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Begin Part 2 of 2

Best Plays Part 2:
1) GM: Ready to break out of an ascending wedge.
2) PNC: Continues to look great.
3) CSBI: A great shakeout.
4) FITB: At support in the handle.
5) HWP: A star doji at support, on low volume.
6) AZPN: At support in the handle.
7) FLEX: Looks ready for the next move.
8) BSC: Another financial that looks ready.
9) JPM: Looks tight in the handle.

Tests of the breakout, continued:

ASD (American Standard Cos---$52.03; -0.38; optionable (ASD)): Materials and construction
http://biz.yahoo.com/p/a/asd.html
STATUS: Got stronger volume (342,600; avg. 337,000), which we said it needed, and the stock reacted by pulling back and showing a doji. Still holding above the 10 day MVA (51.72), and ASD can pull back to that level before heading up. The breakout high is 53.69, and we are looking for a strong move up from this lengthy test of that high. Might get it on the volume momentum established today.
BUY POINT: Over 53.69, on volume of 463,000 or better.
POSITION: Stock and/or April $50 calls to buy (ASD DJ).

SUB (Summit Bancorp--$42.64; -0.15; optionable (SUB)): Regional banks
http://biz.yahoo.com/p/s/sub.html
STATUS: Drifted just lower, still holding above its 18 day MVA (42.42) as volume as well shrinks further (270,400; avg. 766,000). A good shakeout of stockholders; look for the support to hold the stock for a move up in a sector rally. The stock is testing the breakout from the January pennant pattern. High money flow and relative strength.
BUY POINT: Over 44.61 (consolidation high) on volume of 365,000 or better.
POSITION: Stock and/or April $40 calls to buy (SUB DH).

MER (Merrill Lynch & Co--$74.00; +1.00; optionable (MER, JMR)): Brokerage
http://biz.yahoo.com/p/m/mer.html
STATUS: Gapped lower on the open, below the up trendline and other price support (72.50, noted in the weekend report), but on slightly stronger volume (4 million; avg. 4.6 million) fought for a move back over the support, and the 18 day MVA (73.64). Now has to break resistance at the 10 day MVA (74.26), not to mention at 76. We like how the stock is hanging in there after pulling well off the January high of 80.
BUY POINT: Over the intraday high of 76.44 on volume of 5.4 million or better.
POSITION: Stock and/or April $75 calls to buy (JMR DO).

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:

New Play:

GM (General Motors Corp--$57.26; +1.26; optionable (GM)):
http://biz.yahoo.com/p/g/gm.html
STATUS: In a large ascending wedge pattern in the bottom of a 5-month base, finding support at its 50 day MVA (54.56) for a strong move up Friday and Monday (a huge 6.1 million Monday; avg. 3.1 million). Pattern high is 57.13 (hit three times at the top of the pattern), which puts the stock at the buy point. Look for a continued breakout. The stock looks good for a move up to the 200 day MVA (55.14).
BUY POINT: A buy on the breakout up to 60.13 on continued strong volume.
POSITION: Stock and/or June $55 or $60 calls to buy (GM FK or FL).

New Play (from the weekend):

NATI (National Instruments Cp--$50.50; -1.03; optionable (SJQ)): Computer peripherals
http://biz.yahoo.com/p/n/nati.html
STATUS: Pulled back below the 10 day MVA, to close on top of the 18 day MVA (50.37) as volume was just lower at 169,000 (avg. 232,000). The stock tested 50 on the low. Look for a hold at the 18 day until the market rallies. Pattern high in the ascending wedge is 53.13. Money flow looks good.
BUY POINT: Breakout: 53.26, on volume of 313,000 or better.
POSITION: Stock. March and June options have insufficient open interests (54 and 40 respectively). SJQ CJ or FJ

TD (Toronto Dominion Bank--$30.09; +0.48; optionable (TD)): Banking
http://biz.yahoo.com/p/t/td.html
STATUS: Moved up in the ascending wedge, with volume dropping back to average levels (97,900). Volume was above average Friday; one day of lower volume is okay; in a rally that can change quickly. Pattern high is 31.13. Look for support at the three-day lateral consolidation just above the 10 day MVA (29.39), on any turn back down in the pattern ahead of a rally.
BUY POINT: 31.13, on volume of 128,000 or better.
POSITION: Stock and/or April $30 calls to buy (TD DF).

PNC (Pnc Financial Svcs Grp--$74.60; +0.20; optionable (PNC)): Banking
http://biz.yahoo.com/p/p/pnc.html
STATUS: Continues to look fine in the ascending wedge pattern, with the high at 75.81. Made a small move up on lower volume (704,400; avg. 1.1 million), in a good shakeout of stockholders. Outstanding money flow.
BUY POINT: 75.94, on volume of 1.5 million or better. Remains a buy on the breakout up to 79.74.
POSITION: Stock and/or May $75 calls to buy (PNC EO).

Pennants:

New Play (from the weekend):

NCC (Nations City Corp--$28.10; -0.04; optionable (NCC)): Banking
http://biz.yahoo.com/p/n/ncc.html
STATUS: Holding in a three-day lateral movement just under the 18 day MVA (28.33), on volume that shot to average levels (1.23 million; avg. 1.1 million). This stronger volume may be what breaks the stock over the 18 day MVA and on its way to a breakout. Still holding above the support level at 28 (hit 7 times in the pattern). Huge money flow.
BUY POINT: 30.44, on volume of 1.48 million or better.
POSITION: Stock and/or April $30 calls to buy (NCC DF).

Continued Plays:

SWBT (Southwest Bancorp of Tx--$43.13; -0.12; optionable (ZRQ)): Regional banks
http://biz.yahoo.com/p/s/swbt.html
STATUS: Pulled back toward its 18 day MVA (42.76) as the pennant continues to tighten. Volume was up on the drop (at 229,700; average 236,800), and the stock has dropped easily through the 18 day on recent drops, using the 41-42 range as support. We will see if it can turn it around here and make a move back up on its pattern high of 45.63. Showing good money flow and buying.
BUY POINT: Breakout: 45.76, on volume of 320,000 or better.
POSITION: Breakout: Stock and/or May $40 calls to buy (ZRQ EH).

FAF (First American Corp--$31.50; +0.42; optionable (FAF)): Insurance
http://biz.yahoo.com/p/f/faf.html
STATUS: Moving up in its pennant, but inching its way with consecutive dojis on rather low volume (228,600; average 313,700) the last two sessions. Still looking for a breakout over the pattern high of 32.88. Continued high money flow.
BUY POINT: Breakout: 33.01, on volume of 420,000 or better. Remains a buy on the breakout up to 34.66.
POSITION: Breakout: Stock and/or April $30 calls to buy (FAF DF).

NEU (Neuberger Berman Inc--$79.95; -2.00; optionable (NEU)): Financial services
http://biz.yahoo.com/p/n/neu.html
STATUS: Tried a move up in its pennant last week, but has pulled back the last two sessions, still holding to close over its 18 day MVA (79.25), which has been recent support in the pattern. Volume was up on the move at 288,000 (average 275,500), so we will see if the stock can indeed hold the 18 day for a move back up toward the pattern high at 85.69. Good money flow and buying.
BUY POINT: Aggressive: A move backup over 82.50 on increased volume. Breakout: 85.82, on volume of 372,000.
POSITION: Both buy points: Stock and/or April $80 calls to buy (NEU DP Very low open interest).

CFBX (Community First Bankshrs--$19.31; +0.06; optionable (QSJ)): Regional Banks: Pacific
http://biz.yahoo.com/p/c/cfbx.html
STATUS: After pulling back from last week's breakout attempt the stock has held its 18 day MVA (19.05), bouncing up Friday but showing a doji today on very low volume (21,400; average 140,500). Still looking for a move up and a break over the pattern high of 19.50. Plenty of financials are in the same situation, holding support on low volume. Great money flow and better, positive buying.
BUY POINT: 19.63, on volume of 190,000 or better. A buy on the breakout up to 20.61.
POSITION: Stock and/or May $17.50 (QSJ EW) and $20 (QSJ ED) calls to buy (very low open interest).

EDS (Electronic Data Systems--$56.80; -0.25; optionable (EDS)): Software
http://biz.yahoo.com/p/e/eds.html
STATUS: Continues to move in a pennant in the upper right side of its lengthy base, showing a doji today after pulling back toward its 18 day MVA (56.38) Friday. As the pattern tightens the doji could be the point where we see a strong move up and out of the pattern, which has a high of 60. Volume was down at 1.36 million (average 2 million), so we will look for an infusion of volume on the stock's next surge upward. Money flow is still strong.
BUY POINT: Aggressive: A move over 58.25 on increased volume. Breakout: 60.13, on volume of 2.7 million or better.
POSITION: Both buy points: Stock and/or June $55 calls to buy (EDS EK).

CSBI (Century South Banks Inc--$33.56; 0.00; no options):
http://biz.yahoo.com/p/c/csbi.html
STATUS: A financial that continues its pennant consolidation on low volume, showing another doji on much lower volume (6800; average 83,300) than we saw Friday. The stock continues to hold support at its short-term MVA's (10 and 18 day MVAs at 33.43 and 33.29, respectively), and look for a breakout in a market rally. Outstanding money flow and good buying. Great shakeout.
BUY POINT: Breakout: 34.85, on volume of 112,500 or better. Remains a buy up to 36.59.
POSITION: Stock.

BASING/TRADING RANGES: There are many stocks, particularly financial stocks, forming solid patterns from which to break out. Because of the number, write-ups are as brief as possible.

New Play:

FITB (Fifth Third Bancorp--$57.94; -0.37; optionable (FTQ)): Regional banks
http://biz.yahoo.com/p/f/fitb.html
STATUS: Pulling back in the handle of a double-bottom pattern, as volume remains below average and only slightly higher (1.3 million; avg. 2.2 million). Handle high is 59.38; look for the breakout over that price on appropriate volume. The stock hit a high of 61.31 in January. High money flow and good buying.
BUY POINT: 59.51, on volume of 2 million or better. Remains a buy on the breakout up to 62.49.
POSITION: Stock and/or May $55 or $60 calls to buy (FTQ EK or EL).

Some trading plays:

A New Play:

HWP (Hewlett-Packard Co--$35.50; -0.45; optionable (HWP)): Computer hardware
http://biz.yahoo.com/p/h/hwp.html
STATUS: Moving up from a bottom (48.44) in a 5-month base, finding support at its 50 day MVA (54.56) for a strong move up Friday and Monday (6.1 million; avg. 3.1 million) in a large ascending wedge pattern
STATUS: Reached a January high of 37.90 and pulled back the last 4 days on below average volume (4.5 million; avg. 8.5 million). The stock showed a perfect (star) doji right on the 50 day MVA, which is a strong indicator for a change in direction. Looking for that move up; the stock looks good for a rise to the 200 day MVA (48.10).
BUY POINT: Over 38 on volume of 6 million or better.
POSITION: Stock and/or May $35 calls to buy (HWP EG).

Continued trading plays (from the weekend report):

ESRX (Express Scripts Inc--$96.19; +1.06; optionable (XTQ)): Health services
http://biz.yahoo.com/p/e/esrx.html
STATUS: The stock is in a double-bottom with handle pattern, and after moving up Friday from the base of the handle (near the 18 day MVA, at 92.37), the stock gapped up but could only manage a tight doji. Volume was up on the day at 506,500 (average 648,100), which is what we wanted to see on a move up, but the doji pattern indicates that we could get another move back (perhaps another test of the 18 day) before a strong move up. Handle high is 100.
BUY POINT: Aggressive: A move up after a lower-volume pullback to the 18 day. Breakout: 100.13, on volume of 972,000 or better.
POSITION: Aggressive: Stock and/or March (XTQ CS) or May $90 (XTQ ER) calls (low open interest). Breakout: Stock and/or March $95 calls to buy (XTQ CS) (very low open interest for May $95 calls, XTQ ES).

AZPN (Aspen Technology Inc--$38.19; +0.19; optionable (ZQP)): Software
http://biz.yahoo.com/p/a/azpn.html
STATUS: Has been pulling back in the handle of its 22-week cup base, and today the stock showed a loose doji on low volume (165,600; average 355,000). The doji is just over support of its 10 day MVA (37.38), and is a signal that we could be getting a move. Looking for a jump back up with more volume behind it. The handle high is at 41.25. Good buying and high money flow.
BUY POINT: 41.38, on volume of 533,000 or better. Remains a buy on the breakout up to 43.45.
POSITION: Stock and/or March $40 calls to buy (ZQP CH) (May $40 calls (ZQP EH) has low open interest).

BBBY (Bed Bath & Beyond Inc--$26.44; -0.12; optionable (BHQ)): Retail
http://biz.yahoo.com/p/b/bbby.html
STATUS: Looking nice as its has gently pulled back on steadily decreasing volume (2.66 million; average 3.8 million), forming a handle to its 3-month cup base. The stock has been holding strong at 26, and with a bit of a push we could get a breakout move, with the handle high at 27.56. Great money flow, and relative strength broke out ahead of price, a bullish sign.
BUY POINT: Breakout: 27.69, on volume of 5.7 million or better. Remains a buy on the breakout up to 29.07.
POSITION: Breakout: Stock and/or May $25 calls to buy (BHQ EE).

A small stock that looks great:

FRED (Fred's Inc--$23.50; 0.00; no options): Retail
http://biz.yahoo.com/p/f/fred.html
STATUS: A retailer that is moving in a handle to its five-month cup base, today holding pat and showing a loose doji pattern. Volume was strong (88,300; average 38,600) but way down from the huge surge we saw on the move up Friday. We will look for the stock to continue the move, with the handle high ahead at 23.88, but the doji pattern could indicate another pullback first, with support below in the 23 range. Great money flow and high relative strength.
BUY POINT: Breakout: 24.01, on continued strong volume. Remains a buy on the breakout up to 25.21.
POSITION: Stock.

Continued Plays:

SLR (Solectron Corp--$37.95; -1.90; optionable (SLR)): Printed circuit boards
http://biz.yahoo.com/p/s/slr.html
STATUS: Had been consolidating on top of the 200 day MVA (39.70) with numerous dojis, but Monday the stock dropped back through support to close down near the handle lows after testing its 50 day MVA (37.23) at its low of 36.99. Volume was down but still strong on the selling (6.17 million; average 6 million). We will see if the stock can hold support here for a move back up toward the handle high of 41.95.
BUY POINT: Aggressive: Over the 200 day MVA on continued strong volume. Breakout: 42.08, on volume of 9 million or better.
POSITION: Aggressive: Stock and/or April $35 calls to buy (SLR DG). Breakout: Stock and/or April $40 calls to buy (SLR DH).

IBM (International Business Machines--$112.22; +1.95; optionable (IBM)): Computer hardware
http://biz.yahoo.com/p/i/ibm.html
STATUS: Tested back near its 200 day MVA (108.38) to open but moved back up in its handle (to the 21-week base), continuing to move on lower, below average volume (5.1 million; average 7.6 million). The handle high is ahead at 116.94, and we will need to see an infusion of volume to get a breakout. Still showing solid buying.
BUY POINT: Aggressive: A move up in a rally, with increased volume. Breakout: 117.07, on volume of 11.4 million or better.
POSITION: Aggressive: Stock and/or March or April $110 calls to buy (IBM CB or DB). Breakout: Stock and/or March or April $115 calls to buy (IBM CC or DC).

FLEX (Flextronics--$38.00; +0.06; optionable (QFL)): Electronics
http://biz.yahoo.com/p/f/flex.html
STATUS: The stock has gradually pulled back the last week, smoothing out what has been a somewhat erratic handle to its cup pattern. Looks good, especially with today's pattern of a tight doji over the recent support of its 10 day MVA (37.70). Looking for a breakout, with the handle high at 40.13. Still showing excellent money flow nad buying.
BUY POINT: Breakout: 40.26 on volume of 14 million (9.4 million average; 11.1 million today).
POSITION: Stock and/or April $35 calls to buy (QFL DG).

BSC (Bear Stearns Companies--$62.10; +0.30; optionable (BSC)):
http://biz.yahoo.com/p/b/bsc.html
STATUS: Has formed another handle to its 20-week base (previous high 72.50) and is holding above support of its prior breakout level (61.88) and its 10 day MVA (61.51). Volume continues to decrease as the stock gradually pulls back, coming in at 484,900 today (average 1 million). Handle high is 64.45, and it looks good for a move up when the financials rally. Big money flow.
BUY POINT: Breakout: 64.58, on volume of 1.5 million. A buy on the breakout up to 67.81.
POSITION: Breakout: Stock and/or April $60 calls to buy (BCS DL).

VRTY (Verity Inc--$29.69; +0.19; optionable (YQV)): Internet software
http://biz.yahoo.com/p/v/vrty.html
STATUS: Continues to range in the handle of the cup base, but today VRTY tapped down near its 50 day MVA (26.62) at its low of 27.13 before recovering to close. The stock closed with a loose doji on a volume surge (up to 780,000; average 612,000). The high in the pattern is 32.75, which is just above its 200 day MVA (32.67), the line that has defined the upper limit in the handle consolidation. Still showing excellent money flow with good buying.
BUY POINT: Breakout: 32.88, on volume of 918,000 or better. Remains a buy on the breakout up to 34.52.
POSITION: Stock and/or June $30 calls to buy (YQV FF).

C (Citigroup--$56.30; +0.84; optionable (C)): Large Banks
http://biz.yahoo.com/p/c/c.html
STATUS: Has been pushing up along its 10 day MVA (55.60) as it moves in the handle to its 22-week cup base. The stock tapped down to that level again today at its low, pulling back up to show a doji. We could get another test of the 10 day before it makes a strong move up toward the handle high of 57.38. Looking for a breakout when the financials rally.
BUY POINT: Breakout: 57.51, on volume of 19.8 million or better (average 13.2 million; today 8.95 million).
POSITION: Breakout: Stock and/or March or June $55 calls to buy (C CK or FK).

JPM (J.P. Morgan & Co--$54.60; -0.04; optionable (JPM)): Banking
http://biz.yahoo.com/p/j/jpm.html
STATUS: Has pulled back to the support of its 10 day MVA (54.27), testing its prior breakout point (54.69) as it moves in a handle to its 20-week base. The stock closed today with a tight doji as volume continued to drop back, coming in at 5.27 million (average 10 million). The doji indicates a surge back up, with the handle high ahead at 57.33 (previous basing high, 58.38). Very high money flow.
BUY POINT: Aggressive: Up from here on stronger volume. Breakout: 57.46, on volume of 15 million or better. Remains a buy on the breakout up to 60.33.
POSITION: Aggressive: Stock and/or March or June $50 calls to buy (JPM FJ). Breakout: Stock and/or March or June $55 calls to buy (JPM CK or JPM FK).

KEI (Keithley Instruments Inc--$57.13; -3.54; optionable (KEI)): Electronics (scientific and technical instruments)
http://biz.yahoo.com/p/k/kei.html
STATUS: Not performing as we want. Has steadily pulled back after failing on a breakout attempt from its cup-with-handle (breakout high 69.59). Today the stock continued down with increased volume on the drop (502,000; average 480,500), testing below its 200 day MVA (55.03) at its low of 54.21 before pulling back up to close on its 18 day MVA. We need to see this retreat stop here, with the aggressive looking at a strong move back over 60. There are better ones to focus on right now.
BUY POINT: Aggressive: On a move back over 60 on continued strong volume.
POSITION: Aggressive: Stock and/or April $55 calls to buy (KEI DK).

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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