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Begin Part 2 of 2
Support and Resistance
Nasdaq: Closed at 1854.14
Resistance: 1875 is the bottom of the November consolidation. The 200 day MVA (1898.00). 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: 1850 is trying to act as support and held the past two sessions. After that, not much down to 1800 to 1775.
S&P 500: Closed at 1153.04
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 (1147.56). After that, 1125 is the hump in the double bottom, and the simple 50 day MVA (1128.29) and exponential 50 day MVA (1129.85) are converging. 1100 has acted as support as well.
Dow: Closed at 10,517.14
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 (10,009.33) 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): +0.3% actual versus +0.9% expected and -0.2% prior.
Retail Sales, ex-auto, February (8:30): +0.2% actual versus 0.5% expected and 1.2% prior.
3-14-02
Business Inventories, January (8:30): +0.2% actual versus -0.4% expected -0.5% prior.
Initial Claims, 3/9 (8:30): 377K actual versus 375K expected and 380k prior (revised from 376K).
Export Prices ex-ag., February (8:30): 0.0% actual versus 0.1% expected and -0.1% prior (revised from +0.1%).
Import Prices, ex-oil, February (8:30): 0.1% versus 0.1% prior.
Current Account, Q4 (8:30): -98.8B actual versus -$101.5B expected and -98.5B prior (revised from -$95.0B).
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.
THE PLAYS:
Good movers: MU broke the 200 day MVA for the put play; volume was stronger on the selling. NVDA (put) is almost to our target at the 200 day MVA (49.15), falling almost three points. PFG headed up in the handle to the double bottom on rising volume; looking for a breakout! ROH popped from the 18 day MVA on strong volume, hitting the new aggressive buy point (39.50) and looks ready to leap from here! BLC tested the breakout from its flying plateau (buy point 22.50), tested, and started climbing again Thursday, jumping from the 10 day MVA on a stronger rise in volume.
Covered Call: BMS has pulled back to the 18 day MVA on low volume after hitting the buy point for the covered call (57) last week. Will likely hold the support for a bounce, so on that move we will look at buying back the calls after just a point loss. ITT moved over resistance at 62 on strong volume; buy point for the covered call was at 61, but the stock is heading the other way (up), cue to close existing positions.
Continued Plays: AMAT, WWW, SLAB, AVY (put), QLGC, SLVN, GPC, ADSK, NATI, CEY (covered call), SFD and IPCR all look good for making moves tomorrow. AMAT and QLGC depend a lot on the general market for their moves. BLC also looks good.
IPCR (Ipc Holdings--$31.53; +1.29; optionable): Life insurance
http://biz.yahoo.com/p/i/ipcr.html
STATUS: Investors don't run when this stock comes around even though it is life insurance. Dropped from the lateral pattern (test of the breakout from a 6-week saucer) four days ago but after testing the 50 day MVA and shaking out some more sellers, made a nice move Thursday on rising volume (157,000; avg. 231,000). The move puts it back in the range of the lateral pattern, and the stock hit our aggressive buy point on the move at 30.75. From here, new positions on the breakout. Target: 37
BUY POINT: A hold for positions taken at 30.75; breakout is 32 on volume of 312,000 or higher. Stop Advisory (7%): 29.76
POSITION: Stock and/or June $25 calls to buy (QHE FE - no open interest).
http://www.investmenthouse.com/ct/ipcr.html
New:
IBM ($106.60; -0.58; optionable): Software
http://biz.yahoo.com/p/i/ibm.html
STATUS: Forming a reverse head and shoulders pattern and while the stock closed just under the 50 day MVA (107.37), volume continues to fall well below average (5.3 million; avg. 7.8 million). With the 18 day MVA at 104.75 and other price support at that level, on a continued pullback we look for support there. The neckline in the pattern is at the 200 day MVA (109), and on a move over that resistance we will look at buying some calls for a potential pop up to the 115 range where there is resistance from price consolidations and a gap down (we prefer options for quicker moves up to resistance).
BUY POINT: 109.10 on volume in the range of 8 million or higher. Stop Advisory (7%): 101.46
POSITION: Stock and/or July $100 calls to buy (IBM GT).
http://www.investmenthouse.com/ct/ibm.html
JBHT (Jb Hunt Transport--$28.11; +0.85; optionable): Trucking
http://biz.yahoo.com/p/j/jbht.html
STATUS: In a 6-week cup with handle base with previous highs at 29, and Thursday the stock moved higher in the handle on rising volume (still well below average at 168,100; average is 430,272). The pattern formed after a super uptrend from the September lows around 12. Looking for a breakout! Money flow and buying look good. Target is 35.
BUY POINT: 28.69, on volume of 650,000 or higher. Stop Advisory (7%): 26.68
POSITION: Stock and/or May or August $22.50 calls to buy (JHQ EX or HX).
http://www.investmenthouse.com/ct/jbht.html
WY (Weyerhaeuser--$65.17; +2.87; optionable): Lumber
http://biz.yahoo.com/p/w/wy.html
STATUS: Making a strong move off of its 18 day MVA, the stock's third bounce from this support since it broke over the 200 day MVA in January. Volume was high at 2 million (avg. 977,400) on the bounce, so we are looking for WY to move over the previous March closing high at 65.25, just cents away. We can ride the new leg, then consider closing positions as the stock tops out. After 3-4 bounces from the 18 day MVA, WY can then test back closer to the 50 day MVA, a pullback that can be ridden for longer term positions, perhaps selling some covered calls on the move. Excellent money flow and buying. Target: 70
BUY POINT: 65.30 on continued strong volume. Stop Advisory (7%): 60.73
POSITION: Stock and/or July $55 calls to buy (WY GK).
http://www.investmenthouse.com/ct/wy.html
SHW (Sherwin-Williams--$28.55; +0.10; optionable): Building Materials
http://biz.yahoo.com/p/s/shw.html
STATUS: Testing the recent flat base (that turned into a reverse head and shoulders) breakout, consolidating now on low volume in a sideways manner as volume keeps falling below average (492,800; avg. 698,000). Showing a doji at the 10 day MVA (28.13), SHW may move laterally another day or two as volume slips lower, but we are looking for a strong move back up. The breakout volume was high though price movement was not stellar, but stocks can make better gains after a test and this low-volume pullback looks good. Good money flow, solid buying. Target: 34
BUY POINT: Aggressive: 28.75 on volume of 700,000 or higher. Stop Advisory (7%): 26.74
POSITION: Stock and/or June $25 calls to buy (SHW FE).
http://www.investmenthouse.com/ct/shw.html
TIN (Temple Inland--$58.88; +1.41; optionable): Paper Products
http://biz.yahoo.com/p/t/tin.html
STATUS: In a big ascending wedge that started forming in September; the pattern is part of a slightly larger base (7.5 months) with highs near 62. Upper resistance in the wedge is at the 59.50 range and the stock headed that way Thursday as volume broke above average levels to 374,500 (avg. 242,000), TIN moving off of support at the 10 day MVA (57.60). We are looking for a breakout; the stock shows good money flow, and relative strength is heading higher. Target: 67
BUY POINT: Breakout: 59.37 on continued strong volume (minimum breakout volume met at 327,000). Stop Advisory (7%): 55.21
POSITION: Stock and/or May or August $55 calls to buy (TIN EK or HK).
http://www.investmenthouse.com/ct/tin.html
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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