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us stock market, top stock pick
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: Some plays we have looked at recently continue to hold good patterns, such as KLAC and NVLS, and we are revisiting AMAT and some other stocks that are showing good patterns, such as WCNX and TIER, which is ready to break out. NVLS, KLAC and AMAT made good moves today, and in a market turnaround they are in position to be leaders. Put plays are continued at the bottom of the report; please see our note about them in that section.
Best Plays:
1) WLSN: At support in the handle.
2) NVLS: Broke resistance on a move up in the ascending wedge.
3) KLAC: Ditto.
4) WCNX: A tight pattern.
5) TIER: On its way to a breakout.
New Stocks:
Cup with handle:
WLSN (Wilsons The Leather Expt--$18.69; -0.19; no options): Retail: Apparel
http://biz.yahoo.com/p/w/wlsn.html
STATUS: How do you look in leather? Pulled back to support in the handle of its 7-month cup base (10 day MVA, 18.64). Previous basing high is 21.50, the handle high 20. Volume dropped off the last two days, reaching Wednesday 79,600 (avg. 83,318). The stock used the 10 day MVA earlier this month for a three-day bank up to the handle high, so we are looking for that support here. On the breakout, we'll consider positions with stock. High money flow and relative strength. Initial profit target: $23-$24.
BUY POINT: 20.13, on volume of 125,000 or better. Stop loss: 19.63-19.88.
POSITION: Stock only.
http://www.investmenthouse.com/cd/wlsn.html
(Click to view the chart)
Semiconductors: It looks that the semis will lead if the Nasdaq can rally from here.
Ascending wedge:
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).
http://www.investmenthouse.com/cd/nvls.html
(Click to view the chart)
Updated double-bottom patterns:
AMAT (Applied Materials Inc--$48.19; +0.31; optionable (ANQ)): Semiconductor
http://biz.yahoo.com/p/a/amat.html
STATUS: Moving up from the base of the handle in its double-bottom after finding support at 45. Volume has been on the rise the last three days as the stock moved back over the 10 day MVA (47.59) Wednesday, reaching a strong 33 million (avg. 20.7 million). Handle high is 51.50; on a breakout move over that price, we will look at positions with stock and/or calls to buy. High tapped 49.63. Initial profit target on the breakout: $59-$62.
BUY POINT: 51.63, on volume of 31 million or better. Stop loss: 51.13-51.38.
POSITION: Stock and/or July $42.50 or $45 calls to buy (ANQ GV or GI).
http://www.investmenthouse.com/cd/amat.html
(Click to view the chart)
KLAC (Kla-Tenor Corp--$44.94; +1.13; optionable (KCQ)): Semiconductor
http://biz.yahoo.com/p/k/klac.html
STATUS: Also made the move we were looking for as the stock broke resistance (200 day MVA, 44.15) on a nice volume surge (11.8 million; avg. 7 million). There was news of a partnership with I-Logix Inc that most likely contributed in part to the move. KLAC is moving up from the base of its handle pullback to its double-bottom pattern. On a breakout over the handle high of 46.25, we will look at positions with stock and/or calls to buy. Initial profit target on the breakout: $53-$56.
BUY POINT: Breakout: 46.38, on volume of 10 million or better. Stop loss: 45.88 46.13.
POSITION: Stock and/or June $40 calls to buy (KCQ FH).
http://www.investmenthouse.com/cd/klac.html
(Click to view the chart)
Other Updated Stocks:
Lateral consolidation:
WCNX (Waste Connections Inc--$31.88; -0.12; optionable (NBU)): Materials & Construction
http://biz.yahoo.com/p/w/wcnx.html
STATUS: In a tight three-day lateral consolidation above support (10 day MVA, 31.34), the lows of the last two days testing the 10 day and Wednesday, the 18 day MVAs (latter at 30.75). The consolidation is on lower, below average volume (reaching 85,500 today; avg. 363,454), what we like to see in this situation. WCNX is in a 10-week base (35.35, previous high), and this is the first movement by the stock in recent weeks that has settled down and looks promising, while price has held above the 50 day MVA (29.61). We reported on WCNX just prior to its February 28 breakout move, from which it pulled back until forming this recent price movement. Looking for a move up from here. Initial profit target: $37-$39. Outstanding buying and money flow. Relative strength out ahead of price (bullish).
BUY POINT: Over 32.50 on volume of 115,000 or better. Stop loss: 31.50.
POSITION: Stock and/or July $30 calls to buy (NBU GF).
http://www.investmenthouse.com/cd/wcnx.html
(Click to view the chart)
RESP (Respironics Inc--$25.81; +0.12; optionable (SBU)): Health Service
http://biz.yahoo.com/p/r/resp.html
STATUS: Continues to hold above strong support (50 day and short term moving averages at 25.45-25.51). The stock tried to move up the last three days, but volume has fallen off (to 181,200; avg. 224,227), stalling things out just under 27 (November high is 27.38). RESP is in a 10-week base (previous high 34), riding the bottom at this time, and after consolidating in a tight, 4-day lateral movement last week, is trying to make a move up. On a good strong shot of volume, it will likely do so. We will look at taking positions on a move over the January high of 29.13. Money flow is strong. Initial profit target: $33-$35.
BUY POINT: Aggressive: On a move over 27 on above average volume. Safer: Over 29.13 on volume of 245,000 or better.
POSITION: Stock and/or July $25 calls to buy (SBU GE; 56 open interests).
http://www.investmenthouse.com/cd/resp.html
(Click to view the chart)
Ready to break out:
TIER (Tier Technologies Inc--$10.81; +0.75; no options): Software
http://biz.yahoo.com/p/t/tier.html
STATUS: A tech leading higher. Breaking out of a long cup with handle on great volume (806,000; avg. 122,863). The stock is approaching the handle high of 11, so we will look at positions with stock or options on a breakout over that price. TIER shows great money flow and high relative strength (that has broken out). Initial profit target: $13.
BUY POINT: 11.13, on continued strong volume. Stop loss: 10.63-10.88.
POSITION: Stock.
http://www.investmenthouse.com/cd/tier.html
(Click to view the chart)
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. 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,
No reports on stocks in this portfolio tonight. LLL is selling toward the 50 day MVA on stronger volume. It is at a critical juncture and triggered some stop losses on us today.
UP & COMERS PORTFOLIOS:
EXDS, TQNT, BVSN, SANM, PKI and GMST for now.
No reports on stocks in this portfolio for tonight. We are in the process of revamping this portfolio.
MEMBER PORTFOLIO: BRCM, CHKP, CSCO, EMLX, IDTI, INTC, JDSU, MVSN, NT, PWER, SUNW, VTSS
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:
ESRX (Express Scripts Inc--$74.63; +1.25; optionable (XTQ)): Health Services
STATUS: One of our new leader stocks that fell apart since mid-February, ESRX broke below the 200 day MVA (75.31) Tuesday on strong volume, adding to the volume Wednesday (1.97 million; avg. 717,045). The stock gapped down on the opening price of 70.88, then moved up and tested above the broken support on the high of 77.13. It was unable to hold that position, however, and closed back below the (now) resistance. On a move up to re-test the moving average and subsequent turn back down, we will look at buying puts. Target: 70.
BUY POINT: On a move back down on continued strong volume after a test of the 75.31 range, April $85 puts to buy (XTQ PQ).
http://www.investmenthouse.com/cd/esrx.html
(Click to view the chart)
New Puts (from last night):
JNPR (Juniper Networks--$57.25; -1.38; optionable ( JUX): Computer Hardware: Networking & Communication Devices
STATUS: Stretched to a high of 62.75, cruising through the 10 day MVA (59.64) on huge volume (45.6 million; avg. 20 million) but pulling back below the moving average after peaking early in the day. We look for the stock to try another test of the 10 day MVA or the 18 day MVA (69.95) on a Nasdaq rally, then turn back down to the March low of 48.75 for the possible put play
BUY POINT: On a move back down from the 10 day MVA (59.64) on continued strong volume, for a move down to the 49-50 range.
POSITION: April $80 puts to buy (JUX PP).
http://www.investmenthouse.com/cd/jnpr.html
(Click to view the chart)
Other Continued Puts:
LNCR (Lincare Holdings Inc--$53.50; +0.69; optionable (LQN)): Health Services
STATUS: Subscriber request. LNCR inched up on stronger volume (829,100; avg. 744,454) to close above the 50 day MVA (53.32), tapping resistance on the high, the 10 and 18 day MVAs (55). We were looking for a failure to break the 50 day MVA resistance, but the stock did just the opposite. We will now see if the 10 and 18 day MVAs hold the stock back, since that level pushed LNCR back down today (and the stock has been unable to break it over the last 4 days on the highs). We will look at put positions on a move back below 53 (50 day MVA) on strong volume. Be ready to close the position on a move up over the upper resistance on stronger volume. Target for the put play: 44-46.
BUY POINT: On a move back below the 50 day MVA (53.32) on continued strong volume, April $60 puts to buy (LQN PL).
http://www.investmenthouse.com/cd/lncr.html
(Click to view the chart)
OEX (Standart & Poors 100--$596.10; -17.41; optionable (OEY)):
STATUS: A new low on stronger volume (1.37 million; avg. 1.2 million) at 589.89 as the index opened just under Tuesday's closing price of 613.51 and dropped solidly down. This index has offered plenty of downside action in the last week, and looks ready for more on this move. In retrospect we are sorry we sold the OEX puts today.
BUY POINT: On a move down from here on continued strong volume, March $605 puts to buy (OEY OC). Deltas not available at the time of this writing, though this should be a delta of 0.7 or better. Please check with your broker in the morning.
http://www.investmenthouse.com/cd/oex.html
(Click to view the chart)
VRTS (Veritas Software--$59.69; +0.56; optionable (VUQ)): Computer Software & Services: Application Software
STATUS: Made the move up today toward the 18 day MVA (65.65), making it up to 62.88 before pulling back to close. We could get a strong move up with the market, and we will again carefully watch resistance at the 18 day, looking to capitalize on a move back down on continued strong volume (20.7 million; average 13 million). Target of $52-$54.
BUY POINT: On a turn back from the 18 day MVA (65.65).
POSITION: April $85 puts to buy (VUQ PU). If it breaks the 18 day MVA on strong volume, we will look for an upside play to 70 (some resistance) or up to the 50 day MVA at 79.
http://www.investmenthouse.com/cd/vrts.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
top stock pick
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