The Play Of The Day
January 12, 2000
08:33 AM EST.
NASDAQ MAY TEST 3,850 TODAY
We will be looking for the NASDAQ to fall about 72.00 points today right off the open. That should give time for YHOO, and AOL to fall to there estimated support levels of $362.50, and $60.00 respectively.
Last Friday we estimated the NASDAQ had to break through 3,850 to make a repeat visit to 4,000. It took all day to do it but after bouncing off the plus 80.00 point area all day long last Friday just under 3,850. The NASDAQ late in the day about 40 minutes prior to close blow through it and ran up. Last Friday's resistance now becomes today's support. If we loose the key area of 3850 today then the NASDAQ may drop all the way back down to 3,714 its 30 day low.
One thing is for certain today with interest rate yields at 18 month highs the bond market ahead of the Fed coming in mid February will be closely followed the rest of this week.
Good Morning Stock Fans!
Today's Play of The Day is: Egghead.com (NASDAQ:EGGS)
Egghead.com (Nasdaq:EGGS) is a leading Internet retailer of new and surplus computer products, consumer electronics, sporting goods, and vacation packages. Through its auction site -- Onsale.com -- the company offers bargains on excess and closeout goods and services. Egghead.com combines broad selection, low prices, and excellent service to provide an outstanding online shopping experience for businesses and consumers. Egghead.com is located on the Internet at www.egghead.com.
Stock Fans! Looking at yesterday's trading graph of (NASDAQ:EGGS) one would have thought the NASDAQ sold off in the morning and rallied near the close. At least thetas how (NASDAQ:EGGS) traded yesterday. This stock fell to its low in the morning when the NASDAQ was actually trading positive up about 20 or so near its high of the day. Then shares of (NASDAQ:EGGS) made a comeback the rest of the day, and in the midst of a major NASDAQ selloff of more then 140 points. (NASDAQ:EGGS) managed to gain $0.50. The question that must be asked here is just why did this happen?
In order to answer this question we must first look closer at (NASDAQ:EGGS) 30 day history. It seems that EGGS may have had no profits to take yesterday as it fell back on NASDAQ profit taking. Looking back at a key day December 30, 1999. EGGS exploded off the $15.00 area and went as high as $23.50 on big news that it was in the top 5 of all trafficked site on the Internet according to Media Medtrix a traffic Internet information company. That news is all it took to send EGGS flying as over 20 million shares traded as it went up from that magic number $15.00 all the way to 23.00. So where is the stock trading today? How bout that $15.00. Yes, Stock Fans EGGS has now tested it explosion on news and fell back on less volume over the last 10 days falling all the way back off its highs until yesterday when in the midst of a NASDAQ sell off it rallied on increased volume over the last 4 trading days and went higher.
As always we also take a look at the option trading on EGGS. We see that indeed it had action of over 130 option contracts yesterday on the EGGS January $17.50 option call contracts. This kind of action out of the money further supports that EGGS could very well be getting ready to make a move soon.
How quickly investors forget in this market that with increased traffic comes increased sales. With EGGS earnings coming the in early February 2000. It makes perfect sense that some shrewd investors may have figured out that If investors paid $23.50 once for shares of EGGS on big profit indication they will again. We are going to try and not be far behind those investors today as we look to get in EGGS and wait for stellar numbers that look to be coming in less then 30 days.
Buy Area: $14.75-$15.1250
Sell Stop: $12.75
Time Frame: 7 trading days
Type of Trade: Swing Trade
LONGER TERM EGGS
Target: $23.00 February 12, 2000
"RUN THE *NAKED (*owning options without owning stock) OPTIONS!"
The Option Calls that make the most sense here had volume of over 130 yesterday. They are the (NASDAQ:EGGS) Jan 2000 $17.50 Option Calls.Symbol is (QOL-AW) Last Ask: $0.03750
BONUS PLAY #1 Sun Rise (NASDAQ:SNRS)
Sunrise is a refractive surgery company based in Fremont, California that is developing Holmium laser-based systems, which utilize a patented process for shrinking collagen developed by Dr. Bruce Sand ("Sand Process") in correcting ophthalmic conditions. These systems(A) incorporated a non-contact simultaneous application for correction of hyperopia (farsightedness), presbyopia (loss of focus due to natural aging), and over correction resulting from PRK and LASIK treatments for myopia. The system is currently used in Europe and the Americas, and is in clinical trials in the U.S.
About 2 weeks ago Leman came out and upgraded shares of (NASDAQ:SNRS). Was it a coincidence then that yesterday that same brokerage firm succored over 11 million for (NASDAQ:SNRS)? Not likely. Leman seems to know exactly what they are doing. A few months back (NASDAQ:SNRS) was turned down to get FDA approval for new laser technology. On that news (NASDAQ:SNRS) fell back. The stock exploded out of the blocks yesterday on Leman getting that funding to further this procedure. (NASDAQ:SNRS) will find out on Thursday of this week if they get approval. Judging by yesterday's massive volume of well over 4 million shares on (NASDAQ:SNRS) it looks very much like (NASDAQ:SNRS) will indeed get its approval.
To further back up that an approval is close is to look at to other key factors. Number 1 the stock held up and closed near its high of the day at $10.6250 yesterday up more then $1.50. It would have closed at its high of the day $11.1250. If it would not have been for a few sellers getting out with decent one day gains on the close. This is hardly the action that we would expect to see on a stock yesterday trading on the NASDAQ as the rest of the NASDAQ sold off in dramatic fashion. The mere fact that it held up means this stock was trading in a market of its own. Most often this is very bullish.
Number 2 the big boys, or players play stocks many times off the options market. With that in mind there was heavy volume on (NASDAQ:SNRS) yesterday on its option call contracts. What is even more interesting the option premium on these options is extremely high? You option players, ask yourself this? When is the last time you saw an 10.50 stock options trading for 1.00 plus? That is what the (NASDAQ:SNRS) January $20.00 option calls are selling for? This again is a could be a dead giveaway that (NASDAQ:SNRS) is just beginning a big run that could very well take it to $20.00 by the end of this week.
One thing to keep in mind on this play. With such a huge move possible this stock may pull back considerably today to allow big players to get in the stock in volume. Therefore if you decide to play this one it may very well test the under 10.00 area today to wash out sellers. The explode from there. It makes sense to get in this one near 10.50 and hold there. If it begins to run up on more volume today it makes sense to get in this one on momentum. Keep in mind the target on this one is $20.00. So play it assuredly off the buy area today.
KEY INDICATORS: (NASDAQ:SNRS)
TARGET:$15.00-$17.50 ( it could find 20.00 judging by Jan 2000 option calls action)
Time Frame: 2-8 trading days
Type of Trade: Swing Trade
RUN THE *NAKED OPTIONS!" (NASDAQ:SNRS)
The Option Call contracts that make the most sense here are theJanuary 2000 $15.00 Call Options. The symbol is (RNU-AC) last ask was $2.06250.
BONUS PLAY #3 MGC Communications (NASDAQNM:MGCX)
MGC Communications, Inc. is an integrated communications services provider that offers switched local and long distance voice and data services. MGChas switches fully operational in Las Vegas, Atlanta, Chicago, Southern Florida, and in selected suburban areas of southern California. The Company's network footprint provides access to over 11 million addressable lines. MGC's services include business lines, residential lines, long distance services, and data services. The business lines services are composed of single line business, Centrex service, access trunks, and customer owned coin operated telephone lines. The residential line services are composed of single and second line, including multi-dwelling unit lines, and basic telephone service. Long distance services include outbound 1+, Inbound 800/888, and calling cards. Data services include Nortel's Internet Thruway product, MGCi.com Internet service, and bundled voice and high-speed data via xDSL technology. Stock fans that is more than a mouth full, but one thing for sure is that volume is increasing and this was given a Strong buy recommendation by Prudential.
KEY INDICATORS: (NASDAQ:MGCX)
Buy Area: $48.75 to $49.50
Sell Stop: $45.91
TARGET: $54.45 to $56.93
Time Frame: 4 to 7 days
SHORT SWING PLAY - Engage Technologies, Inc. (NASDAQNM:ENGA)
Engage Technologies, Inc. offers a range of products and services that enable Web publishers, advertisers and merchants to target the delivery of advertisements, content and e-commerce offerings to their audiences and to measure their effectiveness. Engage has generated most of its revenue to date through sales of its advertising management software and outsourced services, as well as its services for measuring and analyzing Web site traffic. Now why on earth would I consider shorting this stock. Well, here is the skinny. The lockup on shares with held from the IPO expires on 1/15/00. Thirty-nine million shares, which is 82% of the total shares! Based on current volume it will take 65 days to absorb these released shares! I have been watching and waiting this one and plan on entering as high as possible.
KEY INDICATORS: (NASDAQ:ENGA)
Sell Short Area: $87.00 to $89.00
Buy Stop: $93.531
TARGET: $73.95 to $78.30
Time Frame: 2 to 5 days
STOCKS ON OUR SCREENS TODAY:
AOL- It may test $60 today
YHOO- We called it right yesterday. Look for it to drop to 362.50 today. It then should have buyers come in and make a fast move to $392.00
TWX- it may test $78.00 today
FATB - oversold
MDCM -When Interst rates go up this stock has had a history of moving
EELN - same as MDCM
SMSI - low risk at current levels
CNCX- It may test $32.50 then make a move up.
CPRT-mentioned on CNBC today.
IDC- it may see $45.00 today
ICIX- MSFT will invest heavily in DIGX an August IPO it owns.
INFS- held up well yesterday
JWEB- We like $48.00 today.
Have a great day!
More to come....
and BigPlayStocks.com Team of Traders