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Begin Part 2 of 2
SUBSCRIBER QUESTIONS
Q: When a target is hit, can we protect our gain with a tight stop or must we sell?
A: There are not absolutes in any position or with most things in life. A target is a projected point to where a stock will rise or fall based on the pattern, support, resistance, the overall market, etc. When it is hit there could be other factors that warrant letting a position ride. With that said, we also like to avoid changing the game plan during the heat of battle, particularly in this market. We have seen stocks rise to hit the target just to turn and fall back down. Today we saw puts hit the targets early and we closed out a lot of the positions that did hit the targets. Later in the session the stocks rallied as the market continues its pattern of selling to new lows and then covering up positions. Those are some good reasons to close out positions in this market.
What we also do, however, especially if the stock is really outperforming the market and showing great resilience, is sell at least part of the position when the target is hit and let the other part ride. This depends upone how fast the stock has risen as well. If it shoots up like a rocket, we are less inclined to let it come back on us; they all test the move to some extent, and in this market the tests can be steep as well. If support is near at hand we can take some money off the table, move the stop (we prefer mental stops to avoid market maker games where possible) and see if the stock will hold and continue its move. If it does we can add to the position then: the test has been successful and the stock is showing us it is worthy of our money. In more stable markets we can let more of the position ride. In this market we are usually happy with a nice gain that hits the target; if the stock pulls back and sets up again, we can play it again with that profit already tucked away.
THE PLAYS
Best Plays:
1) SLM: Looks ready for a rollback.
2) CLDN: Ready for a bounce with market after the test.
3) MMSI: Right back to the breakout.
4) JBHT: Looking solid.
5) DTC: Nice test of the 18 day MVA and a tight doji.
6) Continuing/Watchlist stocks that look good: BL; APSG
NEW PLAYS
Downside
SLM (SLM Corp.--$94.20; +0.29; optionable): Credit services
http://biz.yahoo.com/p/s/slm.html
STATUS: Put. SLM broke the 50 day MVA in early June, tested lower, and rallied back up to test. It has been trying to break back, but the resistance is too strong in this head and shoulders pattern with a very weak right shoulder. It gapped lower Wednesday and rallied up to the 18 day MVA again (94.38). Money flow has tanked ahead of the move. Looking for a roll down back toward the 200 day MVA.
Volume: 851.3K Avg Volume: 697K
BUY POINT: $93.78 Volume=850K Target=$89.75 Stop=$96
POSITION: SLM TT - Aug. $100 put (-67 delta)
http://www.investmenthouse.com/ct/slm.html
Upside:
CLDN (Celadon Group--$12.60; -0.03; no options): Air freight
http://biz.yahoo.com/p/c/cldn.html
STATUS: Testing the breakout. CLDN galloped up to 12, making 4 bounces up the 18 day MVA after breaking out in April. It came back to test the 50 day MVA in early June, spending three weeks in a small consolidation at 10. It launched higher a week ago on super volume and is now testing that move, holding right on top of the recent high at 12. The pullback has been on lower volume just as it should be. Looking for a nice bounce from here with super accumulation and relative strength.
Volume: 46.6K Avg Volume: 94.045K
BUY POINT: $12.93 Volume=100K Target=$15.15 Stop=$11.50
POSITION: Stock (no option chain)
http://www.investmenthouse.com/ct/cldn.html
CONTINUING PLAYS
Upside
DRF (Dan River--$5.23; -0.04; no options): Textiles
Play Date: 06/25/2002
http://biz.yahoo.com/p/d/drf.html
STATUS: A strong move Tuesday followed by a day of rest Wednesday on lower volume. Tuesday it broke out of a 7-week lateral consolidation after a strong move up since March (went the opposite way of the rest of the market). After three flat weeks of no volume, DRF blasted off. Accumulation has been solid. This sector has a lot of life in it: after all of the accounting theatrics, textiles seem easy to understand and are needed in an improving economy.
Volume: 142.7K Avg Volume: 113.181K
BUY POINT: $5.35 Volume=170K Target=$9.25 Stop=$4.25
POSITION: Stock (no option chain)
http://www.investmenthouse.com/ct/drf.html
DTC (Domtar--$12.07; -0.16; no options): Paper products
Play Date: 06/17/2002
http://biz.yahoo.com/p/d/dtc.html
STATUS: Cup with handle. Again another easy to understand and in demand industry. Tuesday it made the price move but no volume was there so we did not issue the buy alert. Wednesday it pulled back to test the 18 day MVA on the low (11.87) and rebounded to show a tight doji on stronger volume. Looks ready to try the breakout again. Again accumulation has been excellent in the base.
Volume: 55.1K Avg Volume: 60.727K
BUY POINT: $12.22 Volume=175K Target=$15 Stop=$11.36
POSITION: Stock (no option chain)
http://www.investmenthouse.com/ct/dtc.html
ECOL (American Ecology--$4.44; +0.39; no options): Waste Management
Play Date: 06/20/2002
http://biz.yahoo.com/p/e/ecol.html
STATUS: Made the breakout today from the ascending wedge on some very strong volume. Looking solid. Can still take positions on this move.
Volume: 55.1K Avg Volume: 60.727K
BUY POINT: $4.35 Volume=65K Target=$5.96 Stop=$3.65
POSITION: Stock (no option chain)
http://www.investmenthouse.com/ct/ecol.html
GISX (Global Imaging Systems--$18.75; -0.46; optionable): Retail: GPS systems
Play Date: 06/24/2002
http://biz.yahoo.com/p/g/gisx.html
STATUS: Ascending wedge. After Monday's stronger move GISX has sold back the last two days, testing the 50 day MVA on the low (18.27). Again, a combination pattern of a cup then wedge. Accumulation weeks lead distribution weeks 7 to 3 in the base. Still in the pattern and just needs to build back up for the breakout.
Volume: 133.9K Avg Volume: 160.272K
BUY POINT: $20.85 Volume=185K Target=$25.48 Stop=$18.25
POSITION: Stock and/or GHQ KW - Nov. $17.50 call (72 delta)
http://www.investmenthouse.com/ct/gisx.html
JBHT (JB Hunt Transportation--$30.55; +0.79; optionable): Trucking
Play Date: 06/01/2002
http://biz.yahoo.com/p/j/jbht.html
STATUS: Testing the breakout now. Started back up Wednesday on rising, above average volume after testing the 18 day MVA on the low and bouncing. Still a buy on this move. Again, a very solid industry in an expanding economy, and one easy to understand.
Volume: 900.2K Avg Volume: 491.045K
BUY POINT: $30.02 after a test of 29.72. Volume=545K Target=$36 Stop=$25.40
POSITION: JHQ KX - Nov. $22.50 calls (delta 63) and/or stock.
http://www.investmenthouse.com/ct/jbht.html
MMSI (Merit Medical Systems--$18.97; +0.2; optionable): Merit Medical Systems
Play Date: 06/22/2002
http://biz.yahoo.com/p/m/mmsi.html
STATUS: Cup w/handle. A very nice recovery as it settles right back down after the wild ride on Monday. It has risen back up to the breakout point on rising, above average volume. That is beautiful. Looking for the breakout now given this quick recovery.
Volume: 210.8K Avg Volume: 153.545K
BUY POINT: $19.5 Volume=240K Target=$23.4 Stop=$18.14
POSITION: RMQ JC - Oct. $15 call (80 delta Low OI) and/or stock
http://www.investmenthouse.com/cs/mmsi.html
NFB (North Fork Bancorp--$38.8; -0.13; optionable): Regional bank
Play Date: 06/22/2002
http://biz.yahoo.com/p/n/nfb.html
STATUS: Test of breakout. Still testing, tapping the 50 day MVA on the low (38.15) and rebounding. Held up very well during the selling and we look for the rebound. Again, this presents a good 'add to' point if it can bounce on some volume.
Volume: 609.7K Avg Volume: 649.5K
BUY POINT: $39.20 Volume=750K Target=$45 Stop=$37.50
POSITION: NFB KG - Nov. $35 call (84 delta) and/or stock
http://www.investmenthouse.com/ct/nfb.html
OVTI (Omnivision Technologies--$13.48; -0.42; optionable): Integrated circuits
http://biz.yahoo.com/p/o/ovti.html
STATUS: Ascending wedge. Made the breakout attempt Tuesday but could not hold the gain. Then Wednesday it tested down toward the 50 day MVA (12.48) but rebounded to show a nice doji on some rising volume. Still in the pattern and looking for the breakout. Accumulation in the 6-month pattern is 9 weeks to 2 distribution weeks. Again we look at this one as a trading play, though we would let it run for us if it will.
Volume: 518.7K Avg Volume: 337.181K
BUY POINT: $14.55 Volume=500K Target=$19.48 Stop=$12.85
POSITION: UCM IB - Sept. $10 call (93 delta)
http://www.investmenthouse.com/ct/ovti.html
SALM (Salem Communications--$29.11; -0.64; no options): Salem Communications
Play Date: 06/03/2002
http://biz.yahoo.com/p/s/salm.html
STATUS: Cup with handle. Trying to breakout then not making it. Tuesday's move turned over and today SALM tested down to the 18 day MVA on the close. Volume fell back, so it is still in the pattern, but man are we getting tired of waiting on it. We have learned, however, to just be patient.
Volume: 72K Avg Volume: 69.181K
BUY POINT: $30.17 Volume=100K Target=$36.2 Stop=$27.50
POSITION: Stock (no option chain)
http://www.investmenthouse.com/ct/salm.html
SSNC (SSS&C Technologies--$13.58; -0.22; no options): Application software
Play Date: 06/22/2002
http://biz.yahoo.com/p/s/ssnc.html
STATUS: Testing breakout from ascending wedge. Could not hold the move it started Monday, pulling back to test the 18 day MVA on the low (12.80) and then rebounding. Volume remained solidly above average. Looks as if it could be a minor hitch in the move back up.
Volume: 152.9K Avg Volume: 73.863K
BUY POINT: Riding positions taken and new ones taken today at $13.40. Volume=80K Target=$16 Stop=$11.75
POSITION: Stock (no option chain)
http://www.investmenthouse.com/ct/ssnc.html
Downside
ADVP (AdvancePCS--$24.46; +0.21; optionable): Health services
Play Date: 06/22/2002
http://biz.yahoo.com/p/a/advp.html
STATUS: Test of breakdown. Traded down to 22.30 on the low before the market rebounded. Volume was very, very low, so we don't think this bounce will last. Just caught up in all of the excitement. If it tests 25 again and fails, that is an entry point.
Volume: 961.3K Avg Volume: 2.441M
BUY POINT: After a test of $25 and a roll back down. Volume=300K Target=$21 Stop=$28
POSITION: QVD UZ - Sept. $32.50 put (-74 delta)
http://www.investmenthouse.com/cs/advp.html
CYMI (Cymer--$34.08; +0.95; optionable): Chip equipment
Play Date: 06/25/2002
http://biz.yahoo.com/p/c/cymi.html
STATUS: Put. Tanked to the buy point and then recovered with the market showing some very strong volume on the move up. It tried to pierce the 50 200 day MVA but fell back to close below that level (34.25). It may come back to test the 10 day MVA at 36, but looks as if it will turn again there or sooner.
Volume: 2.734M Avg Volume: 1.482M
BUY POINT: On a failure at 35, new positions can be taken at 33.50 (original $32.95). Volume=2M Target=$25.55 Stop=$37
POSITION: CQG TH - Aug. $40 put (-61 delta)
http://www.investmenthouse.com/ct/cymi.html
IGT (International Game Technology--$55.01; -0.77; optionable): Electronic poker
Play Date: 06/22/2002
http://biz.yahoo.com/p/i/igt.html
STATUS: Test of 200 day MVA breach. Tanked Tuesday after hitting the buy Monday, today IGT gapped lower and tested 54 on the low. We were tempted to take some profits but did not, and IGT rallied to close higher. Volume was stronger as it showed a doji on the candlestick. Should find resistance at 56.
Volume: 1.351M Avg Volume: 1.021M
BUY POINT: Riding current positions. Original buy at $57.70. Volume=1M Target=$53.50 Stop=$61.50
POSITION: IGT TM - Aug. $65 put (delta available Monday)
http://www.investmenthouse.com/ct/igt.html
JCI (Johnson Controls--$77.15; -1.26; optionable): Auto parts
Play Date: 06/25/2002
http://biz.yahoo.com/p/j/jci.html
STATUS: Put. No test at all as JCI gapped lower and tanked on massive volume. We thought about some positions when it recovered late, but it was still too far down. We will wait and see if it does in fact test 80 this time, and if it does and fails we will get on it. Sometimes you just have to sit and wait.
Volume: 1.292M Avg Volume: 442.181K
BUY POINT: After a test of 80, 79.25. Breakdown: $78.30. Volume=600K Target=$75 Stop=$81
POSITION: JCI TQ - Aug. $85 put (-69 delta)
http://www.investmenthouse.com/ct/jci.html
NCR (NCR Corp.--$34; -0.01; optionable): Software; information technology
Play Date: 06/24/2002
http://biz.yahoo.com/p/n/ncr.html
STATUS: Put. Exploded lower Tuesday and was knifing down today but found support at 33.30 and rebounded on some strong volume. It closed with a doji, indicating it could try to rebound up again to test 35 at the 10 day MVA. We are going to hold onto positions for now and let it test.
Volume: 1.084M Avg Volume: 487.863K
BUY POINT: After a test of 35.50 new positions can be taken on a roll back down. Next: $35.25 Volume=625K Target=$31.15 Stop=$38
POSITION: NCR VH - Oct. $40 put (-63 delta) or NCR VI - Oct. $45 put (-80 delta)
http://www.investmenthouse.com/ct/ncr.html
XL (XL Capital--$85.7; -0.3; optionable): Property & casualty insurance
Play Date: 06/24/2002
http://biz.yahoo.com/p/x/xl.html
STATUS: Put. Tanked Tuesday giving the buy point. Today it was selling hard again but found support at 84 and reversed. It was a move with the market as volume was very low. Expect this bounce to be short lived. If it bounces back up to the 87 level, new positions can be taken on a turn back down from there.
Volume: 561.1K Avg Volume: 877.09K
BUY POINT: $87.38 Volume=800K Target=$82.65 Stop=$90.50
POSITION: XL VS - Oct. $95 put (-60 delta)
http://www.investmenthouse.com/ct/xl.html
WATCHLIST/ CONTINUING:
We have put all plays in a summary table that contains the date the stock was put on the report (so you can go back and check out the details of the play) and the other pertinent information. This provides more information than the watchlist summaries and still contains comments when appropriate. VIEW THIS IN COURIER NEW, 12 FOR BEST RESULTS. You can also easily print the table from the website (www.investmenthouse.com) from the 'current reports' section. If you just want to print the table you can cut and paste it to a word document setting the font to Courier New size 12. Just left click on the beginning of the table and drag to the table end. After selecting, right click and select 'copy.' Paste into your word processor. Select it all and choose Courier New, font size 12.
Stock Date Play Close +/- Pivot Tgt Vol AvgV Stop
ADVP 06/22 Put 24.46 +0.21 25.25 21 961K 2.4M 28
AET 06/13 Saucer 47.37 +1 50.35 60 1.8M 1.3M 46.83
We closed it out today but it did rebound a bit.
AMGN 06/20 Put 40.81 +0.15 40.9 37 19M 13M 44.20
Moved back up to test the 10 day MVA on the high on some stronger volume. Still don't think it will break it.
APSG 06/15 Test BO 12.38 -0.15 12.25 16 156K 48K 11
Nice volume move back up.
ATH 06/22 Test BO 66 -0.36 72.75 86.75 2.4M 1.4M 67.66
Trying to move up to test the 50 day MVA and got some volume.
AXP 06/19 Put 35.67 -0.65 37.75 34.05 6.1M 4.7M 41
Below the 200 day MVA again on rising volume.
BGG 05/11 Put 37.35 -0.2 39.4 35 83K 140K 42
Still trending down but finding some support at 36.50.
BL 05/21 cup hdl 23.04 +0.04 23.85 27.5 45K 17K 22
Volume up again for second day. Could be ready.
BLC 05/25 Flat 22.55 -0.28 24.25 30 381K 272K 22.55
Falling again.
BPOP 06/15 cup hdl 32.22 -0.68 32.35 36.5 141K 111K 30.50
Reversed at 32 on rising volume.
BYBI 05/23 BO 11.17 -0.23 9.7 12.75 58K 51K 9.02
Sold way down to the 50 day MVA and then rallied on rising, above average volume. Quite a wild day, but good enough to stay.
CAND 06/19 BO 4.09 +0.08 5.05 6.95 709K 305K 4.45
Tanked below the 50 day MVA on some massive volume but rallied back to that level.
CAND 06/06 BO 4.09 +0.08 4.98 6.95 709K 305K 4
CBRL 06/15 Test BO 31.08 +0.5 32.5 40.25 828K 838K 30.22
Exited.
CERN 05/20 A Wedge 48.48 -1.67 56.1 60 1.4M 435K 53
Massive tank lower on strong volume.
CI 06/15 Put 96.48 -0.5 99.9 95.2 911K 767K 103.50
Hit the target.
CLDN 06/26 Test BO 12.6 -0.03 12.93 15.15 47K 94K 11.50
CMPC 06/12 Test BO 3.58 +0.03 4.1 5.63 105K 137K 3.55
Not performing.
CTX 05/11 Put 55.92 +0.83 53.5 49 1.2M 1.2M 56
Back to 54 on the low and rebounded to 56, but volume was lower.
CVH 06/05 Test BO 29.51 +2.06 32.6 39 1M 464K 29
Tanked but rallied back to near the 50 day MVA.
CYMI 06/25 H&S 34.08 +0.95 32.95 25.55 2.7M 1.5M 37
CYMI 06/03 Put 34.08 +0.95 39.45 33.8 2.7M 1.5M 44
Hit the target.
DRF 06/25 BO 5.23 -0.04 5.35 9.25 143K 113K 4.25
DTC 06/17 cup hdl 12.07 -0.16 12.22 15 55K 61K 11.36
ECL 05/23 cup hdl 45.39 +0.12 47.8 57.36 497K 356K 44.45
ECOL 06/20 A Wedge 4.44 +0.39 4.35 5.96 104K 41K 3.65
ERTS 05/30 Cup 63.75 +1.4 66.12 79.5 3.3M 3M 61.49
Making a nice recovery to rescue the pattern, but it needs some time to calm down.
FRX 06/10 Put 70.41 -0.4 72.45 68 1.2M 1.3M 75
Weak bounce higher looks to be ending below the 10 day MVA.
FSS 05/22 DB hdl 25.2 +0.12 25.8 31 211K 202K 23.99
Holding well in the consolidation above the 50 day MVA. Looks as if it could make another move higher.
FTEK 06/12 Test BO 6.55 -0.2 6.92 8.25 69K 63K 6.37
Well, fell below the 18 day MVA on rising, average volume, holding support at 6.50. Not the action we wanted.
GISX 06/24 A Wedge 18.75 -0.46 20.85 25.48 134K 160K 18.25
HGR 05/20 Test 50 14.8 +0.04 12.6 19 203K 132K 11.72
Nice test of the 50 day MVA and rally back up on some volume. That may be all it needs to move higher.
HI 05/20 Put 48.65 -0.1 53.45 48.5 4.2M 3M 56
Hit the target.
HLT 05/06 Put 13.5 -0.39 14.3 12 1.4M 1.9M 15.80
Not giving the move. Next test of 13 we will exit.
HSY 06/12 Put 63.2 -0.41 65.35 61 1.1M 446K 67.25
Tanked close to the target but recovered on very strong volume. Don't think it will hold.
IBC 06/08 BO 28.53 -0.32 28.6 34.96 367K 269K 26.6
Tested lower but a good recover to hold above the 10 day MVA.
IGT 06/22 Put 55.01 -0.77 57.7 53.5 1.4M 1M 61.50
IMDC 05/20 Put 26.56 -0.22 29.9 26 366K 218K 32
Right at the target.
INTU 05/30 cup hdl 47.15 +2.66 45 54 6.3M 2.9M 41.85
What a recovery on strong volume.
IO 06/22 A Wedge 9.1 -0.25 9.95 12 114K 109K 9.12
JBHT 06/01 A Wedge 30.55 +0.79 28.72 36 900K 491K 25.40
JCI 06/25 Put 77.15 -1.26 78.3 75 1.3M 442K 81
KROL 06/06 BO 20.55 -1 20.2 24 993K 392K 19.50
Holding at the 50 day MVA and showing a doji on massive volume.
LGND 06/15 Put 13.55 -0.28 13.95 10.05 350K 588K 15.35
Still having trouble at 13.
MMSI 06/22 cup hdl 18.97 +0.2 19.5 23.4 211K 154K 18.14
MNTR 06/15 Put 36.5 -0.37 35.95 32.2 122K 116K 38
Back below the 50 day MVA but showed a doji at 36. Will exit if it does not fall again Thursday.
MTB 06/11 Put 83.76 -0.91 82.95 77.75 256K 250K 85.60
NCR 06/24 Put 34 -0.01 35.25 31.15 1.1M 488K 38
NFB 06/22 Test 18 38.8 -0.13 39.2 45 610K 650K 37.50
NFB 04/13 BO 38.8 -0.13 36.55 43.5 610K 650K 37.50
OVTI 06/24 BO 13.48 -0.42 14.55 19.48 519K 337K 12.85
PBG 05/30 Test 18 31.04 -0.96 32.75 36 2.5M 1.2M 30.46
Tanked to the 50 day MVA on strong volume and showed a doji.
PCLE 06/08 BO 9.87 -0.5 11.5 19.94 1.1M 730K 10.25
Closed the positions.
PETC 06/19 BO 23.39 +0.2 26.25 31 199K 231K 24
PETC 06/01 Test BO 23.39 +0.2 25.85 31 199K 231K 24.04
PNR 06/08 Put 46.36 -1.11 44.7 39.75 408K 282K 47
QCOM 06/05 Put 27.08 +0.72 31.5 25 22M 15M 33.50
Up on stronger volume but still below the down trendline and the 10 day MVA.
RE 06/11 Put 57.85 -0.7 58.55 54 436K 558K 63
Heading lower again.
SALM 06/03 cup hdl 29.11 -0.64 30.17 36.2 72K 69K 27.50
SLM 06/26 Put 94.2 +0.29 93.78 89.75 851K 697K 96
SSNC 06/22 Test BO 13.58 -0.22 13.4 16 153K 74K 11.75
SSNC 06/15 A Wedge 13.58 -0.22 12.65 16 153K 74K 11.50
TEVA 06/04 cup hdl 64.55 +1.07 68.05 80 678K 875K 63.29
Nice bounce with a bit more volume.
TEVA 05/15 BO 64.55 +1.07 62.1 67 678K 875K 60.50
XL 06/24 Put 85.7 -0.3 87.38 82.65 561K 877K 90.50
XRAY 05/25 A Wedge 35.98 -0.08 40.35 48.25 340K 352K 37.53
Closed it out.
Good Investing!
Jon L. Johnson and 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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