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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: Still looking at some good patterns tonight.
SUBSCRIBER'S CHOICE:
LAB (Labranche & Co Inc--$46.91; -0.48; optionable (LAB)): Investment Brokerage
STATUS: LAB has had a great run up over the last several weeks, coming off a November low of 21.13 as the 200 day MVA provided good support that month and in December, when the stock actually launched the run. Currently the stock is consolidating on a pull off the February closing high of 48, volume dropping steadily from Tuesday's quite strong levels. Consequently, volume remains just above average even though it's down (441,900; avg.339,000), so the stock looks ready to continue the pullback. Support is likely at the 10 day MVA (45.28), or below at the 18 day MVA 42.62). We have expected financial stocks to hold up in the rate cut environment, but we are seeing some of the good patterns begin to break down in between the cuts, and in the economic environment. LAB still looks good, but simply needs the pullback after the excellent run.
BUY POINT: On a move back up after a pullback to the 10 day or 18 day MVAs (45.28 or 42.62), on again rising volume.
POSITION: Stock and/or May $45 or $40 calls to buy (LAB EI or EH).
http://www.investmenthouse.com/cd/lab.html
(Click to view the chart)
http://biz.yahoo.com/p/l/lab.html
Best Plays: We like all the plays we put on the Daily, but these we are really focusing on tomorrow.
1) BMCS: Making a breakout move in the cup with handle.
2) SFNT: Testing its breakout and ready to move up in a rally.
3) DELL: A low-volume pullback to support.
4) NUAN: A volume spike points to a roll back up.
5) CIEN: Sitting on its down trendline with some decent news.
6) GMST: Looking for a bounce off the 50 day MVA.
7) EXDS: A doji on low volume after the selling.
8) MVSN: Watching this doji on low volume.
New Plays:
VTIV (Ventiv Health Inc--$15.94; +0.56; no options): Business/Mgmt Services
STATUS: Moving up after testing its breakout from its recent base, from a Wednesday doji. Volume was strong on the doji, pulling back to 122,100 (avg. 134,227). We don't like the lower volume, but since it was stronger the previous session, can live with one day of lower volume, expecting it to pick up again on a continued breakout move. Breakout high is 16.59. The stock pulled back the next day from that high to an all-time closing high of 16.13. Good buying and strong money flow, high relative strength.
BUY POINT: Over 19.59, on volume of 165,000 or better.
POSITION: Stock.
http://www.investmenthouse.com/cd/vtiv.html
(Click to view the chart)
http://biz.yahoo.com/p/v/vtiv.html
BMCS (Bmc Software Inc--$31.56; +1.93; optionable (BCQ)): Application Software
STATUS: Moving up on strong volume (7.7 million; avg. 4.3 million), making a breakout move toward its buy point in the 8-month cup with handle base. The pattern is in a much larger base that has a prior high of 86.63. Current base has a prior high of 48.94. The stock broke its down trendline and 200 day MVA (26.03) in January, both of those moves on great volume. We are looking for similar behavior on this breakout move. Good buying; money flow is coming off the floor. Relative has broken out ahead of price, a bullish sign.
BUY POINT: 33.13, on continued strong and rising volume. A buy on the breakout up to 34.79.
POSITION: Stock and/or May $30 calls to buy (BCQ EF).
http://www.investmenthouse.com/cd/bmcs.html
(Click to view the chart)
http://biz.yahoo.com/p/b/bmcs.html
ECLP (Eclipsys Corp--$25.69; -0.19; optionable (IQV)): Software: Healthcare Information Service
STATUS: The stock is in a flat base/pennant consolidation above its 50 day MVA (24.20), as volume continues to drop steadily below average (reaching 170,000, avg. 551,318). The pattern is in the upper right side of the stock's year-long base (prior high of 31.06). The high price in the consolidation is 28.81. Currently the stock is holding support at the 10 day MVA (25.48) as the pattern tightens on the lower volume. Looking for a hold at this support for a move back up in a rally. 18 day MVA is at 25.23. Great money flow and good buying.
BUY POINT: Aggressive: On a move up from here on stronger volume. Breakout: Over 28.81, on volume in the range of 744,000 or better.
POSITION: Stock and/or June $25 calls to buy (IQV FE).
http://www.investmenthouse.com/cd/eclp.html
(Click to view the chart)
http://biz.yahoo.com/p/e/eclp.html
Updates:
SFNT (Safenet Inc--$55.50; +1.19; no options): Computer Software
STATUS: Testing its recent breakout from a short base, consolidating above the 10 day MVA (53.27) after pulling off the breakout high of 59.63. Volume continues to pull back below average for the last two days (86,500; avg. 114,727) as the stock made a small move up from 54.19 (opening price); support looks pretty good at the 54 level as well. Looking for a continued move up as volume surges in a market rally. Good buying, strong money flow and high relative strength. Many software stocks have held up well despite the recent market action.
BUY POINT: Aggressive: On a continued move up from here on stronger volume.
POSITION: Stock.
http://www.investmenthouse.com/cd/sfnt.html
(Click to view the chart)
http://biz.yahoo.com/p/s/sfnt.html
DELL (Dell Computer Corporation--$26.06; -0.44; optionable (DLQ)): Personal Computers
STATUS: Continues to hang in there at support (10 day MVA, 25.98) as volume drops further below average for the second day (the stock is showing its second consecutive doji as well). Volume is down to 23.4 million (avg. 37.2 million). DELL is consolidating in a lengthening handle in the current market, and we like the lower volume and hold at support. 27.50 has been giving the stock some trouble in the last three days, but a strong move up in a decent rally can take that out. Handle high is 28.81. Buying picked up, with money flow and relative strength.
BUY POINT: Breakout: 28.94, on volume of 55.8 million or better. Remains a buy on the breakout up to 30.39.
POSITION: Breakout: Stock and/or May $25 or $30 calls to buy (DLQ EE or EF).
http://www.investmenthouse.com/cd/dell.html
(Click to view the chart)
http://biz.yahoo.com/p/d/dell.html
A formerly covered rolling stock:
NUAN (Nuance Communications--$39.81; +1.81; optionable (NUD)): Business Software
STATUS: Really strong volume Thursday (3.7 million; avg. 1.7 million) on a small move up; NUAN closed just under the 10 day MVA while testing just above the 18 day MVA (41.18) on the high of 43. The stock made a nice move up two days ago from two consecutive dojis, but the 10 day MVA has held it in check since. Today's volume spike suggests an imminent move up over the resistance, however. We are looking for a roll back up to the 50 day MVA (49.06) or better. 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. Good money flow and decent buying. Love that volume spike.
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.
http://www.investmenthouse.com/cd/nuan.html
(Click to view the chart)
http://biz.yahoo.com/p/n/nuan.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: These are in trouble, but may find some room to move up after a long selling bout that has taken many down to their early year lows. These are quick plays as the patterns are not stellar. Take some profit in a rally and get out.
ADBE, AMCC, ARBA, BEAS, BRCD, CIEN, EMC, EXTR, GLW, JNPR, NEWP, NTAP, PMCS, SCMR, SEBL, VRSN, VRTS
SEBL (Siebel Systems Inc--$62.25; -2.38; optionable (SGW)): Computer Software & Services: Application Software
STATUS: Dropped from the doji on lower volume ( 8.6 million; avg. 11.6 million). The stock is now at possible support, tested on the low of 61.81. We could get a quick upside play to the 10 day MVA (67.19), if it can hold this support level. The stock hit 61 twice in January, possible support on a continued move down. The lower volume is encouraging. An aggressive play.
BUY POINT: On a move up from here on rising volume.
POSITION: Aggressive: Stock and/or May $60 calls to buy (SGW EL).
http://www.investmenthouse.com/cd/sebl.html
(Click to view the chart)
VRTS (Veritas Software--$80.25; -1.81; optionable (VUQ)): Computer Software & Services: Application Software
STATUS: The stock pulled back again, this time on lower volume (8.8 million; avg. 11.2 million). If the stock does not hold at this level, look for a move up from 78.50, a price the stock hit twice in January, on continued declining volume. From either level we will look for a move back up in a market rally. May be a short play up to the 10 day MVA (89.02), with possible resistance at 85.69 (hit twice recently). The stock was trading up to 82 in after hours trading (at the time of this writing). Another aggressive, short term play.
BUY POINT: On a move back up from here, or 78.50, on rising volume.
POSITION: Stock. May $75 and $80 calls (VUQ EY and EZ) have 30 and 74 open interests (respectively).
http://www.investmenthouse.com/cd/vrts.html
(Click to view the chart)
EXTR (Extreme Networks Inc--$31.31; -0.38; optionable (EUT)): Internet: Internet Software & Services
STATUS: The company Wednesday reiterated its positive financial outlook for the next two years, but that wasn't enough to give the stock a bump. Volume remained high though down slightly (8.27 million; avg. 6.5 million) as price held near Wednesday's closing price, and matched a price it hit back in December (today's closing price). On a hold of support (the lower volume is encouraging to that end), look for a move up in a market rally, if we get one. The 10 day MVA is at 38.60, for a possible quick upside play. Trading up to 32 in after hours trading, at the time of this writing.
BUY POINT: On a move up from here, on rising volume in a rally.
POSITION: Stock. June $30 calls (EUT FF) have 72 open interests.
http://www.investmenthouse.com/cd/extr.html
(Click to view the chart)
CIEN (Ciena Corporation--$82.94; +1.06; optionable (UEE)): Telecommunications: Processing Systems & Products
STATUS: The stock broke the down trendline and ran up near its 10 day MVA (86.63) on the high of 85.75 as volume rose slightly (19.8 million; avg. 15 million). Price dropped back from there, closing on right on top of the trendline and showing a tight doji. We want to see a hold at this support level now; a break of a down trendline on good volume indicates possible good support. In a rally, the stock can run back up to the 10 day MVA at least. CIEN reports earnings February 15, and reached the high on news that the company won a key contract, beating out several well-known rivals. Trading up over a point after hours (at the time of this writing).
BUY POINT: On a move up from here on continued rising volume, watching the 10 day MVA (86 range) for resistance.
POSITION: Stock and/or April $80 calls to buy (UEE DP).
http://www.investmenthouse.com/cd/cien.html
(Click to view the chart)
UP & COMERS PORTFOLIOS:
EXDS, TQNT, BVSN, SANM, PKI and GMST for now.
GMST (Gemstar-TV Guide Intl--$51.69; -2.50; optionable (GST)): Consumer Durables: Electronic Equipment
STATUS: Don't like seeing Wednesday's nice move up on great volume turn around, but if it had to, at least is was on sharply lower, below average volume, the stock closing at support (10 day MVA). Lower volume pullbacks to support suggest bounces, so that is what we will look for in tomorrow's action. May not be strong if Friday is slow, but we at least expect a hold at the support. 18 and 50 day MVAs are just below, adding to the support (tested on the low of 50.50). Some of these stocks are ready to move, but are having trouble getting traction. This one is an example.
BUY POINT: Aggressive: On a bounce on rising volume. On a bounce right out of the gates, let the stock pull back to test today's close or Friday's opening price.
POSITION: Aggressive: Stock and/or May $50 calls to buy (GST EJ).
http://www.investmenthouse.com/cd/gmst.html
(Click to view the chart)
EXDS (Exodus Communications--$18.56; +0.01; optionable (EXF)): Internet Software
STATUS: Holding in a lateral movement after the stock tanked on the news of its additional shares offering (that took the stock down 20% Monday, an overreaction). Volume keeps pulling back, reaching Thursday 9.7 million (avg. 12.8 million), as the stock showed a tight doji. We are waiting for the stock to make a move back up from here in a market rally, as long as the consolidation can hold. Buying remains positive and shot up today. 10 day MVA is at 21.50; 18 day MVA, 22.31. 50 day MVA is at 24.95. The stock is off the January low of 14.88, not too far away.
BUY POINT: On a move up from here on stronger 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
Can go either way:
CHKP (Check Point Software Tech--$139.31; -7.25; optionable (KGE)): Computer Software & Services: Security Software & Services
STATUS: Dropped just below the 50 day MVA (140.37) on stronger volume (6.4 million; avg. 5.2 million), but up and off the low of 136.69, which tested support at the 50 day MVA simple (135.57). The stock has been holding up well in the recent market action (this is the first dip below the major support level since mid-January), and with the lower test, we are looking for a quick move back over the moving average. The stock will split next Tuesday and we will keep an eye out for a run up to that event. Otherwise, on rising volume and in a negative market, the stock can drop down to the 130 range. If it does, be ready for a quick exit if the Nasdaq finds support at 2500. 18 day MVA is at 145.31. Splits next week.
BUY POINT: Upside: Back over 141 (50 day MVA) on volume of continued rising volume. Downside: Aggressive: On a move down from here on continued rising volume. Safer: Below 135.57 on rising volume.
POSITION: Upside: Stock and/or April $140 (KGE DH). Downside: February $135 or $130 calls to sell (KGE BG or BF), or April $140 puts to buy (KGE NH).
http://www.investmenthouse.com/cd/chkp.html
(Click to view the chart)
VTSS (Vitesse Semiconductor--$63.06; +0.31; optionable (VQT)): Electronics: Semiconductor, Integrated Circuits
STATUS: Holding steady as price inched up to hold just about Wednesday's close and volume dropped back to 7.1 million (avg. 6.4 million). The intraday high reached 64.75 (tapping just under the 18 day MVA, 65.61). VTSS is sitting on top of the down trendline (August/November highs), but just below the 50 day MVA (63.32). On the lower volume, look for a hold of the support level until the market rallies the stock up. Buying continues to improve, though money flow just ticked downward a bit. 10 day and 200 day MVAs are at 66.27 and 68.06, respectively).
BUY POINT: Over 64 on continued rising, strong volume.
POSITION: Aggressive: Stock and/or April $60 calls to buy (VQT DL).
http://www.investmenthouse.com/cd/vtss.html
(Click to view the chart)
MVSN (Macrovision Corp--$60.88; -0.06; optionable (MVU)): Media: Movie Production, Theaters
STATUS: Showing a tight doji on lower volume (218,700; avg. 640,772) after selling down the last two days. The intraday high tested just over the 50 day MVA (simple, at 63.60) before pulling back down to close nearer the low of 59.63, but we like the lower volume and will watch for a move back up from here as the doji suggests. Watch for resistance on that move at the 63.60 level, and the 50 day MVA is at 66.73. That resistance is reinforced by the 18 and 10 day MVAs just above it (67.60 and 66.94, respectively), in addition to the up trendline (Nov/Jan lows). That was the support that held the lower dips in the ascending wedge pattern. That resistance looks daunting, but a 6-point move up to that level would be nice in this market.
BUY POINT: On a move up from here on stronger volume (280,000 or better).
POSITION: Stock and/or April $60 calls to buy (MVU DL).
http://www.investmenthouse.com/cd/mvsn.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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