Wednesday’s Stock Watch


The major averages mustered
a rally on Tuesday in a show of optimism ahead of President Bush’s State of the
Union address.
Volume has been on the light side for the first part
of the week, indicating a lack of conviction for either the long or short side.
There is much speculation that in order for institutional money to be committed,
we need either 1) The matter in Iraq to be resolved convincingly through force,
or 2) Saddam to go into exile. It be a some time until we have a relatively
peaceful geopolitical landscape, so in the meantime, we’re looking for a
technical rally.



Stocks on our watch list have put in mixed
performances since our last report. We are removing one selection, while the
search for new issues goes on with no avail.



From Tuesday’s action:



Market breadth was positive, with NYSE
advancing issues over declining issues by a ratio of 1.77, and up volume over
down volume by a 2.87 ratio. Nasdaq advancing issues over declining issues came
in at 1.67, and up volume beat down volume by a 3.53 ratio.




The Dow Jones Industrial Average
(
$INDU.X |
Quote |
Chart |
News |
PowerRating)

closed
+1.24%
at 8,089.05. The S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)

closed
+1.30% at
858.55. The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating)
closed +1.28
% at
1,342.31.






cellPadding=0 width=”70%” border=1 height=”185″>

































NYSE size=2>NASDAQ
Advancing Issues
1,974

2,044

Declining Issues

1,132

1,256
Advancing Volume
1,002,444,000

198,759,000
Declining Volume

406,725,000

1,059,338,000

Total
Volume

1,421,103,000

346,915,000
New 52-week
Highs

9

4
New 52-week Lows
28

13

Top sectors:

Fiber Optics, Gold and Silver, Internet, and
Computer Security.

Watch List Action:


Putting in an accumulation day Tuesday, International Gaming Technology
(
IGT |
Quote |
Chart |
News |
PowerRating)

continues to consolidate near its 52-week high. Though buyer beware, this
remains an unfriendly environment for intermediate-term plays, so watch out for
a breakdown.





Notching another distribution day Monday, Hovnanian Enterprises
(
HOV |
Quote |
Chart |
News |
PowerRating)
is
now trading below its 200-day moving average, and is below its pivot buy point.
The stock appears to be, at best, forming a new base, though with an RS of 66, it
looks like we’ll be taking this one off the list.





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

Coach Inc.


(
COH |
Quote |
Chart |
News |
PowerRating)

87

31.72

-0.38

872,300

28.35

35.70

Garmin Ltd.


(
GRMN |
Quote |
Chart |
News |
PowerRating)

94

28.67

-0.22

404,400

23.46

31.35

Hovnanian Enterprises


(
HOV |
Quote |
Chart |
News |
PowerRating)

66

30.74

-1.31

597,000

33.56

40.56

International Game Technology


(
IGT |
Quote |
Chart |
News |
PowerRating)

87

78.10

unch

869,800

66.70

80.10

Hovnanian will be coming off the list.


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

Expedia


(
EXPE |
Quote |
Chart |
News |
PowerRating)

69

64.08

+0.32

2,432,900

78.72

Apollo Group


(
APOL |
Quote |
Chart |
News |
PowerRating)

78

41.97

+0.72

2,258,700

46.57

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

None







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).