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Begin Part 2 of 2

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

4-15-02
Business Inventories, February (8:30): 0.0% versus 0.2% prior.

4-16-02
CPI, March (8:30): 0.4% versus 0.2% prior.
Core CPI, March (8:30): 0.2% versus 0.3% prior.
Housing Starts, March (8:30): 1.7M versus 1.769M prior.
Building Permits, March (8:30): 1.685M versus 1.774M prior.
Industrial Production, March (9:15): 0.4% versus 0.4% prior.
Capacity Utilization, March (9:15): 75% versus 74.8% prior.

4-17-02
Trade Balance, February (8:30): -$29.0B versus -$28.5B prior.

4-18-02
Initial Claims, 4/13 (8:30): NA versus NA.
Leading indicators, March (10:00): 0.4% versus 0.0% prior.
Philadelphia Fed, April (12:00): 13.4 versus 11.4 prior.
Treasury Budget, March (14:00): NA versus -$50.7B prior.

SUBSCRIBER QUESTIONS

Q: How can we tell which stocks are for trades and which are for long term holds?

A: In the market that we have had we have been very reluctant to hang onto many positions longer term with breakouts racing up for a good gain and then turning over and giving it all back. Thus we are taking gains on nice moves on breakouts and the other moves we are investing in. We have been pretty ruthless in doing this regardless of the move. We have been taking at least part of our position off the table when our targets are hit. If the move is strong, we are letting part of the position ride, particularly in sectors that have been performing the best: health services, defense, retail. As the market improves, i.e., breakouts hold their tests with more frequency, we will hold positions longer, and we will advise specifically if we think it has long term hold potential as with JNC.

TEAM TRADES

Good moves again Friday on the target side as well as on new positions. SCIO, AEN, LEXR all made solid moves that we got in on. We hit a lot of targets and that freed up some cash to move on to some other great movers. There were many others made the moves we were looking for as well.

LEXR: An interesting bonus play on the SSR, we were watching the stock build toward the buy point all session. The stock formed a reverse head and shoulders over the past three months, so we were waiting for the breakout over the neckline before we got in. Volume was building but the stock could not get past 2.90. Volume is not huge on this stock, about 105,000 average. It was getting close when it exploded at 12:30. It then plateaued for an hour while volume moved over average. Right before 1:30 it hit the buy point and volume was huge. We issued the alert but missed it on the surge up to 3.15. Over the next 15 minutes it tested the breakout, hitting 3.05 quickly. We had entered an order with a limit of 3.08 to try and catch it on a test, and it worked out. The stock was volatile the rest of the session, but continued to climb up the 15 minute MVA, closing at 3.14. A very strong move. We have a target inside the recent high but we are most likely going to adjust that higher based on the strength of this move.

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 Thursday's report:
MYK: Made the buy point but no volume. Look for extra volume this week.
CCRN: Another doji on even lower volume in the double bottom, readying for the breakout.
DANKY: A doji right on the 10 day MVA on very, very low volume (128,300). Looks ready to rip.
RMCI: Another doji on low volume.

Continued Plays:
AGAM: Nice low volume test in progress. New positions over 5.75.
PEGS: May now be ready for the move over 19 on strong volume.
PSSI: Bounding off the 50 day MVA on rising volume.
SPF: Forming a handle on its double bottom off the 50 day MVA. Very much like SNS.
LPX: Making the breakout move Friday on above average volume.
CFBX: Reversed right back up and cleared the March high on rising, average volume. Relative strength breaking out on them move. Nice turnaround from Thursday's action.
OMX: Took a pause Friday.
HARB: Still running on even more volume. Huge move from this savings and loan.
SNS: Started up again, but looks as if it is forming that handle. Looking good.
NBTY: Hit the target Friday and then tested the 20 day MVA on the low. Volume jumped.
HFK: Still rising, but volume is still low, falling to below average levels.
SCIO: Regrouped and made the breakout move again Friday on lower though still above average volume.
GBBK: Pulled back on lower though still above average volume. Bounced well off of the session low.
CHK: Tanked but recovered to close above the 18 day MVA. We got chased out of positions.
CHGO: The pause that refreshes. CHGO exploded higher Friday once again with relative strength blasting off with the move.
HLYW: Moving higher again but volume is not following after the breakout move Tuesday. Still riding positions.
LNY: Gapped higher Friday but could not hold the gain. Volume dropped off and the stock recovered well of some minor selling. Not bad action.
CHPC: Looking every so good in its handle. A small semiconductor waiting for the go ahead for a breakout.
CNB: Making the breakout Friday on above average volume.

Best Plays:
1) STSA: Nice ascending wedge.
2) CRFT: Huge volume breakout.
3) PRU: Nice cup with handle.
4) CHPC: From the continued plays. Looks ready to move on some good earnings reports this week.

New plays:

STSA (Sterling Financial--$22.39; +0.03; no options): Savings & Loan
http://biz.yahoo.com/p/s/stsa.html
STATUS: Yes another savings and loan because they are doing so well. STSA is in a 4-week ascending wedge formed after a breakout from a 6-month cup with handle that hit bottom just after the September 11 selloff. The stock made a super run ($5) off of that breakout, and this ascending wedge is the next step in its run. The pattern is pinching into the end of the pattern and showed a doji Friday on rising volume (35,500; avg. is 38,000). Price/volume action is positive during this wedge. Money flow is super and relative strength has broken out.
BUY POINT: 22.80 on volume of 65,000 or more. Target=27. Stop=21.15.
POSITION: Stock.

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

WLT (Walter Industries--$13.35; 0.09; no options): Residential construction
http://biz.yahoo.com/p/w/wlt.html
STATUS: In residential construction, but has set up a good cup with handle pattern, currently working its way through the handle. Volume has tapered off in the handle, but there are recurrent volume spikes, the most recent on Thursday. Friday's volume calmed down immensely (57,400; avg. is 125,000). Money flow is strong, and relative strength is already above where it was last July when the price was higher. Price/volume action in the pattern is in favor of accumulation with 7 positive weeks versus 4 negative weeks.
BUY POINT: 13.85 on volume of 187,500 minimum. Target=16.62. Stop=12.88
POSITION: Stock.

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

CRFT (Craftmade--$17.95; +0.70; no options): Wholesale electronics
http://biz.yahoo.com/p/c/crft.html
STATUS: After starting to correct in early 1999, CRFT hit bottom in early 2000 and then based out laterally for a year. It formed a pennant the last half of 2001, broke out, and has since formed the current wedge that is riding up the 50 day MVA on the lows. Friday the stock broke out of pattern on huge, huge volume (185,000; avg. is 39,500) on no news. Money flow is excellent and relative strength broke out on the move as well. The stock is just off of its all-time high and is looking to take that out on this move.
BUY POINT: 18.20 on continued strong volume of at least 80,000. Target=21.94. Stop=16.20.
POSITION: Stock.

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

PRU (Prudential Financial--$32.51; -0.09; optionable): Life insurance
http://biz.yahoo.com/p/p/pru.html
STATUS: After its initial run-up following de-mutualization last December, PRU has formed a saucer, moving up to form the right side last week from its 50 day MVA (31.39). It peaked on the move at 33.20, pulling back off of Tuesday's doji on below average volume. A nice dip, dropping back only slightly and holding over its 10 day MVA (32.26), Friday with a 'shooting star' doji (the price moves up intraday but then retreats to close near the open price). Looking for PRU to hold on here and set up a breakout and run. Excellent money flow, strong buying and relative strength is very high. Target: 38.
BUY POINT: Breakout: 33.30 on volume of 3.25 million (average 2.18 million; Friday 1.41 million). Stop: 31.25.
POSITION: Stock and/or June $30 calls to buy (BRU FF).

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

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. New: ICUI; RMCI

ICUI (ICU Medical--$36.44; +0.50; optionable): Medical instruments
http://biz.yahoo.com/p/i/icui.html
STATUS: A strong run through 2001, ICUI is continuing its ways. Over the last 2.5 months it has formed an ascending wedge after that strong run up, and we feel it could give us another good move here before maybe needing to form another longer base. Still in great shape, just coming off a split where it sold back during the middle of the wedge, it is now moving up toward completion of the wedge. Now volume has been slacking off over the past three weeks as it moves higher. That is something for us to be wary off, but since we won't initiate positions until it breaks out of this pattern we can let it show us it has the stones to make the move and earn our money.
BUY POINT: 37.50 on volume of 140, 000 (avg. is 90,000). Target: 45 (initial; we will let it run if the move has good volume behind it). Stop=34.88.
POSITION: Stock.

FRX (77.50; -0.30): Friday the selling slacked off as FRX held near 77.50 on the close, a bit lower than 78, a bit above the 200 day MVA at 76.74. If the stock starts to bounce at this point we will buy the calls back. A strong stock but the above average volume selling the past three sessions is not good. If it breaks the 200 day MVA we will sell and let the calls continue to lose value.

LLL (125.81; +3.45): Will not quit, rising Friday on above average volume (992,500). Another all-time high, and LLL is again above its upper channel line at 122. Ballistic rises over the upper channel can be a problem. We like the rising volume on the move; that means there were more buyers than normal chasing it. We will enjoy the run and look for a topping sign to sell some calls. We will also watch out for the blow off top or burn out above the upper channel. Former upside play GNSS flamed out on such a move, but LLL is in defense, a stable area for the foreseeable future.

UP & COMERS PORTFOLIOS: BBBY, SRCL

BBBY (34.74; +0.11): After a strong move Tuesday, BBBY has pulled back on lower, below average volume (2.9 million), Friday showing a doji as the low tapped the 10 day MVA (34.28). Note how this point is holding roughly above the highs in the 4-month flat base. We are looking to add some positions on a move over 35.50 on above average volume.

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

WMT ($61.23; +1.06): Moved back over the 50 day MVA Friday on the retail sales numbers, but volume was below average (6.48 million). Not a strong move back over this key moving average, but we will take it. 62 is some resistance, but it has to get volume to sustain the move.

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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