2098.88.
Support: 1875 has acted as support Tuesday as it has done in the past. It represents the bottom of the November consolidation range. The 50 day MVA is at 1866.46. After that, not a lot of room before 1800.
S&P 500: Closed at 1165.58.
Resistance: The December high (1173.62) and the January high (1176.97). That point also marks roughly the lows of summer 2001 consolidation that runs up to 1240.
Support: 1150 and the 200 day MVA (1149.13). After that, 1125 is the hump in the double bottom, and the simple 50 day MVA (1128.33) and exponential 50 day MVA (1127.87) are converging. 1100 has acted as support as well.
Dow: Closed at 10,632.35
Resistance: The top of the June, July, and August 2001 trading range at 10,600 (10,679 intraday high), is still holding. 10,800 represents some resistance. That is followed by resistance at 11,000 on its way to the May 2001 high at 11,345.72.
Support: 10,400 has been providing support, followed by the January high at 10,300. Then the 200 day MVA (10,017.21) and 10,000.
Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.
3-11-02
Wholesale Inventories, January (10:00): -0.2% actual versus -0.5% expected and -0.5 prior (revised from -0.6%).
3-13-02
Retail Sales, February (8:30): 0.9% versus -0.2% prior.
Retail Sales, ex-auto, February (8:30): 0.5% versus 1.2% prior.
3-14-02
Business Inventories, January (8:30): -0.4% versus -0.4% prior.
Initial Claims, 3/9 (8:30): 375K versus 376K prior.
Export Prices ex-ag., February (8:30): 0.1% versus 0.1% prior.
Import Prices, ex-oil, February (8:30): 0.1% versus 0.1% prior.
Current Account, Q4 (8:30): -$101.5B versus -$95.0B prior.
3-15-02
PPI, February (8:30): 0.1% versus 0.1% prior.
Core PPI, February (8:30): 0.1% versus -0.1% prior.
Industrial Production, February (9:15): 0.2% versus -0.1% prior.
Capacity Utilization, February (9:15): 74.3% versus 74.2% prior.
Mich. Sentiment-Prel., March (9:45): 93.0 versus 90.7 prior.
TEAM TRADES
VVUS: Va-va-voom. Issued the alert and then just watched it sail on up without acting on it. You know, one of the things you have to do when you see the move you are looking for is act.
SWK: A recent favorite, we were looking for SWK to give us another chance for a good move. It had sold back to and tested the 18 day MVA on Monday, and today it started up off of that level. We could have jumped on it right off the bat, but with the market as it was we waited for it to move up over 50 and show us some decent volume. Well, right after noon CT it cleared 50 on good volume. It had been in an intraday ascending wedge and broke out. We should have jumped in right there. This was its first bounce off the 18 day MVA following its solid breakout in late February. We waited, however, to let some more volume come in; it cleared 50.50, ran to 50.65. It came back to 50.50 and held. We moved in at that point. It started back up over the next hour but then got caught in the selling before rebounding to close right at our buy point. Volume was good and the sector is doing well; it can give us another 20% we think.
THE PLAYS:
Good movers: Lots of them today! Breakout from MYG (the company said that earnings will beat estimates, and an SSB upgrade had to help), and CMX continued its breakout from the 7-month cup with handle. Nice bounces from BDK and SWK, GPC is doing the same in its cup with handle, and NVDA was down three points for the put play, volume rising.
Update on covered call plays: CYMI is holding support at the 10 day MVA. It does not look like it will head lower; instead the stock is testing it recent bounce from the 18 day MVA as volume decreases in a typical pullback to support. Our earlier target for the covered call play was at 41.37. If the stock bounces here that's the cue to buy them back.
CEY: Still hovering in mid-air and we are still waiting for a pullback.
Continued Plays: For tomorrow we are watching GPC, SWK, SLVN, VLY, NATI, SYY, TUES, HET, SFD. See last night's report for buy points.
SWK (Stanley Works--$50.33; +1.22; optionable): Small tools
http://biz.yahoo.com/p/s/swk.html
STATUS: SWK made the bounce we expected, moving up from the 18 day MVA (48.74) on rising, average level volume of 502,600. The stock hit our buy point for aggressive positions at 50.50 then pulled back below it to close, but we are looking for a continued push from here for the bounce. New buy point is over today's intraday high; the stock can pull back the rest of the way to 50 before heading higher tomorrow, and aggressive positions can be taken on a strong move up from there. Buying is excellent, and the stock has high money flow. Target: 60.
BUY POINT: Holding positions taken at 50.50. New buy point (aggressive) 50.80 on volume of 578,000 or higher. Stop Advisory (7%): 47.24.
POSITION: Stock and/or July $45 calls to buy (SWK GI; 91 open interests).
http://www.investmenthouse.com/ct/swk.html
New:
AMAT (Applied Materials--$50.66; -1.13; optionable): Semiconductor
http://biz.yahoo.com/p/a/amat.html
STATUS: AMAT broke out of a 7-week ascending wedge-type pattern early this month and is now testing the move on decreasing volume. The stock reached a breakout closing high at 53.53 but has pulled back in a test of the 10 day MVA at 50. Volume continued to fall, down today to 17.7 million (avg. 16.7 million). Looking for a hold at this support on continued falling volume; AMAT can pull back to the buy point at 48.75 but should hold at or above that price for the move back up. Good money flow. Since we don't want to get caught in any downdraft we will look to buy options on this move to take advantage of their leverage. Target: 57.50
BUY POINT: Aggressive from the 10 day MVA: 51 on volume of 17 million or higher. Stop Advisory (7%): 47.43. From the previous buy point (48.75): 49 on rising volume.
Stop Advisory (7%): 45.57
POSITION: Stock and/or July $45calls to buy (ANQ GI).
http://www.investmenthouse.com/ct/amat.html
PFG (Principal Financial--$25.00; +0.05; optionable): Insurance
http://biz.yahoo.com/p/p/pfg.html
STATUS: A new issue that has formed a double bottom with handle pattern at the top of a three-month uptrend. Currently in the handle, volume has been falling off, and was down Tuesday to a low 615,600 (avg. 2 million). It is a well-formed pattern, with the second dip in the double bottom undercutting the first and a good-looking handle. Target is 31. Buy point is aggressive since the true high in the handle is up at 26, well above the handle itself.
BUY POINT: Breakout (Aggressive): 25.61 on volume of 3 million or higher. Stop Advisory (7%): 23.82
POSITION: Stock and/or July $22.50 calls to buy (PFG GX).
http://www.investmenthouse.com/ct/pfg.html
WWW (Wolverine World Wide--$17.44; +0.10; optionable): Apparel Footwear
http://biz.yahoo.com/p/w/www.html
STATUS: In a 6.5-month cup with handle, consolidating in the handle for the last 4 days. The stock bounced on good volume from the 10 day MVA on Monday, then headed up again Tuesday though volume fell back again to 147,400 (avg. 153,000). The stock may take another day or so in the handle, and for a breakout look for rising volume and a move over 18. The stock shows money flow that is leading price, and that is bullish. Target: 22
BUY POINT: Breakout: 18.10 on volume of 230,000 or higher. Stop Advisory (7%): 16.83
POSITION: Stock and/or June $15 calls to buy (WWW FC).
http://www.investmenthouse.com/ct/www.html
SLAB (Silicon Laboratories--$35.07; -0.43; optionable: Semiconductor
http://biz.yahoo.com/p/s/slab.html
STATUS: In a 10-week cup with handle base, highs at 41. Volume has been decreasing in the handle, down Tuesday to a low 397,500 (avg. 670,000), with the stock currently holding support at 34.15. The 10 day MVA is at 33.15 should SLAB pull back that far, but we will look for a hold at 34.80 or higher; the stock hit that price three times in the base and as volume decreases further the odds improve. Looking for a breakout; SLAB shows huge money flow and strong buying. Target: 45
BUY POINT: Breakout: 37.29 on volume of 1 million or higher. Stop Advisory (7%): 34.68
POSITION: Stock and/or July $35 calls to buy (QFJ GG). Check for deltas.
http://www.investmenthouse.com/ct/slab.html
Previously covered stocks that look ready for a play: RTN, SXT, PZB (looking good; see the 3-06 report for buy points). These stocks look good and are holds for current positions: PH's volume broke over average levels in a strong surge today; the stock has been moving laterally for three days and looks ready to break higher. MAS bounced from the 18 day MVA in the test of breakout; volume was lower but looks interesting (new buy point 28.90). LOGI debuted its new "fabric" keyboard today and was bouncing from the 18 day MVA on strong volume. Looks ready to try a move over the previous March high (46.04). ESST is moving laterally in its test of the breakout with volume tanking. Looking ready for a move up (March high is 25.99).
ABC ($68.20; +1.80): Hit our aggressive buy point at 68.21 for the cup with handle breakout, but not before the stock had formed a quick ascending wedge pattern above the 18 day MVA. Volume was too low to take any positions; new buy point is 68.40 on volume of 1.4 million or higher, stock and/or May $60 calls. A hold for previous buys.
GDW ($64.93; +0.84): Bounced from the up trendline/18 day MVA (has supported the earlier ascending wedge at the upper right side of the 8-month cup with handle base) on rising volume. Buy point for a breakout from the cup with handle is 66.70 on minimum volume of 1.1 million, stock and/or May $60 calls to buy. A hold for buys at 65.10.
ROH ($38.77; +0.02): Broke out of its flat base to reach the March high at 40.68 and has pulled back to test the move, holding at the 18 day MVA with its second consecutive doji. Volume fell below average today. Aggressive buy point for the bounce back up is 39.50 on volume in the range of 1 million or higher, stock and/or July $35 calls. A hold for positions taken at 39.14.
ESST ($25.40; 0.00): Broke out of its double bottom but the move was short. ESST immediately started the test, and as it moves laterally volume is sinking very low below average (827,200 (avg. 1.75 million). Looking ready for a move up. Outstanding money flow. Target is 30. Buy point is 26.09 on volume of 2 million or higher for stock and/or July $22.50 calls to buy.
For a review of frequently asked questions, please use the link below:
http://www.investmenthouse.com/1questions.htm
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.
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world stock market
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