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stock watch, stock trading site
Begin Part 2 of 2
THE PLAYS:
All prices reflect prices at the close on Monday.
Several stocks on the current report (and formerly) have been holding up well and even breaking out in the last month, such as EMLX, HBC, ACS, MRCY, MAPS, LEH, MER, and others. In the current report we are looking at many stocks that look ready to do the same. We will watch with interest as the market moves into the Fed rate cut this week, as we expect these stocks to make good moves as well.
SOME LEADERS TO WATCH:
Continued Play:
Credit Spread:
EMLX (Emulex Corp--$105.63; -1.06; optionable (UEL)):
http://biz.yahoo.com/p/e/emlx.html
STATUS: Pulled back to show a doji on lower volume (3.5 million; avg. 4.5 million) after the stock shot up Friday. Getting ready to break out of its 10-month base, and the doji (which shows a small move up from the opening price of 104.50) suggests a move back up from here. Otherwise, continue to look to 100 for support should the stock consolidate further on a pullback to that level. The stock ran to a high of 109.75, above which we plot the buy point.
BUY POINT: Aggressive: On a move up from here on rising volume. Breakout: 109.88, on volume of 6.75 million or better.
POSITION: Stock and/or April $105 calls to buy (UEL DA). Credit Spread: February $110 puts to sell (UEL NB), and February $105 puts to buy (UEL NA), for a net credit of $2.62 or better.
New (from the weekend):
Credit Spread:
BRCD (Brocade Communications--$104.94; -3.44; optionable (GUF)): Computer hardware
http://biz.yahoo.com/p/b/brcd.html
STATUS: Pulling back from the breakout move (from its double-bottom pattern) on lower, average volume (8 million), opening just below Friday's closing price and unable to move higher. One day of lower volume (when Friday's volume was strong) does not mean a failed breakout. We are looking for BRCD to hold at the 104.25 level, or the 10 day MVA (102.31), on a continued pullback, until the market rallies.
BUY POINT: Aggressive: On a move up from here or the 102 range on stronger volume. Breakout: 112.13, on volume of 12 million or better.
POSITION: Aggressive: Stock and/or April $100 calls to buy (GUF DT). Breakout: Stock and/or April $110 calls to buy (GUF DB). Credit Spread: February $110 puts to sell (GUF NB), and February $105 puts to buy (GUF NA), for a net credit of $2.62 or better.
Best Plays: Lots of good patterns and imminent breakouts.
1) AMAT: Still looks great.
2) SWBT: Making a move on good volume.
3) FAF: Looks like a breakout move.
4) AREM: Looks ready to move up in the pennant.
5) NUAN: Two dojis at support on low volume.
6) AC: Breaking out and still a buy.
7) BSC: Ditto.
8) TGP: A cent off the buy point.
9) LEH: Heading up on good volume as the financials rally.
10) KEI: Making a solid run.
BREAKOUTS:
New Play (from the weekend):
ACS (Affiliated Computer Svc--$63.85; +0.91; optionable (ACS)): Software
http://biz.yahoo.com/p/a/acs.html
STATUS: Made another move up, smaller and on lower (but still strong) volume of 568,100 (avg. 305,000). Showed a doji, and the stock can pull back for a test of the buy point of 62.76. Would prefer the stock have made a stronger breakout move, which it may do in a market rally. Great money flow and high relative strength.
BUY POINT: On a move back up after a test of 62.76, on rising volume.
POSITION: Stock and/or April $60 calls to buy (ACS DL).
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):
AREM has been moved to the Pennant section.
Continued Plays:
ASD (American Standard--$51.15; +0.15; optionable (ASD)): Material and construction
http://biz.yahoo.com/p/a/asd.html
STATUS: Inched up after hitting support (18 day MVA, 50.42) as volume climbed just higher (298,700; avg. 341,000). The stock is testing the breakout from the recent base, and is waiting for stronger volume to break it out of the trading range consolidation. In a well-performing sector, we will see what a rally can do for it. Good buying.
BUY POINT: Aggressive: On a move over 52 (resistance) on continued rising volume.
POSITION: Aggressive: Stock and/or April $50 calls to buy (ASD DJ).
SUB (Summit Bancorp--$42.85; -0.90; optionable (SUB)): Regional banks
http://biz.yahoo.com/p/s/sub.html
STATUS: Volume was stronger, but still below average (523,600), and the stock pulled back off the intraday high of 44.24. Closed at support (10 day MVA, 42.71), so look for a bounce back up in a rally. High to beat to clear this breakout test consolidation is today's high. Look for financials to benefit from the coming rate cut. High money flow and good buying.
BUY POINT: Over 44.24 on volume of 707,000 or better.
POSITION: Stock and/or April $40 calls to buy (SUB DH).
HBC (Hsbc Holdings Plc--$79.41; -0.29; optionable (HBC)): Money Center Bank
http://biz.yahoo.com/p/h/hbc.html
STATUS: Still testing the breakout from the ascending wedge. Volume was lower at 103,400; average is 93,409. The stock opened lower (at 78.50) but moved up from there, in the pattern of the last three sessions. Just one financial stock waiting for a rate cut rally. Good buying, strong money flow, and relative strength.
BUY POINT: Over Friday's high of 80 on volume in the range of 140,000.
POSITION: Stock and/or March $75 calls to buy (HBC CO).
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:
Continued Plays:
AMAT (Applied Materials Inc--$50.19; +2.31; optionable (ANQ)): Semiconductor
http://biz.yahoo.com/p/a/amat.html
STATUS: Made a move up in the ascending wedge, though on lower volume (11.3 million; avg. 19 million), just following the market Monday. What a Tuesday rally could do for this great-looking pattern. Would have preferred lower volume throughout, but AMAT is holding up well, and volume has begun to drop more appropriately over the last week.
BUY POINT: Breakout: 51.63, on volume of 25.6 million or better. Remains a buy on the breakout up to 54.21.
POSITION: Breakout: Stock and/or April $50 calls to buy (ANQ DJ
Pennant:
Back on the report:
SWBT (Southwest Bancorp of Tx--$43.56; +1.25; optionable (ZRQ)): Regional banks
http://biz.yahoo.com/p/s/swbt.html
STATUS: Dropped from the weekend report but back again as the stock moved up on stronger, above average volume (305,300). Looking for a breakout over the pattern high of 45.63 on continued strong volume as the financials continue to look good into the rate cut. Formerly covered as an ascending wedge.
BUY POINT: Aggressive: Up from here on continued rising volume.
POSITION: Aggressive: Stock and/or May $40 calls to buy (ZRQ EH).
Pennants (continued):
New Play:
FAF (First American Corp--$32.00; +1.75; optionable ( )): Insurance
Back on the report:
http://biz.yahoo.com/p/f/faf.html
STATUS: In a pennant that is serving as the possible handle to a year-long base (previous basing high is 35.19). Pattern high is 32.88. The stock popped off support (18 day MVA, 30.25) on stronger, average volume (358,400; avg. 304,500) on a move up from a tight doji, and looks ready to break out. Great money flow, high relative strength, and good buying.
BUY POINT: 33.01, on volume of 411,000 or better. Remains a buy on the breakout up to 34.66.
POSITION: Stock and/or April $30 calls to buy (FAF DF).
New Play (from the weekend):
NEU (Neuberger Berman Inc--$78.89; +0.14; optionable (NEU)): Financial services
http://biz.yahoo.com/p/n/neu.html
STATUS: Continues to hold at support in the pennant with volume inching up to 222,700 (avg. 267,409). The stock opened just above support (18 day MVA, 78.17), that level continuing to hold price on the low volume. Pattern high is 85.69. High money flow, and buying has turned positive in the last week. Very tight pattern and should respond well to a rate cut.
BUY POINT: Aggressive: Up from here on continued rising volume. Breakout: 85.82, on volume of 301,000 or better.
POSITION: Aggressive: Stock. April options below the $85 strike have no open interests. Breakout: Stock and/or April $85 calls to buy (NEU DO; please note that this option still has only 10 open interests).
CFBX (Community First Bankshrs--$19.50; +0.31; optionable (QSJ)): Regional Banks: Pacific
http://biz.yahoo.com/p/c/cfbx.html
STATUS: Approaching the buy point in the pennant on a move up from support (10 day MVA, 19.16) on just higher volume (126,300; avg. 144,090). Look for the breakout as the financials rally into the rate cut; looks like they are going to do that after today's action from several of them. Strong money flow and positive buying. The stock is in a lengthy base (prior basing high of 20.88).
BUY POINT: 19.63, on volume of 195,000 or better. A buy on the breakout up to 20.61.
POSITION: Stock and/or May $17.50 calls to buy (QSJ EW).
EDS (Electronic Data Systems--$55.59; -1.66; optionable (EDS)): Software
http://biz.yahoo.com/p/e/eds.html
STATUS: The stock turned down from resistance at 57.25 (hit four times in the pennant pattern) on stronger volume (1.8 million; avg. 2 million). The low tested near the 50 day MVA (54.62); we think that level will hold the stock for a move back up, if not 55.06, hit 5 times in the pattern. High money flow.
BUY POINT: Aggressive: On a move up from the 54.62 range (or better) on continued rising volume. Breakout: 60.13, on volume of 2.7 million or better.
POSITION: Stock and/or March or June $60 calls to buy (EDS CL or FL).
Continued Plays:
AREM (Aremissoft Corporation--$26.38; +0.07; optionable (UKM)): Application software
http://biz.yahoo.com/p/a/arem.html
STATUS: Formerly in the test of the breakout section. The stock is now in a pennant pattern as it tests the breakout from the recent ascending wedge. Volume continues to drop farther below average (194,000; avg. 501,000) as the stock tested support on the low of 25.75 (the 10 day MVA, 25.91). Look for a move up from here or the moving average, on stronger volume. Pattern high is 28.25. Strong buying and high money flow.
BUY POINT: Over 28.38, on volume of 676,000 or better. A buy on the breakout up to 29.80.
POSITION: Stock and/or April $25 calls to buy (UKM DE).
CSBI (Century South Banks Inc--$33.69; +0.38; no options):
http://biz.yahoo.com/p/c/csbi.html
STATUS: Made a move up from support (18 day MVA, 33.19) on a rise in volume (28,700; still well below the average of 81,181). Low volume, but a good shakeout in the pennant. Look for a breakout over the pattern high (34.72) as the financials stand to rally on the rate cut. Great buying and strong money flow.
BUY POINT: Breakout: 34.85, on volume of 110,000 or better. Remains a buy up to 36.59.
POSITION: Stock.
BASING/TRADING RANGES: There are many stocks, particularly financial stocks, forming solid patterns to break out of. Because of the number, write-ups are as brief as possible. We may see these stocks start to move up prior to the FOMC meeting, but we want to see them move on strong volume when they do breakout.
Back on the report:
NUAN (Numerical Technologies--$47.63; -0.12; optionable (NUD)): Software
http://biz.yahoo.com/p/n/nuan.html
STATUS: Showing its second consecutive doji at support (10 day MVA is at 47.13), volume down to 824,500 (avg. 1.6 million). The stock is in a short base, and price has pulled back from a breakout high (from an ascending wedge at the bottom of the stock's larger base) on the steadily declining volume. Looking for a move up over the 50 day MVA (53.23) and the breakout high of 58.38. Buying picked up.
BUY POINT: Aggressive: On a move up from here on rising volume. Breakout: 58.51, on volume of 2.4 million or better.
POSITION: Aggressive: Stock. March and May $45 options have no open interests (NUD CI or EI. Breakout: Stock. May $55 options have 99 open interests (NUD EK).
New Plays (from the weekend):
Some smaller stocks:
NMTC (Numerical Technologies--$26.38; -0.62; optionable (QEK)): Business Software
http://biz.yahoo.com/p/n/nmtc.html
STATUS: Continues to squeeze down prices in the flying plateau pattern that is serving as a handle to a 16-week base. Volume shot above average Monday (494,200; avg. 319,454) as the stock moved back up from a test of the 10 day MVA (24.83). Great buying and money flow. 200 day MVA is at 33.17.
BUY POINT: 28.88, on volume of 479,000 or better. Remains a buy on the breakout up to up to 30.32.
POSITION: Stock and/or April $25 calls to buy (QEK DE)
CHBS (Christopher & Banks Corp--$42.75; +4.06; no options): Apparel
http://biz.yahoo.com/p/c/chbs.html
STATUS: Extended its breakout as volume soared (743,400; avg. 166,181). Has moved beyond our limit for buying on a breakout (39.97), so look for a test now as volume and the stock pull back to test the buy point (38.07). Relative strength broke out, and money flow is at new high levels. Buying looks good.
BUY POINT: On a move back up after a test of 38.07.
POSITION: Stock.
Some new bigger basing stocks (from the weekend):
IBM (International Business Machines--$114.98; +0.79; optionable (IBM)): Computer hardware
http://biz.yahoo.com/p/i/ibm.html
STATUS: In a 5-month base and making a breakout move from a handle-type consolidation that formed above the 200 day MVA (108.34) after a big move on earnings. The stock gapped back to open today but pushed back up, moving on rather low volume (5 million; average 7.7 million). On a drop back look for the stock to hold in the 111 range for another try on a move up. From here we will look for more volume on a move up.
BUY POINT: Pullback: A move up after a pullback to the 111 range. From here: Over 116 on above average volume.
POSITION: Pullback: Stock and/or March $110 (IBM CB) calls to buy). From here: Stock and/or March $105 (IBM CA).
FLEX (Flextronics--$39.81; +0.81; optionable (QFL)): Electronics
http://biz.yahoo.com/p/f/flex.html
STATUS: Hit the breakout point in its cup-with-handle, but volume dropped off substantially from Friday's big move, coming in at 9.3 million (average 8.9 million). We will see if the stock can hold up, looking for strong volume on a continued move up. We could get a drop back, and if so we will look for it to hold in the 38 range. Great money flow and relative strength is breaking higher. Decent buying.
BUY POINT: From here: A continued move up on volume in the 13 million range. Pullback: A move up after a pullback to the 38 range.
POSITION: Both position: Stock and/or April $35 calls to buy (QFL DG).
CYTC (Cytyc Corporation--$64.84; +0.28; no options): Scientific & technical instruments
http://biz.yahoo.com/p/c/cytc.html
STATUS: Has made a nice move up in recent days, but could not manage a move over recent highs today, closing with a tight doji after hitting an intraday high of 66. Volume was down from Friday's fine move, but still strong at 10.7 million (average 610,000). Needs to break over December top at 66.75 (prior basing high is 67.75). Formerly covered in an ascending wedge (Nov/Dec). High money flow and relative strength.
BUY POINT: Breakout: 66.88, on volume of 900,000 or better.
POSITION: Stock and/or May $60 or $65 calls to buy (YKQ EL or YKQ EM).
SVGI (Silicon Valley Group Inc--$35.44; 0.00; optionable (FQQ)): Semiconductor
http://biz.yahoo.com/p/s/svgi.html
STATUS: Was holding the 10 day MVA (35.26) on a pullback in its handle to its four-month cup base, and managed to close back over that level today after gapping down under its 18 day MVA (34.18) to open. Volume was much stronger today and the move back up was encouraging, so we will see if the momentum can continue. The handle high is 37.88. Good buying and excellent money flow.
BUY POINT: 38.01, on volume of 941,000 or better. A buy on the breakout up to 39.91.
POSITION: Stock and/or March or June $35 calls to buy (FQQ CG or FG).
ADSK (Autodesk Inc--$38.13; +0.82; optionable (ADQ)): Software
http://biz.yahoo.com/p/a/adsk.html
STATUS: In an 8-month cup with handle base (prior high of 42) and today moved up from its recent lows in the handle. Volume remained low at 575,100 (average 721,200), and we will need to see a volume infusion on a move up to the handle high at 39.88. Good buying and money flow.
BUY POINT: 40.01, on volume of 1 million or better. A buy on the breakout up to 42.01.
POSITION: Stock and/or April $35 calls to buy (ADQ DG).
AC (Alliance Cap Mgmt--$58.22; +2.34; optionable (AC)): Financial
http://biz.yahoo.com/p/a/ac.html
STATUS: Broke out of its cup-with-handle pattern today, shooting over the buy point (56.25) on great volume (367,900; average 232,600). The stock is also at a new high, and looks solid, and a buy on this move to 59.06.
BUY POINT: A move up on continued strong volume.
POSITION: Stock and/or April $55 calls to buy (AC DK).
Continued Plays:
MFLO (Moldflow Corporation--$26.94; +0.69; no options): Software
http://biz.yahoo.com/p/m/mflo.html
STATUS: After pushing back up in the handle Friday, the stock gapped up today but could not get past recent levels, hitting 27.44 at its high before showing a loose doji. The pattern indicates another move down could be coming, and the last drop took the stock down to the 24 level. Looking for a breakout move over the handle high of 28.88 on again rising volume. Great buying and good money lower.
BUY POINT: 29.01, on increased volume (115,400 today; average 68,200). A buy on the breakout up to 30.46.
POSITION: Stock.
BSC (Bear Stearns Companies--$63.75; +3.06; optionable (BSC)):
http://biz.yahoo.com/p/b/bsc.html
STATUS: Broke out of its lateral consolidation formed last week after the stock broke out of another handle pattern to its cup base (going back to September). A decent move, but volume was not behind it, coming in up but below average at 9.23 million (average 1.1 million). On a continued move look for above average volume for positions, and if we get a pullback look for it to hold the highs in its recent consolidation, at 61.88. Strong money flow and good buying.
BUY POINT: From here: A continued move on above average volume. Pullback: A move up after a pullback to the 61.88 range.
POSITION: From here: Stock and/or April $60 calls to buy (BCS DL). Pullback: Stock and/or April $55 calls to buy (BCS DK).
FBF (FleetBoston Financial Cp--$42.20; -1.11; optionable (FBF)):
http://biz.yahoo.com/p/f/fbf.html
STATUS: Pulled back after another attempt at breaking out of its cup with handle, selling back on heavy volume (7.96 million; average 3.75 million). The stock closed right on its 10 day MVA, which has been strong recent support. We will see if it can hold, looking for a move back up and out of the pattern, perhaps with the rate cut.
BUY POINT: 43.82, on continued strong volume. A buy on the breakout up to 46.01.
POSITION: Aggressive: Stock and/or April $40 calls to buy (FBF DH).
VRTY (Verity Inc--$30.94; +0.94; optionable (YQV)): Internet software
http://biz.yahoo.com/p/v/vrty.html
STATUS: Continues to range in the handle of the cup base, moving up today on low volume. Pattern high is 32.75 (200 day MVA is at 32.61); looking for a move up on stronger volume (down to 342,800 today; average 633,500). Buying continues to improve as money flow remains high.
BUY POINT: Breakout: 32.88, on volume of 950,000 or better. Remains a buy on the breakout up to 34.52.
POSITION: Stock and/or June $30 calls to buy (YQV FF).
SRNA (Serena Software Inc--$40.38; -0.56; optionable (NHU)): Software
http://biz.yahoo.com/p/s/srna.html
STATUS: Continues to hold in the lower part of its handle (to a ragged cup dating back to November), tapping down near its 10 day MVA (39) at its low of 39.38. The pattern today was a doji, and sharply higher volume of 632,500 (average 457,000) indicates the stock is possibly ready for a move up. Handle high is 46.22. Still shows good buying.
BUY POINT: Aggressive: On a move up from here on stronger volume. Breakout: 46.35, on volume of 698,000 or better.
POSITION: Aggressive: Stock and/or May $35 calls to buy (NHU EG). Breakout: May $40 calls have 25 open interests.
TGP (Georgia-Pacific--$32.00; +0.69; no options): Materials and construction
http://biz.yahoo.com/p/t/tgp.html
STATUS: Continued up today, breaking out of the handle to its six-month cup base. Volume was up but was not good breakout volume, actually coming in under average at 146,200 (average 160,000). The stock is currently right at the high of the left side of its base. Looking for strong volume on a continued move up.
BUY POINT: A move up on volume of 240,000 or better.
POSITION: Stock.
C (Citigroup--$56.20; +1.01; optionable (C)): Large Banks
http://biz.yahoo.com/p/c/c.html
STATUS: Made a move up off of its support at the 10 day MVA (54.91), climbing up toward the breakout point in the handle (itself in a pennant pattern) of its 20-week base Volume was weak, however, lending doubt to the move (9.4 million; average 13.3 million). Still looking for a breakout, which we could get with a rate cut. The handle high is 57.38, with the high in the left side of the base is 59.13.
BUY POINT: Breakout: 57.51, on volume of 19.8 million or better. Remains a buy on the breakout up to 60.39.
POSITION: Breakout: Stock and/or March $55 calls to buy (C CK).
LEH (Lehman Bros--$85.72; +4.22; optionable (LES)): Brokerage
http://biz.yahoo.com/p/l/leh.html
STATUS: After testing its break over the left side of its cup base (at 80), LEH took off again today, gapping up and continuing its move on sharply higher, solid volume (3.65 million; average 2.43 million). This is a new high for LEH, and it looks good for a continued move going into Wednesday rate cut announcement.
BUY POINT: Up from here on continued strong volume.
POSITION: Stock and/or April $80 calls to buy (LES DP).
MER (Merrill Lynch & Co--$75.10; +0.66; optionable (MER)): Brokerage
http://biz.yahoo.com/p/m/mer.html
STATUS: Pulled back from the breakout high of 80, holding support at the 18 day MVA (73.37). The stock gapped below that level today, rising back up on increased volume of 5 million (average 4.6 million). Today's close was at the level of the pre-breakout handle highs; we will see if the stock can make a run back up.
BUY POINT: Over 76, on continued strong volume.
POSITION: Stock and/or April $70 calls to buy (MER DN).
JPM (J.P. Morgan & Co--$55.12; +0.93; optionable (JPM)): Banking
http://biz.yahoo.com/p/j/jpm.html
STATUS: Hit our buy point for a breakout (54.82) on its way to an intraday high of 56, but lacked the volume we were looking for and it pulled back to close. We will still look for a move up with volume in the 15 million range. The prior basing high is 58.38.
BUY POINT: A continued move on volume of 15 million.
POSITION: Stock and/or June $50 calls to buy (JPM FJ).
KEI (Keithley Instruments Inc--$65.01; +3.95; optionable (KEI)): Electronics (scientific and technical instruments)
http://biz.yahoo.com/p/k/kei.html
STATUS: Broke out of the handle of its 15-week cup base, although volume was not great breakout volume, coming in slightly down at 532,300 (average 505,300). We were looking for volume on the breakout of 1.5 times average, and we will continue to look for that on a continued move up. Great money flow and good buying.
BUY POINT: A move up on volume of 750,000. Still a buy up to 66.81.
POSITION: Stock and/or April $60 calls to buy (KEI DL).
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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