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swing trading stock, stock watch
Begin Part 2 of 2
TEAM TRADES
We were looking at taking some additional positions on current positions on this weakness, and we had the chance today. BRCM is looking super before its earnings, and we wanted positions to perhaps get a run into the earnings announcement.
The opened slightly lower and then sold right down to 123 on the low in the first half hour of trading. It started to run back up, and when the stock was at about 125, the May 125 options were asking 26.75 by 28.25. While we usually don't jump right into positions in the first hour, we were interested in getting in on a play that could race into earnings. We put in a limit order at 27.75, trying to shave the spread. Unfortunately, the stock took off on a run to 132. Swing and a miss as we tried to save a few quarters on a play we felt would take off. We let it go, but as always we kept our eye on the play for the rest of the session, checking periodically while away from the computers. We did this buy checking the Palm VII while seeing to other work. In the last hour, BRCM started to sell back as TXN and VTSS were due out after the close.
It tapped down to 126.50 with about 20 minutes to go, and the options were 27.50 by 29. We dropped in a limit order at 29 this time, and we picked up a few positions. The stock ran up to close at 128.81, but on the TXN and VTSS news is fell back to 126 or so after hours. We may use some weakness in the morning to capture a few more positions. Our goal is to ride the stock up to earnings and sell if we have a good profit, and carry some positions through earnings.
For a review of frequently asked questions, please use the link below:
http://www.investmenthouse.com/1questions.htm
THE PLAYS:
All prices reflect prices at the close on Monday.
SOME LEADERS TO WATCH: Several of the leading tech stocks are ready for a pullback after some strong moves over the last week. We are looking to pick them back up after a rest. In addition, we are including some bull put credit spreads for moves up that look like they can be strong.
Continued Plays:
JNPR (Juniper Networks--$127.56; -6.75; optionable (JUY)): Computer hardware
http://biz.yahoo.com/p/j/jnpr.html
STATUS: Tested support on the low of 126.13 on even lower, below average volume (12.4 million; avg. 15.6 million), dropping just below the 18 day MVA at 128.21. We like the lower volume on the move down, and look for the stock to hold support at or above the 124 level, or at the short term up trendline (connects December and January lows) at 123. Look for strong volume in a rally, on a move back up. The stock is trying to form up an ascending wedge, pattern high at 145. Good buying.
BUY POINT: Aggressive: Up from 123 (or better) after a possible continued pullback to that lower level, on stronger volume. Breakout: 145.13, on volume of 21 million or better.
POSITION: Aggressive: Stock and/or April $125 or $130 calls to buy (JUY DE or DF). Breakout: Stock and/or April $145 calls to buy (JUY DI). Credit spread: February $130 puts to sell (JUY NF) and February $125 puts to buy (JUY NE), for a net credit of $2.25 or better.
GLW (Corning--$67.63; -1.50; optionable): Telecommunications equipment. Another stock that has made a great recent move, and GLW broke through its 50 day MVA (64.88) last week. The stock tested close to that level Monday at its low of 65.75 before moving back up to show a doji on lower volume (7.55 million; average 11.7 million). Looking for a move up from here, perhaps after another test back toward the 50 day, with the high Friday having reached 71.19. On the move, stock and/or June $65 calls to buy (GRJ EM).
XLNX (Xilinx--$53.63; -0.31; optionable): Semiconductor. Has had a significant amount of trouble with its 50 day MVA (64.88), but last Thursday the stock was able to break through, and the last two days has held over that level to close after tapping below that support at its low (today 51.31). Volume was very low on today's action, at 4.9 million (average 9.9 million). With consecutive dojis holding over support, looks good for a possible solid move up in a rally. Watch for XLNX to continue to hold support, and on the move, stock and/or June $50 calls to buy (XLQ FJ).
EMLX (Emulex Corp--$98.50; -2.63; optionable (UEL)):
http://biz.yahoo.com/p/e/emlx.html
STATUS: Hit targeted support at 97 on the low of 97.50, as volume dropped back below average to 4.5 million (avg. 4.3 million). The stock ran to a high of 104.94 before pulling down to close below the opening price of 100.19. Can move lower, though on the low volume the stock can hold in the 97 range for a move back up in a rally. Hit a high of 108.63 Friday. Good money flow, relative strength, and buying.
BUY POINT: On a move back up from 97, on rising volume.
POSITION: Stock and/or April $95 calls to buy (UEL DS)
Best Plays:
1) MFLO: Breaking out and still a buy.
2) ASD: Look for a bounce back up.
3) SUB: Moving up toward a new high.
4) HBC: Ready to move up on a volume surge.
5) AMAT: Still looks good in the ascending wedge even after the TXN and VTSS earnings.
6) MI: Up on stronger volume after testing the breakout.
7) BSC: Moving up from the base of the handle.
8) PLT: Ready to move up in the handle.
9) XOXO: Watch for a hold at support and move back up.
10) KEI: Looking good.
TESTS OF THE BREAKOUT: Some of these stocks are moving back on low volume to test the breakout. We often take profits on option plays when they start to pullback on the breakout move and then get back in when the stock bounces up off of the breakout point. This second move is where some of the biggest gains are made.
New Play (from the weekend):
ASD (American Standard--$50.75; -0.94; optionable (ASD)): Material and construction
http://biz.yahoo.com/p/a/asd.html
STATUS: Pulled back from Friday's move up from support (10 day MVA at 50.64), as the stock tests its breakout (from the recent base), in a low-volume pullback. Volume dropped to 278,700 (avg. 337,000), so we are looking for a move back up from here in a rally. Good buying.
BUY POINT: Aggressive: On a bounce on rising volume. Safer: Over 52.
POSITION: Aggressive: Stock and/or April $50 calls to buy (ASD DJ).
Continued Plays:
SUB (Summit Bancorp--$43.00; +1.56; optionable (SUB)): Regional banks
http://biz.yahoo.com/p/s/sub.html
STATUS: Moving up from support (10 day MVA at 41.57) on good volume (average, at 770,200). The stock had pulled back in a test of the pennant breakout high of 43.56, and looks ready to post a new high as this move continues. Previous closing high is 43.06.
Excellent money flow and buying.
BUY POINT: Breakout: 43.69, on volume of 1 million or better.
POSITION: Stock and/or April $40 calls to buy (SUB DH).
WEDGES, PENNANTS, and FLYING PLATEAUS (AND FLAGS): These are some of our favorite patterns as the moves can be explosive. In this market, however, we need to see the move on the breakout on strong volume.
Wedges:
New Plays (from the weekend):
HBC (Hsbc Holdings Plc--$76.00; -0.88; optionable (HBC)): Money Center Bank
http://biz.yahoo.com/p/h/hbc.html
STATUS: Pulled back slightly from Friday's would-be breakout move (from the ascending wedge); volume dropped back below average (63,700; avg. 85,000). The stock opened lower and just above support (10 day MVA 74.96) before moving up slightly despite the day's loss. Is ready to move higher, but needs the strong shot of volume again. Still shows strong money flow and good buying.
BUY POINT: 77.33; on continued strong volume. Remains a buy on the breakout to 81.20.
POSITION: Stock and/or March $75 calls to buy (HBC CO). March $80 options had insufficient open interests at 82 (HBC CP).
AMAT (Applied Materials Inc--$48.94; -1.00; optionable (ANQ)): Semiconductor
http://biz.yahoo.com/p/a/amat.html
STATUS: In an ascending wedge at the bottom of its base (December low 34.13). Pattern high is 51.25; the stock pulled back slightly as volume dropped below average to 16.4 million (avg. 19 million). The low tested near the 10 day MVA (47.04). The stock can move up from here, or may test the support level again before heading back up in a rally. Good buying.
BUY POINT: Aggressive: On a move back up from the 47 range (or better) on rising volume. Breakout: 51.38, on volume of 25 million or better. Remains a buy on the breakout up to 53.95.
POSITION: Aggressive: Stock and/or April $45 calls to buy (ANQ DI). Breakout: Stock and/or April $50 calls to buy (ANQ DJ).
Continued Wedge Plays:
SWBT (Southwest Bancorp of Texas--$41.88; -0.50; optionable (ZRQ)): Regional: Southwest
http://biz.yahoo.com/p/s/swbt.html
STATUS: Slipped below the 18 day MVA (42.89) with volume dropping back as well (130,800; avg. 247,000). Don't like the move below that support, but the stock hit 41.75 three times recently, and on the lower volume, can hold support there until it rallies back up. The ascending wedge high is 45.63. Buying is looking even better.
BUY POINT: Aggressive: On a move back up from 41.75 on rising volume. Breakout: 45.76, on volume of 333,000 or better.
POSITION: Aggressive: Stock and/or May $40 calls to buy (ZRQ EH). Breakout: Stock and/or May $45 calls to buy (ZRQ EH).
ORCL (Oracle Corporation--$31.81; -2.75; optionable (ORY)): Software
http://biz.yahoo.com/p/o/orcl.html
STATUS: The stock tried to move up on stronger volume last week, but was tanked back to the 18 day MVA Monday on a rumor regarding a possible amendment of a filing with regulators, though the company issued a denial. A stock plagued by rumors; short sellers anyone? Nevertheless, volume was stronger at 57.5 million (avg. 45.8 million). The 50 day MVA (31) was tested on the low of 31.31. We will see if the stock can recover on a move back up from the support; it was trading at 32.06 at the end of after hours trading, but it keeps getting knocked back down.
BUY POINT: Aggressive: On a bounce back on continued strong volume.
POSITION: Stock and/or March $30 calls to buy (ORY CF).
TXN (Texas Instruments Inc--$48.56; -1.75; optionable (TNZ)):
http://biz.yahoo.com/p/t/txn.html
STATUS: Dropped back in the ascending wedge to close at support (18 day MVA) on lower, below average volume (9.5 million). The low tested below the 50 day MVA (47.67). Looks good technically for a move back up, but the company reported earnings after the bell that came in below expectations, and first quarter revenues are projected to drop 10%. The stock was trading down to 46.06 in after hours trading, so we will see how it reacts Tuesday on the news, but less-than expected earnings are revenues are not helping stocks in this earnings period. Pattern high is 54.69, and tonight's news won't break it out of the pattern.
BUY POINT: Aggressive: On a move up on rising volume. Breakout: 54.82, on volume of 14.9 million or better. A buy up to 57.56.
POSITION: Aggressive: Stock and/or April $45 calls to buy (TNZ DI). Breakout:
Stock and/or April $50 or $55 calls to buy (TNZ DJ or DK).
Pennant:
New Play (from the weekend):
CSBI (Century South Banks Inc--$33.38; -0.68; no options):
http://biz.yahoo.com/p/c/csbi.html
STATUS: Remains in the pennant and holding above support, the 18 day MVA (33.07), and below the 10 day MVA (33.53). Volume was stronger at 46,100 (avg. 77,500); continue to look for the breakout over the pattern high of 34.72 as volume increases.
Big money flow and good buying.
BUY POINT: Breakout: 34.85, on volume of 105,000 or better. Remains a buy up to 36.59.
POSITION: Stock.
BASING/TRADING RANGES:
New Play:
MI (Marshall & Isley Corp--$53.00; +0.80; optionable (MI)): Regional banks
http://biz.yahoo.com/p/m/mi.html
STATUS: Moving up after a test of the breakout of its 9.5-month base. Opened just above support (10 day MVA 51.99) on stronger volume (199,800; avg. 247,000). Handle high is 53.75 (previous basing high is 57.75) for the breakout. MI shows high money flow and decent buying.
BUY POINT: 53.88, on volume of 371,000 or better.
POSITION: Stock and/or March $50 calls to buy (MI CJ).
New Plays (from the weekend):
MFLO (Moldflow Corporation--$27.56; +2.43; no options): Software
http://biz.yahoo.com/p/m/mflo.html
STATUS: Broke just above the buy point in the handle (27.38) on good volume (162,800; avg. 60,000). Look for a continued move up as the stock remains a buy on the breakout up to 28.75. Excellent money flow, relative strength (which broke out ahead of price, a bullish sign), and buying. Earnings are out after the bell January 24.
BUY POINT: Up to 28.75 on continued strong volume.
POSITION: Stock.
BSC (Bear Stearns Companies--$59.00; +1.31; optionable (BSC)):
http://biz.yahoo.com/p/b/bsc.html
STATUS: Moved up from support (two dojis from the previous two sessions) on stronger volume (877,700; avg. 1.3 million). Handle high in the 18-week cup pattern is 59.69; look for stronger volume to carry the stock through on a breakout. Strong money flow and good buying.
BUY POINT: Breakout: 59.82, on volume of 2 million or better. Remains a buy on the breakout up to 62.81.
POSITION: Stock and/or April $55 or $60 calls to buy (BCS DK or DL).
FBF (FleetBoston Financial Cp--$41.00; 0.00; optionable (FBF)):
http://biz.yahoo.com/p/f/fbf.html
STATUS: Popped up from support (the stock showed two consecutive dojis at the 10 day MVA 41.26) in the handle of the 18-week cup base. Nice move, but volume dropped back just below average to 3.8 million (avg. 3.6 million). For the breakout look for stronger numbers. Pattern high is 43.19. High money flow and strong buying. Look for financials to benefit from further interest rate cuts.
BUY POINT: Breakout: 43.32, on volume of 5.4 million or better.
POSITION: Stock and/or April $40 calls to buy (FBF DH).
PLT (Plantronics Inc--$52.56; -1.69; optionable (PLT)): Telecom
http://biz.yahoo.com/p/p/plt.html
STATUS: In a 19-week base, and pulling back from Thursday's high of 54.81 (prior basing high is 55.75). The stock hit a low of 49.50 but on strong volume (709,500; avg. 375,227) closed near the high of 53. Look for a continued move up from here on the momentum for a breakout from the base; looks like a short handle. High money flow and relative strength.
BUY POINT: 55, on volume of 563,000 or better.
POSITION: Stock. May $50 calls have 24 open interests, too illiquid for the stock (PLT EJ).
PLT (Plantronics Inc--$50.94; -1.62; optionable (PLT)): Telecom
http://biz.yahoo.com/p/p/plt.html
STATUS: In a 19-week base, and continued pulling back from last Thursday's high of 54.81 (prior basing high is 55.75). The stock tapped down to 50, moving on very low volume (205,800; average 375,200), so we will see if it has support here in the range of its December and early-January highs (and 10 day MVA, at 50.10). Excellent money flow.
BUY POINT: Aggressive Back over 52 on increased volume. Breakout 54.94, on volume of 563,000 or better.
POSITION: Aggressive Stock and/or May $50 call to buy (PLT EJ low open interest). Breakout Stock and/or May $50 call to buy (PLT EJ low open interest).
VRTY (Verity Inc--$29.06; -1.88; optionable (YQV)): Internet software
http://biz.yahoo.com/p/v/vrty.html
STATUS: The stock is ranging (again) somewhat laterally after having broken from a recent trading range. The stock pulled back in that pattern today, dropping on lower volume of 711,100; average 606,200). Has made an excellent move the last two months from a December low of 13.13, and is looking to break resistance of the 200 day MVA (32.71). Look for resistance at that level, as the stock continues up on the momentum. Huge money flow and decent buying.
BUY POINT: Aggressive: A move back up on increased volume.
POSITION: Aggressive: Stock and/or June $25 calls to buy (YQV FE).
SRNA (Serena Software Inc--$40.38; -4.25; optionable (NHU)): Software
http://biz.yahoo.com/p/s/srna.html
STATUS: Made a great move up in the right side of its base last week, and after hitting up to 44.63 (range of the December high) we got the inevitable pullback today, although the selling back was on very large volume (up to 1.92 million; average 400,200). We will look for the volume to drop off on continued selling, and see if the stock can hold support at its 50 day MVA (36.61); the 200 day is just below at 35.22, in the range of early January highs.
BUY POINT: A move up after a lower-volume pullback that holds support.
POSITION: Stock and/or May $35 calls to buy (NHU EG).
Continued Basing Plays:
TGP (Georgia-Pacific--$30.94; 0.00; no options): Materials and construction
http://biz.yahoo.com/p/t/tgp.html
STATUS: Gapped down but managed to push back up slightly, closing again right on its 10 day MVA. We will see if the stock can hold on this support since its pullback thurday from its breakout high of 31.88. The stock failed its attempt to break out of the 6-month base (prior high at 32), so we will see if it can hold and mount another attack. Excellent money flow. Earnings January 26. Basic materials usually perform well when the Fed cuts rates.
BUY POINT: Aggressive: Over 31.25 on stronger volume (138,600; average 168,800). Breakout: Over 32, on volume of 253,000 or better.
POSITION: Stock.
AZO (Autozone Inc--$26.25; -2.31; optionable (AZO)): Auto Parts
http://biz.yahoo.com/p/a/azo.html
STATUS: Crash. Forecast some disappointing numbers and has suffered a downgrade, paying the price today with a drop on big volume (1.47 million; average 433,300). After the gap down, took a relief bounce up to the 50 day MVA (27.06) but tumbled back down. No new positions.
XOXO (Xo Communications--$26.94; -0.87; optionable (QNF)): Domestic Telecom
http://biz.yahoo.com/p/x/xoxo.html
STATUS: After breaking from an ascending wedge formed in the bottom of its base, the stock pulled back to test the breakout and surged up again at the end of last week. After gapping up to a breakout high of 29.94, the stock pulled back and today showed a loose doji on below average volume (6.33 million; average 6.35 million). We will see if the stock can hold support here (hit 26 at its low) for a move back up. The 200 day MVA is at 31.93. Excellent buying and huge money flow.
BUY POINT: A move back up, perhaps after another test of the 26 range, with increased volume.
POSITION: Stock and/or April $25 calls to buy (QNF DE).
C (Citigroup--$53.88; -0.50; optionable (C)): Bank
http://biz.yahoo.com/p/c/c.html
STATUS: Started a decent move, but pulled back in its pennant pattern to close over recent support in its 10 day MVA (53.79; the stock has made a habit of tapping down at its lows to the 18 day MVA, 53.18, as it did today). Volume was up on the action at 15.7 million (average is 13.2 million). The consolidation is the (volatile) handle to the stock's 20-week base, so we will see if the stock can make a move and hold it. Pattern high is 57.38. Good buying.
BUY POINT: Aggressive: Over 55 on continued strong volume. Breakout: 57.51, on volume of 19.5 million or better. Remains a buy on the breakout up to 60.39.
POSITION: Aggressive: Stock and/or March $50 (C CJ). Breakout: Stock and/or March $55 calls to buy (C CK).
LEH (Lehman Bros--$78.44; -1.50; optionable (LES)): Brokerage
http://biz.yahoo.com/p/l/leh.html
STATUS: Pulled back after Friday's move up from the 10 day MVA (76.72), dropping on continued decreasing volume (2.7 million; average 2.36 million). The stock is wedging up along its 10 day as it moves in the range of the high in the left side of its cup pattern; not a strong handle pattern, which we like to see pull slightly on low volume. We can look for a continued retreat to the 10 day, while continuing to be ready for a breakout move. Continues with strong money flow and high relative strength.
BUY POINT: Aggressive: On a move up after a lower-volume pullback to the 77 level. Breakout: 82.13, on volume of 4.5 million or better.
POSITION: Aggressive: Stock and/or April $75 calls to buy (LES DO). Breakout: Stock and/or April $77.50 calls to buy (LES DW).
MER (Merrill Lynch & Co--$75.13; +1.25; optionable (MER)): Brokerage
http://biz.yahoo.com/p/m/mer.html
STATUS: Made a move back up to a new closing high but without the volume we were looking for, coming in lower and below average at 3.7 million (average 4.48 million). Not an inspiring move, and we will need to see more volume to make a solid break from its 19-week base. The all-time high is just ahead at 75.88 (intraday high of 75.81 today). Earnings are out before the bell tomorrow, so we will see how it reacts. Excellent money flow and high relative strength.
BUY POINT: 76, on volume of 6.7 million or better.
POSITION: Stock and/or April $70 calls to buy (MER DN).
JPM (J.P. Morgan & Co--$50.88; +0.32; optionable (JPM)): Banking
http://biz.yahoo.com/p/j/jpm.html
STATUS: Appears to have found support on its pullback after having failed in an attempt to break from its handle, showing consecutive dojis over its 18 day MVA (50.63) after having tapped down to that level at its low (50.06 today). Volume dropped off a bit, coming in about the average at 10.6 million. Looking for the stock to rally back toward the high in the handle 54.69. Good buying.
BUY POINT: Aggressive: Over 52.25 on increased volume. Breakout: 54.82, on volume of 15 million or better.
POSITION: Stock and/or June $50 calls to buy (JPM FJ).
KEI (Keithley Instruments Inc--$62.56; +3.68; optionable (KEI)): Electronics (scientific and technical instruments)
http://biz.yahoo.com/p/k/kei.html
STATUS: Continued its remarkable move, running back up Monday with another surge of volume behind it (914,000; average 502,500). Last week the stock broke out of an ascending wedge (at the bottom of its base), but its pullback Friday proved to be brief. Looks like it could continue up from here, but on a pullback we will look for it to hold its down trendline (July, October and January highs) at 57.75. Excellent money flow and buying.
BUY POINT: A move up from here in a rally, looking for continued strong volume.
POSITION: Stock and/or April $60 calls to buy (KEI DL).
PUT PLAYS: Still looking for defensive stocks for possible moves down as the techs rally.
Continued Play:
BMY (Bristol-Meyers Squibb Co--$66.94; +0.88; optionable (BMY)): Drug manufacturer
http://biz.yahoo.com/p/b/bmy.html
STATUS: Pushed back up over its 50 day MVA (66.36) to close, but the 18 day MVA (67.17) continues to present a problem. Volume was not strong on the move up, coming in lower at 3.23 million (average 4.86 million). After the weak move, could still be a put candidate on a drop back below support, which would continue its recent pattern making lower highs on its moves up.
BUY POINT: A move back below 65 on average or better volume.
POSITION: February $70 puts to buy (BMY NN).
Good Investing!
Your Technical Traders Report 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.
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