A good read :
Market's uncertain regarding stem cell stocks by Jeff Bailey
Shares of publicly traded stocks involved with stem cell research
found buyers ahead of President Bush's scheduled announcement on
whether he will allow federal funding for the controversial, yet
promising research. Shares of StemCells Inc. (NASDAQ:STEM)
jumped 36% to close at $6.45, while shares of Aastrom Biosciences
(NASDAQ:ASTM) surged 26% to close at $2.25 and Geron
(NASDAQ:GERN) vaulted higher by 15% to $14.94.
While today's gains are impressive impressive, the charts of
these three stocks indicate that uncertainty does exist. After
you look at their financial statements, you certainly see why
these stocks are traded purely based on the promises that stem
cell research may provide.
When traders or investors begin thinking of where to place their
bets on such a speculative venture, what's the best way to place
your bet? Unless you are well read on the topic or you're a
biologist that understands this research it would be tough to
make an educated bet on which company (if any of these three)
will be the winner. If however we feel that the MARKET is all
knowing, then perhaps there's something in the charts that might
lead us down the path of stem cell prosperity.
Geron Corporation - $1 and $0.50 box
Chart=
stockcharts.com[m,a]daclyymy[pb50!b200][vc60][iUb14!La12,26,9]
I'm not playing favorites, but I did glance at the financials of
the three companies mentioned above. Geron Corporation (GERN)
reported revenues of $1.8 million for the three months ended
March 31, 2001 (most revenue of the three) and approximately 108
institutions own 19% of the stock's float. (STEM 26 inst. 7% of
float, ASTM 25 inst. 5% of float). I'm guessing that the some of
the institutions that own these stocks have analysts with
biomedical backgrounds that understand the technology much better
than I do.
A betting trader might want to try and stack as many odds in his
favor as possible if he is going to speculate and a very brief
process of elimination does show this company with the largest
base of revenue (they lost $7.4 million on the bottom line for
quarter ending 03/31/01). Next closest was Aastrom Biosciences
with quarterly revenue of $653K.
Institutional sponsorship is also greater for Geron (GERN) by a
rather wide margin. To me, the appearance of greater
institutional sponsorship at least give some resemblance of
interest. If things work out for the company and President
Bush's decision is favorable for further stem cell funding, then
I at least have the feeling there are approximately 108
institutions that are familiar with the company and its stem cell
process.
================
Market Sentiment
================
(It's hammer-time )
That's the question facing the markets on Friday. We've heard
enough people spout that the bottom is here and the worst is
over, but now is the time for them to put their money where their
mouth is. But should we?
Dow Jones Industrial Daily Chart
Chart=
stockcharts.com[m,a]daclyymy[pb50!b200][vc60][iUb14!La12,26,9]
The Dow gained five points today. Not great, but considering the
Dow was down over 80 points today, it was a small victory. What
that price action formed was a hammer. This one-day candlestick
pattern signals that perhaps buyers have been able to wrestle
back control from sellers. This pattern is just a potential
turning point, and requires bullish confirmation tomorrow.
Should that fail to happen, like it did on June 11th, keep a
close eye on support in the 10,200 to 10,120 area.
Nasdaq Composite Daily Chart
Chart=
stockcharts.com[m,a]daclyymy[pb50!b200][vc60][iUb14!La12,26,9]
Similar story over at the Nasdaq, early morning sell off followed
by an afternoon rally. The Nasdaq finished 3 points in negative
territory, but formed what is known in candlestick lingo as a
doji. Same interpretation as the hammer, after an extended
decline, buyers have fought back to end the day in a draw,
signaling a possible turning point. Combined with a stochastic,
one-day candle patterns have done a good job of marking turning
points (see chart above). If the Nasdaq doesn't turn, monitor
support at 1,934 for signs of additional weakness.
So if buying at support and selling at resistance has been the
way to play this market, we should be at a buying point, most
likely a short-term one. Going long in the face five straight
days of selling is a tough thing for any trader to do, and can
lead to painful losses if done too soon. Since the bond market
opens before the stock market, look for rising bond yields as a
potential reversal sign. The PPI number also comes out before
the bell, so keep an eye on how bonds and stock index futures
react to that news. The first hour of trading has been an awful
indicator of how the day is going to go, so it might be wise to
wait for all the rookies to place their orders first.
Depending on your trading time frame, bears may want to consider
lowering stops or locking in profits should we get a reversal.
Aggressive bulls may want to consider small long positions (1/4
the size of normal) as market conditions dictate. Conservative
bulls should start lining up long candidates with good
risk/reward ratios and support close by. Based on today's up and
down trading, and the fact that tomorrow should be a light volume
summer Friday, getting an early jump on weekend traffic doesn't
sound bad either.
-----------------------------------------------------------------
Market Volatility
VIX 23.64
VXN 48.15
-----------------------------------------------------------------
Put/Call Ratio Call Volume Put Volume
Total .76 584,760 446,984
Equity Only .69 491,696 341,601
OEX 1.09 19,619 21,363
QQQ 1.61 35,901 57,962
1.61 is one of the most bearish readings in the triple Qs this
year. Another possible sign of a turning point?
-----------------------------------------------------------------
Bullish Percent Data
Current Change Status
NYSE 34 - Bear Confirmed
NASDAQ-100 50 - Bull Alert
DOW 36 - Bull Alert
S&P 500 54 - Bull Confirmed
Readings above 70 are considered overbought, and readings below
30 are considered oversold.
Bull Confirmed - Aggressively long
Bull Alert - Cautiously long
Bull Correction - pause or pullback in upward trend
Bear Alert - Take defensive action if long
Bear Confirmed - High risk if long, good conditions for shorting
Bear Correction - Pause or rebound in downtrend
-----------------------------------------------------------------
5-Day Arms Index 0.96
10-Day Arms Index 1.21
21-Day Arms Index 1.13
55-Day Arms Index 1.07
Extreme readings above 1.5 are bullish, and readings below .85
are bearish. These signals don't occur often and tend be early,
but when the do, they can signal significant market turning
points.
-----------------------------------------------------------------
Advancers Decliners
NYSE 1723 1363
NASDAQ 1681 1984
New Highs New Lows
NYSE 143 59
NASDAQ 55 99
-----------------------------------------------------------------
Advisory Sentiment
Bullish Bearish Correction Net Change
52.6% 23.7% 23.7% 28.9% -0.4%
A bearish reading of 25% to 30%, combined with a bullish reading
greater than 55% is typically considered bearish by contrairians.
A net percentage greater than 30% is also viewed as bearish.
-----------------------------------------------------------------
Commitments Of Traders Report: 07/31/01
Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts at the
Chicago Mercantile Exchange and Chicago Board of Trade. COT data
can be found at www.cftc.gov.
Small specs are the general trading public with commercials being
financial institutions. Commercials are historically on the
correct side of future trend changes while small specs tend
to be wrong.
S&P 500
There were no significant changes in the bullish percent data this
week.
Commercials Long Short Net % Of OI
7/17/01 336,836 403,561 (66,725) ( 9.01%)
7/24/01 317,241 392,146 (74,905) (10.56%)
7/31/01 335,532 409,352 (73,820) ( 9.91%)
Most bearish reading of the year: (111,956) - 3/6/01
Most bullish reading of the year: ( 41,144) - 5/1/01
Small Traders Long Short Net % of OI
7/17/01 122,525 50,211 72,314 41.86%
7/24/01 141,372 61,665 79,717 39.26%
7/31/01 129,648 54,552 75,096 40.77%
Most bearish reading of the year: 36,513 - 5/01/01
Most bullish reading of the year: 91,122 - 3/06/01
NASDAQ-100
There were no significant changes in the bullish percent data
this week.
Commercials Long Short Net % of OI
7/17/01 26,721 37,225 (10,504) (16.43%)
7/24/01 27,396 39,198 (11,802) (17.72%)
7/31/01 28,009 39,613 (11,604) (17.16%)
Most bearish reading of the year: (15,521) - 3/13/01
Most bullish reading of the year: (1,825) - 1/02/01
Small Traders Long Short Net % of OI
7/17/01 11,680 8,183 3,497 17.61%
7/24/01 12,170 7,744 4,426 22.23%
7/31/01 11,216 8,938 2,278 11.30%
Most bearish reading of the year: (1,028) - 1/02/01
Most bullish reading of the year: 8,460 - 3/13/01
DOW JONES INDUSTRIAL
There were no significant changes in the bullish percent data this
week.
Commercials Long Short Net % of OI
7/17/01 14,145 12,963 1,182 4.4%
7/24/01 16,080 12,812 3,268 11.3%
7/31/01 17,748 13,669 4,079 13.0%
Most bearish reading of the year: (8,322) - 1/16/01
Most bullish reading of the year: 8,925 - 5/22/01
Small Traders Long Short Net % of OI
7/17/01 5,255 9,144 (3,889) (27.01%)
7/24/01 5,599 9,526 (3,927) (25.96%)
7/31/01 5,049 9,079 (4,030) (28.52%)
Most bearish reading of the year: (7,572) - 5/08/01
Most bullish reading of the year: 1,909 - 1/16/01
-----------------------------------------------------------------
=========================
Play-of-the-Day (Bearish)
=========================
Chevron Corp. - CHV Close:$90.59 Change:+0.58 Stop:$93.00
Original Comment When Selected on August 2nd:
Company Description:
The third largest US integrated oil company (behind Exxon Mobil and
Texaco) runs more than 8,100 gas stations and has proved reserves of
5 billion barrels of oil and 9.5 trillion cu. ft. of natural gas.
It will expand even further by buying Texaco, and the new
ChevronTexaco will be the world's fourth-largest integrated oil
company, behind Exxon, Mobil, Royal Dutch/Shell, and BP. Overseas,
Chevron is pursuing an exploration and production strategy in such
lucrative areas as Kazakhstan and Angola, and it holds a 50-percent
stake in Caltex, a global refiner and marketer jointly owned by
Texaco. Chevron has also combined its chemicals operations with
those of Phillips Petroleum.
Fundamentals:
Analysts forecast the company will earn $7.86 per share in 2001 and
$5.98 in 2002. Last year, the company earned $8.13 per share. The
company has a current P/E of 11 and a forward 2001 P/E of 12. The
average P/E for the industry is 14.
Why We Like It:
The shares are showing a topping pattern with consecutive trading
sessions of lower closes and session highs. After a sharp move up
from $84.75 on July 24th the shares are over extended and ready to
test lower levels. The next support level is the 200-day moving
average of $87.77. Critical support exists for the shares at $85;
if the bears pick up steam, a move through this level would make
likely a test of $80.
Updated Comments:
Oil stocks got a brief reprieve today, and Chevron gained 54
cents. That wasn't even enough to recoup 50 percent of
yesterday's losses. As the 50-day moving average continues to
fall, this stock still looks like a good short candidate.
Picked on August 2nd at $91.05
Gain since picked: +0.52
Earnings Date N/A
stockcharts.com[m,a]daclyymy[pb50!b200][vc60][iUb14!La12,26,9]Watch List
==========
QUALCOMM - QCOM - close: 65.72 change: +0.63
WHAT TO WATCH: Honestly? You should be watching the NASDAQ.
Shares of QCOM have held up pretty well the last few days only
dipping on Wednesday when selling pressure was the strongest.
If the NASDAQ can reverse course and begin its multi-day journey
back to the top of its trading range (2100) then QCOM might be
able to breakthrough resistance at $69/$70 and really have room
to move. On the other hand if the NASDAQ collapses further then
QCOM will not be immune for long and shares could trade as low
as $57.50 or worse.
stockcharts.com[m,a]daclyymy[pb50!b200][vc60][iUb14!La12,26,9]
Check Point - CHKP - close: 40.51 change: +0.81
WHAT TO WATCH: With the GSO software index hovering at support
near 180
stockcharts.com[m,a]daclyymy[pb50!b200][vc60][iUb14!La12,26,9]
and shares of CHKP hovering at $40 the stock could go
either way. If the NASDAQ rallies up, then CHKP could trade up
to $45/$46. If the NASDAQ breaks down then CHKP could drop to
$35 again. Not a bad move either way if you can catch it.
stockcharts.com[m,a]daclyymy[pb50!b200][vc60][iUb14!La12,26,9]
Qwest Comm. - Q - close: 24.29 change: +0.09
WHAT TO WATCH: Investors should be looking for a close over $25.
You upward target depends on how much you believe in the company's
fundamentals. Many analysts feel that the sell-off in Qwest
shares are way overdone. From the end of April, shares have
fallen from almost $42 to $23 just a few days ago. One possible
culprit was a sell-off in rival Global Crossing (GX). Last week
GX announced they would be forced to slash their own growth
outlooks. In contrast Qwest just confirmed their own growth
outlook for 2002 two days ago (Reuters). We feel that we might
be looking at a potential bottom in Q so it's worth keeping an
eye on the stock over the next few days (market permitting).
Texas Instruments - TXN - close: 34.20 change: +0.54
WHAT TO WATCH: There always seems to be trading opportunities
in the semi stocks and TXN may be one to watch now. Keeping
your eyes on the NASDAQ and the SOX, TXN could go either direction.
If the sector/market rallies, then TXN could return to $38 or
its 200-dma (38.31). If the sector/market falters, then TXN could
fall to support near $30/$29.50.
stockcharts.com[m,a]daclyymy[pb50!b200][vc60][iUb14!La12,26,9]
Intl. Business Machines - IBM - close: 104.08 change: -0.11
WHAT TO WATCH: Yet another stock teetering on support, IBM
bounced off support at $103 for the sixth time since the middle
of July. Today marked the fifth down day in a row for the stock
and its second day under its 200-dma (104.36). The broader
market will be the key but whatever direction IBM decides to go
traders could see several points. Upper resistance is at $110
while short-term support is scattered between 103 and 100.
However, below 100 the stock could fall to 95 or 90.
stockcharts.com[m,a]daclyymy[pb50!b200][vc60][iUb14!La12,26,9]
PeopleSoft - PSFT - close: 40.71 change: +1.20 stop: 45.50
PSFT managed a small bounce today after falling 6.5% on Wednesday
during the software sector's punishing decline with the NASDAQ's
breakdown mid-week. The retracement from $45 to $40 is complete
and PSFT almost hit its 200-dma yesterday with a low of 38.54.
Mid-afternoon today a story was released that said the U.S. Dept.
of Defense had made a deal with PSFT to use the PeopleSoft 8
Human Resources Management Systems for DoD's 3.1 million military
personnel HR and payroll needs. This is likely to be a significant
account for PSFT but details including the final contract amount
was not released. Alas the good news could not shake PSFT's stock
out of its trend of lower highs. Bears should be looking at two
key levels now for the next move down. $40 is the first hurdle
followed by the 200-dma currently at 38.23. New entries should be
made carefully as the stock will likely find some amount of
support in 2.50 increments (40.00, 37.50, 35.00, 32.50, etc...).
stockcharts.com[m,a]daclyymy[pb50!b200][vc60][iUb14!La12,26,9]
Ebay - EBAY Close: $62.84 Change: +0.45 Stop: $59.00
Company Description:
eBay Inc. has developed a Web-based community in which buyers and
sellers are brought together in an auction format to buy and sell
items such as antiques, coins, collectibles, computers,
memorabilia, stamps and toys.
Fundamentals:
For the 3 months ended 3/31/01, revenues rose 79% to $154.1M. Net
income totaled $21.1M, up from $1.8M. Results reflect an increased
number of registered users, higher gross merchandise sales and
improved operating margins.
For the 2001 fiscal year the company's net income is estimated to
increase 114-percent, while it is anticipated that 2002 net income
will rise by 60-percent. Analysts expect company earnings to rise
from $0.45 in 2001 to $0.72 in 2002. The current P/E is 139 and
the forward P/E is 87.
Strategy:
After reaching a near term high of $71.30 in the middle of June,
shares of EBAY took a well deserved breather, retracing recent
gains back down to support at $60.00. The consolidation phase
that the stock has seen this month has dragged shares under the 20
and 50 DMAs and could represent a strong opportunity for investors
at current levels. Perusing through technical indicators,
Stochastics show that EBAY has returned to what could be a
profitable trading range. With MACD sitting at the break even
line and support being reinforced over the last three weeks, all
that remains is a catalyst to remind buyers.
We like EBAY at current levels and are convinced that if buyers
return to the tech markets in the month of August, the blue chip
types are likely to be some of the strongest beneficiaries.
Bearing this in mind, as well as the strong support we see at
$60.00, we'll place our stop at $59.00. Short-term traders might
wish to wait for a minor pullback, but resistance probably won't
arrive until shares clear $65.00. It is at this approximate level
that a short-term exit would be most favorable. However, the
longer-term investor may wish to hold on until the next level of
resistant at $69.00 or longer until the recent high of $71.30 is
reached. Either way, do remember to protect the downside with a
stop at $59.50.
stockcharts.com[m,a]daclyymy[pb50!b200][vc60][iUb14!La12,26,9]
** above all from newsletter , only for guidance in trading always do your own DD....
Oh from the intra-day boyz:
Subject 51208
Economic data due out Friday includes: PPI and Core PPI numbers for July.
As a general comment, I did not like the set ups (either long or short) coming into Friday. Although it appears that we should see a relief rally on Friday, there was a lot of overhead resistance created by the sell off in the markets on Wednesday. The violent nature of the sell off has created many price spikes/head formations and thus significant upside resistance. The best play may be cash or shorting stocks that rally into major resistance zones. Be careful to watch volume carefully and be prepared to take profits quickly on the long side.
LONGS:
JNJ, Johnson & Johnson, Long >54.05, Drug Sector-Major Drug Co’s, $DRG.X
JNJ closed the day near the high on solid, increasing volume. This stock held up well exhibiting good relative strength during the blow-out in the markets on Wednesday. Above 54.05 we break a key resistance zone that has been tested 3 times in the past 4 days. Will see some resistance at 54.20 – 54.40 zone but above this JNJ should see 55.00.
SBUX, Starbucks, Long > 18.30, Retail-Consumer Non-Cyclical, $RLX.X
This stock saw its first significant reversal day in 3 weeks on Thursday. Above 18.30 we break the high of the day and a key Fibonacci resistance zone.
NTAP, Network Appliance, Long >14.28, Computer Storage-Storage Hardware
This stock recovered off a morning sell off to close near Thursday’s high. An increase in volume is critical. Above 14.28 we break the 200 ma on the 15 min chart and the 40 ma on the 60 min chart. First resistance at 14.55 then 15.00.
STJ, St. Jude Medical, Long > 64.60, Healthcare-Equip and Supplies, $HCX.X
After 7 days of relentless selling this stock finally formed a base and a reversal candlestick pattern (doji) on Thursday. Above here we break Wednesday’s high, the 20 and 40 ma’s on the 60 min chart, the 40 ma on the daily chart and the 200ma on the 5 min chart. Volume must be strong for the rally to succeed.
SHORTS:
AFCI, Advanced Fibre Communications, Short < 25.16, Networkers-NGPS & ME Perfect head and shoulders set up on the daily chart. Below 25.16 we begin the break of the neckline with the last leg of support around 24.91. There should be some support on the daily at the 200 ema at 24.50. Below 24.50 we fill the gap to 22.75.
MOT, Motorolla, Short < 17.76, Cell Telephone HW/SW
Motorolla broke below key support on the daily by closing below the 200 and 20 ma’s. Below the Thursday’s low of 17.76 we break the 200 ma on the 60 min chart and should see 17.00.
INKT, Inktomi, Short < 5.25, Internet- B2B, $IIX.X
Below here we break a 6 day trading range on our way to Fibo support at 5.05 and then 4.80. INKT closed near the low of the day on Thursday on strong volume. |
