Monday’s Stock Watch

  • October 25, 2002
  • TradingMarkets Editors


The major indexes posted another week of gains, as volume accounted for
two distribution days. Besides the markets being a little higher,
little has changed over the past week. New 52-week highs and lows are producing
relatively low numbers, while Mark Boucher‘s
Top
RS and ER list is not giving any indication of broad participation in this
rally.



It could take time for stocks possessing both
quality technical and fundamental properties to set up in bases, and it may not
happen until some consolidation in the indexes occurs. We need to remember that
despite evidence of a durable bottom, this is still a bear market. On a positive
note, our recent breakouts are hanging in there, which gives a vote of
confidence for the market.



From Friday’s action:



Market breadth was positive, with NYSE
advancing issues over declining issues by a ratio of 2.14, and up volume over
down volume by a 2.61 ratio. Nasdaq advancing issues over declining issues came
in at 1.83, and up volume beat down volume by a 3.65 ratio.




The Dow Jones Industrial Average
(
$INDU.X |
Quote |
Chart |
News |
PowerRating)
closed +1.52%
at 8443.99. The S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)
closed +1.71% at
897.65.
The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) closed
+2.49% at
1,331.12.





 




cellPadding=0 width=”70%” border=1 height=”176″>

































  NYSE size=2>NASDAQ
Advancing Issues
2,100
2,058

Declining  Issues
957
1,136
Advancing Volume
923,765,000
1,138,507,000
Declining Volume

381,960,000
308,773,000

Total
Volume

1,312,443,000
1,463,308,000
New 52-week
Highs
6
12
New 52-week Lows
5
6

Top sectors:

Health Services and Medical Appliances & Equipment.

Watch List Action:


One of our most recent breakouts, Wellpoint Health
(
WLP |
Quote |
Chart |
News |
PowerRating) has broken down to
below its pivot buy point. We’ll watch the stock as long as it stays above the 8% mark below its buy point. Heavy distribution Thursday is a major red
flag.





Recently added to the “building a base” list, Coach Inc.
(
COH |
Quote |
Chart |
News |
PowerRating) has since
broken out to new 52-week highs, though has provided little in the way of an
ideal entry. The pivot point here is placed 10 cents above its most recent
consolidation, which is 29.80 from 9/10’s high. The stock hit the pivot with
good volume on 10/22, and has since booked major distribution. We’ll now monitor the
stock as a new breakout. 





Recent Breakouts

size=2>

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 are
failing, IT traders should be even more cautious.






















































































color=#ffffff size=2>Company Name color=#ffffff size=2>Symbol color=#ffffff size=2>12 Month RS color=#ffffff size=2>Price color=#ffffff size=2>Price Change color=#ffffff size=2>Average Volume
Pivot
52-Week High

Apollo Group

(
APOL |
Quote |
Chart |
News |
PowerRating)
92
43.09
+2.15
2,606,800
39.60
46.15

Brown & Brown

(
BRO |
Quote |
Chart |
News |
PowerRating)
75
32.16
+1.07
243,500
32.16
 37.00

Coach Inc.

(
COH |
Quote |
Chart |
News |
PowerRating)
97
31.87
31.87
1,000,300
29.80
33.09

Education Mgt. Co.

(
EDMC |
Quote |
Chart |
News |
PowerRating)
83
42.38
+0.96
395,700
41.87
46.65

Hovnanian Enterprises

(
HOV |
Quote |
Chart |
News |
PowerRating)
90
37.48
-0.52
786,200
32.90
40.56

International Game Technology

(
IGT |
Quote |
Chart |
News |
PowerRating)
94
75.19
+2.34
1,019,000
75.19
75.70

Mid Atlantic Medical Services

(
MME |
Quote |
Chart |
News |
PowerRating)
90
40.85
-1.12
529,700
38.83
43.20

Wellpoint Health Network

(
WLP |
Quote |
Chart |
News |
PowerRating)
90
82.01
+1.55
1,398,500
79.05
85.63

Stocks Forming a Handle




















color=#ffffff size=2>Company Name color=#ffffff size=2>Symbol color=#ffffff size=2>12 Month RS color=#ffffff size=2>Price color=#ffffff size=2>Price Change color=#ffffff size=2>Average Volume
Pivot

Commerce Bancorp.

(
CBH |
Quote |
Chart |
News |
PowerRating)
80
44.52
+0.50
738,900
47.80

CBH is not the prettiest of handles, but it’s all
we have now.


Stocks Building A Base





























color=#ffffff size=2>Company Name
color=#ffffff size=2>Symbol
color=#ffffff size=2>12 Month RS
color=#ffffff size=2>Price
color=#ffffff size=2>Price Change
color=#ffffff size=2>Average Volume

Pivot

Chicos FAS

(
CHS |
Quote |
Chart |
News |
PowerRating)
96
20.41
+0.35
1,302,300
21.08

Ross Stores Inc.

(
ROST |
Quote |
Chart |
News |
PowerRating)
90
44.81
+1.17
1,038,000
n/a

We’d like to see CHS and ROST give us a handle in
here, as pegging an ideal breakout point has been warped by recent breakouts to
new highs without volume.


href=”mailto:danielb@tradingmarkets.com”>danielb@tradingmarkets.com


If you are new to the “IT” strategy, be sure to
take a look at our

intermediate-term online trading course.


Intermediate-Term Traders
Report is posted on
Tuesdays and Fridays. For other intermediate-term commentary, be sure to read

Mark Boucher (Fridays),

Tim Truebenbach (Tuesdays and Thursdays), and

Gary Kaltbaum (Mondays and Thursdays).