My Newsletter of the 25th of May....
============================================================
JERRY OLSON'S
"POINT" OF VIEW NEWSLETTER
DATED MAY 25TH 2003
"SHAKEOUT PATTERN LOOKS GOOD"
Hello my fellow traders. Hope you and yours are having a nice Memorial Day Weekend at your homes all across the country and the world. Me? it's raining, it's been raining all throughout May, it's the soggiest May ever...It could have been depressing, but for the fact we're having so much fun trading the markets together. Let me tell you even some mistakes I've made are coming back with a vengeance...That's when you know you're lucky too<vbg>...
Well I've been pondering the current state of the markets in general. The Point & Figure Indicators, and all the Bullish Percents on the indexes & stocks and short and long term indicators...Geez we ARE overbought. What's so amazing though is that the street does not want to SELL yet...They are piling on here scooping up any and all dips...Folks if you step back for a sec, the last 2 selloffs we had were just 2 days wonders. Then pop goes the weasel again. Buyers galore. Not a seller in sight and only more and more buying everyday...I see it in the Daily Candle Charts(DCC). Small pullbacks on light volume that are not even hitting the 20-40 ema's. Certainly not the 38.2% Fibo retrace back down here...Not even close. That just shows me the underlying strength of this market right now. Can that change? In a heart beat. When will it change? No clue..Don't care either..Trail up stops, hard stops, and let those winners run.
The first signs of trouble will be when the 2 short term P&F indicators turn down, and then the "real" signal will be when the BP(Bullish Percent) OPTI(all the optionable stocks in the NYSE & OTC) turns down.. The OPTI is usually the precursor for the other 2 main BP's to turn lower...we will be out of ALL longs then looking for swing and position shorts. This is not there yet folks. We are still moving up. Now headsup here for a minute. I've been talking to you each day over the last week about this P&F Pattern called the "Shakeout Pattern". What this is again is when an index or stock chart is in an uptrend but then all of a sudden gives a sell signal or a double bottom breakdown. As a P&F student/expert we ignore the first sell signal on charts like this. Why? Because when a stock or index is in such a nice chart pattern it this sell signal happens we can assume it's the street or market makers trying to shake out the weak hands first..Then all of a sudden the index or stock rallies up swiftly to make a big recovery by turning right around and printing a 3 box reversal back up. That nails the pattern...
One major caveat here...Please picture in your minds eye, a solid chart, then a double bottom break, then a 3 box reversal back up, BUT, the stock or index immediately reverses back down and breaks the lower column of O's, that would be the 2nd sell signal and we would exit that trade or short that breakdown... On the other hand(OTOH). if the reversal up in X's exceeds the old highs in this Shakeout Pattern and we break a double top?, then we have a very powerful P&F Pattern known as the Bearish Signal Reversal Pattern...Do you understand? Bearish was the double bottom sell signal in the Shakeout, and then we got a 3 box reversal back up, but then we break OUT over the old highs..Hence the Bearish Signal Reversal...this patterns is 85% effective for much higher numbers. I'll include these numbers for you to see on all indexes, and some stocks. If the Shakeout is there.
Now let's talk about planning this next 2-4 weeks. First of all we are very overbought as I've been writing about. It does not matter yet. What will matter is if we break any double bottoms in the coming weeks heading into options expiration week of the 20th of June. If that happens then we exit all longs...Next if we take out the recent highs on the main index charts we have to stay long using trailing stops because this last burst of buying could be unreal. Like the feeding frenzy in a shark attack..This is usually when Mr. & Mrs. Joe 6 Pack dives into the abyss with both feet pushed in there by the stock brokers that are dumb and dumber. They will be BUYING "THE" TOP. Comprende'?. Anyway we'll sell that top and short the market once I get those sell signals. Not until then. You cannot imagine the force of the late bloomers and what they can do to stock prices. So we want this action to push our longs higher and higher without assuming the top.
Please understand this..we can selloff and implode at anytime. Be prepared to exit, have an exit strategy. I did want to say, I would sell stock, not write covered calls here, because this pullback whenever it does happen could be a big one. When the NYSE & OTC exceed 70% and reverses down, that usually means tough times ahead for months. Yes I said months. That simply means we'll be able to short that top, and buy stocks and indexes much much cheaper as these BP's get under 30% from over 70% kapish<G>? Like in overbought to oversold. Ya gotta love this folks.
Using Options in your trading arsenal is another way to participate at these lofty levels, sign up at your online broker and tell them your an expert in all option trading...that's because I am<g>...Next when you use options long calls or puts..there is a reason for this. If you like a stock and want to buy it for a trade. then you can use the leverage of options instead. Example. the stock is 50 you normally trade 1000 chares during the day. hence you can use the leverage of 10 contracts 1 contract=100 shares of stock, and buy only the IN THE MONEY CALLS USING 3 MONTHS OUT IN TIME FOR PROTECTION. AS OF THIS DATE YOU WOULD BUY THE 45 CALLS OF THE STRIKE MONTH OF AUG. That cost will be about 6-7 bucks or $6000-7000 dollars instead of $50,000 for the purchase of 1000 shares at 50. Here's the game plan...1. do not buy 20-30 of these options because you think they're cheap, a BIG NO NO..2nd. if you can get a 50% quick profit you can A. sell 1/2 the calls and get BACK your whole investment, or B. sell it all. Folks a 50% profit on an option trade is very very nice. If the stock is running and it looks like you could double your money, use stops to alert you of any change of direction in the stocks price...When the alert hits or stop hits, sell that call or put...and do it right then!!!!!. Do not get greedy as the premium, the time premium is always dropping as the days ware on. Taking quick profits in options trading will put a smile on your face...Just another tool and tactic we use in our overall portfolio.
===============================================================================================
OK LET'S CHECK THE INDEXES AND THE BP'S...THE MARKET ARE FRISKY HERE LET'S SEE HOW HIGH THEY CAN GO.
DJIA---SOLID CHART PATTERN, OF HIGHER LOWS AND HIGHER HIGHS..IN THE LAST PULLBACK(PB) IT NEVER GAVE A SELL SIGNAL..JUST PULLED BACK NICELY. RIGHT HERE 8700 IS THE DOUBLE TOP(DT), 8750 THE NEW BUY SIGNAL. I HAVE A POTENTIAL TARGET "IF" WE CONTINUE UP AT 9200 THE TOP OF THE 10 WEEK TRADING BAND. NOW ON THE BAD SIDE...8450 THE 3 BOX REVERSAL BACK DOWN(3BXRVDN). 8400 A DOUBLE BOTTOM SELL SIGNAL.
COMPX---A SHAKEOUT PATTERN ON THAT 1480 PRINT OF THE DOUBLE BOTTOM(DB) BREAK. THEN AN IMMEDIATE 3BXRVUP TO 1510. 1520 WOULD CONFIRM IT. 1550 IS THE TOUGH DT, 1560 THE NEW IMPROVED B/O(BREAKOUT). NOW HERE'S WHAT I WAS SAYING ABOUT A BEARISH SIGNAL REVERSAL..ANY TIME YOU BREAKOUT AFTER BREAKING DOWN THAT IS THE PATTERN. SO 1560 WOULD CONFIRM IT...THIS INDEX HAD A PERFECT 2 1/2 DAY PB TO THE 20 EMA DAILY CANDLE CHART(DCC).
NDX---NEEDS A PRINT OF 1140 FOR THE 3BXRVUP AND THE COMPLETION OF THE SHAKEOUT. 1160 IS NOW A TRIPLE TOP AREA OF HEAVY R(RESISTANCE). THEN 1170 A MONSTER B/O THERE, VERY BULLISH TO ME. THE INDEX BP IS AT 77% AND HANGING THERE FOR NOW. THIS LATEST PB NEVER GOT TO THE 38.2% AREA AND JUST MADE IT TO THE 40 EMA ON THE DCC...
SOX---1ST SELL SIGNAL IN A SOLID UPTREND AT 335. 350 IS THE 3BXRVUP AND COMPLETION OF THE SHAKEOUT PATTERN. 365 IS THE NEW BUY SIGNAL AND COULD LEAD TO A LARGE MOVE UP TO 395/400 AREA AT THE TOP OF THE 10 WEEK TRADING BAND. WE HAD A PERFECT PB TO THE 40 EMA. & THE 38.2% RETRACE..FOLKS WE HAVE TO HAVE PULLBACKS TO RELIEVE THE EXCESSES IN THESE MARKET RALLIES. IT CANNOT GO STRAIGHT UP. THE BP SEMI IS AT 56.50% AND DOWN A BIT FROM 58% BUT STILL SOLID..THE 3BXRVDN IS AT 52%...THAT WOULD BE BAD.
BTK---SENSATIONAL RUN UP HERE IN THE BIO TECH INDEX..POWERFUL. FROM THE MARCH 10 LOWS TO LAST WEEKS TOP AT 432..A VERY STRONG SECTOR RIGHT NOW. WITH MORE TO COME. THERE IS SOME HEAVY R HERE AT 430. ON THIS RECENT SELLOFF EARLY LAST WEEK THIS INDEX NEVER EVEN GOT BACK TO THE RISING 20 EMA ON THE DCC..THAT IS VERY STRONG AND VERY BULLISH. RS IS IN X'S COMPARED TO THE SPX, AND THE BP BIOM IS AT 60% LOOKING FOR 70-72% PLENTY OF ROOM TO FLY...THIS IS WHERE THE ACTION IS FOLKS...
BKX---WE HAD A NICE SELL SIGNAL AT THAT DB BREAK OF 790, THEN AN IMMEDIATE REVERSAL BACK UP 3 BOXES TO 805...815 THE DT, 820 THE NEW B/O AREA..BEARISH SIGNAL REVERSAL IF THAT HAPPENS. WE BOUNCED RIGHT OFF THE 20 EMA DCC.,
SPX---SHAKEOUT AT 915 RIGHT AT THE 200 EMA ON THE DCC. THEN A NICE REV UP 4 BOXES AT 935. 945 TOUGH R THERE..950 A VERY NICE B/O BUY SIGNAL. BP SPX IS AT 68%, 76% IS THE TOPPING AREA. 920 THE 3BXREVDN, 910 THE DB BREAK AND NO GOOD(NG)...SET ALERTS BOTH WAYS.
SPM3---FUTURES---BEAUTIFUL SHAKEOUT PATTERN OFF THAT DB BREAK AT 916, WE TOUCHED 912...THIS IS AN IMPORTANT NUMBER REMEMBER 912. WE DID A QUICK REVERSAL BACK UP AT 932, 948 IS THE DT, 952 THE B/O BUY SIGNAL..NOW LISTEN UP HERE..920 THE 3BXRVDN, AND WITH ANY BREAK OF 912, OR A PRINT OF 908 THAT WOULD BE THE SECOND SELL SIGNAL ON P&F..AND BE NEGATIVE BIG TIME...SET ALERTS AND KEEP YOUR BEST EYE OPENED FOR THIS.
NQM3--NAZ FUTURES---BROKE A DB AT 1110, REVERSED UP AT 1140 1160 A HARD TOUGH R AT THE TRIPLE TOP, 1170 THE BIG TIME B/O. MY 100% PROJECTION HERE IS AT 1160..WE MUST TAKE THAT OUT. THEN THE UPSIDE TARGET IS 1195/1200.
VIX/VXN---VERY WEAK CHARTS HERE STILL...RALLIED UP LAST WEEK ON THE PULLBACK AND THEN PROMPTLY SOLD OFF HARD...20 IS THE DB BREAK, 26 THE 3 BOX REV UP.
ALL IN ALL ANOTHER CRITICAL WEEK IS BEFORE US AGAIN. WE'LL WATCH CLOSELY TO SEE IF THESE INDEXES CAN RUN UP HERE. ANY BREAK OF MY NUMBERS AND WE EXIT ALL LONGS..NO IF'S AND'S OR BUTTS.
===============================================================================================
OK HERE'S SOME STOCKS TO TRADE AND WATCH THIS WEEK...THESE ARE EXCITING TIMES WE LIVE IN...
CEPH---COMPLETED A BULLISH CATAPULT FORMATION ON P&F AND BROKE THRU THE DOWN TRENDLINE KNOWN AS THE BEARISH RESISTANBCE LINE THE BRL. I OWN IT AT 44. NOT SELLING IT EITHER<G> I THINK IT HAS LEGS WHAT WITH THE BTK SO STRONG...45.20 THE BTL---44.35 THE SST.
CHIR---LOOKS LIKE IT'S GETTING READY TO B/O HERE..THE CHART IS DEVELOPING NICELY...HELD A SOLID DB AT 40.
42.80 THE BTL---41.80 THE SST...43 IS A TRIPLE TOP, 44 IS A B/O BUY SIGNAL SHOULD THAT HAPPEN STAY LONG.
GPRO---FABULOUS CHART HERE FOLKS...NO SELLERS THERE..SMALL FLOAT AND DAILY VOLUME, BUT LOOKS NICE...
40 THE BTL---39.20 THE SST...
IDPH---THIS CHART IS TRYING TO DEVELOP TOO...NICE RUN SINCE EARLY APRIL THRU MAY. 38.25 THE BTL---37.25 THE SST..THIS STOCK MUST TAKE OUT THE DT AT 38.75, 39 IS THE DT BUY SIGNAL ON P&F AND IT HAS SOME R AT THE BRL AT 40...
PDLI---THIS STOCK PRINTS 14.50 LAST WEEK AND TAKES OUT HEAVY O/H R AT 14..FALLS BACK 3 BOXES IN THIS WONDERFUL UPTREND...LOOKS READY TO RUN HARD. 14.70 THE BTL---13.90 THE SST..LOVE THIS LONG WITH A STAY LONG PRINT OF 15..LOTS OF AIR OVERHEAD...
USAI---I AM LONG THIS STOCK, IT DOES NOT WANT TO GO DOWN...AT R AT THE DT HERE 36..37 IS THE NEXT B/O ON P&F...36.25 THE BTL---35.20 THE SST---
EXPE---EVERY PB TO THE RISING 20 EMA DCC IS BEING BOUGHT. NO SELLERS HERE JUST DAYTRADERS TAKING PROFIT INTRADAY. I AM LONG THIS STOCK AND WILL NOT SELL IT...69.60 THE BTL---68.45 THE SST...70 IS R, 71 ANOTHER B/O BUY...
BRCM---UNREAL POP ON FRIDAY ON THE MRVL NEWS...NOW TSM IS SAYING GOOD THINGS ABOUT BRCM TOO..I EXPECT BRCM TO SAY GOOD THINGS ABOUT THE QUARTER...STILL PLENTY OF LEG UP HERE FOLKS...22.60 THE BTL---21.50 THE SST...I HAVE THE JUNE 20 CALLS..SMILING RIGHT NOW..TARGET? 30-33 I HOPE<VBG>...
NTAP---HERE IT COMES AGAIN..I LIKE THIS ONE LONG AND WILL ADD TO IT ON TUES MARKET WILLING. SOLID PB TO THE 40 EMA, GOOD LOOKING DCC PATTERN TOO...15.60 THE BTL---14.80 THE SST...16 IS THE 3BXRVUP. 16.50 THE DT..17 SEE U LATER...
NVLS---HAS A MID QUARTER UPDATE AFTER HOURS(AH) ON THURS..COULD IGNITE THE SEMIS...BUT COULD BE BAD TOO.. I AM LONG AND UNDERWATER HERE SO FAR. NICE HAMMER FRIDAY DESPITE LOOKING WEAK ALL DAY LONG...28.95 THE BTL---28.00 THE SST...30 IS THE DT...31 B/O NUMBER...COME ON NVLS HURRY...
VRSN---WHAT A NICE ORDERLY DCC CHART...EVERY PULLBACK IN THIS RISING 20 IS BEING BOUGHT..NOT MOVING VERY FAST BUT SOLID...14.05 THE BTL---13.30 THE SST...
YHOO---BEING ACCUMULATED ON HIGH VOLUME FRIDAY..BUYERS EVERYWHERE..CHART IS POWERFUL AS THE INETS RULE STILL..AMAZING RUN HERE FOLKS THEY ACTUALLY MAKE MONEY?<g>...29 THE BTL---27.95 THE SST...
QLGC---CHART LOOKS VERY GOOD HERE ON THE DCC AND P&F... GETTING READY TO REVERSE BACK UP AFTER A SOLID PB...TOUCHED THE 20 EMA AND REVERSED UP NICELY LAST WEEK...46.25 THE BTL---45.45 THE SST...
INTU---TRYING TO REBOUND AFTER A BAD QUARTER...BROKE A DT AT 42 TOIUCHED 44...AND NOW?...44 THE BTL---43.10 THE SST...TARGET MARKET WILLING IS 48-50...HAS SOME R AT THE 200 EMA DCC..UPPER GAP IS AT 50...
RIMM---LOT'S OF NEWS AND UPGRADES ON THIS STOCK. UP FRIDAY ON VERY HIGH VOLUME...20.50 THE BTL---19.50 THE SST.. I LIKE IT LONG..
KLAC---RIGHT AT MAJOR SUPPORT HERE ON THE BULLISH SUPPORT LINE AT 39...EXCELLENT RISK REWARD IF NVLS CAN GUIDE UP..WE ALSO HAVE INTC ON THE 15TH OR SO, CHECK IT OUT PLEASE AND LET ME KNOW...IT'S VERY IMPORTANT...40.40 THE BTL---39.40 THE SST...I LIKE IT LONG...PERFECT 38.2% FIBO RETRACE PB.
OVER---MOVING UP HERE ON THE CHART LOOKING VERY GOOD ON HIGH VOLUME...CUP WITH HANDLE DCC CHART TOO BOOT...NEARING SOME HEAVY R HERE AT 17 THE TRIPLE TOP AREA...16.15 THE BTL---15.10 THE SST..NICE STOCK...
AMZN---AMAZING CHART ALONG WITH YHOO AND EBAY..POWERFUL SECTOR ALL ALONG...WHO'DA THUNK IT? HUH?.
33.15 THE BTL---32.30 THE SST..
JCOM---ONE NUTTY CHART..I AM LONG THE JULY 35 CALLS UNDERWATER HERE FOR NOW...BUT I THINK THIS STOCK HAS MAJOR LEGS LONG HERE...33.60 THE BTL---32.75 THE SST...35 IS THE 3 BOX REVERSAL BACK UP...37 THE DT...
DELL---SELLING IS STILL HERE FOR NOW...HAD GREAT EARNINGS AND PROFIT TAKING HAS IT'S GRIP..I THINK IT WILL SEE SUB 29, THEN REVERSE BACK UP..IT NEEDS THE PB FOR THE NEXT BEST MOVE...29.95 THE BTL---28.95 THE SST..I AM LONG THE JUNE 30'S...
==============================================================================================
OK THAT'S IT FOR THIS WEEKEND FOLKS...PLEASE WATCH THE NUMBERS THERE'S A LOT OF ECONOMIC REPORTS TUES THRU FRIDAY, THEY "WILL" MOVE THE MARKETS..EARNINGS ARE DONE FOR NOW...
THE NEWS IMPROVED PASSWORD IS.................................shakeout......I hope you have your glasses on<g>...
MAKE SURE YOU TELL OTHERS ABOUT OUR SMALL GROUP OF TRADERS..A LOT OF NEW FACES HAVE APPEARED AND SIGNED UP FOR OUR ROOM...I LOVE IT WHEN WE CAN HELP OTHERS TO UNDERSTAND THE DYNAMICS OF THE MARKETS...FEELS GOOD TO US ALL..
SEE YOU IN THE ROOM IN THE AM...8.30 THRU 10 AM IS THE REPORTS..I ALSO KEEP STRESSING THE NEED FOR PEOPLE TO POST REAL TIME NEWS..EVEN IF IT'S A HEADLINE...
BEST REGARDS TO YOU ALL
JERRY
jerry olson
www.buyitbuyitsellitsellit.com
jerry.olson@verizon.net |
