The Play Of The Day
08-11-99 07:01 EST.
Good Morning Stock Fans!
What changed yesterday late in the day that caused Internet Stocks and even Tech Stocks to "Rally" into the close? CNBC's Bob Pasini said around 14:49 EST yeserday that what he called a rather large investor decided to come off the bond and go into selected Internet Stocks causing the many investors that were SHORT The Internet Stock's to have to cover. That sudden totally unexpected move caused stocks like eBAY, and DCLK, and CMGI to come out of the RED and head way up fast. Infact in less the 19 minates. DCLK had come from it low of the day down over $4.00 to EXPLODE and less then 20 minates later it was up more then $4.00. eBAY upgraded earleir in the day would head up into the 90's when it had almost found it way into the upper 80's just 15 minates earlier. NTOP was most impressive as it somehow came for $16.75 to go as high as $20.25 before it would pull back.
What do I think what happened?
Well I can tell you as I watched from my LIVE TRADING ROOM yesterday, it looked to me as if the Market Makers had accumulatied dropping shares of Internet Stocks for the first 5 or more hours of trading yesterday. Then when they had taken them as low as it looked like they would go. The Market Makers I believe had basically gathered in enough shares through out the day to take the supply to demand issue way down.
When this happened investors that were trying to find the bottom and get in on some deals came in the supply was so low that Market Makers who had been short all day. Decided to go long this action moved up stocks bids and ask faster then normal as in comparison with the volume that was talking place.
When Market Makers did this they caused prices to go up even faster and then they just started selling all those shares they had collected for less as the Internet Stocks dropped slowly earlier in the day for much more! With this taking place we went into "Rally" mood and hence the huge moves were made in the Internet Stocks and the Techs as well as the rest of the market even the NYSE followed. I believe the big buyers individual and Institutional are waiting at levels just over those August 5, 1999 lows. Did we get there yesterday? Well, Stock Fans, lets use today's Play Of The Day : CMGI Group (NASDAQ:CMGI) to show us if we have.
Looking back at yesterday, I would say we came extremely close but looking at our Play Of The Day. (NASDAQ:CMGI) we missed those August 5, 1999, lows in (NASDAQ:CMGI) case by only and exactly $2.00. Missing the August 5, 1999 low yesterday by that slim of margin, and in the Big Cap Internet Stocks $2.00 is nothing. The August 5, 1999, low was $66.25 and yesterdays low was $68.25. That does indeed equal $2.00
What sticks out to me more then those two bottom figures for (NASDAQ:CMGI) on August 5, 1999, at $66.25 and yesterday's low (NASDAQ:CMGI) of $68.25 is the prices that were achieved after those lows on the high side. On August 5, 1999, after bottoming at $66.25 (NASDAQ:CMGI) then went on to go as high as $81.25 before it would close near it high of $79.93750.
However (NASDAQ:CMGI) yesterday, after it bottomed at $68.25, it could only get as high as $77.6250. That spread between it low of $68.25 yesterday August 10, 1999, and its high of $77.6250 is only $9.3750. The reason I say only is because (NASDAQ:CMGI) spread between its low of $66.25 and its high of $84.3750 on August 5, 1999, was $18.1250. That high/low spread from August 5, 1999, is almost double the high/low spread achieved yesterday. ($18.1250- $9.3750 = $8.75. I am not sure about you but that tells me that (NASDAQ:CMGI) has reached it low. Its low was achieved on August 5, 1999. My research and data presented here shows that.
What I also did is to further my prediction is I took the high, the low, and the close ranges from August 5, 1999 and yesterday of August 10, 1999 and added them all together to get an average low for CMGI on August 5, 1999 and yesterday August 10 ,1999. The price I came up with subtracting the range was form yesterday's close I came up with $68.23. That is just 2 cents off of yesterday low but it is lower. Then I took the 2 days high price of each and came up with an average of $79.43750.
With (NASDAQ:CSCO) reporting blowout numbers yesterday August 11, 1999 that has taken the S&P Futures up way over Fair Value, the NASDAQ Futures today with it. The Stock Market today has a great excuse for us all to believe that we are going to continue to be in "Rally" mood right off the OPEN TODAY! My answer to that is NO!
CMGI Group (NASDAQ:CMGI) If I had to guess today, and writing this way before I can get any kind of opening indication. My guess then is that (NASDAQ:CMGI) opens at about $79.8750. I look for it to maybe see $81.25 after that I see the brakes coming on and (NASDAQ:CMGI) to fall back fast to about $72.25. Then later in the day. I look for (NASDAQ:CMGI) to trade in a range of $71.93750 and $75.93650 before it drops all the way back down to $67.00 or so even. There we "Rally" right back up and eclipse that August 5, 1999, high and put and end to these ridiculous ranges and get back to trading in ranges we love so much "Sideway" In more realistic ranges ahead of The Fed meeting to decide the markets fate into the fall 1999 on August 25, 1999.
Remember Stock Fans! If the market has what looks to be a definite rate hike figured in already then we can't go as high as last Thursday's August 5, 1999, high. On (NASDAQ:CMGI). That high was $81.25. I look for (NASDAQ:CMGI) to go higher today.
Stock Fans! Here are your (NASDAQ:CMGI)
KEY INDICATORS: (SHORT- on the way down)
Short Area: $80.00-$81.1250
Cover for loss: $83.50- $84.50
KEY INDICATORS: (LONG- on the way back up)
Buy Area: $67.00 - $68.8750
Sell Stop: $65.93750
Run The Options
PUTS on the way down
QGW-TN August 21, 1999 $70.00 PUTS
CALLS on the way back up
QGW-HP August 21, 1999 $80.00 CALLS
BONUS PLAY: AMAZON.com (NASDAQ:AMZN)
KEY INDICATORS: (SHORT on the way down)
Short Area: $94.50-$92.43750
Cover for Loss $96.93750
KEY INDICATORS: (LONG on the way back up)
Buy Area: $83.8750-$85.50
Sell Stop: $81.50
Run The Option
PUTS on the way down
QZN-TQ AMZN August 21, 1999 $85.00 PUTS
CALLS back Up
QZN-HS AMZN August 21, 1999 $95.00 CALLS
CONCENTRIC NETWORKS (NASDAQ:CNCX) "Eccentric Networks!"
I have to comment on this one as I and my faithful followers were driven nuts on this one in my LIVE TRADING ROOM yesterday. It opened up almost $1.00 and went down more then $1.00 for the 4 day in a row! (NASDAQ:CNCX) traded like no other stock I may have ever seen before. Trust me Stock Fans! I have seen a ton of stocks trade before. It had what looked to be all Institutional Investors getting in it on the BUY side yesterday as they sure looked to be "stealing" the little guys 100, 200, 300 shares.
I will say this I hold here even though (NASDAQ:CNCX) broke down yesterday below $17.00. It had real strong support at 17.00 even as it was impossible to buy it under $17.00 yesterday. One could only sell it under $17.00 as it dipped to a low on the SELL side of $16.81250. It was all over the board yesterday.
Well, as it dipped under $17.00. Stock Options CALLS were still being bough on (NASDAQ:CNCX) In fact 2 contracts were bought at $40.00. It had 75 contracts bought on the 20's and amazingly enough 50 Call Option Contracts were bough on the August 21, 1999, Call Options. With (NASDAQ:CNCX) closing yesterday just over $18.25 Those 30's Call Option were bought over $6.00 out of "the money" on a stock that is only trading at $18.25 or so. That is AMZAZING!
Today I have to look to get more as (NASDAQ:CNCX) sure looks to me like it still is inline for a HUGE MOVE as over the last 7 trading days now it has had over 500 Option Call contracts sold in the 20's 22.50's 25's 30's and 40's. That transaltes into 500,000 shares of (NASDAQ:CNCX) borrowed looking for a BIG MOVE. Those options may be sold or bough off of shares already in play. However some investor somewhere is still willing to buy them as they expire less then 2 weeks from today.
Remember Microsoft (MSFT) MSQ- HB Call OIptions bought so far out of the money on July 8, 1999. They went up over 250% in 5 days as MSFT finally on day 4 had news as to why it was going up! (NASDAQ:CNCX) is setting up to be even better then the MSFT Play of The Day was. Think of this in 2 weeks we could possiably be as high as $30.00 to $45.00 dollars a share! That makes me have to get even more today into any kind of weakness!
Have a great day
More to come...