Monday’s Stock Watch

• November 17, 2001
• TradingMarkets Editors

The broader markets
were slightly down today after another week of gains. There were few
breakouts to new highs indicating that the rally is stalling for  the time
being. Volume was slightly below average on the day, defying any speculation of
distribution.

The Dow Jones Industrial Average
(
$INDU |
Quote |
Chart |
News |
PowerRating) closed up 0.06% to

9,866.37. The S&P 500
(
$SPX |
Quote |
Chart |
News |
PowerRating) closed up

0.36% to

1,138.18.
The Nasdaq [COMPQ | COMPQ] closed up
0.13%
to
1,898.16.

 

 

Weekly Perspective

Technology was again in charge with
the Nasdaq up 70.10 points or 3.8%. Computer Technology and the
Internet were the dominate sectors of the week. Blue chips also had a good
showing with the Dow up 258.99 points or 2.6%. The S&P 500 was up
18.37 points or 1.6%, with an increasing number of sectors adding to the breadth
of the rally. Business Software and Services and Business Supplies
in particular have shown strength these past few days.

While the number of breakouts is
encouraging, we would still like to see more evidence of a durable bottom in
place. The breadth and volume of this week’s rally was impressive, but it could
still be better. It has been two weeks since the market has shown any clear
distribution and in that time we have had three accumulation days. The
intermediate-term time frame needs to obey strict rules regarding when and when
not to enter a market. Traders of the likes of Tim Truebenbach, Mark Boucher,
and Gary Kaltbaum are still waiting for positive signals to confirm this trend
because they understand risk and reward. Until breadth and volume show clear
signs of institutional commitment to this trend, they will not commit either.

The top sector gainers:

North American Telecoms Index
(
$XTC.X |
Quote |
Chart |
News |
PowerRating) down
0.97% to
850.66.

Morgan Stanley Internet Idx

(
$MOX.X |
Quote |
Chart |
News |
PowerRating) up
0.82%
to
13.52.



 

Losing sectors:

Securities Broker Dealer Index
(
$KBD.X |
Quote |
Chart |
News |
PowerRating) down
1.37% to
484.01.

Kbw Bank Sector Index
(
$KBX.X |
Quote |
Chart |
News |
PowerRating) down
1.16% to
835.15.

Leading Sectors
with new highs:

Business Software and Services
– 2

Information Technology Services
– 2

 

The biggest mover on our watch list today was Epiq Systems
(
EPIQ |
Quote |
Chart |
News |
PowerRating). The
stock had an accumulation day gaining 3.86% on almost double average volume. The
company is a software developer that caters to the the bankruptcy management and
financial services markets by facilitating their communications infrastructure.
In other words they make administering the bankruptcy procedure a lot easier,
which unfortunately may be a popular thing these days. The stock has an RS of 99
and has a solid balance sheet with five consecutive years of positive earnings
growth. The company has a growth rate of 55%.

Pec Solutions
(
PECS |
Quote |
Chart |
News |
PowerRating) held gains for another day, up 0.845%. After such
strong gains in the past two days it is not surprising that the stock slowed
some. Today’s action is encouraging because it didn’t fall victim to profit
takers like the rest of the tech sector. We will continue to watch this to see
if it will remain a leader.

 

Recent Breakouts

We monitor the action of Recent Breakouts as an indicator of the market
health for IT traders. When breakouts are acting well, this is a good sign for
the likelihood of further sustainable breakouts. When breakouts our failing, IT
traders will be be even more cautious.

American Healthways Inc.
(
AMHC |
Quote |
Chart |
News |
PowerRating) was up 1.34% on well
below average volume.

Copart Inc.
(
CPRT |
Quote |
Chart |
News |
PowerRating) was down slightly at –
0.26% on below average volume.

Genesis Microchip
(
GNSS |
Quote |
Chart |
News |
PowerRating)
had a distribution day, down 9.63% on more than twice normal volume.

Nvidia Corp.
(
NVDA |
Quote |
Chart |
News |
PowerRating)
was down slightly at – 0.86% on below average volume.

Panera Bread Co.
(
PNRA |
Quote |
Chart |
News |
PowerRating)
was up slightly at 0.31% on average volume.

 

Company Name	Symbol	12 Month RS	Price	Price Change	Average Volume
American Healthways Inc.	( AMHC | Quote | Chart | News | PowerRating)	99	41.55	+ 0.55	146,700
Copart Inc.	( CPRT | Quote | Chart | News | PowerRating)	94	29.97	– 0.08	803,800
EPIQ Systems	( EPIQ | Quote | Chart | News | PowerRating)	99	37.37	+ 1.39	219,500
Genesis Microchip	( GNSS | Quote | Chart | News | PowerRating)	99	43.69	– 4.66	2,339,900
Nvidia Corp.	( NVDA | Quote | Chart | News | PowerRating)	94	52.49	– 0.46	10,227,600
Panera Bread Co.	( PNRA | Quote | Chart | News | PowerRating)	96	47.25	+ 0.15	320,300
Krispy Kreme Doughnuts	( KKD | Quote | Chart | News | PowerRating)	95	40.50	+ 1.70	744,000
Pec Solutions	( PECS | Quote | Chart | News | PowerRating)	99	29.82	+ 0.25	362,900

Stocks Forming a Handle

THQ Inc.
(
THQI |
Quote |
Chart |
News |
PowerRating) was down 1.53% on below average
volume.

 

Company Name	Symbol	12 Month RS	Price	Price Change	Average Volume
THQ Inc.	[THQI|THQI}	96	52.68	– 0.82	1,561,900

Stocks Building A Base

MTR Gaming Group
(
MNTG |
Quote |
Chart |
News |
PowerRating) was down 1.66% on
slightly above average volume.

eBay Inc.
(
EBAY |
Quote |
Chart |
News |
PowerRating) was down 0.11% on below
average volume.

 

Company Name	Symbol	12 Month RS	Price	Price Change	Average Volume
MTR Gaming Group	( MNTG | Quote | Chart | News | PowerRating)	95	12.60	+ 0.57	669,300
eBay Inc.	( EBAY | Quote | Chart | News | PowerRating)	96	52.68	– 0.82	1,561,900

 

Remember that all securities are
risky. In any trade, you should always reduce your risk by adjusting position
size and placing open protective stops where you will sell your long or
cover your short in case the market turns against you. For an introduction to
combining price stops with position sizing, see our lesson,
Risky
Business.