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Begin Part 2 of 2

Best Plays, Part 2:
1) WR: Looks ready to pop up from the doji.
2) NVLS: Looking better to lead.
3) TMBR: Moving up in the handle. New play.
4) WCOM: A trading play.
5) JLG: Trying to recover back into the handle.
6) RE: Holding its pattern together; volume can break it higher.
7) Puts: JPM, IMPH

READY TO BREAK TO A NEW HIGH (or just did):

Back to a formerly covered stock:

CNX (Consol Energy Inc--$29.30; -0.30; no options): Metals and mining
http://biz.yahoo.com/p/c/cnx.html
STATUS: Moved below the 10 and 18 day MVA support levels (18 day MVA at 30.10), showing a doji on low volume (68,000). The stock can head up from here, but needs to move back over the 10 day MVA (30.32) on strong volume. The doji is at the bottom of the stock's trading range, and comes after a day of selling, so we are not anticipating a strong move yet.
BUY POINT: On a move over 31 on strong volume.
POSITION: Stock.

Continued Plays:

HI (Household International--$59.69; -0.76; optionable (HI)): Financial
http://biz.yahoo.com/p/h/hi.html
STATUS: Dropped back to close just above the 10 day MVA on stronger volume, the stock gapping lower to open at 58.50, support established over the last three days. Thus, the stock moved up on the day despite the loss, as volume shot higher to 2.5 million (avg. 1.7 million). Looking for a move up from this support level on strengthening volume. We want a move over upper resistance at 61.50.
BUY POINT: New high: Over 62 on continued strong, above average volume.
POSITION: Stock and/or July $55 calls to buy (HI GK).

A small financial stock:

CORS (Corus Backshares Inc--$49.19; -2.31; no options): Banking
http://biz.yahoo.com/p/c/cors.html
STATUS: Tanked below support (18 day MVA, 50.22) on strong volume. Out of the recent consolidation now, so no new positions.

TESTS OF THE BREAKOUT: Some of these stocks are moving back on low volume to test the breakout. We often take profits on option plays when they start to pullback on the breakout move and then get back in when the stock bounces up off of the breakout point. This second move is where some of the biggest gains are made.

Continued Plays:

WFT (Weatherford International--$54.55; -0.60; optionable (WFT)): Oil and gas equipmt http://biz.yahoo.com/p/w/wft.html
STATUS: Pulled back below the buy point of 55.31 on the pullback from the early March run, retracing almost 100% of the move. The stock is showing a tight doji, which suggests a move up after the 4-day pull back, but we don't like the depth of this drop, and the close below the 18 day MVA (54.84) on this strong volume. Volume remained well above average but lower at 2.1 million (avg. 1.4 million).
BUY POINT: On a move back over 56 on stronger volume.
POSITION: Stock and/or May $50 calls to buy (WFT EJ).

SDS (Sungard Data Systems Inc--$53.33; -0.97; optionable (SDS)): Business software
http://biz.yahoo.com/p/s/sds.html
STATUS: Closed on the 50 day MVA (53.11) after dropping to a low of 50.75. SDS has left its previous highs (near 60) high and dry, so we aren't looking at positions until the stock recovers.

EAT (Brinker Int'l--$29.00; -0.02; optionable (EAT)): Restaurants.
http://biz.yahoo.com/p/e/eat.html
STATUS: After the Thursday breakout, EAT retraced the move completely, closing Wednesday just below the 18 day MVA (29.06). This is well below the buy point of 30.34, and the 10 day MVA (29.46), support we looked for in the last report. No new positions.

YUM (Tricon Global Rest Inc--$36.70; -0.99; optionable (YUM)): Restaurants
http://biz.yahoo.com/p/y/yum.html
STATUS: Another failed breakout move, YUM tested on its low the 50 day MVA (36.17) after dropping back well below support and its buy point (18 day MVA, 37.75; buy point, 39.63). No new positions for now.

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:

New Play (from the weekend):

WR (Western Resources Inc--$24.29; -0.22; optionable (WR)): Utilities
http://biz.yahoo.com/p/w/wr.html
STATUS: Pulled back to the 50 day MVA (24.15) to show a tight doji after the stock first hit a low of 23.73 intraday. The 50 day marks lower support in the ascending wedge, and we want to see a move up from here. Still watching this one for the volume spike thrown last week; today's volume was lower on the move down, at 112,200 (avg. 373,000). Looking for a breakout over 25.88 (January high) on another volume surge (though it shouldn't take volume as huge as the spike!). Strong money flow and high relative strength. Initial profit target: $30-$31.
BUY POINT: 26.01, on volume of 504,000 or better. A buy on the breakout up to 27.31. Stop loss: 25.51 25.76.
POSITION: Stock and/or May $20 calls to buy (WR ED).

BASING/TRADING RANGES: Lots of patterns breaking down. That is a sign of a weakening market. Make sure of the breakout and then set stops just below the pivot point. Follow gains up with trailing stops.

New Plays:

TMBR (Tom Brown Inc--$35.25; +0.31; optionable (TQF)): Independent Oil & Gas
http://biz.yahoo.com/p/t/tmbr.html
STATUS: The stock is in a 10-week cup with handle base, the handle consolidation above the 10 day MVA. Tuesday the stock dropped to the 50 day MVA (on the low of 31.88) but battled back to close over the 10 day MVA (33.75). In a similar action Wednesday, TMBR tapped the 18 day MVA on the low of 33.38, rising on stronger volume (403,500; avg. 251,772), so support is firming at the lower levels. The stock hit a March high in the handle of 36.75 that matches the previous high at the start of the base, so that is the resistance to break. TMBR has good money flow and buying, and high relative strength. Initial profit target: $42-$44.
BUY POINT: 36.88, on volume of 378,000 or better. Stop loss: 36.38-36.63.
POSITION: Stock and/or June $35 calls to buy (TQF FG; 28 open interest).

NVLS (Novellus Systems Inc--$46.56; +1.18; optionable (NLG)): Semiconductor
http://biz.yahoo.com/p/n/nvls.html
STATUS: Looked at this pattern last night; NVLS was previously in a double-bottom with handle that has turned into an ascending wedge. The stock broke above resistance, the 200 day MVA (45.72) on even stronger volume of 13.1 million (avg. 6.2 million). This after the stock gapped lower on the opening price of 43.56 (as the market opened lower as well) in a test of the 18 day MVA. We will look at taking positions on a breakout over the pattern high of 49.50. Initial profit target: $57-$59.
BUY POINT: Breakout: 49.63, on volume of 8.3 million or better. Stop loss: 49.13--49.38.
POSITION: Stock and/or June $40 or $45 calls to buy (NLG FH or FI).

A trading play:

WCOM (Worldcom Inc--$16.44; +1.25; optionable (JQD)): Telecom
http://biz.yahoo.com/p/w/wcom.html
STATUS: Moved up from latest support (15 range) on stronger, above average volume (75.7 million; avg. 41 million). The stock looks good for a move up to the 50 day MVA (18) at least, and on the strong volume, perhaps higher. Closed right on top of the 10 day MVA, the high of 17 testing just above the 18 day MVA, first resistance for the stock to beat. The volume momentum looks ready to carry price through the resistance. A down trendline connecting August and January highs adds to potential resistance at the 50 day MVA, so this is a quick trading play from here. Initial profit target: $18, the $20.
BUY POINT: On a move up from here on continued strong volume.
POSITION: Stock and/or June $12.50 calls to buy (JQD FV).

New Plays (from the weekend):

JLG (Jlg Industries Inc--$13.69; +0.37; optionable (JLG)): Manufacturing
http://biz.yahoo.com/p/j/jlg.html
STATUS: After hitting the 10 day MVA Monday, JLG headed lower and Wednesday gapped open at 13.07 (below the 18 day MVA), then headed back up on stronger, above average volume (157,000; avg. 146,318). The high of 14 tapped the level of the former handle that was part of what originally attracted us to the play. The strong volume just may boost the stock back to that level, and we may still get the breakout. An encouraging move. Initial profit target: $16-$17 after a breakout.
BUY POINT: 14.21, on volume of 219,000 or better. Stop loss: 13.71-13.96.
POSITION: Stock and/or July $12.50 calls to buy (JLG GV).

LIN (Linens 'n Things Inc--$34.75; -1.75; optionable (LIN)): Retail
http://biz.yahoo.com/p/l/lin.html
STATUS: Darn. This one was looking good, holding in the handle to the newly formed cup base, but gapped much lower on the opening price of 35.25 and then headed down further. Volume at least was low and below average, but that doesn't help this pattern. No new positions for now.

Continued Plays:

SRCL (Stericycle Inc--$35.94; -1.19; optionable (URL)): Materials and construction
http://biz.yahoo.com/p/s/srcl.html
STATUS: Another stock that lost its grip on the handle of its cup base. SRCL dropped to a test of the 50 day MVA (35.50), showing a tight doji after a three-day drop. Volume was lower though still above average (204,800; avg. 176,000). The support will likely hold the stock, but we aren't taking positions until a move back up to the 39-40 range.

FTS (Footstar Inc--$43.54; -1.41; no options): Retail
http://biz.yahoo.com/p/f/fts.html
STATUS: Lost the double-handle after getting hit with some selling Tuesday. The stock continued below the 50 day MVA (44.14) Wednesday, and while volume is low (35,700; avg. 193,000) and FTS may make a quick recovery back over the moving average, we are not taking positions until it sees 46-48 again.

MFC (Manulife Financial Corp--$25.83; -1.22; optionable (MFC)): Insurance
http://biz.yahoo.com/p/m/mfc.html
STATUS: Dropped out of the handle on stronger volume, falling below support (10 day MVA at 26.89). No new positions.

ADSK (Autodesk Inc--$35.00; -1.38; optionable (ADQ)): Software
http://biz.yahoo.com/p/a/adsk.html
STATUS: ADSK was trying to break out of an 11-month base that is within a larger base. However, after the strong move up at the end of February followed by a consolidation in the over the 10 day MVA (36.91) and the pattern high of 40.38, the stock has dropped back and is trying to hold near its 50 day MVA (35.01). Not looking too strong, and the pattern today was a doji on low volume (605,600; average 868,000). We will see if it can bounce back up into its recent range at 36-40.
BUY POINT: Aggressive Over 38 on above average volume. Breakout: Over 40.38.
POSITION: Both buy points: Stock and/or July $35 calls to buy (ADQ GG).

RE (Everest Re Group Ltd--$63.49; -0.48; optionable (RE)): Insurance
http://biz.yahoo.com/p/r/re.html
STATUS: Has been moving in a handle of the 10-week cup base. Today the stock gapped down below its 50 day MVA (62.28), but managed to push back up a bit and take only a small loss. Volume continued to be low (260,200; average 477,000), which it generally has been as it has pulled back in the pattern. On a breakout over the pattern high of 67.75, we will look at taking positions with stock or options.
BUY POINT: Breakout: 67.88 on volume of 715,000 or better.
POSITION: Stock and/or July $60 calls to buy (RE GL 12 open interest).

LOW (Lowe's Companies Inc--$58.72; -0.89; optionable (LOW)): Retail
http://biz.yahoo.com/p/l/low.html
STATUS: Not looking good as the stock gapped down below its February highs (the highs in its former ascending wedge, at 59.55) and its 18 day MVA (58.03), pushing back up after hitting a low of 57.55. The low was right in the range of our stops, which we had at 57.50-57.75 (low was 57.55). We will keep them in place but watch for the stock to hold and push back up, but we need a breakout for positions. The breakout high was 64.59, but we are looking at the breakout closing high as the target.
BUY POINT: A move over the breakout closing high of 62.47, with increased volume.
POSITION: Stock and/or July (60 calls to buy (LOW GL).

Put Plays: If put positions were not closed today, consider doing so tomorrow if the market continues to head higher, unless the stocks hit resistance and turn back down from there. As always, keep reasonable loss cutting rules in place. The market is in position to head higher if its support level holds, so investors with short positions must be ready to close positions quickly. Otherwise, make sure you see the downside move, along with the market going down as well, and then enter.

New Puts:

DJX ($99.73; -3.18; optionable (DJV)):
STATUS: After a small relief bounce yesterday that gave us the test of 103 we were looking for, it dropped back hard again today. There is support in this range, with an intraday low of 96.56 back in October. We could get another relief bounce here back toward 101, but we can look at positions after that move or on a continued drop from here.
BUY POINT: On a continued drop, perhaps after a failed bounce to the 101 range.
POSITION: April $110 puts to buy (DJV PF).

JPM (JP Morgan Chase & Co--$43.75; -3.65; optionable (JPM)): Financial
http://biz.yahoo.com/p/j/jpm.html
STATUS: Crashed down in Thursday's rough session for financials, hitting the buy point (44) with volume that spiked way up (16.2 million; average 10 million). Looking for continued weakness and a move down, with some October-December consolidation levels around 37.50, but we are first looking at 40 as our initial profit target. 38 is the next level. If we get a relief bounce following today's abrupt selling, we are not looking for it to have strength or staying power, and resistance from recent lows is in the 45 range.
BUY POINT: A continued move down on strong volume.
POSITION: April $55 or $50 puts to buy (JPM PJ or PK).

IMPH (Impath Inc--$44.94; -1.87; optionable (QPH)): Health Services
http://biz.yahoo.com/p/i/imph.html
STATUS: Gapped down but reached all the way up to 49.50 at its high (50 day MVA is at 50.58), but the stock pulled all the way back to close with a loose doji under the 200 day MVA (45.37). We will see if the stock can move back over the 200 day, but if it cannot hold the move and drops back below on stronger selling volume, a put play. The January low is back at 40, with December lows at 35. We will look at 40 as our first target, seeing how it moves from there.
BUY POINT: On a move down after another move over the 200 day MVA fails, looking for increased, above average volume on the selling (311,600 today; average 341,000).
POSITION: April $55 puts to buy (QPH PK).

New Plays (from the weekend):

ISSX (Internet Security System--$38.00; -6.38; optionable (ISU)): Software http://biz.yahoo.com/p/i/issx.html
STATUS: Had a wild day, gapping down but running all the way back up to 47.50 at its high (10 day MVA at 46). Volume was up again at 2.59 million (average 915,000) as the stock closed back near its recent low at 35.88. If the market bounces we could get another bounce up near 47-50, so if our positions were not closed today we will watch carefully tomorrow. On a move down we will see if the stock sells hard through the recent low, but will also watch for new positions after a bounce up, if we get renewed market weakness and a high volume drop back down by the stock.
BUY POINT: Bounce: A move down on continued strong volume after a bounce up in a rally to the 48 range. From here: A move back through 35.88 on continued strong volume.
POSITION: Bounce: April $55 puts to buy (ISU PK). From here: April $45 puts to buy (ISU PI).

IFIN (Investors Fin Services--$66.25; -1.75; no options):
http://biz.yahoo.com/p/i/ifin.html
STATUS: Has slowed the drop, retreating a bit today but closing with a doji in the range of its early-January consolidation range. The January lows are at 59-60 (200 day MVA is at 61.38), but the pattern could produce a bounce up, especially with a bounce in the market. We are watching existing positions, looking to exit on the bounce. If the stock hits back up to the 70-72 range (February low at 72.44, 50 day MVA at 76.08), we will watch for it to show some weakness and look at new positions on a move back down.
BUY POINT: After a relief bounce back up to the 70-72 range, a move back down on increased, above average volume (down to 354,100 today; average 389,300).
POSITION: April $75 puts to buy (FLQ PO).

LH (Laboratory Corp--$134.70; -2.30; optionable (LH)):
http://biz.yahoo.com/p/l/lh.html
STATUS: Continues to move steadily down, gapping lower today and closing with a doji after reaching up to 139.40 at its high. The doji pattern could indicate a pop back up, so we are going to be prepared to close existing positions. On a move up, resistance is at the 50 day MVA (143.56), and on a move up near that level we will again look for new positions on a put. If we get a continued drop, our first target on the put remains at 130.
BUY POINT: A move down on stronger volume (down to 373,400; average 392,500) after a failed bounce up to the 140-143 range.
POSITION: April $155 (LH EK) puts to buy.

UHS (Universal Health--$82.12; +2.01; optionable (UHS)):
http://biz.yahoo.com/p/u/uhs.html
STATUS: UHS caught support at the 80 level, at the 200 day MVA and February lows, although it hit down to 77.33 at Tuesday's low. Today the stock bounced up from the support, moving up on strong volume of 712,400 (average 422,500). The strength could continue, so we of course will be careful with existing short positions that have not already been covered. Indeed, today's action chased most shorts out. We will see if the move up continues, but we will wait for the play to develop, either looking for a continued move up that fails, or a hard drop through the 200 day. There are better ones to focus on right now.

Continued:

DS (Dallas Semiconductor Cp--$30.10; -0.62; optionable (DS)): Semiconductor:
http://biz.yahoo.com/p/d/ds.html
STATUS: After dropping back from its 200 day MVA (35.25) last week, the stock gapped through its 50 day MVA (32.12) Monday and now is trying to hold on near 30. The stock showed it second consecutive doji today, reaching down to 28.79 at its low. Off of the dojis we could see a rebound, especially if the market rebounds, so we are prepared to cover any short positions. We will see how the stock reacts to resistance at the 50 day, looking for new positions on a move back down on stronger selling volume (1.13 million today; average 1.1 million). Our first target on a drop back is the late-January and February lows at 26.
BUY POINT: New positions: A move down on increased volume after turning back down from resistance at the 50 day MVA.
POSITION: April $40 puts to buy (DS PH).

QQQ (Nasdaq 100--$43.75; -0.70; optionable (QQQ)):
STATUS: After its recent drop, holding in a lateral pattern between 42 and 45 (high today 45.13). The QQQ dropped back from its high to close with a loose doji, but we will be watching for a possible upward move Thursday, exiting our existing positions and looking for another put on a move down after it hits and fails at resistance. Looking for weakness as it approaches the 10 day MVA (46.44) and perhaps the 18 day at 48.89, and taking positions on a move back down with continued strong volume (well up today at 97.2 million; average 62 million). We will carefully watch the 42 level on the move for possible support.
BUY POINT: After a move up that loses momentum at 46-49, on a strong move back down.
POSITION: April $53 puts to buy (QQQ PA).

BOBJ (Business Objects--$33.63; -1.06; optionable (BBJ)):
http://biz.yahoo.com/p/b/bobj.html
STATUS: Software. Gapped down and made a move back up, tapping up to resistance at recent lows at 35 before retreating a bit to close. We will continue to look at a put play, although again we could get a move up toward the resistance at 35, from where, upon a continuance of market weakness, we will look for BOBJ to run back down. Recent lows for the last four sessions are at 31.50, with January closing lows at 30. Our first target is 30.
BUY POINT: On a move down after a bounce up fails at 35, looking for increased volume on the drop (down to 1.2 million today; average 836,000).
POSITION: April $43.375 puts to buy (BBO PS).

MERQ (Mercury Interactive--$41.38; -0.56; optionable (RQB)):
http://biz.yahoo.com/p/m/merq.html
STATUS: Pushed up yesterday and made it as high as its 10 day MVA at its high today (44.94), but pulled back to close. We could get a move up tomorrow (so we will be prepared to exit any remaining short positions), but we will again watch resistance at the 10 day and up to 50, and on a pullback with more market weakness and high volume selling, a put play.
BUY POINT: A move down on continued strong volume after a move up fails at the 10 day or perhaps up to recent highs near 50.
POSITION: April $55 or $60 puts to buy (RQB PK or RQB PL).

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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