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understanding the stock market, stock option
Begin Part 2 of 3
ONLINE SEMINARS LIVE OR NOW ON CD!!
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THE PLAYS:
Best Plays:
1) MMSI: Excellent accumulation and price/volume action.
2) AET: Struggling at the down trendline.
3) APOL: Still building pressure.
4) PDCO: Looks ready.
5) GSK: Gapped down to the buy.
6) GDW: Stalling at the 10 day MVA.
7) STJ: Low volume test of resistance.
8) WEN: Ditto.
NEW PLAYS
Upside:
MMSI (Merit Medical Systems--$18.97; +0.57; optionable): Medical instruments
http://biz.yahoo.com/p/m/mmsi.html
STATUS: Ascending wedge. MMSI is in the process of working through a 11-week cup base, and is forming an ascending wedge as a part of that process. While the stock still has to complete the bigger base we are willing to take some positions here on the breakout of this interim base. Volume Monday was excellent, moving above average and close to a breakout. Accumulation in the base is excellent at 4 up weeks on rising volume to 0 down weeks on rising volume. Relative strength is of course breaking out as MMSI moves up as the market moves down. A sign of strength, and when the market rallies it will take off.
Volume: 100.031K Avg Volume: 128.727K
BUY POINT: $19.51 Volume=150K Target=$22.55 Stop=$17.88
POSITION: RMQ AW - Jan. $17.50c (65 delta) and/or Stock
http://www.investmenthouse.com/ct/mmsi.html
SYK (Stryker--$59.26; -0.21; optionable): Medical Instruments
http://biz.yahoo.com/p/s/syk.html
STATUS: Cup w/handle. SYK has made a remarkable reverse of its downtrend, breaking upside in early August. It has finished its 7-month cup and is now working on the handle to that pattern, testing the 10 day MVA (58.74) as it does and showing good accumulation in the base (4 up weeks on rising volume to 2 down weeks on rising volume). It most likely needs a bit more handle formation, but has been showing some excellent price/volume action the past week with some volume spikes the size not seen since July when it hit its low and started the reversal of the downtrend. Looks very solid.
Volume: 597.6K Avg Volume: 701.5K
BUY POINT: $60.55 Volume=1.1M Target=$69.63 Stop=$57.65
POSITION: SYK LK - Dec. $55c and/or Stock
http://www.investmenthouse.com/ct/syk.html
Downside:
AET (Aetna--$38.96; -0.14; optionable): Health care plans
http://biz.yahoo.com/p/a/aet.html
STATUS: Put. Working in a downtrend that started in June. AET broke below the 200 day MVA 8 sessions back and has since attempted a recovery. It has been trying the 18 day MVA on the highs (40.28) and it tried the down trendline as well. It may try a breakout from this point if the market rallies, but if the downtrend resumes, we are going to jump onboard.
Volume: 1.648M Avg Volume: 1.521M
BUY POINT: $38.65 Volume=1.7M Target=$35.85 Stop=$40.25
POSITION: AET WH - Nov. $40p
http://www.investmenthouse.com/ct/aet.html
FTN (First Tennessee National--$34.84; +0.14; optionable): Regional bank
http://biz.yahoo.com/p/f/ftn.html
STATUS: Put. Making a weak bounce up from the selling, stalling out at some potential resistance at 35 that it blasted through on the way down. It is in the middle of a sell off and this might be a bit tight, but when it resumes the selling and hits that target that puts 25%+ in the pocket.
Volume: 361.4K Avg Volume: 468.272K
BUY POINT: $34.45 Volume=500K Target=$32 Stop=$36
POSITION: FTN WH - Nov. $40p (-56 delta, low OI)
http://www.investmenthouse.com/ct/ftn.html
CONTINUING PLAYS:
Upside:
$OEX (S&P 100 options--$417.38; -6.52; optionable)
http://biz.yahoo.com/p/$/$oex.html
STATUS: Relief bounce. Did not make the move up Monday, but we held the position through the worst of it, anticipating the tide to change somewhat. It started to change late and we over the stop point until the last few minutes. Still anticipate it will rise and are looking at more positions on a relief rally. Aggressive up to 424 (over the down trendline).
Volume: 14.195M
BUY POINT: $424.45 Target=$438 Stop=$419
POSITION: OXJ JD - Oct. $420c (56 delta)
http://www.investmenthouse.com/ct/$oex.html
APOL (Apollo Group--$42.87; +0.38; optionable): Education and training
Play Date: 08/15/2002
http://biz.yahoo.com/p/a/apol.html
STATUS: Still in the tight lateral consolidation that is tapping the 18 day MVA (41.92). This is a strong sector and it looks ready to move.
Volume: 1.62M Avg Volume: 2.304M
BUY POINT: New positions: 43.55 Volume=3.3M Target=$50 Stop=$41.50
POSITION: AKA KY - Nov. $36.625 c (75 delta) and/or Stock
http://www.investmenthouse.com/ct/apol.html
CENT (Central Garden & Pet--$15.83; +0.2; optionable): Wholesale industrial equipment
Play Date: 09/12/2002
http://biz.yahoo.com/p/c/cent.html
STATUS: Cup w/handle. Big volume spike Monday as it held the handle very well. Looks ready to make the break out of the 3-month base. Accumulation is excellent and money flow is shooting up ahead of the move. Still looks super.
Volume: 400.8K Avg Volume: 136.954K
BUY POINT: $16.15 Volume=300K Target=$18.15 Stop=$14.94
POSITION: EQH KV - Nov. $12.50c (82 delta, low OI) and/or Stock
http://www.investmenthouse.com/ct/cent.html
COCO (Corinthian Colleges--$35.99; -0.56; optionable): Education
http://biz.yahoo.com/p/c/coco.html
STATUS: Ascending wedge. Closed at the 18 day MVA after testing lower on the low (35.60). Volume was still below average, but matched Friday's volume increase. Don't want to get too excited and jump the gun. Need to let it breakout.
Volume: 641.794K Avg Volume: 828.272K
BUY POINT: $38.11 Volume=809K Target=$42.75 Stop=$35.44
POSITION: UCS BF - Feb. $30c (74 delta) and/or Stock
http://www.investmenthouse.com/ct/coco.html
GLG (Glamis Gold--$9.9; -0.2; no options): Gold mining
http://biz.yahoo.com/p/g/glg.html
STATUS: Cup w/handle. 4-month base. Still in the base, holding the 10 day MVA on the close on lower, below average volume. Need to see the high volume breakout in a gold stock.
Volume: 603.7K Avg Volume: 844.59K
BUY POINT: $10.59 Volume=1.3M Target=$12.75 Stop=$9.45
POSITION: Stock (no option chain)
http://www.investmenthouse.com/ct/glg.html
PDCO (Patterson Dental--$52.19; +0.42; optionable): Wholesale medical equipment
http://biz.yahoo.com/p/p/pdco.html
STATUS: Cup w/handle. Solid move Monday but the volume was lower. That is okay as the stock is still working in the handle. That lower volume is what we were looking for as it follows up in the handle. Now we look for the breakout on very strong volume.
Volume: 450.957K Avg Volume: 374.772K
BUY POINT: $53.21 Volume=557K Target=$61.25 Stop=$49.49
POSITION: DOU AJ - Dec. $50c (57 delta) or DOU AI - Dec. $45c (73 delta) and/or Stock
http://www.investmenthouse.com/ct/pdco.html
PRX (Pharmaceutical Resources--$27.43; -0.55; optionable): Generic drugs
http://biz.yahoo.com/p/p/prx.html
STATUS: Ascending wedge. Tapped the 18 day MVA on the low (27.06) and recovered to the 10 day MVA on the close. Still working on that 3-month ascending wedge base, and is tightening up at the end of the pattern. Good accumulation in the pattern at 3 up weeks on rising volume to just one down week on rising volume.
Volume: 202.7K Avg Volume: 309.59K
BUY POINT: $28.91 Volume=525K Target=$34.65 Stop=$26.89
POSITION: PRX KE - Nov. $25c (71 delta) and/or Stock
http://www.investmenthouse.com/ct/prx.html
Downside:
GSK (Glaxosmithkline--$35.56; -0.89; optionable): Drug manufacturer
http://biz.yahoo.com/p/g/gsk.html
STATUS: Put. Gapped back down Monday below support at 36, but traded in a very narrow range after that. Volume was way down on the session, so we held off from jumping in. The candlestick pattern showed a doji on the close. We will see if it tests 36 one more time and then rolls over on some rising trade. If it does that is when we get in.
Volume: 822.6K Avg Volume: 1.153M
BUY POINT: $35.95 Volume=1.5M Target=$32 Stop=$37.35
POSITION: GSK WH - Nov. $40p (-67 delta)
http://www.investmenthouse.com/ct/gsk.html
CUB (Cubic Corp.--$18.65; -0.57; optionable): Scientific and technical
Play Date: 09/18/2002
http://biz.yahoo.com/p/c/cub.html
STATUS: Put. Started back down Monday but did not have much volume behind it. After the short covering rally Friday it was ready to fall. Looking for more positions on a further move down.
Volume: 71.3K Avg Volume: 104.09K
BUY POINT: New positions: $18.98 Volume=85K Target=$16 Stop=$21
POSITION: CUB MX - Jan. $22.50p
http://www.investmenthouse.com/ct/cub.html
GDW (Golden West Financial--$62.88; +0.33; optionable): Savings and loan
Play Date: 09/21/2002
http://biz.yahoo.com/p/g/gdw.html
STATUS: Put. Started lower and then rallied on us, but it stalled on a move over the 10 day MVA (63.19) and closed below that level. Volume was down again, falling to average. Looks ready to roll down from here with the close off the high and lower volume at resistance.
Volume: 682.2K Avg Volume: 671.909K
BUY POINT: $62.29 Volume=675K Target=$58.55 Stop=$63.85
POSITION: GDW WM - Nov. $65p (-55 delta)
http://www.investmenthouse.com/ct/gdw.html
STJ (St. Jude Medical--$36.4; +0.11; optionable): Medical appliances
http://biz.yahoo.com/p/s/stj.html
STATUS: Put. Another low volume move up Monday, tapping the simple 50 day MVA on the high (36.76) and falling back off of that level to close. It looks as if it is stalling out at this MVA and at price resistance at 36 as well.
Volume: 1.072M Avg Volume: 1.254M
BUY POINT: $35.95 Volume=1.9M Target=$32.05 Stop=$37.35
POSITION: STJ MH - Jan. $40p (-54 delta)
http://www.investmenthouse.com/ct/stj.html
SY (Sybase--$11.75; -0.25; optionable): Application software
Play Date: 09/19/2002
http://biz.yahoo.com/p/s/sy.html
STATUS: Put. SY started lower without a bounce up to test the 10 day MVA, but the market was not ready to carry it to that point. Kind of tight from here, but on a test higher toward 13 that does fail, we will look at entering.
Volume: 414K Avg Volume: 639.227K
BUY POINT: After a test of 13: $12.75. From here: 11.95. The options are inexpensive so that is plenty of room to make some good money. Volume=680K Target=$10 Stop=$13.55
POSITION: SY XV - Dec. $12.50p (-50 delta)
http://www.investmenthouse.com/ct/sy.html
WEN (Wendys International--$32.53; -0.04; optionable): Burgers and fries
http://biz.yahoo.com/p/w/wen.html
STATUS: Put. Looks to be stalling at the 10 day MVA (32.68), showing a hanging man doji Monday just below that level on very low volume.
Volume: 771.2K Avg Volume: 1.369M
BUY POINT: $32.45 (orig. $32.75) Volume=1.6M Target=$30 Stop=$33.33
POSITION: WEN XG - Dec. $35p (-57 delta)
http://www.investmenthouse.com/ct/wen.html
End Part 2 of 3
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understanding the stock market
stock option
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