Intermediate-Term Traders Report

  • August 27, 2004
  • Tsutae Kamada

The headline was powerful. “The US DOJ has launched an investigation
into Career Education Corp (CECO)”. That was Thursday morning. As expected,
sellers flooded the market and CECO gapped down nearly 10% at the open. But as
you can see below, dumping the stock at the opening moment was clearly the worst
timing. In fact, CECO managed to fill the gap and closed near the day’s high.

You may say hindsight is 20/20, but let me tell you there were more than handful
of traders bought CECO shortly after the opening bell. Take a look at the
5-minute chart. CECO reversed to the upside without touching the previous low
set on August 6. Buyers did not wait. They were aggressive.

Let me show you another example from Thursday. Following a disappointing
earnings report, Krispy Kreme Doughnuts (KKD) gapped down. Notice, KKD hit the
previous low before reversing to the upside. Buyers waited. They were not as aggressively
as the CECO buyers.

Let’s review the market. Both NASDAQ and DOW finished just below
the resistance level. It’s going to be an interesting week next week.

Notable stocks of the week:

National Oilwell (NOI): The stock formed bullish hammers two consecutive
weeks. Look for a resumption of the uptrend.

Jupitermedia (JUPM): The issue shaped a bearish tail on its weekly chart
and closed poorly. Look for selling opportunities.

Economic Calendar:

DATE TIME (ET) RELEASE FOR CONSENSUS
Aug 30 08:30 Personal Income July +0.5%
Aug 30 08:30 Personal Spending July +0.7%
Aug 31 10:00 Consumer Confidence August 103.0
Aug 31 10:00 Chicago PMI August 60.0
Sep 01 10:00 Construction Spending July +0.5%
Sep 01 10:00 ISM Index August 59.9
Sep 02 08:30 Productivity Q2 +2.8%
Sep 03 08:30 Nonfarm Payrolls August +150K
Sep 03 08:30 Unemployment Rate August 5.5%
Sep 03 10:00 ISM Service August 62.0

Best performing
industries of the week: Airline +6.53%, Diversified Technology
Services +6.10%, Consumer Services +5.07% 

Worst performing industries of the week:
Factory Equipment -6.04%, Steel -3.75%, Coal -2.76%

Good night and see you Monday.

T.Kamada