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stock watch, stock trading information
Begin Part 2 of 3
Support and Resistance
Nasdaq: Closed at 1868.30.
Resistance: 1875 is the bottom of the November consolidation. The 200 day MVA (1896.13). 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 was able to hold as support last week. After that, it is pretty sparse down to 1800 to 1775.
S&P 500: Closed at 1166.16
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. Before that point there is some resistance at 1183 from March 2000.
Support: 1150 and the 200 day MVA (1146.94). After that, 1125 is the hump in the double bottom, and the simple 50 day MVA (1128.52) and exponential 50 day MVA (1131.27) are converging. 1100 has acted as support as well.
Dow: Closed at 10,607.23
Resistance: The top of the June, July, and August 2001 trading range at 10,600 (10,679 intraday high), is still in the way. 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 held as support during this consolidation. That is followed by the January high at 10,300. Then the 200 day MVA (10,006.84) and 10,000.
Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.
3-19-02
Trade Balance, January (8:30): -$26.9B versus -$25.3B%
FOMC Meeting (2:15): Results announced
3-20-02
Housing Starts, February (8:30): 1.63M versus 1.678M prior.
Building Permits, February (8:30): 1.65M versus 1.706M prior.
Treasury Budget, February (2:00): -61.0B versus -$48.2B prior.
3-21-02
Initial Claims, 3/16 (8:30): 377K versus 377K prior.
CPI, February (8:30): 0.2% versus 0.2% prior.
Core CPI, February (8:30): 0.2% versus 0.2% prior.
Leading Indicators, February (10:00): 0.3% versus 0.6% prior.
Philadelphia Fed, March (12:00): 17.8 versus 16.0 prior.
FOMC Minutes, 1/30 (2:00)
SUBSCRIBER QUESTIONS
Q: When an analyst upgrades or downgrades a stock, does his big money clients get advance notice?
A: This is one of the overlooked conflicts of interest. Surprising in this time of supposedly heightened scrutiny of all transactions. What has developed in recent years is the rise of the big name stock analyst in a particular sector. Each big brokerage house wants a few of them to get the name out there when these big market, stock or sector calls are made. They have made a lot of fuss lately about how tough their analysts have become, some even giving bonuses for downgrades that turn out to be 'the best.' They have been chased around with big salaries much like baseball free agents.
The way things have been set up is that these big name analysts often are given free rein to make whatever calls they want without having to necessarily conform to what the brokers are selling to or telling their clients. The idea is to give them intellectual freedom to make calls as they see them and then avoid the very question you raise: controversial calls being made but the big money clients getting word of it first.
So in theory, they do not get the inside scoop ahead of time and neither does the average investor. Some of my brokers handle accounts that contain millions of dollars. When Jonathon Joseph of SSB made the controversial chip call back in September 2000, the brokers did not get a heads up on this. One broker complained to us that he had just put some big clients into some semiconductor stocks just in time for the call to come out and for them to get whacked. Many brokers complain of not getting the information ahead of time and being able to properly position their clients. Again, these include accounts with millions of dollars in assets in them. Not only do they not get an alert before the big calls are made, but all calls from these 'semi independent' analysts. Seems they carry the brokerage's name but don't have to reveal to the brokers or their clients the calls they are going to make.
To us that sets up a conflict of interest in the other direction. It is not the well to do clients getting the scoop before the street (although that may indeed happen for those in the very inner circle), it is the client getting the shaft. Many of these clients rely on their broker's advice as to where to put their assets to work, particularly in managed accounts. If the brokerage house is taking in fees for this service and then a call from one of their big name analysts runs contrary to that advice and loses the client's money, that appears to breach a duty owed to the client. You pay money for advice and expertise, and then one of the firm's analysts makes a call contrary to that advice given and paid for and you lose money. Seems you bought the shaft with your fees.
THE PLAYS:
Removed to a watchlist unless otherwise indicated:
PZB ($24.00; +0.34): Broke out, hitting the buy point of 23.95 for the lateral pattern breakout. Remains a buy on the move up to 25.16, so still has some room; volume was strong so we are looking for the stock to make it at least that far initially. A hold for the ride.
FDX ($57.45; -0.50): Still testing the breakout from the ascending wedge but has pulled back below the 18 day MVA, remaining above the buy point at 56.10. A hold.
PFG ($25.50; +0.08): Tried to make its move Thursday in the 6-week double bottom with handle, but volume was weak Friday on the small gain. A hold for positions, if taken, at 25.61.
HDWR ($15.04; +0.32): Broke out of the ascending wedge but has moved over the 5% limit for buying on breakouts. Will watch for a pullback; volume has fallen for 2 days though the stock is climbing still.
MYG ($44.80; +0.05): A hold for positions taken at 41.05 on the flying plateau breakout; is moving afterward laterally for three days on sharply lower volume. May have another 2-4 days of consolidation before heading back up. Looks like a potential flag-thrower.
EXPE ($62.95; +1.49): Moved up after the flying 'w' test of the breakout but hasn't had much volume behind it. Now testing the 10 day MVA on low volume. May need a deeper test before it can launch another run like that of late January. A hold for buys at 62.60.
BDK ($47.69; -0.40): Did not make the move we wanted on the 18 day MVA bounce. Still may form a pennant. A hold for buys at 47.50; new buy point over 50.
ADSK ($44.63; +0.03): Holding above the 18 day MVA in a test of the late February run, forming a pennant pattern. Volume higher Friday with the stock holding at support but unable to move up from the opening price at 45.26. A hold for buys at 45.
SYY ($29.35; -0.09): Can't get back over the 18 day MVA, support for the ascending wedge, but is holding at an up trendline (Sept/Nov/Feb/March lows). Will keep watching for the breakout (buy point 30.45), though the higher volume Friday suggests it might break support.
URS ($33.25; +0.32): Moved higher Monday as expected, but the strong volume didn't exactly blast it up. A hold for buys at 32.55 as URS consolidates above the short term MVAs on low volume.
TUES ($20.02; -0.39): Pulled back a bit too far in the breakout test, closing below the 18 day MVA. Sold pretty hard below the 50 day MVA Wednesday, but made a nice recovery with the 18 day MVA still giving it some trouble.
HET ($43.34; +2.34): Bounced from the 18 day MVA Friday on stronger volume. HET hit our original buy point (42.30) six days ago in the test of the breakout (from the cup with handle), and moved through the new aggressive buy point (42.75) Friday. A hold.
SWK ($48.70; -0.26): Testing the breakout from its cup with handle, and has been trying to sell on rising volume the last 2 days. Closed just under the 18 day MVA showing a hammer doji; will see if it can get back over quickly. A hold for current positions.
IPCR ($31.75; +0.22): Moved over the February high (high in the lateral test of breakout from the 6-week saucer) but pulled back. Volume was high on the move; a continued hold for buys at 30.75 and 32.
SFD ($24.80; -0.10): Recovered back into the handle, moving over the short term MVAs again by Thursday. Volume remains low, so we'll keep watching for the breakout. Buy point is 26.09 for the breakout.
WY ($65.45; +0.28): Made the buy point for a continued bounce from the 18 day MVA, but the stock did not follow through with any strength; volume was slightly lower. A hold.
TIN ($59.65; +0.77; optionable): In the 7-month ascending wedge pattern, and continued Thursday's move off the 10 day MVA on a much stronger surge in volume though the stock cuts its gains back. Closed right at the pivot at 59.65; new buy point is 59.80 on continued strong volume for stock and/or May or August $55 calls (TIN EK or HK).
FMKT ($24.70; -0.37): Formed a new handle to the 9-week cup, falling back again on Friday with a bullish shooting star doji. Volume was slightly higher, the stock holding above the 18 day MVA (23.87). Still looking for breakout; a hold for positions taken at 26.22. New pivot for breakout: 27.07 on 2 million volume; stock and/or July $22.50 or $25 calls (check for deltas).
JBHT ($28.24; +0.13): Started a move up in the handle of its 6-week cup, showing a hanging man doji on rising volume. Still looking for a breakout, but the stock may consolidate another day or so (3-14).
Puts:
AVY (60.85; +1.87): Never hit the buy point at 58, and is back over the 50 day MVA.
PLCM ($24.58; -0.23): Still weak and a hold for put buys at 26.50. Hit a low at 23.46 Friday, bouncing up with a doji on lower volume, but is still below resistance at the 18 day MVA (26.33).
NVDA ($52.77; +2.14): Hit the target (50) and bounced on rising volume. Buy point was 57, so the drop to 50 was a good place to close positions after a tidy profit.
Covered Call:
CEY ($40.44; -0.60): Started the move down, hitting the buy point for the covered call (40.50) but support is now closer, the 18 day MVA at 39. Forming a flying plateau pattern now, though the higher volume Friday may send it down. Target is 39 (was 38 when the play was written).
Best Plays:
1) Indexes: OEX and SOX looking ready for some quick upside.
2) NYT: Breaking out and still a buy.
3) MAT: Ditto.
4) CMA: Ditto.
5) MOLX: Moving up after a test.
6) VSEA: Ready to bounce.
7) WABC: Ready to break out.
8) PL: Ditto.
9) EMBT: Breaking down.
10) SLAB: Still a nice pattern.
11) GPC: Another nice pattern.
12) NATI: Looking for a nice move.
13) WWW: Ready to break out!
NEW PLAYS:
Indexes:
OEX (Standard & Poors--$591.13; +6.80): S&P 100 options
STATUS: Looks ready for more upside after breaking through the upper 200 day MVA (588) on strong volume Friday (1.48 million; avg. 1.35 million). The first play is aggressive, looking for a quick move up to 600 (level of the December and January highs). That is the January resistance, but we think it will take that out. A break over that is the next buy point.
BUY POINT: Aggressive: 592 on continued strong volume for a move up to 600. Breakout: over 600.
POSITION: Aggressive: April $580 or $590 calls to buy (OEB DP or DR).
SOX (Phili Semi--$594.19; +15.35; optionable):
STATUS: Looking for a bounce from the SOX after it has held support at the 18 day MVA the last three days (581.21), after a move down to that support from the March high at 638. The index was up from the 18 day Friday, moving just over the 10 day MVA (591.38) to close. There is resistance at the 600 level (600.91, hit twice since January), but on a move over that, looking for a quick run up to 625, or the March high at 637.94.
BUY POINT: Aggressive: 602
POSITION: April $590 or $600 calls to buy (SJX DR or DT).
Breakouts:
NYT (New York Times--$48.09; +1.48; optionable): Media
http://biz.yahoo.com/p/n/nyk.html
STATUS: Breaking out of a 7.5-month cup with handle on strong volume (1.12 million; avg. 520,200)! NYT had an orderly pullback in the handle, volume falling right along with price, until it just blasted up Friday after a quick test of the 18 day MVA at 46. The handle had been holding above the 10 day MVA (46.63). Remains a buy on the move, and our target is 57. Money flow is climbing; buying picking up as well.
BUY POINT: For the breakout was 47.59, making the stock a buy up to 50 on the breakout. From here: 48.15 on continued strong volume. Stop Advisory (7%): 44.86. Minimum breakout volume is 780,000.
POSITION: Stock and/or July $45 calls to buy (NYT GI).
http://www.investmenthouse.com/ct/nyt.html
MAT (Mattel--$20.04; +1.21; optionable): Toys
http://biz.yahoo.com/p/m/mat.html
STATUS: We saw several breakouts from cup with handles Friday, and MAT is another. In a big move, the stock gapped up and blasted off on huge volume (5.2 million; avg. 2 million), enjoying an upgrade and news that Barbie was going to be in the movies again. Buy point was 19.56, so the stock remains a buy to 20.54 on this move. The strength was such that it can easily surpass that, however. After such a strong move we can see a pullback to test the breakout toward 19.50. Look for continued gains after a test of the breakout. Money flow breaking out and leading. Target: 24
BUY POINT: 20.15 on continued strong volume. Safer: a pullback to test 19.50. Stop Advisory (7%): 18.74. A buy to 20.60 on breakout.
POSITION: Stock and/or July $17.50 calls to buy (MAT GW).
http://www.investmenthouse.com/ct/mat.html
CMA (Comerica--$64.13; +1.89; optionable): Regional Banks
http://biz.yahoo.com/p/c/cma.html
STATUS: Another beneficiary of an improving economy. A strong breakout from its 7-month cup with handle base, the stock gapping up Friday and taking off on huge volume (2.06 million; avg.720,400). Still close enough to the buy point at 63.70 to get in on the move. CMA shows strong money flow and high relative strength; buying is spiking up. Target: 77
BUY POINT: 64.25 on continued strong volume. Stop Advisory (7%): 59.75. A buy on the breakout up to 67.
POSITION: Stock and/or July $55 calls to buy (CMA GK).
http://www.investmenthouse.com/ct/cma.html
End Part 2 of 3
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stock trading information
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