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Begin Part 3 of 3
Continued Plays:
SDS (Sungard Data Systems Inc--$57.00; +1.63; optionable (SDS)): Business software
http://biz.yahoo.com/p/s/sds.html
STATUS: Moving up on good volume after testing the 18 day MVA (54.85) on its breakout test. The stock is attempting a move back to the breakout high of 60.14. Volume was excellent at 1.8 million (avg. 900,000), so we are looking for a follow-through on the momentum.
BUY POINT: Aggressive: Up from here on continued strong volume. New High: Over 60.14 on continued strong volume.
POSITION: Aggressive: Stock and/or July $55 calls to buy (SDS GK). New High: Stock and/or July $60 calls to buy (SDS GL).
WEDGES, PENNANTS, and FLYING PLATEAUS (AND FLAGS): These are some of our favorite patterns as the moves can be explosive. In this market, however, we need to see the move on the breakout on strong volume.
Wedges:
Continued Plays:
A small financial stock:
CORS (Corus Backshares Inc--$50.75; +0.25; no options): Banking
http://biz.yahoo.com/p/c/cors.html
STATUS: Made a breakout move Thursday and inched only higher Friday as volume dropped back to 17,600 (avg. 32,272), beating the buy point of 50.26. We will see if the stock can get another volume surge to carry out the breakout; one day of lower volume won't destroy the move. Continued strong buying and money flow.
BUY POINT: Remains a buy on a breakout up to 52.77, but we will have to see volume in the range of 44,000 or better.
POSITION: Stock.
Pennants:
Continued Play:
EDS (Electronic Data Systems--$66.45; +1.86; optionable (EDS)): Software
http://biz.yahoo.com/p/e/eds.html
STATUS: Looking good as the stock continues Thursday's move off support (10 day MVA, 63.56). EDS has moved up after testing its recent breakout in its 10-month base (which formed a handle). Now the stock will try to attack the previous basing high at 73.56, and can carve out a bit more on this move as long as volume keeps looking this good (stronger at 4.7 million; avg. 2.5 million).
BUY POINT: Remains a buy up to 68.91, on continued strong volume.
POSITION: Stock and/or June $65 calls to buy (EDS FM).
BASING/TRADING RANGES:
New Plays:
NE (Noble Drilling Corp--$48.50; +2.42; optionable ( )): Energy
http://biz.yahoo.com/p/n/ne.html
STATUS: Moving up from the base of the handle to a 24-week cup base. Volume remains below average on the move (978,800; avg. 2 million), so we are looking for a strong surge to sustain this pop back over the short term moving averages (10 day MVA, 47.44). Handle high is 52. Good buying, and relative strength has broken out ahead of price.
BUY POINT: Aggressive: Up from here on stronger volume (average or better). Breakout: 52.13, on volume of 3 million or better.
FTS (Footstar Inc--$45.00; +0.25; no options): Retail
http://biz.yahoo.com/p/f/fts.html
STATUS: Pulling back in the handle of a 9-week cup base, support tested on the low of 44.05 (50 day MVA, 43.75). Moved up on lower volume (127,500; avg. 205,590), but off the high of 46.25 to close just under the 18 day MVA (45.10). We will look at the aggressive play on a move over the intraday high for taking positions with stock and/or calls, and for a breakout over the handle high of 48.90 on strong volume. Good buying and relative strength that is out and ahead of price.
BUY POINT: Aggressive: Over 46.25 on stronger volume. Breakout: 49.03, on volume of 308,000 or better.
POSITION: Stock.
MFC (Manulife Financial Corp--$27.85; -0.12; optionable (MFC)): Insurance
http://biz.yahoo.com/p/d/dme.html
STATUS: In a double bottom, coming up the last leg. Volume remains above average but declined Friday (380,500; avg. 276,363), pulling the stock back down slightly in the possible start to a handle formation. If not, we look for a breakout over the peak of the middle hump, 29.14. Previous high at the start of the base is 32.19. Money flow and buying look decent.
BUY POINT: 29.27, on volume of 415,000 or better.
POSITION: Stock and/or June $30 calls to buy (MFC FE); options have no open interests.
YUM (Tricon Global Rest Inc--$38.47; -0.54; optionable (YUM)): Restaurants
http://biz.yahoo.com/p/y/yum.html
STATUS: Made a breakout move Thursday from a short cup with handle base that formed in the upper right side of the stock's much larger base (previous high 44.38). Pulled back slightly on lower volume Friday (718,100; avg. 851,590), below the buy point of 38.51, so a continued pullback to the 10 day MVA (37.71) is possible. The stock hit 38.20 twice recently, however, so might find support there.
BUY POINT: On a move back over the breakout high of 39.50 on average or better volume.
POSITION: Stock and/or July $35 calls to buy (YUM GG).
Continued Plays:
ADSK (Autodesk Inc--$38.06; -0.32; optionable (ADQ)): Software
http://biz.yahoo.com/p/a/adsk.html
STATUS: Made a breakout run (from the base of its handle) that ended Monday, and the stock pulled back to consolidate above its 10 day MVA (37). Showing a loose doji, volume was strong and well above average, so we will see if the stock can respond better than this within the next day or so. Volume was 1.7 million (avg. 823,363). Stock still shows great money flow and buying, and high relative strength.
BUY POINT: Breakout: 40.01 on continued strong volume.
POSITION: Breakout: Stock and/or July $35 calls to buy (ADQ GG; 50 open interest).
IVGN (Invitrogen Corporation--$80.88; +1.25; optionable (IUV)): Biotechnology
http://biz.yahoo.com/p/i/ivgn.html
STATUS: Pulled back the last three days from the ascending wedge breakout (the pattern formed the bottom of the stock's 2-month base), and Friday moved up after a test of the 18 day MVA on the low of 77.38. Thursday's pullback doji was on lower, below average volume, and with Friday's move up, the stock showed two days of good price/volume action (volume shot up to 1.2 million; avg. 753,000). Looking for a continued move up, over the intraday high of 83.06.
BUY POINT: A move over 83.06 on continued strong volume.
POSITION: Stock and/or May $80 calls to buy (IUV EP).
A Trading Play:
New Play:
RE (Everest Re Group Ltd--$66.50; +1.27; optionable (RE)): Insurance
http://biz.yahoo.com/p/r/re.html
STATUS: Looking for a move up to the 74 range; RE broke ahead of resistance at the 65 level Friday on solid volume (747,600; avg. 498,363). Pulled off the high of 67.75 as the move lost a bit of steam, most likely on the overall market selling. Ready to pick it up from here or at support in the 65 range. December high is 74.75.
BUY POINT: On a move up from here or back up after a pullback to the 65 level.
POSITION: Stock and/or July $65 calls to buy (RE GM; options have 27 open interests).
Other Basing Plays continued:
LOW (Lowe's Companies Inc--$57.10; +2.09; optionable (LOW)): Retail
http://biz.yahoo.com/p/l/low.html
STATUS: Moving up in the handle of its 10.5-month base. Thursday LOW made a huge recovery move from a low of 49 to close back over the 18 day MVA (55.06). The stock moved over its 10 day MVA (56) Friday on lower volume (2.4 million; avg. 2.9 million), so we will look for higher volume to sustain this move up. Handle high is 59.55. Excellent money flow and relative strength, and continued strong buying. A retail stock holding up pretty well considering the sector's recent troubles.
BUY POINT: Over 59.68 on volume of 4.3 million or better.
POSITION: Stock and/or July $55 calls to buy (LOW GK).
STE (Steris Corp--$18.10; +0.26; optionable (STE)): Health services.
http://biz.yahoo.com/p/s/ste.html
STATUS: We thought the stock was heading out of its double-handle pattern Wednesday (to its 20-month saucer base), but instead it dropped back to the 18 day MVA (17.96) on lower volume. Still holding at that support level, the stock made a small move up as volume shot above average (322,400; avg .273,000). STE hit resistance at the 10 day MVA (18.16). We will see if the volume can pop the stock up to the buy point. If not, we will move on.
BUY POINT: Breakout: 19.38, on volume of 410,000 or more.
POSITION: Stock and/or June $17.50 calls to buy (STE FW).
Put Plays: New and continued.
New:
AEOS (American Eagle Outfitter--$32.13; -2.50; optionable): Retail apparel. Split 3:2 effective 2-26-01.
http://biz.yahoo.com/p/a/aeos.html
STATUS: AEOS got hit with the retailers and has made a post-split retreat, dropping back Friday through its 50 day MVA (33.89), moving on increased volume (3.45 million; average 12.6 million). On a further move down there is some support at the November highs and January consolidation lows at 30. We will see if the stock can bounce back up toward the 50 day, and on a failed move and retreat back down, a possible play.
PLAY: A move down after a failed move on the 50 day, with April $36.625 puts to buy (HUJ PY).
BBY (Best Buy Co Inc--$40.10; +1.20; optionable (BBY)): Retail Electronics
http://biz.yahoo.com/p/b/bby.html
STATUS: Moved up to the 50 day MVA (40.55) on lower volume (1.9 million; avg. 2.5 million). Previous session the stock failed to break the resistance on stronger volume. We are looking for a move back down from the moving average and on stronger volume will look at puts on a move down to 35.
BUY POINT: On a move down on stronger, above average volume.
POSITION: April $50 puts to buy (BBY PJ).
NVDA (Nvidia Corp--$43.56; -4.66; optionable): Semiconductor.
http://biz.yahoo.com/p/n/nvda.html
STATUS: Has come back down steadily after two tries at its 200 day MVA (59.94) last month, and Wednesday the stock took out its 50 day MVA (49.28) and tested as low as 40 on Thursday. Friday NVDA tried a move back up on the 50 day, but was pushed back down to close with a loose doji after hitting up to 47.94. Volume was huge at 5.89 million (average 2.47 million), and we will look for a strong move down after another test up toward the 50 day, while keeping a watch for it to tank from here.
BUY POINT: Test A move on strong volume after a move up toward the 50 day. From here A move below 43 on continued strong volume in a weak tech market.
POSITION: Test April $55 puts to buy (UVA PK). From here April $50 puts to buy (UVA PJ).
NETE (Netegrity--$40.50; -3.63; optionable): Security Software.
http://biz.yahoo.com/p/n/nete.html
STATUS: Has been in a steady downtrend from the 65 level since early February, and Friday the stock gapped down to support from recent and November-December lows, showing loose doji pattern while moving on strong volume of 1.45 million (average 773,000). The pattern indicates a possible bounce, but we will not look for such a move to have strength, watching for the stock to drop back from what had been soft support at 45, looking to play it down. There is some support below from the November intraday low at 36, and the January lows around 30.
BUY POINT: Bounce A move down on strong volume after a bounce up toward 45. From here A move below 40 on continued strong volume.
POSITION: Bounce April $50 or $55 puts to buy (UPN PJ or UPN PK). From here April $45 puts to buy (UPN PI).
PDLI (Protein Design Labs Inc--$57.88; -0.37; optionable (PQI)): Drugs
http://biz.yahoo.com/p/p/pdli.html
STATUS: Having a hard time breaking resistance at its 18 day MVA (60.93). The stock tried to make a move to that level stick Friday, but pulled back down on lower volume (1.46 million; avg. 1.86 million). The stock can move back to the resistance if it gets a shot of volume, but we are looking for a move back down from there; on stronger volume, we will look at buying puts on the move down to 50.
BUY POINT: On a move down from the 61 range on strong volume.
POSITION: April $65 puts to buy (PQI PM).
TLB (Talbot's--$46.70; -2.20; optionable): Retail Apparel.
http://biz.yahoo.com/p/t/tlb.html
STATUS: The sector is plummeting, and TLB along with it. After falling out of a cup-with-handle last month the stock bounced a few times on its 50 day MVA (48.65), but Friday it gave up that level, gapping below it on heavy volume (up to 752,700; average 496,000). After the gap down, the stock made a move back up toward the 50 day, but fell back from its intraday high of 48.30 to close with a tight doji. It could try another test of the 50 day, but on a failed move we are looking to ride it down. There is support here from the February low and at 43 from the January low.
BUY POINT: A move down after a failed test of the 50 day MVA. From here A move below 46 on continued strong volume.
POSITION: Test April $55 puts to buy (TLB PK). From here April $50 or $55 puts to buy (TLB PK or TLB PL).
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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