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Begin Part 2 of 2
THE PLAYS:
A note on options: The symbol in the parenthesis represents the option prefix for a particular stock. It usually does not change. The last two letters indicate the month and the strike price. We are striving to make sure they are accurate, but please be sure to double check them when you place any order to make sure you are buying the right option.
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.
NOTE: Financial stocks continue to set up well, and we have seen a few breakouts in that sector: take a look at TSFG (below), and SBIB broke out Monday. Retail stocks continue to look good, too (AEOS was on the report last night and made a move up today), along with some smaller tech stocks: ATVI was covered last Thursday, and broke out Friday, and DELL is looking ready to do the same. EFII moved up on stronger volume today. In our view, the market is looking better and better, as evidenced by the positive moves and nice patterns that are showing up in these sectors, and we are excited about what we are seeing.
SUBSCRIBER'S CHOICE:
PRSF (Portal Software Inc--$11.94; -0.75; optionable (PFR)): Business Software
STATUS: After consolidating for 6 days on top of its 50 day MVA (12.48), the stock slipped back below that level on stronger volume (6.5 million; avg. 5.7 million), showing a doji just below the 10 day MVA (12.05). After a two-day pullback on below average volume, look for the desired move up as the doji suggests. The low tested support at the 18 day MVA (11.25) as the high tapped the resistance of the 50 day MVA. Consolidation high is 15.31. The stock broke over its 50 day MVA January 29 on news of a licensing pact with America Online. Shows good buying.
BUY POINT: Aggressive: Over 12.48 (50 day MVA) on continued rising volume. Safer: Over 15.31 on volume of 8.8 million or better.
POSITION: Aggressive: Stock and/or April $10 calls to buy (PFR DB). Safer: Stock and/or April $15 calls to buy (PFR DC).
http://www.investmenthouse.com/cd/prsf.html
(Click to view the chart)
http://biz.yahoo.com/p/p/prsf.html
Best Plays: We like all the plays we put on the Daily, but these we are really focusing on tomorrow.
1) NSIT: Mounting a move up in the handle.
2) TSFG: Breaking out and remains a buy.
3) NUAN: Ready to roll up.
4) WMT: Ditto.
5) BELM: Moving up on stronger volume.
6) DELL: Heading up in the handle on good volume.
7) EXTR: Another possible roller.
8) VTSS: A doji on the 50 day MVA.
New Play:
NSIT (Insight Enterprises Inc--$28.25; +0.37; optionable (QNT)): Retail: Catalog
STATUS: Looks ready to move up in its handle; the stock is in a 15-week cup with handle in the bottom of its larger base (with a prior basing high of 43.44 for the larger base). Volume shot above average (1.66 million; avg. 673,318) as NSIT moved up from the opening price of 27.56, tapping 28.75 on the high. Handle high is 29.94. The stock shows nicely improving money flow and buying.
BUY POINT: Breakout: 30.07, on volume of 1 million or better. Remains a buy on the breakout up to 31.57.
POSITION: Breakout: Stock and/or May $30 calls to buy (QNT EF).
http://www.investmenthouse.com/cd/nsit.html
(Click to view the chart)
http://biz.yahoo.com/p/n/nsit.html
Updated Financial: A breakout.
TSFG (South Financial Group--$14.81; +0.43; optionable (QCF)): Regional Banks: (Mid-Atlantic
STATUS: Breaking out of the handle of its 32-week base on strong volume (259,000; avg. 117,590). The stock beat the buy point of 14.51, and is still a buy on this move. Prior high in the base is 17.75. TSFG broke over its 200 day MVA (currently at 36.10) in late December and has continued climbing from there, into the upper right side of the base. Looks good, with excellent money flow and improving buying.
BUY POINT: Up to 15.24 on the breakout, on continued strong volume.
POSITION: Stock. May $12.50 (QCF EV) and May $15 (QCF EC) calls have 35 and 0 open interests (respectively).
http://www.investmenthouse.com/cd/tsfg.html
(Click to view the chart)
http://biz.yahoo.com/p/t/tsfg.html
A couple of rolling plays:
NUAN (Nuance Communications--$39.94; +5.00; optionable ( )): Business Software
STATUS: Making a strong move up from the February low of 32.25; volume shot above average (from well below average numbers) to 2.4 million; average 1.7 million. The stock closed right on its 10 day MVA (18 day MVA is just ahead at 41.73), and on the strong volume we are looking for a run up to 48.50 (hit four times, three times in the January lateral consolidation). The 50 day MVA is at 49.91. NUAN rolled back up from the January low of 26.50 to the current level of the 50 day MVA, so we are looking for a similar run here.
BUY POINT: Aggressive: Up from here on continued strong volume.
POSITION: Aggressive: Stock. May $35 (NUD EG) and $40 (NUD EH) options had insufficient open interests (35 each).
http://www.investmenthouse.com/cd/nuan.html
(Click to view the chart)
http://biz.yahoo.com/p/n/nuan.html
WMT (Wal-Mart Stores Inc--$53.20; -0.64; optionable (WMT)): Retail
STATUS: Pulled back four days from a high of 57, hit a week ago. The stock is seesawing its way up the right side of a 29-week base, but remains below its down trendline (connecting July and January highs). However, the chart showed a doji at the bottom of the pullback, as volume remains below average (5.4 million; avg. 8.2 million), so we are looking for a roll back up to the 57 level. The down trendline is just under 58. Look for a move up on stronger volume.
BUY POINT: Aggressive: On a move up from the doji on stronger volume. Watch for possible resistance at the 18 day and 10 day MVAs (53.87 and 54.14, respectively).
POSITION: Aggressive: Stock and/or June $50 calls to buy (WMT FJ).
http://www.investmenthouse.com/cd/wmt.html
(Click to view the chart)
http://biz.yahoo.com/p/w/wmt.html
Other updated stocks that are looking good:
BELM (Bell Microproducts Inc--$21.25; +1.62; optionable (QBL)): Electronics Wholesale
STATUS: Moving up from support (50 and 18 day MVAs at 19.49 and 19.78, respectively) on stronger volume of 253,700; avg. 299,727). The stock is in a ragged double-bottom pattern, and pulled back in the handle on lower, below average volume. Like this move up; handle high is 22.38. Money flow is high and buying improved.
BUY POINT: Breakout: 22.51, on volume of 450,000 or better. A buy on the breakout up to 23.64.
POSITION: Stock and/or June $20 calls to buy (QBL FD).
http://www.investmenthouse.com/cd/belm.html
(Click to view the chart)
http://biz.yahoo.com/p/b/belm.html
PLC (Plc Systems Inc--$1.48; -0.09; no options): Health: Medical Appliances & Eqpmt
STATUS: A small stock covered on the weekend report after it broke its down trendline on strong volume. The stock pulled back the last two days from that move, as volume fell back along with price in a very orderly manner (which we love to see). Volume dropped to 72,800 Tuesday (avg. 157,318), while the stock held above support of its up trendline that is supporting the pennant pattern. Pattern high is back over the down trendline at 2. Looking for a bounce back up in a sector rally. Good buying and money flow.
BUY POINT: Aggressive: From here on rising volume. Safer: 2.13, on volume of 212,000 or better. Remains a buy on the breakout up to 2.24.
POSITION: Stock.
http://www.investmenthouse.com/cd/plc.html
(Click to view the chart)
http://biz.yahoo.com/p/p/plc.html
DELL (Dell Computer Corp--$26.88; +2.44; optionable (DLQ)): Personal Computers
STATUS: Moving up from support (near the 50 day MVA, 23.87) on great volume (51.1 million; avg. 36.6 million). The stock is in a cup with handle at the bottom of its six and a half-month base, and looks ready to beat the handle high (28.69) if it isn't thwarted by the CSCO news.
BUY POINT: 28.82, on volume of 55 million or better.
POSITION: Stock and/or May $25 calls to buy (DLQ EE).
http://www.investmenthouse.com/cd/dell.html
(Click to view the chart)
http://biz.yahoo.com/p/d/dell.html
THE 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 are looking as if they are ready to pick up a few shares.
THE LEADERS:
ADBE, AMCC, ARBA, BEAS, BRCD, CIEN, EMC, EXTR, GLW, JNPR, NEWP, NTAP, PMCS, SCMR, SEBL, VRSN, VRTS
VRSN (Verisign Inc--$68.81; -1.25; optionable (VUQ)): Internet Software & Services
STATUS: Showing a doji at the top of its intraday trading range (high is 70.75) on lower volume (3.7 million; avg. 6.57 million). The low of 66.56 tested near possible support (Monday's opening price of 65.75 and Friday's low at 66.25). The 10 day MVA is at 73.49 and the stock looks good for a move up to that level in a rally. However, with the CSCO earnings report out, the stock is trading just lower (67.75) at the time of this writing, though holding above the support level. This stock has so much good news about it that it makes all of the techs everyone is watching pale.
BUY POINT: Up from the doji on stronger volume in a rally. Watch resistance at the 73 level.
POSITION: Stock. March and June $65 options have 46 and 11 open interests (respectively). QVR CM or FM
http://www.investmenthouse.com/cd/vrsn.html
(Click to view the chart)
Another possible rolling play:
EXTR (Extreme Networks Inc--$36.13; -0.81; optionable (EUT)): Internet: Internet Software & Services
STATUS: Showing a doji after a 5-day slide down on decreasing volume (for the last two days) at 3.97 million; average 6.4 million). The stock looks ready to roll back up from here, for a move to at least the 10 day MVA (42.12). 18 day MVA is at 43.52. We like the lower volume on the pullback especially over the last two days.
BUY POINT: Aggressive: On a move up from here on stronger volume.
POSITION: Aggressive: Stock and/or June $35 calls to buy (EUT FG).
http://www.investmenthouse.com/cd/extr.html
(Click to view the chart)
CIEN (Ciena Corporation--$82.69; -1.81; optionable (UEE DP)): Telecommunications: Processing Systems & Products
STATUS: Holding above possible support at 82.50 (a price hit five times since July) and showing a doji on the slight move down. Volume shot above average (19.4 million; avg. 14.8 million) as the stock held its ground, and we'd like to see price shoot up as well, using the stronger volume momentum. These high volume doji's can indicate a reversal of the recent selling. The 200 day MVA converges with the 10 day MVA at 88.68, so the stock can at least run up to that level. Was trading down just over a point in after hours trading (at the time of this writing), so we will have to see what the stock's action will be in the morning in the aftermath of the CSCO earnings report.
BUY POINT: Aggressive: On a move up from here on continued strong volume.
POSITION: Aggressive: Stock and/or April $80 calls to buy (UEE DP).
http://www.investmenthouse.com/cd/cien.html
(Click to view the chart)
BEAS (Bea Systems Inc--$62.88; -1.75; optionable (BUC)): Computer Software & Services: Business Software & Services
STATUS: Couldn't muster the break of resistance at the 50 day MVA (64.98), but volume was lower (5 million; avg. 10.77 million), still enabling the stock to come up off the low of 61.38. BEAS can find support at 61.25 or 61, each of those prices hit three times over the last few months, should it pull back further (in fact, the stock was trading down slightly in after hours trading to 62). We like low-volume pullbacks to support, but will have to see what the market can offer the stock tomorrow. Money continues to flow into this stock big time.
BUY POINT: Over the intraday high of 66, on rising volume.
POSITION: Stock and/or June $65 calls to buy (BUC FM).
http://www.investmenthouse.com/cd/beas.html
(Click to view the chart)
UP & COMERS PORTFOLIOS:
EXDS, TQNT, BVSN, SANM, PKI and GMST for now.
EXDS (Exodus Communications--$19.44; +0.69; optionable (EXF)): Internet Software
STATUS: May be ready to make that move up; the stock was up slightly on huge volume (54.2 million; avg. 11.8 million) and had kind words spoken of it today. We want to see a hold at this level (the stock closed Monday at 18.75 after getting spanked on news of an offering of additional shares on the market). Buying shot up. The 18 day and 10 day MVAs are at 24.98 and 25.84, respectively. Again, a 20% selloff on news that could potentially dilute shares 6% is way overdone. We are buyers.
BUY POINT: On a move up from here on continued strong volume. Watch upper resistance levels on a strong move.
POSITION: Stock and/or June $15 or $17.50 calls to buy (EXF FC or FW).
http://www.investmenthouse.com/cd/exds.html
(Click to view the chart)
MEMBER PORTFOLIO: BRCM, CHKP, CSCO, EMLX, IDTI, INTC, JDSU, MVSN, NT, PWER, SUNW, VTSS
MVSN (Macrovision Corp--$65.31; -4.88; optionable (MVU)): Media: Movie Production, Theaters
STATUS: Closed on the up trendline that is supporting the ascending wedge low prices, after the low of 63.19 tested support at the 50 day MVA simple (63.10). We are looking for a hold here for a bounce back up into the pattern; the stock was holding at the closing price in after hours trading (at the time of this writing). Volume was just higher on the move down at 401,200 (avg. 629,000). Don't want to see the stock break the trendline. Needs to hold the line here with a strong move up.
BUY POINT: Aggressive: On a bounce back over the 10 day MVA (69.93) on continued rising volume. Breakout: 78.13, on volume of 849,000 or better.
POSITION: Aggressive: Stock and/or April $70 calls to buy (MVU DN; April $65 options have 80 open interests, MVU DM). Breakout: Stock and/or April $75 calls to buy (MVU DO).
http://www.investmenthouse.com/cd/mvsn.html
(Click to view the chart)
VTSS (Vitesse Semiconductor--$64.25; -2.06; optionable (VQT)): Electronics: Semiconductor, Integrated Circuits
STATUS: Dropped to close just above the 50 day MVA (63.35) after the low tested 62.31. Volume rose to average levels (6.3 million) on the move; we'd like to see the stronger volume pop the stock up from the doji. If not, look for support at the moving average until a tech rally. The 18 day MVA is at 66.28; 10 day MVA is at 67.93. VTSS pulled back on overall below average volume from the January high of 77.25. Buying looking even better. The stock is down just over a point in after hours trading (at the time of this writing).
BUY POINT: Aggressive: From here on strong volume in a Nasdaq rally. Safer: Back over the 10 day MVA (over 68) on volume of 8.5 million or better.
POSITION: Aggressive: Stock and/or April $60 calls to buy (VQT DL). Safer: Stock and/or April $65 calls to buy (VQT DM).
http://www.investmenthouse.com/cd/vtss.html
(Click to view the chart)
Good Investing!
Jon 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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