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Begin Part 2 of 3
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: Some nice plays setting up.
BONUS PLAYS: Prior bonus plays EAT and SDS are still set up nicely.
KCIN (Kpmg Consulting--$19.95; -0.03; optionable): Business Services
http://biz.yahoo.com/p/k/kcin.html
STATUS: KCIN broke out of its recent (December-February) rolling range, hitting 21.49 before testing the move. It has dipped back this week on lower volume, holding its 10 day MVA (19.71) with a doji on high volume today (4.48 million; average 1.48 million). The pattern is nice and suggests a bounce, and we will look for a strong move back over the breakout high. Good money flow and buying. Target: 23.50.
BUY POINT: Over 20.35 on continued strong volume. Stop: 19 (7%).
POSITION: Stock and/or July $17.50 calls to buy (CUF GW).
ROAD (Roadway Express--$40.50; +0.99; optionable): Trucking
http://biz.yahoo.com/p/r/road.html
STATUS: ROAD made a great move up in September-January, and since then it has formed a double bottom. The last week and a half ROAD has exited into a handle, holding over the short-term MVA's (18 day at 38.98). Today ROAD tested the 18 day and pushed back up. Volume was stronger but remained at the below average levels we have seen in the handle (123,500; average 170,000). Looking good for a breakout. Target: 47.
BUY POINT: Breakout: 41.10 on volume of 255,000. Stop: 38.22 (7%).
POSITION: Stock and/or June $35 calls to buy (EJQ FG - low open interest).
Quick updates prior bonus plays.
NEU - Still looking good
DD - Started a bounce
CMX - Could pull back for a test
MER - Has pulled back but still looks nice in the handle
CUM - Could be ready to move again
BVF - Moved back over the 50 day and is holding
MKSI - Made a bounce back after testing the 18 day MVA
SHFL - Good pattern
MARKET FAVORITES: PRGS held up after testing back to its 18 day MVA, and FLEX hit the put buy point.
1) ZRAN - Testing former cup highs
2) MERQ - Revisiting on the nice pullback
3) MSFT - Looking at more downside
ZRAN (Zoran Corp--$38.32; +0.15; optionable): Semiconductor
http://biz.yahoo.com/p/n/ntap.html
STATUS: ZRAN made a nice run recently from 27.50 up to a high of 42.52 last week, taking out its December high (38-39, which formed the left side of a cup) and August highs (40-41). It has pulled back with the market, gapping down Tuesday but holding on in the range of the December highs and the 10 day MVA (38.29). Looking good as it holds, and looking for a solid bounce in a stronger market. Target: 43, watching the high.
BUY POINT: Bounce: Over 39 on above average volume. Stop: 36.75.
POSITION: Stock and/or June $35 calls to buy (ZUO FG).
MERQ (Mercury Interactive--$39.44; -0.26; optionable): Software
http://biz.yahoo.com/p/m/merq.html
STATUS: Made a very strong, hammering through our buy point Monday with a strong move. MERQ has since pulled back with the market, and is looking pretty good on the drop. Volume has dipped substantially, coming in today at 2.4 million (average 3.67 million) as MERQ showed a loose doji over the 10 day MVA (38.68), just under prior pattern highs at 40. Looking for a hold on this test, and in a stronger market a continuation of its strong move up to a target of 48.
BUY POINT: In a stronger market, new or additional positions on a move over 40.50 on above average volume. Stop: 37.76 (7%).
POSITION: Stock and/or July $35 calls to buy (RQB GG).
MSFT (Microsoft--$61.22; -0.88; optionable): Software
http://biz.yahoo.com/p/m/msft.html
STATUS: Made a run at the 200 day MVA (64) with the recent run in the market but has fallen back. After gapping down Tuesday and holding the 18 day MVA (61.87; 50 day at 62.63), MSFT failed to hold and fell back today on higher, though below average volume (25.9 million; average 27 million). Showing weakness, and in a continued weak Nasdaq we can look at a put play on MSFT back to a target of the recent lows at 58.
BUY POINT: A drop through 60 on increased volume.
POSITION: July $70 puts to buy (MSQ SN).
Updates on recent Market Favorites:
NTAP - The handle is a small ascending wedge now
LRCX - Gapped back again Wednesday, but holding on the test
XLNX - Pulled back to the support of the 50 day MVA
MANU - Pulled back a bit harder today, still holding support
BRKS - Bullish'Shooting star' doji over support today
PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: None scheduled for this week.
PRE-ANNOUNCEMENT BEST PLAYS: Most are consolidating with the indexes and are set up well.
1) MMM - Looking good in its handle consolidation
2) MRBK - Has formed a nice pattern
3) KRI - Time for the move
4) IFIN - Nice test
5) MUR - Holding support with a pennant
6) DRI - Setting up for a possible drop
7) CPS - Volume surge in the pennant
MMM (Minnesota Mining & Mfg--$120.59; +1.09; optionable): Conglomerate. Forecast to announce a split on 4-18-02 in conjunction with earnings. At this time the company will not confirm the date.
http://biz.yahoo.com/p/m/mmm.html
BACKGROUND: Last announced a 2:1 split on 3-15-94 in conjunction with a board meeting. The stock price was $100. The annual shareholder meeting was on 5-8-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: MMM has pulled gradually back into a handle to its two-month cup. MMM has been battling its highs at 125 (all-time high at 127), having made a nice trend up the last two months after having tapped down to 100. MMM broke over the December high of 122, forming the cup in the right side of a huge reverse head and shoulders pattern going back over a year. The handle looks good, moving on below average volume, and today it again tapped its 18 day MVA (119.20), which has acted as recent support. Looking for a run to a new high. Target: 140.
BUY POINT: Breakout: 123.80 on volume of 3 million (today down to 1.5 million; average 2.1 million). Stop: 118. Aggressive: Over 122 on volume of 2.5 million. Stop: 118.
POSITION: Stock and/or July $115 calls to buy (MMM GC).
MRBK (Mercantile Bankshares--$44.99; +0.09; no options): Banking. Back in split range; it last split in 1997 at $40.
http://biz.yahoo.com/p/m/mrbk.html
STATUS: MRBK has formed a nice little cup over the past six weeks, and is now forming a handle. It is back up at its all-time highs, actually completing a year-old double bottom in January, when it pulled back to form the present cup. MRBK hit a new high Tuesday at 45.15, and is currently pulling laterally with three consecutive doji or loose doji candlesticks. Today volume dipped back to 125,000 (average 189,100), and we could get a bit more pullback in the handle toward the 10 day MVA (44.50), and that would be fine - a handle should drift back, shaking out those weak holders and setting up the breakout. Target: 51.
BUY POINT: 45.25 on volume of 285,000. Stop: 42.75.
POSITION: Stock only.
KRI (Knight-Ridder--$67.20; -0.15; optionable): Newspapers. Forecast to announce a split on 4-24-02 before the open. There is also the shareholder meeting the next day at 9:30 PT.
http://biz.yahoo.com/p/k/kri.html
BACKGROUND: Last announced a 2:1 split in July 1996 at a stock price of approximately $70. The company has sufficient shares for a 2 for 1 split.
STATUS: Continues in the tightening pennant, a good pattern but we would like to see a move. Pennants can go either way, but KRI has been solid of late and made an excellent breakout in mid-February. We are looking for another solid move out of this pattern. Today KRI again closed at the support of the 10 day MVA; it has closed over that level while using the 18 day (66.78) as support at its intraday lows. Volume continued to be light (220,500; average 395,000), which is good action. Target: 80.
BUY POINT: 68.35 on volume of 540,000. Stop: 63.57. The move to a new high is 68.83.
POSITION: Stock and/or July $65 calls to buy (KRI GM - under 50 open interest).
IFIN (Investor's Financial Service--$75.77; -0.22; optionable): Looking at an announcement on 4-16 with earnings or with the 4-23 shareholder meeting.
http://biz.yahoo.com/p/i/ifin.html
BACKGROUND: Last announced a 2:1 split on 5-15-00 with a board meeting. The stock price was $82. The annual shareholder meeting was on 4-17-01 at which time authorized shares were increased.
STATUS: After its nice breakout from a small double bottom, IFIN has drifted over and down slightly, testing the move and holding over the prior pattern highs (75-75.50). IFIN has now shown four consecutive dojis, getting a strong volume jolt Wednesday but settling back down today to 57,200 (average 198,000). Looking good, and watching for a strong move back up following this test.
BUY POINT: A move over 77.35 on above average volume. Stop: 72.50.
POSITION: Stock and/or July $70 calls to buy (FLQ GN - low open interest).
MUR (Murphy Oil--$87.94; +0.40; 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 broke to a new high last week, moving out of a very short consolidation formed after it had broken over the highs in its recent range. Volume was not the greatest on that move, so MUR has come back to test the former highs, and is holding up nicely over those levels (86-87), with its 10 day MVA (87.07). It has developed a little pennant, today tapping back to 86.35 at its low but moving back up to close on increased volume (239,300; average 223,800). Setting up to make a better move this time. The high is 90.25.
BUY POINT: 89.67 on volume of 300,000. Stop: 84.
POSITION: Stock and/or July $85 calls to buy (MUR GQ).
DRI (Darden Restaurants--$38.45; +0.85; optionable): Restaurants.
http://biz.yahoo.com/p/d/dri.html
STATUS: Restaurants have been hammered, a leading sector now turned sour. Monday DRI fell hard through its 50 day MVA (39.38), and has come back to test near that level the last two sessions. Wednesday it closed well off of its high as volume was very high, but rather than dropping back DRI continued back up today, but on much lower volume (1.47 million; average 865,600). Looking for this test to fail, and for DRI to drop back down toward the initial target of 34, but looking at a possible drop to the 200 day MVA, currently at 32.06.
BUY POINT: For new or additional positions, a drop back through 37.50 on continued strong volume.
POSITION: July $45 puts to buy (DRI SI - no open interest as yet).
CPS (Choicepoint--$54.11; +0.30; optionable): Business Services. Forecast to announce a split on 4-18-02 in conjunction with earnings. At this time the company cannot confirm the date for the release, but based upon our research this is the date for the release. There is going to be a mid quarter conference call on 3-14-02 and we will watch that as well.
http://biz.yahoo.com/p/c/cps.html
BACKGROUND: Last announced a 3:2 split on 1-31-01 with a board meeting at a price of $53. Before that CPS announced a 2:1 split on 10-20-99 at a price of $63. The company has sufficient shares for a 3 for 2 split.
STATUS: CPS is pulling tighter into a pennant. It is now holding support over its 18 day MVA (53.79), making a slight move up today with a volume spike behind it (way up to 242,600; average 215,800). Since its last split a year ago, CPS has dashed back up into range, as splitting stocks often do. It has been on a nice uptrend, hitting 55.40 before pulling into the present pattern. Looking good, and watching for an upside breakout. Target: 62.
BUY POINT: 55.10 on volume of 310,000. Stop: 51.75.
POSITION: Stock and/or July $50 calls to buy (CPS GJ - low open interest; plenty at $55).
LSTR (Landstar System--$92.80; -0.40; no options): Researching a new date.
http://biz.yahoo.com/p/l/lstr.html
BACKGROUND: Based upon our research it does not appear that LSTR has ever split its stock. The annual shareholder meeting was on 5-16-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: Blasted up with a breakout move Wednesday! Volume was excellent, and today volume backed off a bit (99,200; average 61,800) as LSTR rested. The lower volume doji after the abrupt breakout run could be just a pause before a continued move, and LSTR is still a buy up to 93.76 on continued strong volume. Looking for a run to 100.
BUY POINT: A buy up to 93.76 on continued strong volume. Stop: 86.30-87.20.
POSITION: Stock only.
PRE-SPLITS BEST PLAYS: SMD is making a very nice run into the split.
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) JEC - A small bounce
2) PMI - Trying to bounce
JEC (Jacobs Engineering--$70.77; +1.04; optionable): Splits 2:1 on April 2.
http://biz.yahoo.com/p/j/jec.html
STATUS: Started a move today with a little bounce out of its short consolidation over the 10 day MVA (69.29). JEC had pulled back to test its recent move, where it hit 72.96 before an abrupt drop. The stock has made a solid move up over the last month as it builds the right side of its base. Looking for more on the pre-split move. Target: 75.50.
PLAY: A continued move over 71.20, with stock and/or July $65 calls to buy (JEC GM). Stop: 68.
PMI (Pmi Group--$73.85; +1.47): Surety & Title Insurance. Splits 2:1, effective date TBA.
http://biz.yahoo.com/p/p/pmi.html
STATUS: PMI is at the highs of a 16-month double bottom, and has been trending steadily up the 18 day MVA (72.55). The stock made a new high at 75.25 as it gapped up and reversed last week, but held the 18 day MVA (72.55), making a nice bounce back up today. Volume was sharply higher on the bounce, coming in at 369,400 (average 244,400). A good move off of support, and we will look for more on a continued move toward 80.
PLAY: Momentum: Over 74.50 on continued strong volume, with June $70 calls to buy (PMI FN).
CONTINUING CANDIDATES BEST PLAYS:
1) JCI - Shakeout of its pennant
2) INVN - Testing back but needs to hold here
JCI (Johnson Controls--$90.34; -1.07; optionable):
http://biz.yahoo.com/p/j/jci.html
STATUS: After its nice January breakout, JCI has made a nice move up (from 83), hitting a high of 92.94 last week. It has pulled into a pennant pattern, pulling off of intraday highs over 92 the last two sessions before today, which saw JCI gap back and test its 18 day MVA (89.53). Volume was sharply up (501,300; average 497,600) as the stock showed a loose doji, and a sharp drop into the lower range of a pennant can be a "shakeout" that occurs prior to a solid move. We will see if the stock can rebound. We could get a run to 100 on a breakout.
BUY POINT: A move over 92 on increased volume. Stop: 86.58.
POSITION: Stock and/or July $85 calls to buy (JCI GQ).
INVN (Invision Technologies--$44.57; -2.08; optionable):
http://biz.yahoo.com/p/i/invn.html
BACKGROUND: Based upon our research it does not appear that INVN has ever split its stock. The company has sufficient shares for a 3:2 split.
STATUS: After its nice breakout Tuesday, INVN has come back to test the move, but is giving up more ground than we would like. However, although it has given up the former pattern highs (closing 45.50), it is still holding the 10 day MVA (44) and the retreat has been on much lighter volume than we saw on the breakout (down to 1.75 million today; average 2.28 million). Looking for a hold here and a strong move back up for new or additional positions. Still targeting 57.
BUY POINT: After showing it can hold the 10 day, a move back over 45.50 on above average volume. Stop: 42.41 (7%).
POSITION: Stock and/or July $40 calls to buy (FQQ GH).
POST SPLITS BEST PLAYS:
1) CHBS - Holding support in a consolidation
CHBS (Christopher & Banks--$30.80; +0.73; optionable): Split 3:2 in December.
http://biz.yahoo.com/p/c/chbs.html
STATUS: Has really rebounded with strength, moving back over the 50 day MVA (29.37) last week. After that strong run CHBS has settled back a bit, tapping at the 50 day Wednesday, but holding nicely as volume has dipped with the price (down to 258,200 today; average 498,000). Looking for a strong move over the recent high in this little consolidation, which would also take the stock over one of its short-term down trendlines (connecting December-January highs).
PLAY: On a move over 31.30 with volume of 600,000, stock and/or June $26.63 calls to buy (ULH FW).
End Part 2 of 3
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