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us stock market, stock recommendation
Begin part 3 of 3
THE PLAYS:
Upside:
Play Date: 10/25/2008
DDM (DJ30 Ultra ETF--$30.50; -3.43; optionable)
STATUS: Double bottom. This is a 2:1 upside ETF on the DJ30. It gives you 2:1 leverage on Dow moves. With the Dow holding over the early October intraday low the DDM is showing a double bottom, setting it up for a bounce as the high gloom could not push the Dow lower. Thus we are looking to play the coming bounce to the upside using DDM as the vehicle. Our initial target is modest; if this market bounces with the strength it should for a meaningful rise before another test to set the base DDM could go to 40 or higher. A move to the initial target with our options lands a 45%ish gain.
Volume: 22.944M Avg Volume: 6.575M
BUY POINT: $30.65 Volume=10M Target=$35.00 Stop=$28.50
POSITION: HXD LI - Dec. $30c (60 delta) &/or Stock
http://www.investmenthouse.com/ci/ddm.html
Play Date: 10/25/2008
DMND (Diamond Foods--$27.02; -1.49; no options): Processed and packaged foods
http://biz.yahoo.com/p/d/dmnd.html
EARNINGS: 12-3-08
STATUS: Test 50 day EMA. DNMD broke out from a 9 month base the last day of June and has been rallying up the short term 10 and 18 day EMA with an occasional test of the 50 day EMA (27.04). Got a bit ahead of itself mid-month, and spent the past couple of weeks resting at the 18 day EMA (28.18). Then Friday DMND gapped lower but held the 50 day EMA on the close. This looks like a routine 50 day EMA test and we are looking for a move higher to give us a buy as DMND continues its upside move.
Volume: 299.144K Avg Volume: 198.315K
BUY POINT: $28.42 Volume=300K Target=$33.95 Stop=$26.82
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ci/dmnd.html
Play Date: 10/25/2008
EBS (Emergent BioSolutions--$15.65; +0.44; optionable): Biotechnology
http://biz.yahoo.com/p/e/ebs.html
EARNINGS: 11-6-08
STATUS: Breakout test/50 day EMA test. A new issue in November 2006, EBS just this month broke out of a large 20 month base, the stock's only real base since coming public. Big surge starting two weeks back on some huge volume broke it out of the base. In last week's selling it sold as well, but on Fridays gap lower it held the 50 day EMA (14.04) and then reversed, holding the breakout over the late September high at 15. Like its snap at the key 50 day EMA and holding the breakout. Ready to move in as it continues higher after this breakout test, one of the best times to enter, particularly in a weak market.
Volume: 534.382K Avg Volume: 361.935K
BUY POINT: $15.95 Volume=550K Target=$19.45 Stop=$14.83
POSITION: EBS CC - Mar. $15c (57 delta, 116 OI) &/or Stock
http://www.investmenthouse.com/ci/ebs.html
Play Date: 10/25/2008
EEM (Emerging Markets ETF--$19.82; -2.28; optionable)
STATUS: Bounce. The emerging markets have been slaughtered. We have played the ultra short EEV to the upside, but the options have become so expensive with the exploding volatility component that they have become too expensive too buy and brokers require too much margin to sell them naked. So we are looking at playing a bounce play to the upside with the EEM. EEM sold hard the past week after failing at the 10 day EMA (23.88). Looking for EEM to rebound with the rest of the market after this slaughter in a rebound move. On the last bounce it made it to the 18 day EMA (26.08) and thus we are looking for a move on through the 10 day EMA a bit. A move to the target lands us a 50%ish gain on the options, 20% on the stock. This is a bounce only; once it shows signs of slowing we bank the gain and are gone.
Volume: 170.2M Avg Volume: 80.705M
BUY POINT: $20.04 Volume=150M Target=$24.20 Stop=$19.04
POSITION: MBY LS - Dec. $19c (50 delta) &/or Stock
http://www.investmenthouse.com/ci/eem.html
Play Date: 10/25/2008
RRC (Range Resources--$34.53; +1.90; optionable): Independent oil and gas
http://biz.yahoo.com/p/r/rrc.html
EARNINGS: Announced 10-22-08
STATUS: Trend reversal. RRC is one of the energy stocks preparing for a bounce higher, making a higher low on the intraday lows to end last week and picking up strong, above average volume as it reversed off the lows each session. Money flow has picked up, leading the stock. Looking for a bounce up toward the 50 day EMA (40.18) as our initial target, but it could punch on through if the market really bounces here to set up the base better.
Volume: 5.622M Avg Volume: 4.696M
BUY POINT: $35.08 Volume=6.5M Target=$40.00 Stop=$33.55
POSITION: RRC AG - Jan. $35c (54 delta) &/or Stock
http://www.investmenthouse.com/ci/rrc.html
Play Date: 10/25/2008
SSO (ProShares SP500 Ultra ETF--$26.50; -2.06; optionable)
STATUS: Double bottom. This is the SP500 2:1 leverage ETF, and we are looking to use SSO to play the bounce higher in SP500 that set up last week as it tested the early October intraday low and held. As we expect a bounce higher to form a better base for a potential market bottom this play can give us a fast and nice gain. A move to the initial target lands a 52%ish gain, but it could go on up to 34.50 or even near 40, a very nice gain indeed.
Volume: 100.723M Avg Volume: 31.762M
BUY POINT: $26.65 Volume=60M Target=$32.74 Stop=$24.95
POSITION: SOJ LZ - Dec. $26c (48 delta) &/or Stock
http://www.investmenthouse.com/ci/sso.html
Good Investing!
Jon L. Johnson and your IH Alerts Team
All of the foregoing is commentary for informational purposes only. All statements and expressions are the opinion of Online Investment Services, LP. or its paid consultants and are not meant to be a solicitation or recommendation to buy, sell, or hold securities. We are not licensed or registered in the securities industry. The information presented herein and on our related web site has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. The security portfolio of Partners in Online Investment Services, LP. or its paid consultants may, in some instances, include securities mentioned herein and on our web site. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future developments may differ materially due to many factors. Good Investing!
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us stock market
stock recommendation
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