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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's report:
USAP: MVA bounce. Headed higher on a rise in volume, but needs more power!
HMC: Cup with handle. Holding steady at support in the handle.
LDG: Cup with handle. A small move up but volume dropped back.
NOC: 18 day MVA bounce. Volume was lower and the stock pulled back almost a point.
Good Movers: AXP, ADBE, GIVN, HARB
Continued Plays:
ADBE: Broke out of the recent flat base on strong volume!
DLTR: Target is 44; the stock is making a move up in the flying plateau.
GIVN: Cup with handle breakout!
HARB: Another new high!
MEOH: Bounced off the 50 day MVA today on a rise in volume.
NCC: Keeps bouncing off the 18 day MVA.
NUE: Moved over resistance, the 18 and 50 day MVAs, and even on lower, well below average volume. Buy point for the put play was 58.75 and the stop advisory is at 61 (closed at 60.10).
OATS: What a chart! Stronger volume and another move higher - this can't continue, so needs to be watched for potential profit-taking.
PEGS: Still holding in the flat base. Volume rising on a move back over the 18 day MVA resistance.
PKG: Continued a bounce that started Monday, but today volume shot above average; the stock is working on the May high (21.05; closed at 20.75).
PLB: Holding the 10 day MVA in its test of the breakout, but higher volume might take it to a test of the 49.50 range.
PVAT: Previously a subscriber's choice. Headed up from the 18 day MVA on good volume Tuesday. New buys (aggressive) over $4 on continued rising volume.
RPM: Buy point 17.10. Tested the 18 day MVA support and bounced in the handle as volume rose. Buy point was 17.10 (hit May 2) so is definite hold for the breakout! Volume needs to break above average to keep this move going.
SVM: Broke out a week ago from its flat base, and after three days of consolidation on low volume, headed up again on stronger volume Tuesday.
Best Plays:
1) SSCC: Ready for a breakout.
2) SSFT: A strong bounce.
3) VWKS: Getting ready to make its move.
4) EMLX: A strong break of resistance.
New plays:
SSCC (Smurfit-Stone Container--$17.95; +0.83; optionable): Paper products
http://biz.yahoo.com/p/s/sscc.html
STATUS: Ascending wedge/Reverse head and shoulders breakout. The 8-week base is part a bigger, 9-month base that resembles an ascending wedge. Tuesday SSCC broke out of the smaller base, with volume surging in a big way to 3 million (avg. 1.6 million). SSCC closed at upper resistance in the bigger pattern at 18; we are going to call it a breakout on a move over 18.05. The big base shows good accumulation (13 up weeks on rising volume vs. 3 down weeks on rising volume), thus good price/volume action. Money flow has blasted out ahead of price, along with relative strength.
BUY POINT: 18.15 on continued strong volume. Target=22. Stop=16.88
POSITION: Stock and/or August 15c to buy (JJQ HC; delta=0.74)
http://www.investmenthouse.com/cd/sscc.html
SSFT (Scansoft--$7.01; +0.93; no options): Application software
http://biz.yahoo.com/p/s/ssft.html
STATUS: Making a nice move on strong volume Tuesday, after testing the 50 day MVA on the previous day. The stock opened just under its 18 day MVA then surged ahead (volume up to 945,600; avg. 471K) and closed near the high at 7.13. The move came after a pullback off the April closing high (7.20), after SSFT broke out of a double bottom base in late March. After the pullback and test of the 50 day, the stock made the move and now looks ready to continue for another leg up. Money flow and relative strength are breaking out ahead of price. Great buying.
BUY POINT: Aggressive: 7.25 on continued strong volume. Target=10. Stop=6.75 (7%)
POSITION: Stock.
http://www.investmenthouse.com/cd/ssft.html
Revisited:
VWKS (Vitalworks--$7.80; +0.20; no options): Business software
http://biz.yahoo.com/p/v/vwks.html
STATUS: Test of breakout. We covered VWKS at the end of March in its 4-month cup base; the stock went on to form a handle throughout most of April then broke out to a 52-week high at the end of that month. Now the stock is testing that breakout, holding above the 18 day MVA (7.37) the last week in its flying plateau pattern. Volume shot up Tuesday to 1.17 million (avg. 410K) and VWKS made a move off the support after testing it on the low. We like the volume and the move, so we are looking for another breakout from this consolidation. Money flow and relative strength are high, and buying is strong.
BUY POINT: Aggressive: 8.15 on continued strong volume (1.2 million or higher). Target=12.25. Stop=7.58 (7%)
POSITION: Stock (no option chain).
http://www.investmenthouse.com/cd/vwks.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, and JNC.
FRX (78.02; +1.57): We closed positions on FRX in late April, but note the stock's move Tuesday as it broke back over the 200 and 50 day MVAs. Volume was much lower, and well below average, but if the stock can hold the 50 day MVA (77.82) we can look at getting back in as it continues to form its double bottom pattern.
MIK (41.86; +0.81): Broke above the recent closing high (41.59) in today's trading as retail sales for April boosted the sector. Volume was down to average levels, so the price/volume action isn't what we want. We will let it pull back; the stock tested the 50 day MVA four days ago and has been bouncing higher but on steadily decreasing volume.
JNC (60.72; +0.96): Capped off Monday's move off of the 10 day MVA, gapping to the opening price and heading up from there on rising volume on the retail sales numbers. Can continue this bounce, but not an entry point here unless it pulls back again to test 60.
ICUI (39.91; +1.78): Rallied from support at 38, just under the short term MVAs. Volume higher, strong and above average on the move, but ICUI closed at some resistance (40) and has more at 42. It is not in a clear pattern, just trying to consolidate above its 18 day MVA for another run, and after testing the 50 day MVA Friday, it may be starting another run here. Money flow heading up. We like the volume on the move. Stock and/or August $35 calls.
DGX (90.86; -1.14): Still looking rough, as it closed below the 18 day MVA on rising volume. Tapped support and bounced (from 90) but the higher volume indicates DGX might be ready for a test of the 50 day MVA at the 85 range after bouncing three times from the 18 day after the early March test of the 50 day MVA.
UP & COMERS PORTFOLIOS: BBBY, SRCL
BBBY (36.06; +1.26): Bounced from the 50 day MVA, back over resistance at 38 though volume was lower, retail sales boosting these stocks higher. Will look for a hold at the 18 day MVA if it volume does not surge quickly to continue this move.
SRCL (72.50; +0.08): Tried to continue Monday's move off of the 18 day MVA at 70, but after hitting a high at 75.55, the nice move pulled back into a tombstone doji. Volume was high and SRCL may move down as the doji suggests, but has support at the 10 day and at that 70 range. The stock is testing the recent run off its 50 day MVA.
MEMBER PORTFOLIO: CSCO, SEBL, EMLX, BRCM, HDI, BRCD, BUD, AMGN, WMT, ORCL, HB, NOC
Techs rallied Tuesday, but so many are beaten down that we can't jump in and chase them for now. A few, however, like EMLX, look good:
EMLX (Emulex--$31.25; +3.62; optionable): Computer Peripherals
http://biz.yahoo.com/p/e/emlx.html
STATUS: Break of resistance. EMLX is working on the bottom of its base, and on Tuesday's break above the 50 day MVA (30.24), we are looking at the potential for the stock to offer plays on the way back up (volume broke above average to 12.5 million; avg. 10.5 million). There will be plenty of overhead supply that can turn the stock back down after a run, so that is action for which we can be ready. Today's move was strong, so we look for a continued move from here before the stock tests. It may not test all the way back to the 50 day MVA depending on how far it can run on this show of strength; potential support above the moving average can emerge at the 31.50 range.
BUY POINT: 31.50 on continued strong volume. Target=38.50. Stop=29.75
POSITION: Stock and/or October 27.50c to buy (UMQ JY; delta= 0.70).
http://www.investmenthouse.com/cd/emlx.html
AMGN (51.79; +3.83): Moved above some resistance at the 18 day MVA just over 51, and can head up to the 50 day (54.65) if volume continues climbing like it did today. AMGN is well below its 200 day MVA (59) so it is one to wait on. BRCD also moved over its 18 day, with the 50 day MVA ahead, SEBL same story. BRCM remains below its 18 and 50 days. CSCO moved up from the 50 day MVA but has the 200 day MVA ahead, just over 17.
WMT (55.04; +1.38): Announces quarterly sales Tuesday; the stock bounced up toward its 200 day MVA (just over 55) Monday but volume was lower, indicating a set-up for a move back down. The stock was trading slightly higher after hours trading; if numbers are good we'd like to see a move over this major resistance.
HDI (54.40; +2.10): Broke above its 50 day MVA on strong volume. HDI held above its 200 day MVA on this last dip, and is in a flat base. It has plenty of overhead supply up to the January high at 57, but this is a positive move.
BUD (50.64; -0.48): Gapped below the up trendline on strong volume. BUD has an up trendline just under 44, so a move down to that level still keeps it in the up trend, but we aren't going to hold it from here. The 200 day MVA is at 46.
WMT (57.39; +2.35): Enjoyed the April sales numbers and the company's own good earnings, and WMT popped up to its 50 day MVA on the high (58.25). Showing a doji there on the big gap up, and with volume strong, the stock closed off its high, not unusual on a strong move, but the doji signals a possible move back down and apparently the 50 day is going to pose resistance. We can look for support on a move down at the 18 day MVA (56.39).
HB (62.42; +1.23): Back over the 50 day MVA Tuesday. Still has work to do, getting over the 18 day MVA for starters (at 63). Volume still strong but fell back pretty sharply. Will see if it holds the 50 day MVA (62); HB fell all the way to 58 on Tuesday's low.
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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