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Begin Part 2 of 2

We apologize for the late part 2 tonight. We are having some flooding problems once again, though these are minor compared to last summer.

SUBSCRIBER QUESTIONS

Q: Would April 15 (tax day) have any effect on selling pressure from institutions this week?

A: Tax selling is something that occurs before the end of the taxable year. April 15 is the date set by the government for individuals to pay their taxes. Thus it has no real significance as far as institutions moving in or out of stocks.

TEAM TRADES

KLAC: We have been watching KLAC, putting it as a pre-split candidate on the Stock Split Report based on its price, performance, and the recent AMAT split announcement. As with many chip equipment stocks, it has been performing well on a relative basis. Now today it was well off of our targeted buy point, but after an early selloff it was making a solid move. At noon it hit 64.50 after starting that good run. It got ahead of the 10 minute MVA, and we were going to watch it as it pulled back to meet it. If it held, we were going to take some positions. Sure enough, over the next 10 minutes it pulled back to the 10 minute MVA and then started to bounce. We sent the lunchtime alert and intent to start picking up KLAC. At that point the stock just cleared 64.50, but the spread was 64.50 by 64.51. We dropped in a quick order and with this stock's liquidity, that was no problem. The stock continued to rally but them tumbled back to the 15 minute MVA. A bit more pullback than before, but it held right at 64.50 and bounded to 66. It was up, than back, up, then back. Mid afternoon it got the dips below the 15 minute MVA, but again it held well over 64.50 and rallied to 66 in the close. A bit aggressive, a bit early, but this stock has held up well with all of the earnings hoopla, and we are looking for it to give us a nice run into earnings.

THE PLAYS:

Reading the Plays: Please note that when we reference the 10, 18, and 50 day moving averages (MVA), those are exponential moving averages (EMA). The 200 day moving average is always simple (SMA). We will note when we reference a particular MVA differently, e.g., a simple 50 day MVA. Please click on the Yahoo and chart links for company and charting information. A "prior high" refers to the high at the start of a base.
For conserving space on listings of stop losses, the symbol (7%) indicates that the stop is 7% below the buy point.

Stocks from Weekend report:
WTW: Decent price move toward the breakout, but could not generate the volume Monday that it had Friday (77,000). Still looking ready to make the move.
UNFI: Tried to make the breakout move on price, but fell short. Volume did the same, dropping to very low levels (51,000).
CHGO: Sold below the 18 day MVA but then reversed to finish slightly higher on some heavy volume. This could be the reversal day that ends the test. 6.48 is the breakout.
NCC: Still holding in the pattern, showing a loose doji on rising though still below average volume (1.1 million).

Continued Plays:
MLS: Made the move today on solid volume!
YHOO: Started the pre-earnings run that we anticipated (earnings Wednesday after the close).
PDX: Strong move over 42 on solid, above average volume.
LQI: Started back up after the test on very strong, above average volume.
PEGS: Still working laterally on below average volume, showing two dojis the past two sessions.
LOOK: After the abrupt test, it bounced off the 18 day MVA and started to rally on rising volume.
HKF: Tested the 50 day MVA on the low (16.60) and rebounded in a strong move on much stronger volume.

SUBSCRIBER'S CHOICE

PVAT (Paravant--$3.88; -0.24; no options): Personal computers
http://biz.yahoo.com/p/p/pvat.html
STATUS: Well off of its former highs at $8 hit in 1996 and 1997, PVAT bottomed in September near $1, rallied to $3, and then formed a 4.5 month flat cup with handle. It broke out in mid-March on a huge volume surge for the stock and ran to its peak (4.36) on the intraday high Friday. It reversed Friday and pulled back further today; a ballistic move that needed to be tested. There has been a lot of buying since mid-March, and money flow has jumped up with it. More sanguine news from DELL and now CPQ may be helping. On today's action volume fell way off the pace, down to 224,600 from levels in excess of 600K and 700K. This stock might make a good trade on a bounce up from the 10 day MVA (3.75) or the 18 day MVA (3.50) with a target in the $5 to $6 range.

http://www.investmenthouse.com/cd/pvat.html

Best Plays:
1) USLB: Very nice pattern.
2) SCIO: Trying for a new high.

New plays:

USLB (US Laboratories--$14.37; +0.39; no options): Research services
http://biz.yahoo.com/p/u/uslb.html
STATUS: In a 12-month cup pattern, racing up from 11 to 14 past three weeks to complete the cup. It has pulled back toward 13 on the intraday lows the past 7 sessions, forming somewhat of an abbreviated handle. We would like to see more of a shakeout, but the stock may not do that as it was moving toward a breakout over the handle high Monday on rising volume (90,200; avg. is 93K). Volume during the pattern is as it should be: low and quiet at the bottom, ramping up as it moved up to complete the right side starting in February. Again, more of a shakeout would be nice, and it may be that we take just a partial position on the breakout and then wait for the test if there is one to complete it. Buying is strong and money flow is as well. Relative strength is breaking out already.
BUY POINT: 14.55 on volume of at least 175,000. Target: 17.44 (initial). Stop=12.95.
POSITION: Stock (no option chain).

http://www.investmenthouse.com/cd/uslb.html

SCIO (Scios--$29.70; +0.31; optionable): Wholesale drugs
http://biz.yahoo.com/p/s/scio.html
STATUS: SCIO is approaching an all-time high over 31. The pattern is open to interpretation, but it is no doubt solid. It can be viewed as a flying w double bottom with handle, or a test of a breakout of a big ascending wedge with tops at 28 to 29. Either way, we like the lower volume pullback it is exhibiting as it tests the recent move over 29 (907,300; avg. is 950K). Money flow is excellent and relative strength is set to breakout.
BUY POINT: Breakout: 31.89 on volume of 1.5 million or more. Aggressive: 30.95 on similar volume. Target=37.95. Stop=29.65.
POSTION: Stock and/ or August 25c to buy (UIO HE).

http://www.investmenthouse.com/cd/scio.html

GBBK (Greater Bay Bancorp--$35.30; +0.94; optionable): Pacific regional bank
http://biz.yahoo.com/p/g/gbbk.html
STATUS: Moving in a 15-month base that is shaping up to be a cup with handle. It has been moving in the handle for the past three weeks, Monday showing a solid move up but on continued below average volume (315,500; avg. is 410K). Indeed, Monday's move was a breakout move as far as price is concerned, but there was no volume. Often, however, we see volume move in after the breakout. What we plan on doing is take a position if we see more volume Tuesday on a good move. If volume comes in, great. If it does not come in, we will hold off and wait for the test. Money flow is excellent as is relative strength. The price/volume action in the base has been solid, with up weeks on rising volume outnumbering down weeks on rising volume.
BUY POINT: 35.50 on volume of 615K minimum. Target: 41.95. Stop=33.
POSITION: Stock and/or October $30c to buy (BBU JF).

http://www.investmenthouse.com/cd/gbbk.html

Revisited:

CHK (Chesapeake Energy--$7.59; -0.03; optionable): Independent oil & gas
http://biz.yahoo.com/p/c/chk.html
STATUS: CHK gave us a nice run and profit in March, and now it has pulled back to just above the 18 day MVA (7.45) after a nice run up to 8.15. We note that it held right at the October high the past two sessions, showing a doji today on lower volume (1.12 million; avg. is 1.24 million). Volume on the pullback has been a bit higher than we would like on a pullback as oil stocks deal with the daily volatility of oil prices. Money flow remains strong as does relative strength. We think CHK could give us another run and another nice return. We may not stay in it long term, but we will gladly take the profit.
BUY POINT: 7.86 on 1.5 million or better. Target=9.40. Stop=7.25
POSITION: Stock.

PORTFOLIOS: Each report, we look at these to see which is in a buy position. We don't cover them all each time, just the ones that look ready to pick up a few shares.

THE LEADERS: DGX, FRX, LLL, MIK

DGX (84.72; +2.22): Beautiful. Rising again, clearing the recent high at 84.10 on lower, though still above average volume. Closed some short term positions on the target being hit today, but letting our longer term holdings run.

FRX (80.04; +0.79): Tested the 50 day MVA again today on the high (80.55) and closed below the 50 day MVA again. Volume was up, but still below average (806,600). If it cannot recover tomorrow, this looks something like a kiss goodbye, but there is support at 78. Given that, we are not inclined to bail on this good stock just yet.

UP & COMERS PORTFOLIOS: BBBY, SRCL

BBBY (36.03; +1.93): Rallying to a new closing high on strong volume (5.97 million)! Letting this baby run for us.

MEMBER PORTFOLIO: CSCO, SEBL, EMLX, BRCM, HDI, BRCD, BUD, AMGN, WMT, ORCL, HB, NOC

HB (61.15; -0.04): Nice low volume pullback toward the 18 day MVA (60.58). Volume moved slightly higher, but still well below average volume (72,900). Money flow is really good, and the pattern is a short 7-week cup with handle. Short, but not too short. The breakout is a move over 62.33 on volume of 240K or more. That will put it at another new high and coming out of a good pattern.

HDI (53.20; -0.30): Holding just below the 50 day MVA (53.55) after tumbling down to that level last Wednesday. Showing good resilience in avoiding the selloff and now trying to recover on continued below average volume (1.04 million). Money flow is falling. Pattern looks as if it is trying to form a reverse head and shoulders, but that is stretching it a bit.

WMT (59.78; +0.64): Trying to make a run at the 50 day MVA (60.23) on rising volume (6.1 million) after spending a week at 59 trying to sort out the downgrade. This is the key time approaching as it moves up to test the 50 day and even the gap down point at 61.30. If it fails in this range it may be in for a further fall.

Good Investing!
Jon L. Johnson and The Daily Staff

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 of 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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