The Play Of The Day
April 27, 2000
8:50 AM EST
Stock Jock! Short JDSU, YHOO, CMRC, CMGI, ORCL, CSCO, DELL, INTC, Long - INSP
GDP 5.4% ( A little weaker)
ECI (Employment Cost Index) 1.4% Much Stronger)
Estimate was.09% + 46.5% above what was expected
NASDAQ MARKET OUTLOOK TODAY:
"Get the BEAR Off My Back Today As NASDAQ should test April lows of 3,221.00 and then close over our 'DOUBLE BOTTOM" - 3,321.00!"
Stock Fans, The NASDAQ Futures were up more then 3.00 points ahead of the ECI hitting today at 8:30 EST. As soon as it hit the NASDAQ Futures dropped almost 80 points down 72.50, then they did! They currently sit down 107.50 points.
"What Does This Mean?"
It would appear now that the NASDAQ will drop down and test its April 17, 2000, Low of 3,221.00. I am going stay with my prediction that the NASDAQ goes there and then closes over 3321.00 today. JSDU told us a great deal as we were short but survived the barrage. On seeing JDSU explode on CNBC CEO and on it heavily being shorted it told us that the market was set up to indeed test April lows. Some thought 3600.00 tested 5 times in the last 3 days was rock solid since MSFT sent us there this Monday. It looks now very much like the NASDAQ will open under Monday's 3480.00 open down over 150.00 points. It help 3340.00 that day. However the market is not one that will let Allen Greenspan and the FED tighten by .50 to hold of inflation. The truth is history shows that Greenspan won't increase by .50 the 2nd week of May when the Fed meets next to set interest rates. So then how do we fend off inflation that today's ECI and April 14, 2000 showed was creeping up something that must be stopped to avoid a recession? Well its simple really the market now will adjust so that Allen won't have to raise .50 in May. What this means is that the NASDAQ should stay under 3,500 into that meeting falling back today and testing those lows of April 17, 2000. Looking at recent history on the NASDAQ we go back to March 22, 2000 the last time the FED met. The NASDAQ fell to 4,46.00 ahead of what was expected,and turned out to be a .25 rate increase. We then saw a huge move as the NASDAQ Market Technicians shorted the NASDAQ as it rocketed to 5,000 again up more then 500 points in less then 4 days. Then came April 4, 2000 we dropped to 3,649.00. What that told us was that the market was figuring in 500 points on average for each point increase. Therefore it now looks like the FED would have to raise .50 to off set the CPI and today's ECI. So in order to keep .50 out of play. The NASDAQ must lose about 500 points. It should come close today dropping down to 3221.00 maybe a little lower. I do however see the NASDAQ bouncing up over 3321.00 and closing somewhere between there and 3,400.00 today. The most important thing is the NASDAQ stays under 3,500.00 into the FED meeting in MAY. It also should according to history of bear markets. The NASDAQ is in one 20% off its highs of March 10, 2000 stay off the sub 3,000.00 area as history shows dating back all the way to the crash of Oct 24 1987, and the recent drop in summer 1998 and summer of 1999 that the NASDAQ doesn't allow more then 40% off all time highs in a 200 day period. So we should hold 3,000 today, but lose 3,300.00 only to close over it. At 3,321 to 3,400.00. Then we await the FED 2nd Wed of MAY.
Today's "Play of The Day!" is: NASDAQ 100 INDEX TRACKING STOCK (NASDAQ:QQQ)
Predicted Area: 3,230.00
This is the tracking stock for the Top 100 stocks in the Nasdaq stock exchange. We know that the Nasdaq can advance, or decline for that matter, 250 points or more in one day. When this happens, the QQQ can move 6 to 8 points or more. Sometimes it can be difficult to pick the specific stock in the Nasdaq that is going to move and produce big returns as some stocks will not rebound from the bottom as others will. The QQQ is a solid bet for a huge pop from the bottom possibly moving 15-20 points in just a few days time. Therefore, here is how we are going to play this one: when we feel the Naz has reached bottom, we will enter the June QQQ calls that are closest to the money. June will give us 6-7 weeks until expiration and will also move quite rapidly with the QQQ underlying stock. At first, the June at the money call QQQ will advance about 1 point for every 2 of the QQQ. However, after that, it will begin to advance 1 point for every 1 point of QQQ stock advance. This call should be a huge winner especially if the Naz rebound over 4000 by June.
KEY INDICATORS: QQQ ( The Stock) LONG of Bottom
Buy Area: $78.1250-$79.6250
Sell Stop: $75.00
RUN THE OPTIONS: QQQ (Option Calls of bottom)
Buy Area: Whichever QQQ June call is at or near the money (should be going for about 6-7 per call at the money.
Stop: Looking for swing trade here, stop 25% below entry price
Target: Possible triple on this one by late May, or early June.
BONUS PLAY # 1 Amazon.com, INC (NasdaqNM: AMZN)
Amazon.com, Inc. is a leading online retailer of millions of distinct items in categories such as books, music, DVDs, videos, toys, electronics, software, video games and home improvement products. Through marketplace services such as Amazon.com Auctions, zShops and sothebys.amazon.com, the Company has created Web-based marketplaces where buyers and sellers can enter into transactions with respect to a wide range of products. In addition to its United States Website, Amazon.com currently has two internationally focused Websites located at www.amazon.co.uk and www.amazon.de.
Stock Fans, I like Amazon as a site but if there is no way that they can support a market cap of 18 Billion loosing as much money as they do. I expect to see Amazon move into the lower $40's. We are going into a seasonally slow period for the "E-tailers". We know Greenspan is going to raise rates, which is bad for Companies in debt like Amazon. Amazon has a Relative Strength of 23 (weak) and a EPS rate of 3 (JDSU EPS rate by comparison is 99). Volume has increased above its moving volume average to the downside.
KEY INDICATORS: AMZN
Sell short: $52.00 to $54.00
Target $46.00 to $49
Time Frame 1-4 days
BONUS PLAY # 1 Motorola, Inc. (NYSE: MOT)
Motorola, inc. is engaged in providing integrated communications solutions and embedded electronic solutions. These include Software-enhanced wireless telephone, two-way radio, messaging and satellite communications products and systems, as well as networking and Internet-access products, for consumers, network operators, and commercial, government and industrial customers; Embedded semiconductor solutions for customers in networking, transportation, wireless communications and imaging and entertainment markets; Embedded electronic systems for automotive, communications, imaging, manufacturing systems, computer and industrial markets; and Digital and analog systems and set-top terminals for broadband cable television operators.
Stock Fans, with earnings out of the way and the stock on sale, Motorola looks good to Motor. They are in a hot industry, earnings and sales are up. Motorola's closing price crossed its 10 day moving average, giving the buy signal. Motorola has a Relative Strength of 72 and a EPS rate of 75. Motorola also splits its stock 3 for 1 on June 2. Looking to buy on the dip!
KEY INDICATORS: MOT
Buy Area:$114.00 to $117.00
TARGET:$125.00 to $130.00
Time Frame: 4 to 8 days
Type of Trade: Swing Trade
STOCKS ON OUR SCREENS TODAY:
INSP - It had good numbers it should hold $58.00
ANCR- It has great support off 20.50-21.00 We look to buy it there.
JDSU - As we know it was heavily shorted resulting in a Short Squeeze ecplostion. It should now test $78.00 -$74.50 area.
YHOO- It looks as if it goes back to $110.00 -$107.00 area.
CMGI- It may drop all the way back to $52.00
MFNX- Look for a bounce off $22.00 area.
DELL- $45.00 $46.00 looks to be right.
CSCO- Look to get it at $58.00-$57.00
BVSN- It had great numbers look for it to hold $30.00
CMRC- Back to $47.50-$44.00
EWBX- Back to $12.00 maybe $11.00
LPTHA- It should fall under $18.00 to $16.50
Have a great day!
More to come.....
and BigPlayStocks.com TEAM OF PRO TRADERS!