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Begin Part 3 of 3
PNC has been moved to the next section.
Pennants:
Continued Plays:
SWBT (Southwest Bancorp of Tx--$43.50; -0.25; optionable (ZRQ)): Regional banks
http://biz.yahoo.com/p/s/swbt.html
STATUS: Back at support in the pennant (10 day MVA, 43.37). Volume rose to 219,300 (avg. 237,000), so we want to see a hold at the support (or below at the 18 day MVA, tested on the low of 42.94) for a bounce back up; pattern high is 45.63. A financial stock that continues to hold a good-looking pattern. Outstanding money flow and high relative strength.
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--$34.91; +2.66; optionable (FAF)): Insurance
http://biz.yahoo.com/p/f/faf.html
STATUS: Broke out of the pennant on great volume (736,000; avg. 322,000). Right at our limit for buying on the breakout (34.78), but the aggressive can play this on up on the momentum. Money flow shot through the roof as relative strength broke out.
BUY POINT: Aggressive: On further upward movement on continued strong volume. Safer: After a pullback to test the buy point of 33.12.
POSITION: Both buy points: Stock and/or April $30 calls to buy (FAF DF).
NEU (Neuberger Berman Inc--$82.00; +0.99; optionable (NEU)): Financial services
http://biz.yahoo.com/p/n/neu.html
STATUS: Continues to hold its nice-looking pennant as volume stays well below average (108,200; avg. 283,000). Price moved up from support (10 day MVA, 80.59) on the slightly lower volume. Looking for a volume surge to breakout this one out; pattern high if 85.69. Strong money flow and high relative strength.
BUY POINT: Aggressive: Up from here on higher volume. Breakout: 85.82, on volume of 382,000.
POSITION: Aggressive: Stock and/or March $80 calls to buy (NEU CP; 25 open interests). April $80 options have no open interests. Breakout: Stock and/or April $85 calls to buy (NEU DQ; 20 open interests).
EDS (Electronic Data Systems--$63.60; -0.14; optionable (EDS)): Software
http://biz.yahoo.com/p/e/eds.html
STATUS: Gapped up on the earnings report Thursday, and since has held in a lateral pattern, showing a perfect doji today on continued decreasing volume (2.83 million; average 2.23 million). The gap-up was a breakout move from a pennant that was functioning as a handle to a cup base (prior high of 68). Look for a hold at this level for a continued move up on stronger volume. Showing good buying and money flow.
BUY POINT: From here: Over 64.75 on increased volume. Pullback: On a move back up after a pullback to the 60 range to test the breakout.
POSITION: From here: Stock and/or June $60 calls to buy (EDS FL). Pullback: Stock and/or June $55 calls to buy (EDS FK).
PNC (Pnc Financial Svcs Grp--$75.15; +1.72; optionable (PNC)): Banking
http://biz.yahoo.com/p/p/pnc.html
STATUS: Made a nice move back up, stopping the trend that saw it gradually pulling back in its pattern. The move, which came on increased volume of 948,000 (average 1.1 million), puts the stock just under its high of 75.81. Looking for a continued move over that level. Excellent 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).
Best Plays, Part 3
1) PPDI: Moving nicely.
2) AZA: A doji on lower volume.
3) FITB: Another bank stock moving up.
BASING/TRADING RANGES: There are many stocks forming solid patterns from which to break out. Some new, some continued.
New Play:
DGX (Quest Diagnostics Inc--$111.90; +2.80; optionable (DGX)): Health services
http://biz.yahoo.com/p/d/dgx.html
STATUS: Setting up in similar fashion to an earlier wedging-type pattern from which the stock ran to a new closing high in December (143.06). The stock just moved over its 50 day MVA (111.51), and the consolidation is forming on below average volume (210,900; avg. 472,000). We also like that this new consolidation has posted higher lows than the previous wedging pattern. Consequently, look for a breakout and run up to the level (and perhaps higher) of the previous closing high.
BUY POINT: Aggressive: Over 116 on volume of 285,000 or better.
POSITION: Stock and/or May $115 calls to buy (DGX EC).
Back on the report:
MAY (May Department Stores Co--$37.99; +1.78; optionable (MAY)): Retail
http://biz.yahoo.com/p/m/may.html
STATUS: The stock moved back over the 10 day MVA (37.53) from below the 18 day MVA and on stronger, average volume (1.49 million). We will see what the numbers out tomorrow will do for retail stocks. MAY is climbing up the right side of its base (prior high at 45) and looks like it has established support at the 36 level (opened at 36.21), after pulling off the recent closing high of 39.47. Good money flow into the stock.
BUY POINT: Over 39.47 on volume of 2 million or better.
POSITION: Stock and/or June $35 or $40 calls to buy (MAY FG or FH).
New Play (from the weekend):
PPDI (Pharmaceutical Prod Dev--$54.38; +5.25; optionable (PJQ)): Health services
http://biz.yahoo.com/p/p/ppdi.html
STATUS: Made a solid move today, breaking over recent levels in a short consolidation it formed after bouncing from the 50 day MVA (44.58). The stock had bounced twice from the 50 day since pulling back from its recent run that took PPDI up to a high of 58.75. With the strong move today, which came on much higher volume of 626,900 (average 490,000), the stock could be ready to attack its high. Great money flow and good buying.
BUY POINT: A continued move on strong volume.
POSITION: Stock and/or April $50 calls to buy (PJQ DJ).
WB (Wachovia Corp--$67.27; +0.04; optionable (WB)): Regional banks
http://biz.yahoo.com/p/w/wb.html
STATUS: Made a nice move up last Friday from the base of its handle in a nice-looking 35-week cup with handle base (prior high, 75.25). Today the stock could only manage a doji on slightly lower volume (771,000; average 929,000). Still looking for a breakout over the handle high (69.36). Money flow is improving, and buying decent.
BUY POINT: 69.49, on volume of 1.4 million or better. Remains a buy on the breakout up to 72.96.
POSITION: Stock and/or April $65 or $70 calls to buy (WB DM or DN).
STE (Steris Corp--$19.04; +0.85; optionable (STE)): Health services.
http://biz.yahoo.com/p/s/ste.html
STATUS: Continued to move up in its handle with another strong move today. STE formed the current handle after breaking out with a strong move in late December, and now the stock is just below the handle high of 19.25. Looking for a breakout with another surge of volume (down slightly to 406,800 today, but still strong breakout volume as the average is 266,000).
BUY POINT: 19.38, on continued strong volume.
POSITION: Stock and/or March or June $17.50 calls to buy (STE CW or STE FW).
AZA (Alza Corporation--$43.42; -1.13; optionable (AZA)): Drug delivery
http://biz.yahoo.com/p/a/aza.html
STATUS: After making a strong run the last two sessions, breaking from its rolling base that is something of a double-bottom with handle, the stock tested all the way back to 41.31 (just above the 18 day MVA, at 40.96) before recovering to close with a doji. We will see if the stock can hold up here, looking again at aggressive positions on a move over the December high (center of the double-bottom) at 44.94 (the stock approached that level on its recent run, hitting as high as 44.75 Friday). The November high is at 47.
BUY POINT: From here: A move over 45 on increased volume.
POSITION: Stock and/or April $42.50 calls to buy (AZA DV).
Continued Plays:
FITB (Fifth Third Bancorp--$59.00; +1.31; optionable (FTQ)): Regional banks
http://biz.yahoo.com/p/f/fitb.html
STATUS: Made a move up in the handle to its double-bottom, running up near the handle high of 59.38 on sharply higher volume of 1.75 million (average 2.2 million). A promising move, and we will look for a breakout on a continued move. The stock's high is at 61.31. High money flow and good buying.
BUY POINT: Breakout: 59.51, on volume of 3 million or better. Remains a buy on the move up to 62.49.
POSITION: Stock and/or May $55 calls to buy (FTQ EK).
NCC (Nations City Corp--$27.40; +0.19; optionable (NCC)): Banking
http://biz.yahoo.com/p/n/ncc.html
STATUS: Previously covered as a pennant, the stock remains in the handle of its 15-month base, looking like it has, at least for the moment, support on its 50 day MVA (27.09). NCC bounced off of that level today, but only managed a slight gain before closing with another tight doji. Volume was down again at 835,300 (average 1.14 million). From here, the stock has some resistance at the 18 day MVA (27.91) and the 29 level has been tough for the stock of late.
BUY POINT: Aggressive: A move over 28 on increased volume. Breakout: 30.44, on volume of 1.7 million or better.
POSITION: Both buy points: Stock and/or April $25 calls to buy (NCC DE).
Some continued trading plays:
AZPN (Aspen Technology Inc--$38.00; -0.13; optionable (ZQP)): Software
http://biz.yahoo.com/p/a/azpn.html
STATUS: Has pulled back for the second time in the handle of its 23-week cup base, but appears to again have support at the 37.50 level, showing a doji above that level today (and tapping down to its 18 day MVA at its low of 37.38). We will see if the stock can make another move up from here, this time breaking out over the handle high of 41.25.
BUY POINT: Aggressive A move up in a decent Nasdaq, with increased volume (down to 1.63 million today; average 369,300). Breakout 41.38, on volume of 554,000 or better. Remains a buy on the breakout up to 43.45.
POSITION: Aggressive Stock and/or May $35 calls to buy (ZQP CG low open interest). Breakout Stock and/or March $40 calls to buy (ZQP CH) (May $40 calls (ZQP EH) have 27 open interests).
A small stock that looks great:
FRED (Fred's Inc--$25.00; +0.31; no options): Retail
http://biz.yahoo.com/p/f/fred.html
STATUS: Broke out of the handle to its 22-week cup base Friday, and was able to continue up today on increased volume of 93,800 (average 44,600). The stock is just under the high in the left side of the cup, at 25.38, and for additional positions we will want to the stock take out that level. If we get a pullback, we will look for the stock to hold the prior breakout level of 23.88. Great money flow and buying.
BUY POINT: From here A move over 25.38 on continued strong volume. Pullback A move up after a lower-volume pullback to the 23.88 level.
POSITION: Stock.
Continued Plays:
JPM (J.P. Morgan & Co--$52.55; +0.60; optionable (JPM)): Banking
http://biz.yahoo.com/p/j/jpm.html
STATUS: Moved up slightly in the handle to its cup base, showing another doji today just below its 18 day MVA (52.81). Volume continued to pull back slightly, coming in a 5.2 million (average 9.5 million). Still looking pretty good, with the handle high is 57.33. Buying picked back up and relative strength continues to be strong.
BUY POINT: Aggressive: Over 54 on volume in the range of 7.5 million. Breakout: 57.46, on volume of 15 million or better.
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).
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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