The Play Of The Day
June 7, 2000
04:22 AM EST
The NASDAQ ended its rally of more than 840 points yesterday (dating
back to 5/24/00 as it traded from a low of 3,042.00 to a high yesterday (6/6/00) of 3,884.00. The 840 point increase in less than 10 days was its biggest historical percentage and point gain ever within that time frame. It fell off its new 30 day high of 3,884.00 and succumbed to selling pressures late in the day which were encouraged by investors pondering whether the FED will increase rates later this month. The Techs and The Nets were hurt the worst as many of them fell back more than 5% off of their day highs and the NASDAQ closed at its low of the day at 3,756.00. The sell off of more than 110 points off the NASDAQ high yesterday to its close was still seen by many analysts as normal profit taking--leaving many of them still Bullish!
NASDAQ OUTLOOK TODAY (6/7/00):
The NASDAQ yesterday (as my afternoon ALERT Emails pointed out) needed to
hold 3,758.00. Friday's (June 2, 2000)low of 3758, after exploding through the 3,729 marker went as high
as 3,790. I saw this as a KEY NUMBER in the range as the NASDAQ traded more than 3 billion shares in less than 3 days in a range of 3,758.00-3790.00 -- If that isn't SHORTING the top after a rally in order to set it up for a drop, then I dont know what is!
Today The NASDAQ appears like it will open under Friday, June 2, 2000s trading low of 3758.00 as it closed under that yesterday, June 6, 2000 at 3,756.00. It should open just over 3729.00 today. If it does, and can hold that number, then it could go higher. However, if it loses 3729.00 then the NASDAQ should test 3,600.00 and then perhaps lose it--filling its entire 148 point open gap from 3,581-3,729.00. If it loses 3581.00 then the NASDAQ would seem to have at least short term support at 3501.00. If it can't hold 3500.00 today it will then be down over 250 points and that may cause some *PANIC BUYERS!" (Panic Buyers are typically seen in a rally like the one the NASDAQ just had. They come in and buy fast and furious without thinking of risks involved in short term trading because they dont want to miss big gains. They tend to use 100% margin if they can! ) The NASDAQ Market Makers of Stocks would seem to have shorted the Panic Buyers margined shares thus setting the NASDAQ up to have more supply in its stock and on fewer buyers. The resultant lower demand sends the price down quickly--as we saw yesterday from 2:42 PM EST - 4:00 PM EST as the NASDAQ dropped more then 120 points in less than 2 hours!
THE NASDAQ KEY BULLISH NUMBER! 3,790.00 MY BEST INDICATOR TO BUY LONG!
Stock Fans! NASDAQ 3790.00 was the number that looked to me that the NASDAQ Market Makers have used over the past three days as an area to stop shorting stock. This number looks very much to have been reached over 10 times in the last 3 daysand acting as an area of resistance before 3,814 was seen on Friday, June 2, 2000 and 3,875.00 was reached on Monday, June 5, 2000 and yesterday's (6/6/00) 3,884.00 was reached. My first indicator that would lead to covering the shorts that I am holding overnight today will be 3,790.00. This number is key because every time it has been broken the NASDAQ has seen a new high.
Stock Fans! I will also have a close eye on all three of the NASDAQ open "non-trading gaps" that the NASDAQ created on 5/25/00 from 3042.00 to yesterdays 3,884.00. These gaps fill in 75% of the time or more before the NASDAQ adds on more than 10% to its high. They are as follows:
NASDAQ GAPS TO FILL: 3,042.00 -3,884.00
3,581.00-3729.00 (148 points wide) occurred on 6/2/00
3,401-3,459.00 (58 points ) occurred on 6/1/00
3205.00-3,290.00 happened on 5/30/00
Stock Fans! One final point, remember many rookie traders could panic today and give away their shares as they see the NASDAQ drop today. The NASDAQ can drop over 300 points from its high of 3884.00 and still be in a very bullish Fibonacci Retracement pattern. This is used by many Fund Managers to find the average area stock gains or index gains retrace to support on profit taking. The most common number is 38% of the total gains in the rally. Because the rally ended yesterday at 840 points, then 38% of that is 320 points. What this means is if the NASDAQ does sell off today (not saying it does)! However if it does, then it can go as low as 3463.00 in relation to Fibonacci (50% of its gains in the 840 point run--gone ) a drop of 293.00 points. Its doubtful that this happens in one day, but it is more likely that the NASDAQ bounces today--at worst at 3581.00 - 3501.00.
HERE IS THE PLAN I WILL USE TODAY ON THE NASDAQ:
I Will the SHORT NASDAQ today on open and continue to short if it loses, or never breaks 3,729.00.
If the NASDAQ holds 3,729.00 then I will look to go LONG at 3,762.00 and add to it going all in LONG at 3,790.00!
If the NASDAQ loses 3,581.00 Today I will stay SHORT till 3,523.00 AT 3,523.00 I will go long for a short term projected bounce up to 3,662.00.
Today's "Play of The Day!": Celara Genomic Group: (NYSE:CRA)
Stock Fans! I see some of you saved my call of over 2 months ago on CRA as it traded over $100.00 at that point to drop to under $55.00 to fill in its gap! Well, it did just that as it went all the way down to $50.68750 nine trading days ago, and low and behold it exploded and when the Bio Tech rally ended, CRA went as high as $118.8750 yesterday.
How does a stock more than double in less than 10 days of trading? Well, Stock Fans! Can you say PANIC BUYERS!" Yes,indeed, it had to be those types of buyers in rallies like we just had. As I said earlier, these individuals typically go all in and burn 100% of the margin to do it, because they don't want to miss big gains! In the short term! Those Panic Buyers should become panic sellers today as CRA should open under $100.00 today and should be able to break $104.00 before it tests and the EXIT LIGHT should light up brightly as investors sell out perhaps faster than they bought in. It is without much doubt that CRA was shorted higher and it looks very much like it will see $78.00 before it sees $103.00 again!
KEY INDICATORS: CRA: (SHORT)
Sell Short Area: $96.00-$97.8750 ( or if NASDAQ loses 3,729.00)
BUY TO COVER: $104.50
Time Frame: 1-3 DAYS
CRA LONG - @ $78.25-$79.50
Sell Stop: $76.43750
Time Frame: 1-3 DAYS
RUN THE OPTIONS: CRA
5 of the CRA JUNE $80.00 OPTION PUTS (off today's open)
SJ's BONUS PLAY #1 - Gene Logic (NASDAQ:GENE:)
Stock Fans, GENE is another BIO TECH stock that had 2 great days on Monday and Tuesday (June 5-6, 2000) as it ran from $16.3750 to over $25.00 yesterday. It looks as if GENE also was targeted by Panic Buyers who now probably sell faster than they bought into stock that should increase its supply as demand decreases--causing shares of GENE to drop today.
KEY INDICATORS: GENE (SHORT)
Sell Short Area: $22.1250-$23.6250
Buy To COVER: $25.8750
SJ's BONUS PLAY #2 - Mederex Inc. (NASDAQ:MEDX)
MEDX is yet one more BIO TECH stock that has had a huge run up of late. This one should also look to sell off as investors book profits.
KEY INDICATORS: MEDX) (SHORT)
Sell Short Area: $68.25-$69.50
Buy To Cover: $72.00
Time Frame: 1-3 Days
BONUS PLAY #3- Commerce One: (NASDAQ:CMRC) SHORT & LONG
Stock Fans!, CMRC is a B2B stock. It is one of the leaders in its space and already had a lot of profit taking after a sizable run up the last few days. It, however, went as low as 47.75 yesterday & it could open today under $46.00 If it does, then I will look to short it. I will also go long on this one after it fills in its gap up of $41.8750-$42.50 as I will buy shares LONG at $41.00.-$42.00 and issue a sell stop at $36.50 CMRC has great support that sends it back up over $40.00 in about 5 days (on average) over the last 60 days of trading.
KEY INDICATORS: CMRC (SHORT)
Sell Short Area: $47.1250-$45.3750
Buy to COVER: $51.50
TARGET: $42.50-$41.8750 1-3 DAYS
KEY INDICATORS: CMRC (LONG)
Buy Area: $41.00-$39.6250
Sell Stop: $37.50
Time Frame: 4-10 Days
SAGO'S BONUS PLAY'S!
Stock Fans! Look for Sago's Bonus Plays after 8:30 AM EST today and before 9:05 AM EST in a second email to be added to today's play posted on our site!
STOCKS ON OUR SCREENS TODAY:
JDSU- Short at $105.00 and under Buy Stop: $109.00 3 DAY Target: $97.00-$94.50
YHOO Short YHOO until NASDAQ breaks 3,790.00 or sees $127.00
AOL- It looks like it will hold $55.00
HGSI- Short at 119.00 and under till 92.00 or 3,662.00 on NASDAQ
MACR: Buy MACR long at $88.00
BRCD: Long at $122.00 Sell Stop: $117.00 TARGET: $132.00 1- 3 DAYS
SCII : It should lose 5-8 more today then bounce
SCON: This one could lose 5-7 today
RBAK: Long at $98.00 Sell Stop $95.00 TARGET: $111.00
ANCR: LONG at $29.8750
MFNX: Long at $36.18750 Sell Stop: $33.00 TARGET: $40.75 5 days
ORCL- Looking for it to go lower test $72.50
EBAY- Look to cover at 67.8750-68.00 LONG EBAY @ $66.00
RNWK: Short till $41.00 LONG under $40.00
Have a great day!
More to come.......
Stock Jock! and BigPlayStocks.com TEAM OF PRO TRADERS!
*Please note that the Stockjock and BigPlayStocks.com, Inc. are not licensed investment advisors or broker dealers and cannot give financial advice or buy and sell recommendations. The above information is intended as an adjunct to your own financial research, not a substitute thereof. Please research your stocks and trade wisely.