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us stock market, trading system
Begin Part 2 of 2
THE PLAYS:
Please note that when we reference the 10, 18, and 50 day moving averages (MVA), those are exponential moving averages (EMA). The 200 day moving average is always simple (SMA). We will note when we reference a particular MVA differently, e.g., a simple 50 day MVA.
Best Plays: Got some good moves from some of last night's plays: DELL, SJT and TTN look good, and TSS continues to tighten its pennant pattern. For tonight, we are looking at some other plays such as KLAC, NVLS and AN that show promise as they are forming good-looking patterns. Here are the ones we are really focusing on for the next session:
Best Plays:
1) AN: In a cup with handle pattern.
2) KLAC: Moving up on good volume, though we may see a handle form here.
3) NVLS: Ditto.
4) RCGI: Looking interesting.
5) TTN: Moving up from the base of its handle.
6) TSS: Still in the tight pennant.
7) LLL: A resurgent leader.
8) CPN: Showing life again.
Trading Play: Trading plays are short plays to a near-term target. That doesn't mean the stock won't turn into a good long-term hold at some point, but that is not why we are looking at the play for now:
A rolling pattern (updated):
The current market is ideal for trolling for patterns where stocks roll up to hit resistance, then move back down again.
NHAN (Nhancement Tech Inc--$4.88; -0.12; no options): Business Software
STATUS: Continued its move down Tuesday in the rolling pattern, breaking support at 5 and heading for support in the 4.50 range (February intraday low was 4.22). From there we will look for a rebound to the 18 day MVA (5.62). The stock showed a doji that closed at the low, on stronger volume (73,300; avg. 150,500), which inclines us to look for a move to that lower support before a move up. Whether it does that or heads up from here, on the roll back up to the resistance level we'll look at positions with stock.
BUY POINT: On a move back up from 4.22 or better, watching for resistance at the 5.62 level (18 day MVA).
POSITION: Stock.
http://www.investmenthouse.com/cd/nhan.html
(Click to view the chart)
http://biz.yahoo.com/p/n/nhan.html
New Stocks:
APD (Air Products & Chemicals--$41.83; +1.38; optionable (APD)): Chemicals
STATUS: Broke above a long-term down trendline on good volume (1.87 million; avg. 918,590). The stock has trended up from a March 2000 low of 23.81, and looks ready to break over the January high at 42.44 (the high tested 42.50). APD is in a 22-month base (previous high is 49.13), and the steady uptrend is closing in on the previous high at 49.13. Strong money flow and relative strength has broken out ahead of price.
BUY POINT: Aggressive: Up from here on continued strong volume.
POSITION: Stock and/or June $35 calls to buy (APD FG).
http://www.investmenthouse.com/ct/apd.html
(Click to view the chart)
http://biz.yahoo.com/p/a/apd.html
AN (Autonation Inc--$8.01; -0.01; optionable (AN)): Specialty Retail: Auto Dealerships
STATUS: Pulling back in the handle of a 9.5-month cup with handle. Volume continues to drop below average (reaching Tuesday 693,9000; avg. 1.1 million). The stock tested support at the 18 day MVA on the low of 7.90. Looking for a move up soon for a breakout move. Handle high is 8.48. The stock shows strong money flow and high relative strength.
BUY POINT: Breakout: 8.61, on volume of 1.7 million or better.
POSITION: Stock and/or July $7.50 calls to buy (AN GU).
http://www.investmenthouse.com/cd/an.html
(Click to view the chart)
http://biz.yahoo.com/p/a/an.html
Updated Stocks:
Two double-bottom patterns that should do well in a continuing rally. After hours Intel announced that it does not expect end-demand for semiconductors to snap back rapidly. That is affecting chips after hours, but the result can be a pullback into a handle formation, a move for which the two following stocks are in position:
KLAC (Kla-Tenor Corp--$45.00; +3.25; optionable (KCQ)): Semiconductor Equipment
STATUS: Broke its down trendline on good volume (9 million; avg. 6.7 million), and crossed the 200 day MVA (44.28) to boot. KLAC has formed a classic double-bottom pattern and is completing the right leg on this move. High in the middle peak of the pattern is 46.63; we will look for a breakout over that price on a move up from here. Otherwise, a pullback into a handle (with support at the down trendline at 42) from here will dictate a buy point over the intraday high of 45.94. KLAC is in a 6-month base (prior high is 67.38 from September, origin of the down trendline, which goes on to connect January and February highs). High money flow and good buying.
BUY POINT: Breakout: 46.76, on volume of 10 million or better.
POSITION: Stock and/or June $45 calls to buy (KCQ FI).
http://www.investmenthouse.com/cd/klac.html
(Click to view the chart)
http://biz.yahoo.com/p/k/klac.html
NVLS (Novellus Systems--$46.81; +2.87; optionable (NLQ)): Semiconductor Equipment
STATUS: The stock has formed a classic double-bottom pattern in February, and is currently shooting up the right leg on above average volume (8.2 million Tuesday; avg. 5.6 million). High in the middle peak is 47.50, and we will be looking for the stock to begin forming a handle here, pulling back to the 200 day MVA (45.66) for support on that move. Previous high in the short base is from January (49.50). In a continued rally, this stock can offer a solid breakout. Shows high money flow and good buying. NVLS is in a 6-month base.
BUY POINT: Breakout from here: 47.63, on continued rising volume (minimum breakout volume is 8.4 million). If the stock pulls back into a handle here, we will look for a breakout over today's intraday high (48.13).
POSITION: Stock and/or June $40 or $45 calls to buy (NLQ FH OR FI).
http://www.investmenthouse.com/cd/nvls.html
(Click to view the chart)
http://biz.yahoo.com/p/n/nvls.html
Other Updated Stocks:
RCGI (Renal Care Group Inc--$27.44; +0.50; optionable (NUQ)): Specialized Health Services
STATUS: The company reported good earnings after the bell Tuesday. In regular trading the stock moved closer than it has in several weeks to clearing a ranging ascending wedge developed on top of the 50 day MVA (25.99). High price in that range is 27.88, and the stock reached a high of 28.63 in December. We like the higher lows the pattern continues to show, and the move up today on stronger, average volume (371,100) looks good; the stock moved up from a test of the 18 day MVA on the low of 26.13. On a breakout over the December high, we will look at positions with stock and/or calls to buy. Outstanding money flow, high relative strength, and good buying.
BUY POINT: Over 28.63 on volume of 501,000 or better.
POSITION: Stock and/or June $25 calls to buy (NUQ FE).
http://www.investmenthouse.com/cd/rcgi.html
(Click to view the chart)
http://biz.yahoo.com/p/r/rcgi.html
TTN (Titan Corp--$24.58; +1.56; optionable (TTN)): Business Software
STATUS: Moved up from the base of its handle, after hitting support Monday at the 10 day MVA (23.21), making a strong move on volume that broke above average (611,900; avg. 408,000). On the breakout over the handle high (25.40), we will look at positions with stock and/or calls to buy. The pattern is at the bottom of a larger 8-month base, and the stock shows good money flow and buying. Stop loss on the breakout: 25 (a half-point under the pivot point).
BUY POINT: Breakout: 25.53, on volume of 612,000 or better. A buy on a breakout up to 26.81.
POSITION: Stock and/or July $25 calls to buy (TTN GE).
http://www.investmenthouse.com/cd/ttn.html
(Click to view the chart)
http://biz.yahoo.com/p/t/ttn.html
TSS (Total System Services--$24.13; -0.09; optionable (TSS)): Business Software
STATUS: Continues to look great in the pennant, as price squeezes down even tighter in the tail of the pattern, showing Tuesday a very tight doji. Volume dropped back down to 16,200 (avg. 57,181), but the stock moved up from a test of the 10 day MVA at 24.05. Pattern high is 24.63. We will look at taking positions with stock and/or calls to buy on the breakout. Stop loss on the breakout: 24.03 (at 10 day MVA). Strong money flow and high relative strength.
BUY POINT: 24.76, on volume of 78,000 or better. Remains a buy on the breakout up to 26.
POSITION: Stock and/or May $22.50 calls to buy (TSS EX).
http://www.investmenthouse.com/cd/tss.html
(Click to view the chart)
http://biz.yahoo.com/p/t/tss.html
THE PORTFOLIOS: Each report, we look at these to see which is in a buy position. We don't cover them all each time, just the ones that are looking as if they are ready to pick up a few shares.
THE LEADERS: We are not changing our strategy on the current stocks in the leaders portfolio. Stocks such as JNPR, AMCC, CIEN, GLW, SEBL, VRSN and EXTR continue to exhibit superior earnings power and will rebound, but it is further out in the future. Indeed we still have investments in several of these. What we are doing is looking to those leaders in the current market, those stocks that are asserting good patterns on top of strength in earnings while the other stocks we have been following work through their bases. This provides additional stocks that are showing more near-term potential in the current market. We focus on the stocks that are performing best in a down market as they tend to help lead when the market turns back up.
New Leaders: ACS, CPN, SGR, ESRX, NATI, LLL
Previous Leaders: ADBE, AMCC, ARBA, BEAS, BRCD, CIEN, EMC, EXTR, GLW, JNPR, NEWP, NTAP, PMCS, SCMR, SEBL, VRSN, VRTS,
LLL (L-3 Communications--$86.81; +4.11; optionable (LLL)): Telecom Equipment
STATUS: After a 4-day consolidation below the 10 and 18 day MVAs (84.08, 83.42 respectively), LLL surged back over that resistance and headed for its February all-time closing high of 88.26. The stock is halfway, on this move, through overhead supply up to the level of that previous high, and looks ready to take it out. Volume moved above average to 480,900 (avg. 368,590). Money flow remains high and relative strength is out ahead of price.
BUY POINT: Aggressive: On further upward movement on continued strong volume. New High: 88.44 on 600,000 shares.
POSITION: Stock and/or July $80 calls to buy (LLL GP; have 69 open interests).
http://www.investmenthouse.com/cd/lll.html
(Click to view the chart)
CPN (Calpine Corp--$46.20; +2.21; optionable (CPN)): Electric Utilities
STATUS: Finally used the 18 day MVA (44.45) and the 10 day MVA (45, where the stock opened Tuesday) for support, and moved up on stronger volume (2.5 million). That is still below the average of 3.6 million. The stock bounced from the 18 day MVA and gapped up to open on the 10 day MVA, dropping back down to test the 18 day support intraday. On a move over the February high of 48.80, we will look at positions with stock and/or calls to buy. The aggressive can play the stock up from here on better volume.
BUY POINT: Aggressive: Up from here but on average or better volume. Safer: Over 49 on volume of 3.4 million or better.
POSITION: Aggressive: Stock and/or July $45 calls to buy (CPN GI). Safer: Stock and/or July $45 or $50 calls to buy (CPN GI or GJ).
http://www.investmenthouse.com/cd/cpn.html
(Click to view the chart)
UP & COMERS PORTFOLIOS:
EXDS, TQNT, BVSN, SANM, PKI and GMST for now.
No reports on stocks in this portfolio for the weekend report.
MEMBER PORTFOLIO: BRCM, CHKP, CSCO, EMLX, IDTI, INTC, JDSU, MVSN, NT, PWER, SUNW, VTSS
PUT PLAYS: We continue to look at stocks that are poised for moves down if this market cannot turn itself around. As always, keep reasonable loss cutting rules in place.
New Puts:
DS (Dallas Semiconductor Cp--$34.16; +1.60; optionable (DS)): Semiconductor: Integrated Circuits
STATUS: Moved up to tap its 200 day MVA on the high of 35.38, but dropped back down on lower volume (2.26 million; avg. 11. million). The stock has run up for 4 days, and after closing near the intraday low (33.75), looks ready to head back down. On a break of support (18 day MVA, 32.51; 50 day MVA, 31.89), we will look at playing the stock down, with put positions, to the 26-27 range (February low is 26.50).
PLAY: Below 32 on strong volume, April $40 puts to buy (DS PH).
http://www.investmenthouse.com/cd/ds.html
(Click to view the chart)
Good Investing!
Jon Johnson and The Daily Staff
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 of 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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us stock market
trading system
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