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trend trading stock, top stock pick
Begin Part 2 of 2
QQQ: Today I was on a boat trying to take something similar to a vacation and trying to catch white bass. Fishing was slow, but even if it was hot I was going to call my broker to confirm the plays and see what the Fed actually did. While we were looking at some last minute positions, the announcement came. One of the plays we were debating was a QQQ put. I went with the May $50 puts (broker wanted me to buy something further out of the money) on the news of the cut, getting them at 8.90. The broker called back 10 minutes later in a panic saying the market was rallying. While we talked it hit its old top and started to fall. I said buy more. I put in a sell order at 9.90 and went back to fishing. He called back with 20 minutes left saying the market was falling and did I want to change sell orders. Fortunately I did not get the message but was actually catching fish. The sell order was hit; I could have made another 0.50 on the trade, but for a day of fishing, things went pretty well anyway. I spent about 10 minutes total on the phone, got all of my orders entered and traded, made some really good money, and got to spend some time with my father in law and my sons. With upfront planning I was able to make my trades and make the money from an opportunity that was presented even though I was not in the office. You can do it too.
For a review of frequently asked questions, please use the link below:
http://www.investmenthouse.com/1questions.htm
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: We are looking at some previously covered stocks that are making good moves (RDEN, TRA, AN), and PTEK, which has formed a nice pattern, as has CRUS (new), that is looking interesting in its large double-bottom formation. CPN is showing its New Leader stuff on its move up today. The new Up & Comers held up well, and we are looking at some new puts.
Best Plays:
1) CRUS: Will try to break resistance on this strong move.
2) RDEN: One of our rolling plays that is moving well.
3) TRA: A strong breakout.
4) AN: And getting ready to do the same.
5) PTEK: In an ascending wedge.
6) CPN: A strong move.
7) LOW: Strong volume looks promising.
8) Puts: ADBE, SOX, DJX, MERQ
New Stock:
CRUS (Cirrus Logic Inc--$22.25; +2.75; optionable (CUQ)): Electronics: Semiconductor
http://biz.yahoo.com/p/c/crus.html
STATUS: Forming a double-bottom base, dating from November. Middle hump has a high of 35.81, and the stock looks ready to begin the move up into the last leg of the pattern. Volume shot above average (3 million; avg. 1.6 million), the first strong shot the stock's seen in two weeks (the lower volume has been appropriate for the recent consolidation). The intraday high tapped resistance at the 50 day MVA (22.99), the level over which we want to see the stock break. On that move, we will look at taking partial positions with stock and/or calls to buy, with an eye on adding to those on a breakout (which would be over 36).
Initial profit target: 25-26.
BUY POINT: Over 23, on continued strong volume. Stop loss: 22.50-22.75.
POSITION: Stock and/or June $17.50 or $20 calls to buy (CUQ FW or FD).
http://www.investmenthouse.com/cd/crus.html
(Click to view the chart)
Updated Stocks:
A rolling pattern:
RDEN (Elizabeth Arden Inc--$15.75; +0.62; no options): Personal Products
http://biz.yahoo.com/p/r/rden.html
STATUS: Looking strong on this pop up after the stock took a 2-day breather that consisted of two consecutive dojis at support (10 day MVA, 15.22). Volume was strong, supporting the move up, as 156,600 (avg. 91,000). We are looking for a run up to 16.19-16.25, so watch that level for resistance, but the stock can surely break out over the March high of 16.44. Looks good to go, for possible positions with stock. Initial profit target: 16.16-16.25.
BUY POINT: On further upward movement on continued strong volume. Stop loss: 15.75-16.
POSITION: Stock.
http://www.investmenthouse.com/cd/rden.html
(Click to view the chart)
Ascending wedge:
TRA (Terra Industries Inc--$4.02; +0.15; no options): Basic Materials Wholesale
http://biz.yahoo.com/p/t/tra.html
STATUS: Solidified the breakout from the ascending wedge pattern, shooting up on strong volume (401,500; avg. 138,000). Buy point is 3.85, so the stock remains a buy to 4.04, though that limit has just about been reached on this move. We will look for a test of the breakout from here, looking for a pullback to 3.85 or better. The aggressive can play the stock up from here on the momentum of the strong volume. Initial profit target: 4.23-4.43.
BUY POINT: Up to 4.04, on continued strong volume. Stop loss: 3.35-3.60.
POSITION: Stock.
http://www.investmenthouse.com/cd/tra.html
(Click to view the chart)
Cup with handle:
AN (Autonation Inc--$86.0; +0.17; optionable (AN)): Auto Dealerships: Specialty Retail
http://biz.yahoo.com/p/a/an.html
STATUS: Making a solid move from the double handle of its cup base. Handle high is 8.71, nearly reached on the intraday high of 8.70. Volume came in at average, up from much lower volume the previous session (Tuesday's volume is 1.2 million). On the breakout, we will look at positions with stock and/or calls to buy. The stock has strong money flow and a high relative strength. Initial profit target: 10.
BUY POINT: 8.84, on volume of 1.8 million or better. Remains a buy on the breakout up to 9.28. Stop loss: 8.34-8.59.
POSITION: Stock and/or July $7.50 calls to buy (AN GU).
http://www.investmenthouse.com/cd/an.html
(Click to view the chart)
Formerly a flag-thrower:
PTEK (Ptek Holdings Inc--$2.91; +0.10; optionable (TQO)): Telecom: Diversified
http://biz.yahoo.com/p/p/ptek.html
STATUS: Formerly covered as a flag-throwing pattern, PTEK is now forming a good-looking ascending wedge with a high at 3.13. The stock moved up on stronger, above average volume of 319,000 (avg. 339,000), showing a doji off the high of 3.03. On another dip in the pattern, look for support near the low of 2.81, which tested the 10 day MVA. To the upside, we will look at taking positions on a breakout, as the stronger volume today can pop PTEK right back up from here. Initial profit target on that move: 3.58-3.75.
BUY POINT: 3.26, on volume of 458,000 or better. Remains a buy on the breakout up to 3.42. Stop loss: 2.92-3.01.
POSITION: Stock.
http://www.investmenthouse.com/cd/ptek.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: While we continue to keep the previous leaders in the portfolio (eventually the majority will rebound, but that is far out in the future), they are not and have not performed for taking long-term positions. Some of the new leaders have fallen under the pressure of the bear market and can no longer be considered top picks for such investments (ACS, LLL, NATI, ESRX). We continue to look to stocks like CPN as the new leaders, as they are holding up well despite everything. With this in mind, we must reiterate that while we are looking for any of these stocks to once again yield long-term investments when the markets turns, for now the plays for moves up in such stocks should only be considered short-term. We must 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: CPN, SGR (ESRX, NATI, LLL, ACS)
Previous Leaders: ADBE, AMCC, ARBA, BEAS, BRCD, CIEN, EMC, EXTR, GLW, JNPR, NEWP, NTAP, PMCS, SCMR, SEBL, VRSN, VRTS,
CPN (Calpine Corp--$52.00; +3.00; optionable (CPI)): Electric Utilities
http://biz.yahoo.com/p/c/cpn.html
STATUS: Broke out on news that it will receive natural gas from a proposed pipeline expansion project from a unit of Pacific Gas & Electric. This is the move we have waited for from CPN, as the stock gapped up on the opening price of 49.50, and raced past our buy point of 50 on good volume (4.5 million; avg. 3.56 million). The stock is in position to break out of its 6-month base, which has a previous high of 52.97. Relative strength broke out. Initial profit target: 58-61. Stop losses are wise here.
BUY POINT: On further upward movement on continued strong volume. Stop loss: 40.50-40.75.
POSITION: 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)
Previous Leaders:
JNPR (Juniper Networks--$52.44; -6.00; optionable (JUX)): Computer Hardware: Networking & Communication Devices http://biz.yahoo.com/p/j/jnpr.html
STATUS: JNPR is rolling in a trading range between (generally) 51 and 57. The stock turned down from the the 10 day MVA (57) on stronger volume, and we will look for a move back up from the 51 level once the stock hits that range. From there, we will look at taking positions with stock on a move back up to the 10 day MVA, or the 57 range, which will be our initial target.
BUY POINT: On a move up from here or the 51 level. Stop loss: 45.50-45.75.
POSITION: Stock.
http://www.investmenthouse.com/cd/jnpr.html
(Click to view the chart)
UP & COMERS PORTFOLIOS: We have added some new stocks to this portfolio (LNCR, BJ, ANF, LOW, HI and THQI). We like the patterns and how they are holding up in this market. The currently existing members (EXDS, TQNT, BVSN, SANM, PKI and GMST) are on a current watchlist we will continue to monitor for recovery when the market finally emerges from the bear market.
BJ (Bj's Wholesale Club Inc--$46.00; 0.00; optionable (BJ)): Retail: Discount, Variety Stores http://biz.yahoo.com/p/b/bj.html
STATUS: Continues to hold in the lateral consolidation, showing its fourth consecutive doji just above support (18 day MVA, 45.83). The stock tried to hold a move to a high of 47.50 but moved back down on slightly stronger volume (707,200; avg. 663,000). We want to see a hold at support here and move back up from this tight pattern. On a move up and back over the March high (48.35), we'll look at positions with stock and/or calls to buy. The stock has outstanding money flow and high relative strength (that is out ahead of price). Initial profit target: 53-56.
BUY POINT: Over 48.35 on volume in the range of 945,000. Stop loss: 47.85-48.10.
POSITION: Stock and/or June $40 calls to buy (BJ FH).
http://www.investmenthouse.com/cd/bj.html
(Click to view the chart)
LOW (Lowe's Companies Inc--$62.37; +1.12; optionable (LOW)): Retail
http://biz.yahoo.com/p/l/low.html
STATUS: Headed higher after Monday's incipient moved up from the 10 day MVA (60.34), reaching a high of 64.10 on strong, above average volume (4.5 million; avg. 3.1 million). The stock pulled back down from the high (testing resistance at the March high of 64.59), but we will look for a surge back up on continued strong volume. LOW is attempting to consolidate for a breakout move from a long base (start of the base is the April 2000 high of 67.25). On a pullback, look for support at the 60 level at the lowest (10 day MVA). LOW shows strong money flow and high relative strength. Initial profit target on a move the March high: 69-72.
BUY POINT: Over 63 on continued strong volume. Stop loss: 62.50-62.75.
POSITION: Stock and/or July $55 calls to buy (LOW GK).
http://www.investmenthouse.com/cd/low.html
(Click to view the chart)
HI (Household International--$57.88; -2.02; optionable (HI)): Credit Services
http://biz.yahoo.com/p/h/hi.html
STATUS: Don't like to see a move like this the day after introducing a stock, but at least the drop back to the 50 day MVA (57.69) was on lower, below average volume of 1.7 million (avg. 1.8 million). HI moved up Monday to close just on top of its 10 day MVA (59.47), then fell back down through that support, heading down from late in the morning, after its annual business review began earlier. No news was available at the time of this writing on the outcome of that report. Looking for a bounce back, but we will not look at taking positions until we see a strong move back over 60. HI shows outstanding money flow and high relative strength. Initial profit target: 68-71.
BUY POINT: Over 60, on volume of 2.3 million or better. Stop loss: 50.50-50.75.
POSITION: Stock and/or July $55 calls to buy (HI GK).
http://www.investmenthouse.com/cd/hi.html
(Click to view the chart)
THQI (Thq Inc--$33.19; +0.19; optionable (QHI)): Multimedia & Graphics Software
http://biz.yahoo.com/p/t/thqi.html
STATUS: The stock popped to a high of 34.13 on stronger volume (464,400; avg. 376,000), but it wasn't enough to break resistance, the uppermost level being 34.50. As a result, THQI pulled back down, but is holding above support of the 10 day MVA (32.60). We will see if the stock can combat the market trend and head back up as volume kicks higher. Look for support at the 10 day MVA; THQI tested lower support (18 day MVA, 32) on Monday's low. THQI has strong money flow and buying, and relative strength has moved out ahead of price, a bullish sign. Initial profit target on a move over 35: 38-39.
BUY POINT: 34.63, on volume of 628,000 or better. Stop loss: 34-34.38.
POSITION: Stock and/or June $25 or $30 calls to buy (QHI FE or FF).
http://www.investmenthouse.com/cd/thqi.html
(Click to view the chart)
PUT PLAYS: We continue to look at put plays since sentiment is generally against a market bounce on the anticipated 50-point interest rate cut. As always, keep reasonable loss cutting rules in place, be ready to close positions quickly if necessary, and make sure you see the downside move, along with the market going down as well, and then enter.
New Put:
ADBE (Adobe Systems Inc--$32.81; +1.06; optionable (AEQ)): Computer Software & Services: Application Software http://biz.yahoo.com/p/a/adbe.html
STATUS: Showing a doji at the top of a three-day run, which placed the stock back over the 18 day MVA (30.15). That action suggests a turn back down, and in a declining market, ADBE is primed for a turn back down to the 25 range. Watch the 18 day MVA for support unless the move down is strong.
BUY POINT: On a move down from here on continued strong and rising volume in a selling market, May $40 puts to buy (AEQ QH).
http://www.investmenthouse.com/cd/adbe.html
(Click to view the chart)
Continued Puts:
ESRX (Express Scripts Inc--$75.63; +0.57; optionable (XTQ)): Specialized Health Services
http://biz.yahoo.com/p/i/ibm.html
STATUS: Moved up to test the 200 day MVA (76.01) on slightly stronger, still below average volume of 622,400. The stock can move back up to test the moving average again, and if it fails to break the resistance, we will look at buying puts on a move back down on stronger volume. Initial profit target: 70 (March low).
BUY POINT: On a move down after a failed test of 76, on stronger, above average volume (over 754,000), May $80 puts to buy (XTQ QP).
http://www.investmenthouse.com/cd/esrx.html
(Click to view the chart)
VTSS (Vitesse Semiconductor--$33.50; -7.81; optionable (VQT)): Electronics: Semiconductor, Integrated Circuits
STATUS: Hit a new low on sharply stronger volume (9 million; avg. 6.5 million). No support in sight, so we will look at buying puts on a continued move down in a negative, selling market. Initial profit target: 37-38.
BUY POINT: On a continued move down on stronger volume, May $40 puts to buy (VQT QH).
http://www.investmenthouse.com/cd/vtss.html
(Click to view the chart)
SOX (Philly Semiconductor Index--$577.76; +36.50; optionable (SJX)):
STATUS: Turned down from the 10 day MVA (579.79) as expected, and looks ready to undercut the neck on the head and shoulders pattern the index has formed since December (first shoulder; second shoulder is this month). The neck is at 535, making our target on a successful completion of the pattern in the range or 307.
BUY POINT: Below 535 on continued strong volume, April $600 puts to buy (SJX PT).
DJX ($97.21; -2.38; optionable (DJV)):
STATUS: Headed back down from the 100 level (high was 100.20), hitting a low of 97.18. Volume was just over average and rising, and on a move below 95 on continued selling in the Dow, we will look at buying puts. Initial profit target on that move: 86-81.
BUY POINT: On a move below 95 on strong and rising volume.
POSITION: May $108 puts to buy (DJV QD).
QQQ (Nasdaq 100--$40.35; -2.75; optionable (QQQ)):
STATUS: Almost made it to the 10 day MVA (44.55), but turned down from a high of 43.81 on strongly above average volume (104 million; avg. 63 million), posting a new closing low. On a continued move down from here, we will look at put positions once again. Initial profit target: 36-34.
BUY POINT: On a move down on continued strong volume, May $48 puts to buy (QQQ QV).
OEX (Standard & Poors 100--$581.93; -15.73; optionable (OEY)): S&P 100 options
STATUS: Time for the typical bounce back up after a move down, but the index moved farther on volume that was above average (1.2 million) but lower than Friday's stronger selling volume that didn't pack as much of a punch. We will look for a continued move down (the index hit a new low) on the possibility of further selling on the rate cut.
BUY POINT: On a move down on continued strong volume.
POSITION: Lower: April $585 or $590 puts to buy (OEY PQ or PR).
http://www.investmenthouse.com/cd/$oex.html
(Click to view the chart)
MERQ (Mercury Interactive--$39.13; -0.50; optionable (RQB or RBF)):
http://biz.yahoo.com/p/m/merq.html
STATUS: Tried to stick a move over the 10 day MVA (41.80), but pulled back down. Volume was strongly above average at 7.3 million. On a retest of the 10 day MVA, we will look for a failed test and move down, for an initial target of the March low (35).
BUY POINT: On a move down from 41-42 on continued strong volume.
POSITION: May $55 puts to buy (RQB QK).
http://www.investmenthouse.com/cd/merq.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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trend trading stock
top stock pick
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