us stock market, stock watch

Begin Part 2 of 2

Support and Resistance

Nasdaq: Closed at 1877.06.
Resistance: 1875 is the bottom of the November consolidation, and it has not broke clear of that. The 200 day MVA (1894.10) stopped it in its tracks today and is the next level it has to beat. 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 1165.55
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 (1146.31). After that, 1125 is the hump in the double bottom, and the simple 50 day MVA (1128.52) and exponential 50 day MVA (1132.62) are converging. 1100 has acted as support as well.

Dow: Closed at 10,577.75
Resistance: The top of the June, July, and August 2001 trading range at 10,600 (10,679 intraday high), is still holding it back. 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 held as support during this consolidation. That is followed by the January high at 10,300. Then the 200 day MVA (10,004.11) and 10,000 teaming up together.

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 you buy puts on a stock that is breaking down can you sell short as well, using the buy point for puts as the point to sell short?

A: What we do in buying and selling options is based on the movement of the underlying stock. We always look for stocks in a good pattern that shows either accumulation (upside plays) or distribution (for downside plays); if the stock makes the move, buying or selling the right options will allow us to benefit from that move using the leverage of options. As we base the option play on the actual movement of the stock, we can buy or sell the stock at those points as well. Now with selling short, you cannot sell when the stock breaks down. There is a rule in short selling that you have to sell on an uptick; that helps keep sellers from just piling onto a stock and driving it into the dust. It does not always save the stock, but it makes things more orderly. So, if selling short, it is good to watch for the breakdown and then the test of that level that it broke through. That means watching it move up and hit the level and fail. Then put in your order to sell it short. It may take another session or two to get the test if it was just a 'normal' breakdown, i.e., not prompted by some accounting worries or other kiss of death news the market is focusing on at that time. Buying into a move after a test is always the less aggressive of the buy points: you see the breakdown, then the fight to recover. If that recovery fails, then the drop is pretty fast to support.

TEAM TRADES

ACF: A credit services company, a sector that has done well lately. ACF had formed a double bottom and broke over its 200 day MVA last week, tested it, and looked ready to move higher. Today it started higher and we were looking to get in. The Dow had started the day stronger and had pulled back to near the point where it gapped open and looked as if it was trying to hold around 9:05 CT. ACF had shot up to 38.75 but it too had pulled back. It started higher and took out the early high with a solid surge. It was moving very fast with a 6 to 10 cent spread. The bid and ask were 38.78 by 38.85 when we were hit at the ask. The stock continued to 39.33 on that move. So far so good. Then it came tumbling back down on us as the rest of the market fell, holding above the gap up point on the low and rallying 80 cents in the last hour to close at 37.99. Volume was lower on the session, and it looks as if ACF is continuing to form more of a handle as is the rest of the market. It remains above the October interim high and the 200 day MVA on low, consolidation volume. We still like the looks of it, but we won't let it fade below that 200 day MVA on the close. We will also look for the breakout over 40 on a volume surge to complete our buy.

PLAYS TO LOOK AT:

BONUS PLAYS: Strong move by UVN! ACF started a move but pulled back, still looking good in its consolidation over support.

CSL (Carlisle Companies--$42.14; +0.19; optionable): Rubber & Plastics
http://biz.yahoo.com/p/c/csl.html
STATUS: I just want to say one word to you. Just one word: Plastics. CSL made a solid breakout from a reverse head & shoulders (right shoulder was a double bottom) to start this month. That breakout was at 38, and it hit 42.50 before pulling back into the present consolidation. It gapped back to the 10 day MVA (41.35), but pushed up from there on increased, solid volume of 86,200 (average 68,700). Looks like it could give us another surge, and we can target 47.50. Good relative strength.
BUY POINT: Over 42.60 on increased volume of 90,000. Stop: 39.90.
POSITION: Stock only.

VIA (Viacom--$50.83; +1.22; optionable): Media entertainment
http://biz.yahoo.com/p/v/via.html
STATUS: Fell off of double tops in December-January, but has rebounded nicely. Over the last month VIA has made a nice climb back up through its 200 day MVA (44.43), and back over the prior tops (48.20). It has pulled back into a handle to the large cup dating back to May 2001 (high 59.69), and after finding support in the handle at the 10 day MVA (49.33), it has started back up again, today on increased volume of 409,000 (average 420,000). Looking for a stronger move over the recent high. Good relative strength. Target: 60.
BUY POINT: 51.49 on volume of 630,000. Stop: 47.88 (7%).
POSITION: Stock and/or May $47.50 calls to buy (VIA EW).

DCLK (Doubleclick--$12.92; +0.22; optionable): Internet software
http://biz.yahoo.com/p/d/dclk.html
STATUS: Deep in its base, but DCLK has formed a cup with handle over the last ten weeks after having made a nice October to January move up from close to 5. Before formation of the handle, DCLK made a move up to 13.88 on an intraday spike, but dipped back and has held the 10 day MVA (12.62) as it forms the handle, which is an ascending wedge. Volume has been appropriately low as the stock has consolidated the last week over the 10 day, today at 1.32 million (average 1.85 million) as it hit up to 13.20 before pulling back a bit to close. Looking for a move over the recent high of 13.39. Target: 16. Strong money flow.
BUY POINT: 13.49 on volume of 2.8 million. Stop: 12.55.
POSITION: Stock and/or July $10 calls to buy (QWE GB).

PRE-ANNOUNCEMENTS: FITB and MMM still in their patterns, and RUS broke out, but had no volume.

MUR ($90.02; +1.66): Working on a new date. Made a move back up today off of its 10 day MVA (87.80), moving up from a brief consolidation over that level made on a test of a recent move to a new high. Volume was up at 296,100 (average 225,800), and we will look for mUR to continue its move. Targeting 100, and on a continued move over 90.25 on increased volume, stock and/or July $85 calls to buy (MUR GQ).

BMS ($55.99; +0.24): Made a nice move and breakout in January-February, hitting a high of 58.24 earlier this month before a gradual retreat. That move has taken BMS back to its 18 day MVA (55.72), holding over that point for several sessions. Today BMS reached down to 54.88 at its low but recovered for a loose doji over the 18 day, with volume up to 318,200 (average 220,100). Looking good for a bounce, and on a move over 56.60 on increased volume, stock and/or July $50 calls to buy (BMS GJ). Targeting 62. Stop: 53.

ATK ($98.26; +0.50): Researching a date. A wild day saw ATK close with a loose 'star' doji after hitting up to 100.25 and down to 95.90. Volume was not quite what we were looking for, but still a decent attempt to move that hit our buy point. It is still holding the 10 day MVA (97.19) in its pennant pattern, formed after breaking from a cup with handle and trending up nicely. Looking for it to hold and make a move over 100.25 with increased volume, with stock and/or May or August $95 calls to buy (ATK ES or ATK HS).

KRB ($38.27; -0.25): Still in its consolidation formed after breaking from a small double bottom to start this month. It is holding firm over the 10 day MVA (37.76), today tapping that level at its low before closing with a doji on reduced volume of 2.43 million (average 3.08 million). The buy point is 39.10 on increased volume of 4 million, with stock and/or June $35 calls to buy (KRB FG).

PRE-SPLITS: Good move by WTNY, which remains a buy. MKC continued up on good volume, but a bit suspect with a relative strength and buying divergence (lower than last time the price was at this level).

DF ($73.58; +1.57): Splits 2:1 effective 4-24-02. Has made a nice bounce after testing back below its 18 day MVA (70.78; recent low 69.10), and today hit the buy point, although volume was lower than we would typically want in a breakout from a cup with handle (526,400; average 547,700). For new positions from here we want a move over 74.10 on increased volume of 800,000, with stock and/or June $70 calls to buy (DF FN - no open interest as yet for May).

CONTINUING CANDIDATES: RYL started the move down. BBY is testing prior highs and PII remains in its consolidation.

INVN ($46.07; +0.57): Holding at the prior pattern highs on the test of its recent breakout (from a three-month ascending wedge). Volume has been nice and low on the test, and today INVN moved up slightly, showing a doji on reduced volume of 824,100 (average 2.24 million). Want to see volume over the average with a buy point of 47, with stock and/or July $40 calls to buy (FQQ GH).

POST-SPLITS: Great move by ACS! CHBS tried a move but pulled back, and is still looking strong.

ICUI ($34.37; +1.37): Nice bounce on the split! ICUI had been holding the 50 day (32.97), and today jumped back up, clearing its 18 day MVA (34) as volume rose to a strong 100,100 (average 52,500). Still a buy on this bounce on a move over 34.60, with stock. Stop: 32.75.

GILD ($37.40; +1.41): GILD has been in the choppy handle to its choppy saucer, and after holding the 10 day MVA (36.16), today gapped up and continued the move on increased volume of 2.73 million (average 2.26 million). Good move, and we can look at new or additional positions on a move over the high (37.90) on increased volume, with stock and/or August $35 calls to buy (GDQ HG). Stop: 35.50.

XRAY ($35.01; +0.97): Great move today! XRAY had formed an ascending wedge with support along the 50 day MVA (33.34), and today broke out with a nice run on volume of 477,100 (average 314,200). Still a buy up to 36 on this run, but we are targeting 39.50. Stock and/or July $33.38 calls to buy (RHE GX).

Good Investing!
Jon L. Johnson and the Stock Split Report Staff.

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.

us stock market
stock watch