The Play Of The Day
January 27 , 2000
07:45 AM EST.
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NASDAQ OUTLOOK THE REST OF THIS WEEK:
Stock Fans, the NASDAQ Market closed at its low of the day, as it for the first time in months saw less volume. The NASDAQ closing down almost 98.00 points at 4,069 didn't sell off abruptly while Allen Greenspan spoke on Capitol Hill yesterday. Instead of dropping fast and allowing buyers to come in and bounce the sold off tech and Internet related issues higher. This didn't happen yesterday. Instead of a storm that the weather your weather person failed to give much attention to until it was to late. I had my eye on the volume on the NASDAQ yesterday and I have been looking for the NASDAQ to sell off slowly for weeks now. No, I am not a Bear. Instead I realize that when the market rises a lot or drops a lot that's OK, because it creates trading ranges. What kills this market is when there is a lack of buyers and sellers. This type of action on the market eliminates trading ranges. So we have yesterday. Some thought maybe the market is slowing in volume ahead of Greenspan talking. A good excuse, but one if you held a lot of high flying tech and Internet stock yesterday long that would by days end still have you looking for a bounce as the NASDAQ from 2:15 EST until the very bell sold off slowly with no bounce from a gain of 20 plus all the way down to almost a 100 point loss.
Here at BigPlayStocks.com, we didn't go cash. Instead at about 1:45 EST time I issued an Alert Email warning telling all of you on that valuable Alert email list that I was selling off all my high flying Internet and tech stocks long and going short. It proved to be the right call as I saw the beaten down financials stocks rise, and the likes of 1 Key Stock on the NASDAQ that many of you might not call a key stock. However in the mid of higher interest rates a stock like e-LOAN (NASDAQ:EELN) made a move to 200 day highs as it nearly made $20.00 yesterday. This move on EELN took place for a good reason with rising interest rates a stock like EELN will be able to sell loans at higher rates. Hence more money. Stock Fans, even the hammered Bank One (NYSE:ONE) managed to gain as investors bailed out of techs. and into safe haven less vulnerable stocks.
So, what to expect today? Well, the NASDAQ looks as if it may open under 4,019 today down another 50 points right off the bat today. If this happens we will then approach a Key Area in the NASDAQ trading g range that we have bounced off of intrados in January of 2000 several times now. That Key Area I told you all of 2 days ago as I saw the NASDAQ to look to test it then is 3,953. Write this number down know it well. If we lose that there is one more area of support we may have to save us but its another 100 points or so down again. It is the low on 2000, at 3,750. I hate to say what's next being a BULL as I am. If we lose 3,750, then look for the bleeding to stop at 3,681. That level is more then 500 points of our highs we hit just this week on the NASDAQ it also is considered an abrupt correction are as it is almost 40% off our all time highs. The market may be setting up for rate increases. We may not have to worry about more then a .25 increase in interest rates coming however the only reason why we won't is simple with a shedding of more then 500 points the market will have adjusted for it.
NASDAQ KEY AREAS TODAY & LONG & SHORT AREAS:
I will go LONG the NASDAQ today if the NASDAQ can get back over 4,019 or never loses 4,019 today.
I will short the NASDAQ if it opens under 4,019 with DELL helping out we could open lower then 4,019 today.
I will go long when or if the NASDAQ finds it way back up to 4,019 today.
I will go short if the NASDAQ opens under 4,019 or loses 4,019. I will stay short until 3,953. If we hold that area I will again go long back up in the trading range.
If we lose 3,953 I go short and will not look to go long until we get back 3,953 or we bounce off of 3,750
I hope this doesn't happen, but if we lose 3,750 then I will go short all the way down to 3,681 where I will go long and go long big for a major NASDAQ bounce
SAFE HAVENS WHILE NASDAQ SELLS OFF:
Financials, Banks, Brokers, and Online Brokers, and then companies that have little gains to lose. Example EGGS, SATH, ASFD.
OTHER SAFE HAVENS TO WATCH CLOSELY:
Stock Fans, when the market is dropping as the NASDAQ is right now, then Internet Incubators have somewhat of an advantage as they are investing in no traded start up companies. What this means is these start up companies don't trade in any stock market so they don''t lose any value. So this is why you saw a stock like Rare Medium (NASDAQ:RRRR) add on more then 5.00 as the rest of the market was selling off. RRRR has an IPO coming public soon so with that IPO not trading yet it keeps its value and therefore shares of RRRR increase. Another stock that has been getting notice is (NASDAQ:HHGP) It had lower volume yesterday. However it managed to close near it high of the day. It owns a lot of a stock that ran on Tuesday of this week called (NASDAQ:NANX). One more stock that added on some good gains yesterday on good volume was (NASDAQ:THCG). This stock gained 3 plus yesterday. It should add on more today as it probably gaps up on a the fact it owns a lot of (NASDAQ:LEAF). This stock made a deal with (NASDAQ:BVSN) and was up more then $4.00 in after hours last night
The following stocks to watch as the NASDAQ probably drops more over next few days are:
RRRR,HHGP, INTM PWCC, WCAP, VFND, THCG, MAWI.
STOCK TO SHORT:
The stocks that are the most vulnerable are the run up extremely popular NASDAQ tech stock like MSFT, INTC, and QCOM as well as the high flying Internet stocks like YHOO, EXDS, CMRC, JDSU.
Today's Play of The Day is: Vertel, Inc. (NASDAQ:VRTL) "SHORT!"
The stock ran up last Friday as it was called the "Stock of The Day!" on CBS.Marketwatch.com. That is all it needed to run up for a major area of 3 month resistance of $14.1250 to as high as almost $18.00 on more then 5.5 million shares trading. It however did n't hold that 18.00 area it on less then 500,000 shares late in the day this past Friday it fell back to close at $15.6250. In the middle of the trading range it had created on Friday.
I was amazed when I saw it trading in pre market on less then 120,000 shares up more then 2 as it was nearing 20.00 up almost 5 points form where it had closed on Friday. It sure looked like it would fall fast so I alerted the Live trading room members to go short. Well, it somehow on increased volume found $23.25. I still hold strong and short as I knew it had to fall back and retrace. While the next day it did it fell to 17.00 and made a great short play. Yesterday somehow in a NASDAQ sell off that lasted into the close it held for the most part $18.00.
Today, Stock Fans that's should be all over this stock is dying to fall back to 15.6250 at least and may even retest as it has 2 times before in its history all of its gains back down to $14.25. It just looks to good not to go short on this one again today as it may even open higher amazedly. With no news on the company and volume increases as it falls and lessens as it rises it should lose its steadfast grip today and fall.
KEY INDICATORS: SHORT VRTL
Sell Short Area:$17.50-$18.50 SHORT off open
Cover for Loss:$19.75
1st- TARGET:$15.75 hopefully today
1st-Time Frame: today maybe Friday.
2nd- TARGET: $14.50
2nd- Time Frame: 1-4 days
Go Long Area: The beauty of a well thought out short is if you play it right you buy long at the bottom. VRTL will be oversold and low risk in its range at $13.93750. Sell stop then is: $12.93750
BONUS PLAY #1 : Dell Computer (NASDAQ:DELL) SHORT then LONG
Stock Fans, The Dell news of warning of missing numbers is not good at all for the NASDAQ market today. The stock fell abruptly yesterday in after hours as the news hit the wires. It went from over $40.00 to go as low as $35.93750 for literally seconds on major volume in after hours of more then 2 million shares trading. The stock then managed to hold $36.06250. As DELL held its 200 day moving average of $36.00 by the slimmest of margins.
The stock today somehow is trading up at $39.25 today on much less volume. A stock trading up on less volume is not good. Dell saying it won't come close to it estimated revenues or growth for upcoming earnings reports but a black cloud on this entire NASDAQ market. You can bet if and when DELL comes close to its 200 day moving average today CNBC will be all over it. I really think the play is to SHORT Dell off the open and cover at $36.00. It should hold 36.00 today. We will have a lot more to worry about then Dell if it loses $36.00 today.
KEY INDICATORS: DELL SHORT
Sell Short: Off Open
Cover for Loss: $41.1250
Time Frame: today
KEY INDICATORS: DELL LONG
Buy Area: $36.00-$36.43750
Sell Stop: $35.6250
Time Frame: today
"RUN THE OPTIONS!" DELL BOUNCE
When Dell hopefully bottom today at 36.00 or so. We will look to get the Dell Feb 2000 40.00 Option Calls. We will look for $41.00- $43.00 as our Target in 10 days
BONUS PLAY #2 Conexant Systems (NASDAQNM:CNXT)
Conexant Systems provides semiconductor products and systems solutions for communications electronics. Conexant delivers integrated systems and semiconductor products for a broad range of communications applications. These products facilitate communications worldwide through wireline voice and data communications networks, cordless and cellular wireless telephony systems, personal imaging devices and equipment and emerging cable and wireless broadband communications networks.
Stock Fans, this is being added to the S&P 500 on Friday night. Fund managers have to buy. So I am looking to take a position on the dip. I expect this to gap up then sell off on profit taking. I plan on taking a 1/2 position on the 10:00 to 10:30 dip. I will add on further weakness if we get a sell off.
KEY INDICATORS: CNXT
Buy Area:$76.00 to 80
TARGET:$85.00 to $95.00
Time Frame: 2 to 4 days
Type of Trade: Swing Trade
BONUS PLAY #2 Mastech Corporation (NASDAQNM:MAST)
Mastech Corporation is a worldwide provider of high value information technology services and solutions to large and medium sized companies. Founded in 1986, Mastech provides a broad range of information technology (IT) applications solutions and services including client/server design and development, conversion/migration services, Year 2000 services, enterprise resource planning package implementation services, E-Business solutions and applications maintenance outsourcing. Mastech delivers its services to more than 900 clients through 26 offices in North America, Europe, Asia, Australia and Africa.
Stock Fans, I love the chart on this stock. It has been consolidating and I expect it to break out in the next day or two.
KEY INDICATORS: MAST
Buy Area:$27.25 to $ 28.00
TARGET:$30.80 to $32.20
Time Frame: 2 to 5 days
Type of Trade: Swing Trade
BONUS #3 LONG TERM OPTION CALLS: America Online (NYSE:AOL) Jan 2001 $100.00 LEAPS:
Stock Fans, I remember about 4 months back when the likes of Mr. Sofftee (MSFT) and Intel INTC were added to the Dow average. They left out AOL? How do they leave out the most heavily traded NYSE stock there has been in the last 3 year? They said AOL was to volitile. Well, Stock Fans with the likes of AOL now trading in 1.5 shares of its stock with no collar to the much more stable Time Warner (NYSE:TWX) that would indeed satisfy the Dow Boyz and Girlz. Right? I really think AOL gets added later this year to the Dow average as it is way more stable now with the TWX deal.
Henry Blodgett over at (NYSE:MER) has said already he sees 55.00 as the worst for AOL and then he likes it to see 90-100 over the next 10 months. Well, with that in mind I look for Henry no dummy to go into AOL in size with the Munder Munder Boyz and Girlz and then upgrade the stock to a strong buy. That should be all it takes to send AOL on a move upward a steady strong one. AOL Steve Case may have looked a little out of touch when he let his AOL get hammered off $85.00 plus all the way to $59.00. However keep in mind Case is a genus what he did is leveraged his high flying stock that he probably knew was overvalued and decided to buy up TWX while his stock one that really only had 2 good months in 1999 March and October was still just off all time highs. What he did in essence is a lot smarter then what I 3 Key high flying NASDAQ stocks CEO's didn't do and they are now paying the price.
You see Stock Fans, this market is all about supply and demand. The lower the supply amount of outstanding shares the higher the demand. Ask yourselves something. Has QCOM bought anything with its run up stock? Nope, and then on top of that its splits creating more supply in turn bad figures in economics 101 to make money less demand. Look at YHOO that company has said time and time again of late we go alone. OK fine YHOO if you will not buy up a company with your 400% increased stock then you will pay price as you are preparing to split 2 for 1. Remember YHOO in Feb 2000 went after to huge Internet stocks. The first was Broadcast.com then (NASDAQ:BCST), and the second was CMGI's then owned GeoCities (NASDAQ:GCTY). Neither one today trades on its own. YHOO gave up there shares to get those 2 companies. They both stopped trading on their own back on July 1, 1999. Well, how bout that YHOO didn't split and then as the NASDAQ Internet stock sell off ended on August 6, 1999 YHOO then trading at $125.00 would run up more then 375% over the next 5 months. Why did it happen YHOO kept supply low and then when demand heightened so long to upside YHOO stock?
So, AOL has now made itself like YHOO did. With that we today will join the savvy investors who yesterday bought more then 600 plus AOL Jan 2001, Option Leaps. What we should see as we buy them today and hold them under our pillows is plenty of investors going after AOL now as I never thought I would say this AOL a value play? Yup! We will also look to get in AOL long term on the stock as its worst case low is $54.00. Its high should, and could be over $100.00 in less then 11 months time.
RUN THE OPTIONS AOL-
The Jan 2001, $100.00 Option Leaps
Last Ask yesterday was $5.1250 for each contract.
Today we buy 5 and look to unwrap them in early 2000.
LONGER TERM OPTION PUTS:
Stock Fans, as I profiled in the AOL piece above. There are some Key Tech, and Internet related high flyers that should really see investors bail in mass over the next 6 months here they are. We will look to get 2-5 option puts of each one over the next week or so.
Remember Stock Fans, these are plays we are going for John Jaha like Home Runs. What we are going do is hold these babies with the intention of losing all of our money invested. " 100% RISK CAPITAL ONLY! We do this cause we are willing to lose what we invest to try and hit one deep and long where nobody will catch are BIG PLAY GAINS! Accept our tax preparers!
OPTION PUTS WITH STRIKE PRICES:
QCOM April 2000 $90.00's
YHOO- July 2000 $100.00's (YHOO to split 2 for 1 soon adjusted YHOO $100.00)
CMRC- July 2000 $115.00's
STOCKS ON OUR SCREENS TODAY:
HLTH- Janus Funds invests major $$$
MACR- blow out numbers. Check the front page of our web site later today for my special MACR report.
RAZF- off MACR
INTM- off MACR
SPLN- Elway's MVP.com
EELN - Target is $20.00
MDCM -Target is $10.00
MADGF- It may see $17.00 today
THCG- owns alot of LEAF called up 9 today
Have a great day!
More to come....
and BigPlayStocks.com Team of Pro Traders.