The Play Of The Day

June 9, 2000
09:15 AM EST.

Good Morning Stock Fans!


MAY PPI : Expected.02% FLAT unchanged
MAY Core: Expected.01% .02% Up


The NASDAQ sold off ahead of the PPI yesterday June 8, 2000, as it popped on MSFT power yesterday to go to 3,890.00. Then, it dropped off that number never to find it again as it closed near its low of the day. MSFT had traded as high as 72.8750 in the AM hours, but when it was all over (but the cry’in) yesterday MSFT would see its stock under 69.00. Apparently, MFST co-founder Paul Allen had had enough! He filed to sell 3 million shares of MSFT before he left his office yesterday. It might have just been a timed release of stock. But for Gates and company, Allen selling 3 million shares doesn't look so good. The S and P set up the NASDAQ for its drop as it changed MSFT rating mid day. The rating basically labelled it what it has been for over a year now-- "Dead Money!"


Well, Stock Fans! A mixed BAG! S and P as well as the NASDAQ Futures were all over the board. The news was very good, the (PPI) on one hand was better then expected but what it took away the CORE PPI added back in. The way I see it, this leaves the NASDAQ hungry for more news. The NASDAQ Futures did jump from 45.00 to 100.00 on the number. They, however, dropped back to 65.00 and 50.00. I also point out volume very low. If we compare it to last Friday's (June 2, 2000) Labor Report the volume was much higher perhaps 90% higher on the reaction of the news. The NASDAQ seems to say it will need more information to break out of its Technical BEAR MARKET at 3,825.00. It still sits 208.00 points off less than 20% off its 52 week high.

What I want to point out to you all is something that the research of my own and another good TRADER, and friend o’mine Mike "The Hammer!" Hamilton found. We tracked several stocks against their 50 day Moving Averages. What we were able to see doing this, is that almost all the NASDAQ index stocks are currently, at least in the short-term over bought. We also saw that the 50 Day EMA has been declining. What this potentially means is that the stocks can now pull back, and still be seen as BULLISH. Many investors might know on their own, or off CNBC Pasani, that stock over their 50 day EMA is a good buying signal. With the 50 day decline based on the NASDAQ 60 day high-- coming May 1, 2000, at 3982.00 and now June 8, 2000, high yesterday at 3890.00 stocks still based on 50 days are in a declining mode. It means that stocks now can pull back and look to retrace the popular Fibonacci reading of. 38% and still be in the buying mode technically.

Stock Fans, The CORE could set up a small rally then SELL THE NEWS! The NASDAQ has enjoyed a big run, and it looks like to me that it will need more data in the form of the CPI to further its rally. I don't think the NASDAQ has the "GAS!" ("Speaking of gas it increases today at most pumps") blast through the current 60 day high of 3,982.00 -- much less 4,000.00 on this latest news.

I look for the NASDAQ to access a double top near or possibly right at 3890.00 today-- either gapping there or trading into that area and then selling off in favor of more profit taking. The NASDAQ, as the 50 day EMA suggests, can still keep the vast majority of its index stock above the declining 50 day EMA.

I also point out the GAPS! On the NASDAQ against the Fibonacci as I found a very interesting trend. The NASDAQ move up is now 3,890.00 - 3,042.00 = 848.00 points. The Fibonacci first area and BULLISH retracement number is 38% of that rally amount 848 = 322.00. The finding I point out is this. If the GAPS on the NASDAQ are subtracted off the rally amount of 848.00 the result is ( 148+ 58 + 85 + 45 = 336.00 ). The NASDAQ GAPS are 14 point more than the 38% Fibonacci 38% retracement number. What this says to me is that the NASDAQ is really then 3,890.00 - 337.00 = 3,553.00 ) This amount is where it actually traded. I will look for this as an area that I go in LONG AND STRONG as it could very well be the NASDAQ retracement upcoming over the next 10 days!

The close on the NASDAQ may be around the 3735.00 area today, or inside the 3,729.00-3,581.00 gap. I might be wrong, but my data doesn't suggest 3,982.00 and a new 60 day high on the current news I will add will make sure if 3982.00 is busted I am LONG and STRONG for a 4,000 bust out! Remember, also that 4,009.00 IS a TRIPLE TOP in NASDAQ range very strong resistance with nearly 90 days separating its penetration moves 4,009.00 look to be extremely hard to bust on any break out!

Today's "Play of The Day! is: EBAY (NASDAQ:EBAY) (LONG)

EBAY had a nice run ahead off its split. It has had some bad news of late on its web site. It was reported this week that EBAY members might actually be running up their own merchandise by bidding on it setting up a fraudulent situation. EBAY sold off the 79.00 area it achieved on Friday of last week to lose 70.00 and find 68.00 already this week. Yesterday, it traded as low as 71.00 on low volume. Today, it looks like on extremely low volume less then 10,000 shares its indicated at 73.00. EBAY if you take the FIB retracement figure on the NASDAQ and then EBAY 50 day EMA. It would seem that EBAY is a "Steal" at$ 67.00-$66.00 (strong support $66.00 ) EBAY’s recent bad news seem to have put it ahead of the GAME as far as a pull back on profit taking. Therefore, EBAY may be one of the stocks that leads the NASDAQ back up after it retraces. IN "Short" The LONG of it is EBAY is an Internet company here to stay and Mary Meeker the Internet Analyst on the Street agrees!

Buy Area: $68.3750-$67.3750
Sell Stop: $65.50
10 DAY TARGET: $75.00
90 DAY TARGET: $83.00-$84.50

The EBAY July 2,000 $75.00 OPTION CALLS

BONUS PLAY #1 Ditech Corp (NasdaqNM: DITC)

Ditech Corp. designs, develops and markets equipment used in building and expanding telecommunications and cable communications networks. The Company's products fall into two categories: echo cancellation equipment and equipment that enables and facilitates communications over fiber optic networks. The Company's echo cancellation products eliminate echo, which is a significant problem in existing and emerging networks. The Company's optical communications products enable the implementation of wavelength division multiplexing technology, which is becoming more widely adopted by service providers to address network capacity constraints. Ditech's optical communications products are designed to function either as stand-alone products or as a complete system known as the Optical Path Solution. To date, the vast majority of its revenue has been derived from sales of its echo cancellation products.

Wed Jun 07, 2000
. Alert: Deutsche Bc Alex. Br reiterates coverage of DITC at Strong Buy, price target $125

(Headline only) - 10:13 AM EDT


Stock Fans, Ditech is looking pretty solid here. The daily chart timing indicators are turning up. Earnings for this Company are quite impressive. The last 4th quarter earnings have increased by ( most recent first) 999%, 999%, 488% and 300%. Sales have been increasing proportionally. Cash flow / share is $1.41. Looking to grab some shares for the swing.

Key Indicators: DITC
Buy Area:$82.00 to $83.25
TARGET:$91.58 to $95.75
Time Frame: 3 to 7 days
Type of Trade: Swing Trade
Daytrade for $1.00 - $2.00 point scalps. Avg. daily price range $8.49

Key Indicators: MERX
Buy Area:$44.50 to $45.25
TARGET:$47.00 to $49.75
Time Frame: 1 to 2 days
Type of Trade: Swing Trade
Daytrade for $.50 - $1.00 point scalps. Avg. daily price range $2.55

CKFR - Watch for a $5.00 point pull back then its a good core holding!
CSCO- Look for it to miss $66.00 then drop back.
CVNT- It has a gap to fill look for ap ull back.
RNWK- It looks solid at $40.00-$41.00
JDSU- $100.00 seems to be a good spot to get this one.
NUVO- This one may lose $70.00 then its a buy!
MSTR- It should sell off and lose $40.00 soon!
YHOO - $133.00 Looks to be a good buy area.
DCLK - $44.00 Is solid support!
MSFT- Paul Allen files to 3 million shares!
ORCL- Watch this one close $83.50 Is the true break out for it and perhaps the NASDAQ!
CRA- 88.00 it a buy it may not happen today but at 88.00 it good for a bounce to $94.50 -$96.75
SCON - Look for it to pull back 5.00 off it top out at about 10:00 AM EST.
MACR- 88.00 on this one is the KEEPER LEVEL as SJ's! "that's me STOCK of 2,000 HAS BEEN stellar through out the NASDAQ drop off 5048.00 its gone higher! MACR $88.00 truly great LONG TERM MACR!
WEBT- Watch for $29.00 strong support on this one and long term hold!

More to come...

Stock Jock!

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