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Begin Part 2 of 2
TEAM TRADES
MRK: A wide array of sectors are under pressure, big drugs as well. MRK is a Daily play as a stock that had rallied to the 50 day MVA and failed on high volume. It started down again Monday as did most stocks, hitting the buy point in the first half hour. We were looking at some November put options, and when the buy was hit they were trading 5.00 by 5.20. The limit was put in at the ask price and that was sufficient even though the stock continued to fall. The stock moved lower to 45.10 (buy at 46.08), but then bounced mid-morning with the rest of the market. The options made it back to the buy point after moving up to 5.60 and higher, but then the stock rolled back over, the options closing at 5.20 by 5.40.
THE PLAYS:
Best Plays:
1) VRTX: Ready to fall.
2) WFC: In trouble.
3) COCO: Looks ready in a bad market.
4) PRX: Looks ready.
5) RINO: Building pressure.
6) UNT: Good move.
7) ACS: Another doji at the 10 day MVA.
8) AMGN: Still looks ready to fall.
9) UBS: Doji below the 10 day MVA.
10) WEN: Rolled over on above average volume.
NEW PLAYS
Downside:
VRTX (Vertex Pharmaceuticals--$18.49; -0.07; optionable): Drug manufacturer
http://biz.yahoo.com/p/v/vrtx.html
STATUS: Put. Testing the breach of the 50 day MVA (19.06), VRTX showed a tight doji in a $2 trading range on continued above average volume. A doji can show a change in direction; after moving up off of 16, VRTX tested 20 Friday and reversed to close right at the 10 day MVA. Monday it tested the 50 day and returned to close below the 10 day MVA (18.53). There is some support at 18, but on a move below that we are looking at positions. Delta is good and option prices make this workable.
Volume: 981.129K Avg Volume: 837.363K
BUY POINT: $17.96 Volume=900K Target=$15.75 Stop=$19.45
POSITION: VQR WD - Nov. $20p (-61.6 delta, low OI)
http://www.investmenthouse.com/ct/vrtx.html
WFC (Wells Fargo--$48.16; -0.29; optionable): Big bank
http://biz.yahoo.com/p/w/wfc.html
STATUS: Testing the 200 day MVA (48.73). WFC tested the 50 day MVA Friday and fell to close below the 200 day. Monday it tanked down to 47 but recovered to again test the 200 day MVA on the high and fell back. That action shows a doji after the move up from 46. It has failed for a week to get over the 50 and 200 day MVA. Looking for a resumption of the downtrend to take positions.
Volume: 5.487M Avg Volume: 5.769M
BUY POINT: $47.98 Volume=5.5M Target=$45.75 Stop=$49.03
POSITION: WFC MJ - Jan. $50p (-54 delta)
http://www.investmenthouse.com/ct/wfc.html
Upside:
BSTE (Biosite--$28.99; +0.57; optionable): Diagnostic drug substances
http://biz.yahoo.com/p/b/bste.html
STATUS: Cup w/handle. BSTE has formed this 5-month base after moving up off of its lows at 14 from February to May. It is forming this 2-week handle on mostly low volume as the tail end of a base showing positive accumulation at 5 up weeks on rising volume to 4 down weeks on rising volume; just takes a simple majority. Now we wait and see if it gives the volume breakout to finish off the pattern. This sector has some hot stocks and some cold stocks; BSTE is forming a good pattern to make a strong move from.
Volume: 512.411K Avg Volume: 435.863K
BUY POINT: $31.25 Volume=652K Target=$35.94 Stop=$29.06
POSITION: BQS AF - Jan. $30c (57 delta) and/or Stock
http://www.investmenthouse.com/ct/bste.html
CONTINUING PLAYS:
Upside:
CENT (Central Garden & Pet--$17.11; +0.25; optionable): Wholesale industrial equipment
Play Date: 09/12/2002
http://biz.yahoo.com/p/c/cent.html
STATUS: Cup w/handle. Continued moving on the breakout Monday on some rising volume; not huge, but above average volume once again. Not a powerful move but look at the market it is moving up in.
Volume: 189.155K Avg Volume: 141.181K
BUY POINT: Riding current positions for now (16.95 and $16.15) Volume=300K Target=$18.15 Stop=$15.75
POSITION: EQH KV - Nov. $12.50c (82 delta, low OI) and/or Stock
http://www.investmenthouse.com/ct/cent.html
COCO (Corinthian Colleges--$37.74; +0.89; optionable): Education
http://biz.yahoo.com/p/c/coco.html
STATUS: Ascending wedge. Making a better volume move toward the breakout point. Edged over the breakout point intraday and then pulled back. It held close to the high on the day, and it looks ready to make the breakout.
Volume: 684.11K Avg Volume: 789.5K
BUY POINT: Breakout: $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
DIAN (Dianon Systems--$47.31; +1.21; optionable): Medical labs
Play Date: 09/28/2002
http://biz.yahoo.com/p/d/dian.html
STATUS: Rallying higher, following through on the Friday move. Volume backed off to below average levels as the move continued. Can still provide a good return using options but we would like to see more volume. Again we are playing this as a trade, looking for a move up to first resistance at 50 to start and 52.50 as the next resistance level.
Volume: 236.34K Avg Volume: 438.227K
BUY POINT: New positions: 47.48 (orig. $46.28) Volume=425K Target=$50 Stop=$43.04
POSITION: UID KI - Nov. $45c (60 delta) or UID BI - Feb. $45c (62 delta)
http://www.investmenthouse.com/ct/dian.html
Play Date: 09/26/2002
IDXX (Idexx Labs--$30.5; -0.5; optionable): Diagnostic substances
http://biz.yahoo.com/p/i/idxx.html
STATUS: Cup w/handle. Still in the handle of the 4-month base, testing down but holding the 18 day MVA on the close. Volume dropped next to nothing on the move. Very solid still. Excellent accumulation at 5 up weeks on rising volume to 1 down week on rising volume. Money flow is ahead of the price, and relative strength is ahead of where it was at the May high.
Volume: 168.461K Avg Volume: 297.478K
BUY POINT: $32.11 Volume=468K Target=$36.75 Stop=$29.86
POSITION: IQX LF - Dec. $30c (61 delta) and/or Stock
http://www.investmenthouse.com/ct/idxx.html
IDXX (Idexx Labs--$30.94; +0.44; optionable): Drug Manufacturer
Play Date: 09/28/2002
http://biz.yahoo.com/p/i/itmn.html
STATUS: Cup w/handle. IDXX has worked its way into this 4-month pattern, forming the handle the past two weeks as it tests back. 30 is acting as some support and IDXX jumped up off of this level Monday on rising though still below average volume. Looks as if it could be ready to make a breakout move. We are looking at this as another trade, but will let it run if it has momentum at the target. Nice accumulation since late May at 3 up weeks on rising volume to 1 down week on rising volume.
Volume: 224.071K Avg Volume: 286.727K
BUY POINT: $31.85 Volume=2M Target=$36 Stop=$29.62
POSITION: IQY AF - Jan. $30c (65 delta) and/or Stock
http://www.investmenthouse.com/ct/itmn.html
Play Date: 09/26/2002
ITRU (Intertrust Technologies--$3.19; -0.05; no options): Application software
http://biz.yahoo.com/p/i/itru.html
STATUS: Cup. Now forming the handle in the 3-month cup base, pulling back to test the 10 day MVA on the low (3.05) on lower though still above average volume. Accumulation in the base is positive at 2 up weeks on rising volume to 1 down week on rising volume; again, a simple majority is all that it takes.
Volume: 1.028M Avg Volume: 419.743K
BUY POINT: $3.35 Volume=550K Target=$4.75 Stop=$2.99
POSITION: Stock (no option chain)
http://www.investmenthouse.com/ct/itru.html
PDCO (Patterson Dental--$51.18; -0.09; optionable): Wholesale medical equipment
Play Date: 09/21/2002
http://biz.yahoo.com/p/p/pdco.html
STATUS: Cup w/handle. Showing a tight doji with long tail in the handle, holding right above the 10 day MVA on the Monday close. Volume backed way off as it tested 50 and then rallied back. Want to see that strong volume breakout, and it is setting up for that.
Volume: 285.785K Avg Volume: 387.818K
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--$27.98; -0.22; optionable): Generic drugs
Play Date: 08/20/2002
http://biz.yahoo.com/p/p/prx.html
STATUS: Ascending wedge. Working well in the pattern, testing close to the 50 day MVA on the low (26.85) and recovering to close at the session high. Looks really good in the 3.5-month pattern that shows good accumulation in the pattern at 3 up weeks on rising volume to just one down week on rising volume. Need to see the big volume breakout.
Volume: 245.7K Avg Volume: 287.136K
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
Play Date: 09/28/2002
RINO (Blue Rhino--$15.29; +0.06; no options): Propane tank exchange
http://biz.yahoo.com/p/r/rino.html
STATUS: Testing the breakout. RINO is moving laterally above 15 as it consolidates the breakout move three weeks back. Monday it tested down to the 10 day MVA on the low (14.65) and closed positive on rising, above average volume. It looks ready to make its next move.
Volume: 241.535K Avg Volume: 200.272K
BUY POINT: $15.55 Volume=225K Target=$19.45 Stop=$14
POSITION: Stock (no option chain)
http://www.investmenthouse.com/ct/rino.html
Play Date: 09/25/2002
UNT (Unit Corp.--$19.15; +0.73; optionable): Oil & gas drilling
http://biz.yahoo.com/p/u/unt.html
STATUS: Cup. Monday UNT tested down to the 18 day MVA on the low (17.74) and then put in a solid rally on solid volume. It hit our buy point but we were getting bad data on this one and the volume was reading very low. Turns out volume was at the target. Still a buy on this move.
Volume: 272.1K Avg Volume: 172.909K
BUY POINT: New positions: $19.31 (orig. $18.31). Volume=255K Target=$22 Stop=$16.95
POSITION: UNT CC - Mar. $15c (-70 delta, no OI) and/or Stock
http://www.investmenthouse.com/ct/unt.html
Downside:
ACS (Affiliated Computer--$42.55; -0.05; optionable): ITS
Play Date: 09/28/2002
http://biz.yahoo.com/p/a/acs.html
STATUS: Testing 18 day MVA. Showing another tight doji that tested the 18 day MVA on the high (43.25) and closed just above the 10 day MVA on rising, above average volume. This comes after a rally up off of low at 38; looks very much as if at least one more test of the low is coming if it breaks below 42 on some more volume.
Volume: 1.663M Avg Volume: 1.562M
BUY POINT: $41.96 Volume=1.8M Target=$38 Stop=$43.35
POSITION: ACS WI - Nov. $45p (-56 delta)
http://www.investmenthouse.com/ct/acs.html
AMGN (Amgen--$41.70; -0.30; optionable): Biotechnology
Play Date: 09/28/2002
http://biz.yahoo.com/p/a/amgn.html
STATUS: Put. Gapped lower and showed a doji that tested the 10 day MVA on the high (42.94) as volume continued to move higher above average. Does not look as if it is ready to reverse and move higher, so we are still on with our play lower. Still a buy at this point, just 21 cents below the buy point.
Volume: 22.256M Avg Volume: 16.525M
BUY POINT: New positions: $41.60 (orig. $41.96) Volume=15M Target=$39 Stop=$43
POSITION: AMQ WI - Nov. $45p (-61 delta)
http://www.investmenthouse.com/ct/amgn.html
GDW (Golden West Financial--$62.18; -0.5; optionable): Savings and loan
Play Date: 09/21/2002
http://biz.yahoo.com/p/g/gdw.html
STATUS: Put. Opened lower and tanked with market, but then rallied with the market as well. Tested the 10 day MVA on the high (62.79) and fell back as volume rose. Very similar to AMGN; even with this recovery we don't think it is moving higher here.
Volume: 814.6K Avg Volume: 682.136K
BUY POINT: New positions: 61.97 (orig. $62.29). Volume=675K Target=$58.55 Stop=$63.85
POSITION: GDW WM - Nov. $65p (-55 delta)
http://www.investmenthouse.com/ct/gdw.html
Play Date: 09/25/2002
RF (Regions Financial--$32.67; +0.17; optionable): Regional banks
http://biz.yahoo.com/p/r/rf.html
STATUS: Put. Testing the 10 day MVA on the high (32.95) as it showed a doji that reached down to 31.75 on the low and recovered with a gain on some rising, above average volume. Could be a reversal, but the stock is burrined under the 50 and 200 day MVA (33.55). Still a buy on some further selling.
Volume: 809.1K Avg Volume: 664.181K
BUY POINT: New positions: 32.45 (orig. $32.95). Volume=650K Target=$30 Stop=$33.65
POSITION: RF MG - Nov. $35p (-60 delta)
http://www.investmenthouse.com/ct/rf.html
STJ (St. Jude Medical--$35.7; -0.98; optionable): Medical appliances
Play Date: 09/21/2002
http://biz.yahoo.com/p/s/stj.html
STATUS: Put. Gapped below the 10 day MVA (36.29) and closed below 36 as volume rose to slightly above average volume levels. It looks ready to continue the move lower now as Friday did indeed look like the final gasp.
Volume: 1.136M Avg Volume: 1.27M
BUY POINT: New positions: 35.65 (prior: 36.25, $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
UBS (UBS Warburg--$41.00; -0.50; optionable): Bank
Play Date: 09/28/2002
http://biz.yahoo.com/p/u/ubs.html
STATUS: Put. Rallying up off of the low near 38, UBS has run into the 18 day MVA (42.31) and gapped below the 10 day MVA (41.42), showing a very tight doji on sharply higher volume. It showed this action before and then sold further. Still a buy as it is just below the buy point.
Volume: 363K Avg Volume: 180.772K
BUY POINT: New positions: 40.89; (orig. $41.15). Volume=225K Target=$37.75 Stop=$43.15
POSITION: UBS WI - Nov. $45p (-65 delta)
http://www.investmenthouse.com/ct/ubs.html
Play Date: 09/21/2002
WEN (Wendys International--$33.11; -1.29; optionable): Hamburger joint
http://biz.yahoo.com/p/w/wen.html
STATUS: Test of 200 day MVA breach. WEN rallied up to the 200 day MVA (34.66) and then rolled back over big time Monday on much stronger, above average volume. It broke below the short term MVA on the move. Looking for a further move down from here. Buy point is at 32.75, but we are willing to take new positions on a move below 33 on continued strong volume.
Volume: 1.885M Avg Volume: 1.354M
BUY POINT: $32.75 Volume=1.6M Target=$30 Stop=$33.33
POSITION: WEN XG - Dec. $35p (-57 delta)
http://www.investmenthouse.com/ct/wen.html
WATCHLIST/ CONTINUING:
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
$OEX 09/28 Put 407.25 -5.97 411 395 13M 0 415
Buy not issued. Tanked hard and fast early and was down near the target point without giving much of a chance to enter.
ABFS 09/24 BO 28.69 -0.11 29.18 33.45 297K 421K 27.14
Current. Nice test back to the 10 day MVA, showing a doji on low volume.
ACS 09/28 Put 42.55 -0.05 42.45 38 1.7M 1.8M 43.35
Buy not hit. Looks ready.
AET 09/23 Put 35.81 -1.24 38.65 35.85 1.8M 1.7M 40.25
Hit the target.
AMGN 09/28 Put 41.7 -0.3 41.96 39 22M 15M 43
Current. Hit the buy and tanked but managed to rally back some.
AMLN 09/18 cup hdl 16.62 +0.76 13.55 16.25 2M 750K 12.45
Current. Hit the target, but we are letting it run on some super volume.
APOL 08/15 A Wedge 43.43 -0.2 40.65 48 2.1M 3.3M 42
Current. Doji that tested the 18 day MVA. Looks very good.
AXP 09/03 Put 31.18 -0.3 33.18 29.25 7M 8.5M 33.55
Current. Hit close to 30 and it held on big volume. Have a hunch it will go further.
BLC 05/25 Flat 21.88 -0.74 24.25 30 623K 342K 22.55
Buy not hit. Tanking.
BRCM 08/17 CCall 10.68 -0.27 19.2 19.8 9.2M 9M 17.25
Current. Doji on low volume.
BSTE 09/30 cup hdl 28.99 +0.57 31.25 35.94 512K 652K 29.06
New.
CENT 09/12 BO 17.11 +0.25 16.15 18.15 189K 300K 15.35
Current. Moving up on solid volume.
CLE 09/07 DB hdl 21.8 -0.81 22.41 25.94 312K 365K 20.84
Buy not issued. Heading the wrong way.
COCO 09/18 Test 18 37.74 +0.89 38.11 42.75 684K 809K 35.44
Buy not issued. Close.
CTSH 09/14 Test BO 57.47 -0.72 63.32 70 625K 348K 58.89
CTSH 09/05 A Wedge 57.47 -0.72 60.35 67.94 625K 348K 56.75
Current. Holding at the 50 day MVA.
CUB 09/18 Put 17 -1.06 18.98 16 129K 85K 21
Current. Tanking on strong volume once again.
DIAN 09/28 BO 47.31 +1.21 46.28 50 236K 425K 43.04
Buy not issued. Did not get any volume, but a good price move.
GDW 09/21 Put 62.18 -0.5 62.29 58.55 815K 675K 63.85
GDW 09/14 Put 62.18 -0.5 63.54 60 815K 675K 64.55
Current.
GLG 09/18 cup hdl 9.25 -0.27 10.59 12.75 862K 1.3M 9.45
Buy not hit.
HD 09/16 Test 50 26.1 -0.66 34.55 38 18M 10M 32.13
Doji on rising volume.
IDXX 09/26 cup hdl 30.94 +0.44 32.11 36.75 224K 468K 29.86
Buy not hit, but looking better.
ITMN 09/28 BO 32.82 +1.09 31.85 36 2.3M 2M 29.62
Current. Good volume move.
ITRU 09/26 cup hdl 3.19 -0.05 3.35 4.75 436K 550K 2.99
Buy not issued. Testing the 10 day MVA on the low on lower volume.
KDE 09/25 A Wedge 23.73 +0.34 21.31 25.55 209K 180K 21.55
Current. Still moving up.
LH 09/24 Put 33.78 -0.22 33.55 27.75 1.4M 2.5M 35
Buy not hit.
MMSI 09/23 A Wedge 19.31 -0.83 20.5 24.65 234K 150K 18.94
Current. Volume shot up on the test, reaching down to the 18 day MVA before recovering to close just over the 10 day MVA. Needs to hold here.
OSTE 09/28 Test 50 5.16 -4.3 9.57 11.35 2.4M 265K 8.88
Buy not hit. Died a quick, ugly death.
PDCO 09/21 cup hdl 51.18 -0.09 53.21 61.25 286K 557K 49.49
Buy not hit. Looks solid.
PFE 09/07 Put 29.02 +0.44 30.55 27 21M 25M 30.25
Current. Tried to clear the 10 day MVA but could not. Needs to get below 28 fast. If it tests and hold we will take the gain.
PIXR 08/30 Test BO 48.1 -1.37 50.25 56.55 787K 580K 48.15
Current. Selling on some higher volume. Held the short term MVA.
PL 09/25 Put 30.77 +0.39 30.45 27.45 275K 200K 31.55
Current. Back up to the 200 day MVA on rising volume.
PRX 08/20 cup hdl 27.98 -0.22 28.91 34.65 246K 525K 26.89
Buy not hit. Looks good.
RF 09/25 Put 32.67 +0.17 32.95 30 809K 650K 33.65
Current. Testing higher but still in trouble.
RINO 09/28 A Wedge 15.29 +0.06 15.55 19.45 242K 225K 14
Buy not hit. Looks ready.
RINO 08/28 cup hdl 15.29 +0.06 13.8 16.75 242K 300K 14
Current.
STJ 09/21 Put 35.7 -0.98 36.25 32.05 1.1M 1.9M 33.71
Current. Looks ready to head back down.
STT 09/17 Put 38.64 +0.07 39.59 35.75 1.5M 1.5M 40.97
Current. Gapped lower on stronger volume.
SY 09/19 Put 11.62 -0.3 12.75 10 435K 680K 13.55
Buy not issued. Heading lower.
TCB 09/17 Put 42.33 -0.27 44.65 40.75 344K 375K 44.25
Current. Doji at 42 on rising volume. Needs to get below 42.
TEVA 08/12 DB hdl 67 -1.18 68.25 77.85 1.6M 1.2M 66.50
Current. Gapped lower and recovered to hold the 50 day MVA on sharply higher volume.
TIER 09/04 cup hdl 18.92 +0.13 20.21 23.25 97K 239K 18.65
Current. Holding above the 50 day MVA with a doji.
TTWO 08/24 cup hdl 29 -0.45 26.61 31.94 1.7M 1.5M 26.05
Current. Holding up well.
TTWO 08/17 cup hdl 29 -0.45 24.75 29.85 1.7M 1.5M 26.05
Current.
UBS 09/28 Put 41 -0.5 41.15 37.75 363K 225K 43.15
Current. Doji below the 10 day MVA on high volume.
UNT 09/25 Cup 19.15 +0.73 18.31 22 272K 255K 16.95
Buy not issued. Moving well.
VRTX 09/30 Put 18.49 -0.07 17.96 15.75 981K 900K 19.45
New.
WEN 09/21 Put 33.11 -1.29 32.75 30 1.9M 1.6M 33.33
Current. Looks ready for more downside.
WFC 09/30 Put 48.16 -0.29 47.98 45.75 5.5M 5.5M 49.03
New.
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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