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Begin Part 2 of 2

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 report:
COA: Cold feet at the verge of a breakout, testing 18 and then rallying back on rising volume. Still looks ready.
COL: Beautiful breakout on strong volume!
GIVN: Doji on very low volume.

Good moves: AMI, CFBX, COL, NCC, WM, BBA, CACOA, ABCW, PETC; GMRK; HARB; KEY

Continued Plays:
ABCW: Took off on the breakout on above average volume!
AMI: Blasting off on the breakout!!
APPB: New high on rising, average volume. Upper channel at 41.25.
CCRN: Up again but finished well off the high on rising volume. This can signal the initial move is over and could be ready to test the breakout. Want it to hold near 31.
PETC: Now it is cooking with a solid point move on rising volume.
GPT: Fractional gain on a strong shot of volume. Watch this one close.
WM: Got the volume today and the stock really took off!
TENT: Taking another day off on very light volume.
BRCM: Put. Fell again, but need it to break below this range at 32 to get down to the target.
CAT: Put. Low volume test of the 50 d on the high. Could be all she wrote for the move up.
CNMD: Held the 18 day MVA on the close as volume backed off. Better, but still very wary of a quickly reversing breakout. Again, we won't let below 25.25.
FDC: Put. Starting to fall again.
GMRK: Still running on above average volume. Must test eventually test lower.
GSB: Rising again on above average volume. Looking good.
GYMB: Still building on the move on solid volume.
HARB: Still running away on even stronger volume.
HNT: The doji is leading to some selling on risign volume. Test of 28.75 ahead.
HUM: Still rising on that stronger volume, but having to deal with 17, the recent high where it reversed abruptly.
IBPI: Had to punt.
PMSI: Health services. Another nice point move, but again, no volume.
RKY: Turned the bounce into some strong volume on the move up.
RPM: Still struggling with 17.
STSA: Holding at 22 with a doji on rising volume. We will see if it can make that move up over 22.50.
UPL: Moving up off the 18 day MVA on very strong, above average volume. Looks ready to another new high.

Best Plays:
1) CLF: Nice test of breakout.
2) OEX: Ready to fall.
3) NYCB: ready to take off.
4) Continuing: GSB; NUE (put)
5) Covered calls: LLL, NOC, SRCL

New plays:

PHTN (Photon Dynamics--$45.76; -3.35; optionable): Semiconductor equipment
http://biz.yahoo.com/p/p/phtn.html
STATUS: Put. Broke below the 50 day MVA today (46.77) on above average volume (715K; avg. is 588K). While it had been holding in a generally solid pattern, today's move gets us ready for a further breakdown. We want to see it break below 45 on continued strong volume and then try to ride the move down to 40.
BUY POINT: 44.95 on volume of 700K or more. Target=40. Stop=47.50.
POSITION: July 55p to buy (PDU SK; delta -67)

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

CLF (Cleveland-Cliffs; $28.03; +0.68; no options): Steel and iron mining
http://biz.yahoo.com/p/c/clf.html
STATUS: Test breakout. An explosive move in early March on tariff news sent the stock from 17 to 32 recently. After that big move it has pulled back to the 18 day MVA (26.98) and today it started back up on rising, above average volume (112K; avg. is 60,000). Money flow and buying are very strong, and we are looking to capture the bounce up toward 34, its previous resistance level.
BUY POINT: 28.28 on volume of 125K or more. Target=34. Stop=26.90.
POSITION: Stock (no option chain).

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

OEX (S&P 100 537.54; -1.00; optionable): S&P 100
STATUS: Put. As described in the market summary, the OEX rallied up to the 10 day MVA (540.52) on the high and then turned down from there to close with a doji on lower volume. Volume has tapered since the big jump on Tuesday (1.36 million). We would like to see a move up to test 540 early and then some selling. We are looking to get in and capture the move down to 525 initially.
BUY POINT: A move below 537. Target=525 initially. Stop=542
POSITION: May 540p (OEB QH) or June 540p (OEB RH).

http://www.investmenthouse.com/cd/$oex.html

Revisited:

NYCB (New York Community Bancorp--$29.69; +0.19; optionable): Savings & Loan
http://biz.yahoo.com/p/n/nycb.html
STATUS: Cup w/handle. Massing at the border, rising today on stronger, above average volume (632K). Tuesday it rose on strong, above average volume as well. It looks very ready.
BUY POINT: 29.88 on volume of 650K+. Target=35.85. Stop=28.25.
POSITION: Stock and/or October 25c to buy (NQK JE; delta 79).

http://www.investmenthouse.com/cd/nycb.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 (39.29; +1.32): Getting a handle on its recent choppy action. After three doji's on the 18 day MVA, ICUI rose today on rising volume (still slightly below average at 80,300). This is giving us a better opportunity this time around. We are looking for a break over 40 on volume of 150,000 or more.

LLL (130.39; -0.91): The 9-point move the prior two sessions started to erode today, but on lighter volume just as we would want (1.07 million). It could easily pullback to test 125. We are looking at selling the May 130 calls (bidding 3.10 at the close). With a 60 delta, on a $4 move down they should be asking around 1.30. We can buy them back at that point and pocket $1.80 per option. We don't want to lose these shares with the split upcoming; this is a more aggressive play, but we do this with our stock positions on a regular basis. This is how we get our investments to work double time for us: on the way up AND on the way down. If you want to learn more about this you should take the covered call seminar. You can sign up at www.stockseminarsonline.com.

UP & COMERS PORTFOLIOS: BBBY, SRCL

SRCL ($71.50; +2.51): Continued the move higher on rising volume, but closed well off of the high at 73.85. This can signal a reversal or at least a pullback on the move. Another case where we can sell some calls for a move back down toward 67. That is a 4.50 point move; plenty for a call sale.

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

NOC ($123.40; -1.28): After its own 10 point move NOC sold back today on rising volume (2.2 million). It too looks ripe for a covered call sale down to 119. May 120 calls are selling for 4.90 with a 91 delta. On a 4 point fall they options should be asking 1.50, netting us around $2. This is putting our assets to work for us as they rise and inevitably pull back.

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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