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Begin Part 2 of 2
TEAM TRADES
With the market continuing its downtrends after breaking support, we were looking over the weekend for stocks doing the same with a lot of vigor. There were quite a few choices, one of them was EMR in the rapidly weakening electronics sector. The buy point was 53.60, and in the first hour it tested to just above that level and bounced without hitting the buy point. It bounced as far as the 15 minute MVA and started down. 45 minutes later it was back at 53.60, bounced one more time and then ducked below the buy point. Volume was not huge, but the test of the 200 day MVA Friday was on moderate volume as well. The stock had breached the 200 day MVA Thursday on high volume, so with the price action we were willing to go ahead and enter the play. The June 60 put options were trading at 7.20 by 7.40 right at the break, and by the time we got the order in after the alert was sent the ask was at 7.60. We put in a limit at that price since we wanted the fill and the spread was very narrow for options. The stock acted just as the market: it sold down the rest of the session, riding below the 15 minute MVA all the way. A strong downtrend intraday complementing a strong breach and weak test of the 200 day MVA.
Good movers: Puts have been doing well (CUM, FDS, NAV, WL, OEX), but upside has been getting roughed up though FBC continues its run.
THE PLAYS:
Best Plays:
1) GISX: Great accumulation ongoing.
2) TROW: Put. Having trouble again.
3) ARW: Put. Moving down still.
4) GWW: Put. Starting the fall after the kiss goodbye.
5) FIX: A bit wild today, but still a nigh pattern.
6) AMGP: Waiting patiently during this pullback.
7) THER: Very low volume lateral move.
NEW PLAYS:
TROW (T. Rowe Price--$34.67; -0.16; optionable): Asset Management
http://biz.yahoo.com/p/t/trow.html
STATUS: Broke the 200 day MVA Thursday (35.09) on strong volume, and has tested that level the past two session, today on below average volume (599K; avg. is 625K). It has already tumbled down from the 50 day MVA to complete the head and shoulders pattern, and it has now broken below the neckline (36). We are looking for a fall to 30.
BUY POINT: 34.40 on volume of 700K or more. Target=30. Stop=36.
POSITION: July 40p to buy (RQW SH).
http://www.investmenthouse.com/cd/trow.html
AAPL (Apple Computer--$23.96; +0.95; optionable): Personal computers
http://biz.yahoo.com/p/a/aapl.html
STATUS: Put. Apple is in a long base, and tried to make a move out of its bottom reaches two weeks back when it hit 26, but was pushed right back down. Wednesday it broke below the 50 day MVA, recovered, but then was slammed back down Friday. Volume was not huge, but it made a lower volume recovery attempt today (4.87 million; avg. is 5.4 million) that on the high tapped at the 50 day MVA (24.11). This test of the 50 day MVA after the breach is where we like to enter put positions. Now it has to roll down on selling volume. We are looking at the 200 day MVA at 21 down to 20 as the target, so we will get on it quick if it starts to fall.
BUY POINT: 23.55 on volume of 5 million+. Target=20. Stop=24.50.
POSITION: July 30p to buy (AAQ SF).
http://www.investmenthouse.com/cd/aapl.html
GISX (Global Imaging--$19.06; +0.36; no options): Specialty retail
http://biz.yahoo.com/p/g/gisx.html
STATUS: Double bottom. Since peaking in January near 22, GISX has moved laterally between 16 and 20, setting up a double bottom and now forming a handle on volume that has settled down into quiet, boring below average trade. In other words, exactly what we want to see in a handle (120,300; avg. is 245K). In addition the intraday lows have been lower, acting to shake out the last weak holders. Price/volume action shows accumulation weeks leading 5 to 1, a very nice ratio.
BUY POINT: 19.60 on volume of 350K+. Target=24.50. Stop=18.22.
POSITION: Stock.
New Puts from the Weekend Report:
ARW (Arrow Electronics--$25.60; -0.36; optionable): Wholesale electronics
http://biz.yahoo.com/p/a/arw.html
STATUS: Put. Today ARW continued down from the breach of the 200 day MVA (26.75) and took out the next support at 26. It hit our buy point at 25.70 and closed out the day with decent volume though below what we wanted (594K; avg. is 595K). A decent start to the put play. Electronics just had an awful day, and ARW was in there with them. Want to see more volume on the continued drop.
BUY POINT: Original buy point was 25.70 on volume of 700K or better. Positions can still be taken. Target=22. Stop=27.50.
POSITION: June or July 30p to buy (ARW RF (74 delta) or ARW UF (60 delta), respectively).
http://www.investmenthouse.com/cd/arw.html
BVF (Biovail--$36.80; -9.65; optionable): Drug delivery systems
http://biz.yahoo.com/p/b/bvf.html
STATUS: Put. This call came one session too late. BVF was downgraded again before the open to a sell, and that is what investors did. It gapped down to 43.50, just 1.50 above our target. We were not going to jump in at that point as we wanted to see if it tried a recovery. It did not, and bad became ugly. We could have made our money on the play as it finished below 37, but we were not going to jump in when things were so volatile.
http://www.investmenthouse.com/cd/bvf.html
ETM (Entercom Communications--$51.42; -2.40; optionable): Radio broadcasting
http://biz.yahoo.com/p/e/etm.html
STATUS: Put. Got the move down! After giving up the 50 day MVA (54.19) Friday, ETM gapped down Monday but then tested the 50 day intraday, setting up today's big drop. Volume was down on the selling (293k; avg. 332k), and we could see a relief bounce before we get continued selling. That could create a new entry point for new or additional positions. The double top set up the drop, and we are targeting 47.50.
BUY POINT: Riding existing positions. For new or additional positions, after a relief bounce toward 53 on decreasing volume, a drop back through 51.40 on above average volume. Target=47.50. Stop=54.50.
POSITION: June 55p (ETM RK; 70 OI).
http://www.investmenthouse.com/cd/etm.html
INTC (Intel--$28.04; -0.08; optionable): Semiconductors
http://biz.yahoo.com/p/i/intc.html
STATUS: Put. Hit the buy point but recovered from an intraday low of 27.51 to cling to recent support. INTC has been in a solid downtrend but is hanging on to the 28 level, where there is a November consolidation there and then another test of that level in early April for several days. Volume again was not large and under what we were looking for in positions (40.7m; avg. 45.4m). We are looking for a test of the 200 day MVA once again on a bounce on the Nasdaq, but then if there is no volume it will turn back down. On a strong move through 28 INTC should crash to 24.
BUY POINT: After a bounce up from here, a drop back through 27.50 on volume of 45 million or better. Target=24. Stop=31.
POSITION: July 32.50p (INQ AZ; 69 delta) or July 35p (INQ SG; 79 delta) to buy.
http://www.investmenthouse.com/cd/intc.html
OMC (Omnicom Group--$87.53; -2.07; optionable): Advertising agency
http://biz.yahoo.com/p/o/omc.html
STATUS: OMC has been hammered, and after giving up its 50 day MVA (92) Friday, it did not bother with a test of that broken support. Instead, it dropped again on even stronger volume (2.71m; avg. 1.33m). Targeting 85 so a bit tight now, so we will monitor OMC for a bounce to see if it can set up for a playable move.
http://www.investmenthouse.com/cd/omc.html
New upside plays:
FIX (Comfort Systems USA--$4.76; -0.09; no options): Construction contractor
http://biz.yahoo.com/p/f/fix.html
STATUS: Cup w/handle. FIX is in a 4-month cup with handle after and recently hit a 52-week high after a nice move off of its 2001 low starting back in September. The stock broke out of the cup in early April on massive volume, but for the past two weeks volume has tapered off to well below average levels other than two above average volume spikes, the last occurring on Friday. Today FIX dropped back to touch 4.60 at its low, but recovered to close back over the support of its 18 day MVA (4.72). Volume was down at 126k; avg. 132k), so we are looking for a hold and breakout. Excellent buying and huge money flow complement excellent price/volume action that shows 6 accumulation weeks to one distribution week during this handle.
BUY POINT: 5.07 on volume of 225K or more. Target=6.96. Stop=4.60
POSITION: Stock.
http://www.investmenthouse.com/cd/fix.html
THER (Therasense--$24.65; -0.20; no options): Medical instruments
http://biz.yahoo.com/p/t/ther.html
STATUS. Cup w/handle. A new issue in October 2001, THER has undergone a 4.5 months correction, forming a cup and the start of the handle. After a high volume move up from the bottom of the cup on strong volume, trade has backed off as it should, today with very low volume (119K; avg. is 296K) as THER gapped up slightly and reversed. Money flow is excellent as is price/volume action which shows 6 accumulation weeks to just 2 distribution weeks during this base.
BUY POINT: 25.55 on volume of 450K or more. Target=30.66. Stop=23.75.
POSITION: Stock
http://www.investmenthouse.com/cd/ther.html
JILL (J. Jill Group--$31.89; +0.25; optionable): Catalog retail
http://biz.yahoo.com/p/j/jill.html
STATUS: Testing BO. Hit the buy point today, although volume was less than what we were looking for, and JILL pulled back to close (intraday high of 32.92). JILL is currently testing its March breakout of a 14-month cup with handle base. The first test was in March and early April, and over the past two weeks the stock has pulled back again to the high on the left side of the handle (30.50), holding the 18 day MVA (30.72) at recent lows. Buying has been solid for two months and money flow is excellent. Price/volume action shows strong accumulation over distribution weeks (17 to 8 in the base). It did not make it today, but still looks good for another rally off of the 18 day MVA, and it rises $4 to $5 on each such bounce.
BUY POINT: Riding existing positions. We can look at another chance for options positions on a move over 32.92 on volume of 500k or more. Target=36. Stop=29.95.
POSITION: We are looking primarily at options to leverage the best return on the bounce. September 25c to buy (JUI IE; delta 82).
http://www.investmenthouse.com/cd/jill.html
CONTINUING PLAYS:
AMGP (Amerigroup--$33.20; -0.30; no options, new issue): Health care plans
http://biz.yahoo.com/p/a/amgp.html
STATUS: Testing breakout. A new issue in November 2001, AMGP formed its fist base from January to March, broke out, and is continuing its low volume pullback to the 10 day MVA (33.38). Monday AMGP dipped as low as 32 but recovered for a loose 'hammer' doji, with volume dipping to 142,100 (avg. 137k). Looks good, and shows good buying and good money flow. Price/volume action is very good as volume surged on the rally and has pulled back handily on this test. One of the better sectors.
BUY POINT: 34.25 on volume of 200K or better. Target=41.10 (initial). Stop=31.85.
POSITION: Stock (no option chain yet).
http://www.investmenthouse.com/cd/amgp.html
PLCE (Children's Place--$35.41; -0.28; optionable): Children's apparel
http://biz.yahoo.com/p/p/plce.html
STATUS: Ascending wedge. PLCE is trying to break over long-term resistance at 35 to 36, moving off of the 50 day MVA on very strong volume last week. It stalled out on the market selling, dropping again today (after a gap up), but volume has peeled way back as well (today 225,500; avg. is 276K). We need to wait patiently for the break over resistance on strong volume. Buying has surged in the past week. Again we are looking for a breakout to kick off a move that lets it work toward its old highs of 50 to 55.
BUY POINT: 37.45 on volume of 1 million or better. Target=49. Stop=34.83.
POSITION: Stock and/or September 30c to buy (TUY IF; 53 OI).
http://www.investmenthouse.com/cd/plce.html
Continued put:
GWW (W.W. Grainger--$54.44; -0.61; optionable): Wholesale Electronics
http://biz.yahoo.com/p/g/gww.html
STATUS: Put: Breach of 50 day MVA. Tested up toward the 50 day (55.50) yest again Monday (high of 55.40), but fell back again. Volume was down at 288k (avg. 461k), and we are still looking at the 'kiss goodbye' scenario, the drop after the failed test of broken support.
BUY POINT: 53.95 on volume of 500K or better. Target=50. Stop=56.
POSITION: July 60p to buy (GWW SL; low OI, Delta 74)
http://www.investmenthouse.com/cd/gww.html
WATCHLISTS:
Awaiting Breakout Watchlist: These plays have not reached the buy point yet. We were thinking of calling this the 'waiting on breakdown' watchlist, but that really applies to the second list where the selling got brutal on some plays today.
BRO (Brown & Brown--$32.76; -0.35; optionable): Surety and title insurance
STATUS: Cup w/handle turned reverse head and shoulders. This one has fallen further in the handle than we wanted, gapping down to a tight doji on the 50 day MVA today as volume rose (343K). The pattern can be interpreted as either, but the action looks more like the reverse head and shoulders now.
BUY POINT: 35.63 on volume of 585K+. Target=42.75 (new high territory). Stop=32.95.
POSITION: Stock and/or September 30c to buy (BRO IF; low OI for now, but delta of 80).
http://www.investmenthouse.com/cd/bro.html
CMH (Clayton Homes--$16.95; +0.05; optionable): Manufactured housing (mobile homes)
STATUS: Reverse head and shoulders. Still moving toward a new 52-week high, rising today on rising, above average volume (571K; avg. is 510K).
BUY POINT: 17.72 on volume of 750K or more. Target=21.25. Stop=16.40.
POSITION: Stock and/or August 15c to buy (CMH HC; low OI, delta 81).
http://www.investmenthouse.com/cd/cmh.html
DVA (Davita $25.79; +0.03; optionable): Specialized health services
STATUS: Flying plateau. Another doji on rising volume (408K), right on the 10 day MVA. It is testing our will to be patient. We can wait it out.
BUY POINT: 26.05 on volume of 800K. Target=31.25 (initial). Stop=24.25.
POSITION: Stock and/or October 22.50c to buy (DVA JX).
http://www.investmenthouse.com/cd/dva.html
ITRI ($33.24; +1.40): Skirted disaster, rallying from 32 today on rising, average volume (379K) after tanking Friday. It held where it absolutely had to hold. Now it has to clear 34 on continued strong volume to rescue the breakout.
PDQ (Prime Hospitality--$12.90; +0.32): Getting some buy action at the 50 day MVA while still in the handle, but not much as volume rose but was still below average (135K). Still in the handle to the 15-month cup with handle, so we are going to let it work toward the breakout.
XL (XL Capital--$92.11; -0.96; optionable): P&C insurance
STATUS: Run to $100. Falling further on rising volume (711K). If it falls further really would be quite a run to 100. We will keep any eye on it, but the action is not bullish.
Current plays Watchlist: These are plays that have hit the buy point and we are currently monitoring.
AMMD (American Medical--$22.09; +0.18; optionable): Medical appliances
STATUS: Double bottom with handle. Nightmarish ride today to finish fractionally higher after testing the 200 day MVA on the low. A long way but could not make it over the 50 day MVA. Much too wild and if not out, time to get out.
http://www.investmenthouse.com/cd/ammd.html
ESI (ITT Educational--$49.73; -1.33; optionable): Education and Training
STATUS: Successful test of breakout. Not that successful. Today ESI gapped down to the 10 day MVA and showed a star doji on rising volume (155K). The doji is about the only good news, and that it held close to 50. If it bounces up from here we will let it try to recover. If it does not, we are out.
http://www.investmenthouse.com/cd/esi.html
GMP (Green Mountain Power--$18.88; +0.08; no options): Electric utility
STATUS: Cup with handle. After hitting the buy point Thursday GMP has gone nowhere, showing a doji today on much higher volume (15,300; avg. 6350). Never like to see breakouts stall quickly and we will not let it move below 18.50. Needs to break over 19 on this kind of volume.
http://www.investmenthouse.com/cd/gmp.html
MAR (Marriott--$44.38; -1.21; optionable): Lodging
STATUS: Ascending wedge. Hit the buy point Wednesday, but crapped out on us today after going nowhere. Volume rose but was still low (868K), but it is breaking down. We are not going to wait for 42.80 to stop it out unless it can reverse and bounce fast tomorrow.
http://www.investmenthouse.com/cd/mar.html
MTEC (Meridian Medical--$38.52; -3.88): Turned back from 42.50 after being unable to continue the breakout move. Fell on sharply higher, above average volume (222K). Back to the 18 day MVA. Won't let it get below 37.50 on us.
MVL (Marvel Enterprises--$7.42; -0.57; no options): Toys and Games
STATUS: Continuing the breakdown, not breakout. Looked very solid and then collapsed. Got the bounce over 8 early and that was all it gave before tanking to the 50 day MVA. Again, another breakout gone bad.
http://www.investmenthouse.com/cd/mvl.html
QFAB (Quaker Fabric--$13.27; -0.71; no options): Textile maker
STATUS: Breakout test. It is getting to where every move down gets you wondering. Today QFAB fell on lower volume after failing the breakout move Friday. We won't let it get below 13 on this move. Too many stocks reversing breakout attempts.
http://www.investmenthouse.com/cd/qfab.html
Puts:
BRCD (Brocade--$23.95; +0.69; optionable): Telecom
STATUS: Put. One of the big name techs that actually moved higher today though volume was even lower (9.38 million). Still riding current positions for a target of 21.75, but it is showing some will to move higher ahead of that level. With the descending wedge pattern continuing, we don't think it will hold any bounce higher for long.
http://www.investmenthouse.com/cd/brcd.html
CUM (Cummins--$41.85; -1.61; optionable): Big engines
STATUS: Put. The weak test of the 50 day MVA collapsed today as CUM rolled down on rising volume (530K). We are going to ride current positions toward the target of 39, though there is some potential support at 40.
http://www.investmenthouse.com/cd/cum.html
FDS (Factset Research--$34.60; -1.66; optionable): Information services
STATUS: Put. Friday's lower volume rally did not last and FDS rolled down hard today on rising, above average volume (211K; avg. is 145K). Going to ride the positions lower toward the target of 32.
http://www.investmenthouse.com/cd/fds.html
NAV (Navistar--$38.53; -1.32; optionable): Trucks
STATUS: Dropped again Monday, with volume continuing to be low at 524k (avg. 640k). Still riding positions toward target of 37.75.
http://www.investmenthouse.com/cd/nav.html
WL (Wilmington Trust--$63.16; -0.53; optionable): Regional bank
STATUS: Put. Gapped down but closed with a loose doji on much lower volume (73k; avg. 81k). Riding current positions but looking to take profits on a bounce.
BUY POINT: Riding current positions but ready to take profits. Target=200 day MVA at 62.50; 60 if that breaks.
OEX (S&P 100--$526.84; -5.53; optionable): S&P 100 options
STATUS: Put. Continued to tank, hitting down near the target (525, low today 525.78). As indicated this weekend, took profits on the move down near the target, as we are wary of a potential bounce.
http://www.investmenthouse.com/cd/$oex.html
SYMC (Symantec--$33.78; -0.37; optionable): Internet software
STATUS: Put. Dipped down to 32.67 but recovered a bit to close as volume dipped to 3.5m (avg. 4m).
BUY POINT: Riding current positions. Target: 30. Stop=36.25.
http://www.investmenthouse.com/ct/symc.html
VARI (Varian--$32.40; +0.37; optionable): Scientific & Technical Instruments
STATUS: Head and shoulders. Bounced slightly from 32, where there is some support from prior price levels. Still targeting 31.50.
http://www.investmenthouse.com/ct/vari.html
Upside:
BYBI (Back Yard Burgers--$7.13; -0.92; no options): Restaurants
STATUS: Broke down out of the cup with handle, droppping hard out of the handle today, closing below the 50 day MVA (7.29). Nothing happening here for now.
http://www.investmenthouse.com/cd/bybi.html
ULAB (Unilab--$29.07; -0.38; optionable): Healthcare software & services
STATUS: Double bottom. Has moved up recently on weak volume, and today dipped back on slightly higher, but still below average volume (350k; avg. 466k). Cautious and holding stops at 28.
BUY POINT: Target: 35. Stop: 28
http://www.investmenthouse.com/ct/ulab.html
UPS (United Parcel Service--$59.73; -0.68; optionable): Delivery
STATUS: Gapped up but reversed with big volume (2.49m; avg. 1.5m), still holding the 50 day (59.65) for now.
BUY POINT: Target: 66.44 represents a former high and is the initial target. Stop Advisory: 59
http://www.investmenthouse.com/ct/ups.html
Good Investing!
Jon L. Johnson and 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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