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Begin Part 2 of 2

Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.

4-8-02
Wholesale Inventories, February (10:00): -0.7% actual versus 0.0% expected and -0.5% prior (revised from -0.2%).

4-11-02
Initial Claims, 4/6 (8:30): na versus 460K.
Export Prices ex-ag., March (8:30): 0.0% versus 0.0% prior.
Import Prices ex-oil, March (8:30): na versus -0.5%

4-12-02
PPI, March (8:30): 0.6% versus 0.2% prior.
Core PPI, March (8:30): 0.1% versus 0.0% prior.
Retail Sales, March (8:30): 0.5% versus 0.3% prior.
Retail Sales ex-auto, March (8:30): 0.4% versus 0.4% prior.
Michigan Sentiment-Prel., April (9:45): 97.3 versus 95.7 prior.

SUBSCRIBER QUESTIONS

Q: Can you explain what a mixed shelf is? For example, Raytheon announced a $3 billion mixed shelf.

A: A "mixed shelf" has to do with the registration of securities with the SEC. When a company does a "shelf registration," they are registering securities to issue at some future, undetermined date as needed from time to time, saving them from having to update the registration statements every time there is an issuance of securities covered by the registration. A "mixed shelf" is the shelf registration of different types of securities, such as a mixture of debt and equity. One could do a mixed shelf of common stock, preferred stock, and convertible debt securities, up to an amount specified in the registration.

TEAM TRADES

Big caps, particularly big cap techs, just cannot get traction. We have been looking elsewhere for several months, and while the big techs move lower, these 'unknown' stocks move higher.

USLB: A medical research company that set up a nice cup with big volume and buying over the past two months. A short, low volume slightly descending handle led to today's big breakout. We watched the stock early move up sharply and were ready to pull the trigger around 9:45CT, but given the market decided to let volume come in. It worked laterally for two hours and then ran up to 15.60, well above our original buy point (14.55). Volume was good. We waited for a pullback and were going to get in. After a ballistic move over 15 minutes, the odds of a pullback and test are good. It did that and fell back to 15.20 over the next hour. When it bounced from 15.20, the top of the mid morning consolidation, we were ready and issued the alert. We were able to get in right at 15.30 and it ran to 15.70, backed off, and then rallied back up to near 15.70 in the last few minutes. Volume was super on the move. We took partial positions, and will look at more on a possible test of 14.55.

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 Monday's report:
USLB: Breakout on massive volume!
SCIO: Still tightening up in the handle on very low volume (588,400).
GBBK: Tried the breakout, but no volume (181,000). May need to come back to the 18 day MVA at 34 and try again.
CHK: Not the day for oil stocks. After the close current oil supplies were released and they were higher than expected. It has to hold here to keep the play alive.

Continued Plays:
CHGO: Started to bounce today, moving off the 10 day MVA. Lower volume, but still really strong. 6.48 is the breakout.
NCC: Bounding off the 50 day MVA (29.55), but no volume to go with it yet (828,300).
HLYW: Making a strong, high volume breakout!
LNY: Interesting pattern. Forming an ascending wedge after jumping off the 50 day MVA on the intraday low Monday (24.50). Today volume jumped up to 255,200, well above average. Breakout is over 26 on continued strong volume.
UCI (3-25): Made the breakout (insurers doing well on Bush terrorism speech), but volume just edged over average (157,500). Not bad, not great.
CBUK: Holding a tight ling over 7 for the past four weeks, now moving on very low volume (22,400). It is either going to break higher here or breakdown.
HELE: Appliances are still hot. Today HELE cleared some resistance at 14.25 on some solid, above average volume (263,000). Ready to tackle the high at 15.79.

Best Plays:
1) RITA: Making the breakout on huge volume.
2) NBTY: Ready for a new high.
3) HKF: Looking for a new high as well.

New plays:

RITA (Rita Medical Systems--$10.09; +0.39; no options): Medical appliances
http://biz.yahoo.com/p/r/rita.html
STATUS: A new issue in August of 2000, lovely RITA hit the market at the wrong time, falling from its first-day high of 17.47 to a low near 2.50 in September 2001. That is a correction. Starting in November, however, RITA started to build the right side of its base on some nice volume. It then based out in a cup in January to early March, and then shot higher on even more explosive volume. In late Mach it formed a handle that was like a flying plateau, moving laterally and slightly lower for two weeks. Volume had really fallen off (Monday it was 21,000; avg. is 77K). Today volume shot higher (436,700) as it peaked over the March high at 10.05. It pulled off of its high today (10.35), but great buying, great money flow, and relative strength is breaking out on the move.
BUY POINT: 10.26 on continued strong volume (200K+). Target 12 (initial). Stop: 9.
POSITION: Stock (no option chain).

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

SNS (Steak N Shake--$14.50; +0.43; no options): Restaurant
http://biz.yahoo.com/p/s/sns.html
STATUS: Almost done. SNS was a play for us before when it broke out of the ascending wedge in February in two big moves and then immediately turned and full tested the move. It fell back to the 50 day MVA at 13 where it bounced on hefty volume. The bounce fell short of the high at 15.10, and dropped again to the 50 day MVA where it once again bounced on good volume. It moved up on lower volume and today jumped over the middle of the double bottom pattern on a jump in volume (152,400; avg. is 90K). Money flow is way out ahead of the move. Now it has a lot of momentum and can run right on up to test the high from here. We are going to look at some positions if it continues its run, and then pick some up after a test of the high or when it breaks out of any handle it may form.
BUY POINT: 14.65 on continued strong volume of 125,000 or better. Target: 18 (initial). Stop=13.62.
POSITION: Stock (no option chain)

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

Revisited:

NBTY (NBTY--$17.97; +0.75; optionable): Drug products
http://biz.yahoo.com/p/n/nbty.html
STATUS: After breaking out of an ascending wedge in early March, NBTY has run up the 18 day MVA and tested the 50 day MVA (now at 15.51). It jumped right off of that level on above average volume and today made the move toward the August 2001 high (18). Volume was better and above average (613,600; avg. is 610,000). Relative strength has already broken out ahead of the move.
BUY POINT: 18.10 on volume of 900,000 or better. Target: 21.88 (initial). Stop=16.75.
POSITION: Stock and/or September $15c to buy (NBQ IC).

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

HKF (Hancock Fabrics--$18.04; +0.30; no options): Retail fabrics
http://biz.yahoo.com/p/h/hkf.html
STATUS: Last on the report 3-18. Tested the 50 day MVA (now at 16.58) twice over the past two weeks, intraday jumping up hard off of that level on strong volume (272,400; avg. is 115K). It needs to clear the recent high at 18.25 on that strong volume. Price/volume action has been great and relative strength is already breaking out.
BUY POINT: 18.35 on volume of 175,000 or better (preferably better). Target=21.94 initially. Stop=16.35 for starters.
POSITION: Stock (no option chain)

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

FRX (80.36; +0.32): Tried to make a move over the 50 day MVA (80.58) but could not hold the move, closing just below that level on rising though still below average volume (1.06 million). Trying to make the break back over that level on the rising volume, but it could not muster it. Again support at 78 if it fails to make the move back over the 50 day MVA.

UP & COMERS PORTFOLIOS: BBBY, SRCL

SRCL (59.86; +0.98): Rallying back up on stronger volume (334,300; right at average), trying to get back over the 50 day MVA (61.44). On the high it hit 60.74 but peeled back on the close. It is going to have some trouble at that point.

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

HB (61.65; +0.50): The low volume pullback is now turning into a nice, above average volume move higher (239,800). Moving to clear the high in the handle of its 7-week cup with handle. 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 (54.07; +0.87): Didn't give in, clearing the 50 day MVA today on rising though still below average volume (1.33 million). That reverse head and shoulders may be in the trick.

WMT (60.10; +0.32): Making the bounce up toward the 50 day MVA (60.29) on a bit higher volume (6.22 million), but unable to hold the move over that level. The candlestick patterns shows a tight doji. If it cannot clear this level on stronger volume it could be ready to fall lower. In most cases, stocks do not make it back over before falling lower. WMT may be different given the stock and the strength of the consumer. We will know more tomorrow when more same store sales numbers were released.

CSCO, BRCD, SEBL, AMGN: It is not pretty at all. Heavy volume with some major breakdowns.

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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