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stock watch, stock recommendation
Begin part 2 of 2
SUBSCRIBERS QUESTION
Q: You mention quite often in your reports that you watch the leaders and how they perform during rallies. How do you filter out the leaders to watch them? Is there a special screen that you use?
A: Looking for leaders depends upon what stage of a rally you are in, but the plan of action is still similar. During the downtrend we would keep an eye on stocks that were in 'building patterns.' That is our name for stocks that are coming off their downtrend and are working laterally, attempting to build the first base off of that trend. Those are not necessarily easy to find other than watching the various sectors and observing which stocks are building. Now before we do that, we also look at what sotcks are growing their earnings and sales at 20% plus clips per quarter. That helps narrow the search. We watch for those that form up and start moving ahead of the the pack. Those that form up those bases and breakout first and have strong earnings and sales growth are typically the leaders in any rally.
After the rally starts we continue to watch those that breakout first and how they perform. EBAY, GRMN, SOHU, SINA, NTES, YHOO, ERES, HITK, OVIT were early leaders and have continued to perform through the rally. There are many others on the reports. Those are stocks that we got into early and have ridden up the rally. We know what these stocks are, so we can keep tabs on them because we are in many of them and it is easy to find them by looking for stocks that are within 10% of their 52-week highs.
Indeed, that is how we narrow the search during the start of rallies or when the market looks as if it is trying to put together a run. We search for stocks that are within 10% to 15% of their 52-week highs. That shows they are leading the market, and as the big gains of the leaders during this rally have shown, it is the leaders that can make you some impressive money as they barely hiccuped during the early part of the year when most of the market was struggling to hang on. From that group we look at those that are growing those sales and earnings at 20%+ per quarter, year over year. Those are the stocks that will typically give the best runs.
SEMINARS ON CD
http://www.stockseminarsonline.com
This is Jon Johnson's own site devoted exclusively to seminars designed to teach you what you need to know about the stock market and stock movement and how to take advantage of those moves without incurring the usual high costs of travel and related expenses usually associated with seminars.
THE PLAYS
Good movers Friday: ADIC; AETH; MME; SOHU
Friday Plays:
ADIC: Massive breakout
CNQR: Still working laterally, holding the 10 day MVA on sharply higher volume.
C: Holding the 18 day MVA.
Best Plays:
1) CVC: Good 50 day MVA bounce on volume.
2) TLB: Falling in a stone-like manner.
3) Continuing: SFNT is still in a nice handle. CNQR remains in a tight, lateral move.
New Plays:
Upside:
Play Date: 05/17/2003
CVC (Cablevision Systems--$22; +1.4; optionable): Cable TV
http://biz.yahoo.com/p/c/cvc.html
STATUS: Test 50 day MVA. CVC broke out of a 3-month cup w/handle base in April, and has now come back to test that breakout, testing down to the 50 day MVA (20.25) midweek. From there it bounce, moving up solidly Friday on a nice increase in above average volume. Accumulation since the November peak is excellent at 10 up weeks on rising volume to 2 down weeks on rising volume, showing many more buyers than sellers. Friday it bounced up off the 50 day on stronger, above average volume. Good stocks should move off the 50 day on strong volume. That is what CVC is doing and on a further move on volume it is a buy.
Volume: 3.162M Avg Volume: 2.289M
BUY POINT: $22.35 Volume=3M Target=$26.84 Stop=$20.79
POSITION: CVC IX - Sep. $22.50c (60 delta) &/or Stock
http://www.investmenthouse.com/cd/cvc.html
Play Date: 05/17/2003
ROK (Rockwell Automation--$22.74; +0.19; optionable): Industrial automation
http://biz.yahoo.com/p/r/rok.html
STATUS: Cup w/handle. A rather ragged 4-month pattern, but accumulation is solid at 6 up weeks on rising volume to 2 down weeks on rising volume. This base follows a double bottom spanning May to November 2002 where there was a breakout and nice run to 25. We like these base on base patterns as they often lead to another breakout and nice run. The handle is good and Friday ROK was higher on rising volume after tapping at the 50 day MVA on the low (22.07). Looking for a strong breakout to enter.
Volume: 849.7K Avg Volume: 841.671K
BUY POINT: $23.06 Volume=1.3M Target=$27.65 Stop=$21.75
POSITION: ROK JX - Oct. $22.50c (57 delta) &/or Stock
http://www.investmenthouse.com/cd/rok.html
Downside:
Play Date: 05/17/2003
TLB (Talbots--$26.51; -0.89; optionable): Apparel stores
http://biz.yahoo.com/p/t/tlb.html
STATUS: Put. Retail is suffering with the concerns about deflation and the consumer. TLB was in a cup w/handle pattern as several retailers are, but at the end of last week it started to fall, and Friday it broke the 50 day MVA (27.20) on rising, above average volume, closing near the session low. It might try to give a test of the 50 day, and that would be our preferred entry point as failed recovery attempts are great downside entry points just as breakout tests are great upside entry points. Still, if it continues down from here we will look at entering some positions in case it does not make a test.
Volume: 357K Avg Volume: 332.771K
BUY POINT: $26.38 Volume=375K Target=$23 Stop=$27.45
POSITION: TLB TF - Aug. $30p (-76 delta)
http://www.investmenthouse.com/cd/tlb.html
Continuing Plays:
Play Date: 05/17/2003
QLGC (Qlogic--$46.21; -0.27; optionable): PC Data storage components
http://biz.yahoo.com/p/q/qlgc.html
STATUS: Testing the breakout. QLGC broke out of a 5-month reverse head and shoulders pattern in late April, and rallied up to 47.50 Tuesday. It has since eased back to the 10 day MVA, tapping that support level on the Friday low (45.91) on lower, below average volume. It showed a doji at that level, i.e., the open and close prices were almost identical. That shows buyers and sellers evenly matched after the sellers were ahead on the pullback. Dojis can signal a change of momentum/direction, especially when they occur over support. Looking for a bounce higher on much stronger volume to enter positions.
Volume: 3.846M Avg Volume: 7.395M
BUY POINT: $46.78 Volume=8M Target=$54 Stop=$44.65
POSITION: QLC JI - Oct. $45c (60 delta) &/or Stock
http://www.investmenthouse.com/cd/qlgc.html
MEMBER PORTFOLIO: AMZN, BRCM, IBM, IGEN, KLAC, MSFT, RCII, TEVA, WMT YHOO
These are the stocks that our subscribers vote to put in a 'portfolio' to track their progress and comment upon when they reach buy points, sell points, or levels to write some covered calls on. They are not intended to be held as a portfolio by subscribers and are not covered in their entirety in every report. When something interesting is developing we take note.
AMZN 05/03 BO 33.05 +0.42 30.3 35.45 7.7M 12M 30.08
Current. Up again Friday after a quick test lower.
BRCM 05/03 Cup hdl 21.4 +0.45 19.2 22.94 16M 15M 19.06
Current. It is loving this wireless internet access rally.
Reached toward 22 Friday but could not hold all the
gain as volume backed off. Letting it work for us
some more.
KLAC 04/02 Test 50 40.61 -1.36 39.4 45.48 11M 13M 41.22
Exited. Exited with a trailing stop as it broke the 18 day
MVA on volume.
RCII 01/11 Test BO 65.85 +0.05 0 0 300K 0 62.45
Still moving laterally in a tight range on very low volume.
CONTINUING/WATCHLIST:
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
ADIC 05/13 DB hdl 9.69 +1.14 8.95 10.75 6.7M 521K 8.32
Buy Not Hit. Massive gap higher on great earnings. We went ahead
and entered some positions. Next will be on a bit of
a test back.
AETH 05/14 Cup hdl 4.6 +0.4 4.45 5.45 1.4M 244K 4.21
Current. Massive breakout from the cup with handle pattern was
too much to resist. networkers have come to life.
AGEN 05/13 Cup hdl 10.81 -0.36 10.95 13.22 377K 417K 10.25
Current. Strong breakout Wednesday but is already testing the
move. Needs to hold thsi breakout.
ALTR 04/15 Rv H&S 17.61 -0.06 15.75 18.81 9.8M 12M 16.62
Current. Nice surge Thursday but with the chip weakenss Friday
gave back some of the move. Still held up very well.
ASCL 05/07 FlyPlat 3.69 -0.07 4.05 4.96 2M 1.7M 3.77
Buy Not Hit. Another big doji at the 18 day MVA, showing big volume
as it does. We will see if this sets up the move.
BCE 04/05 Cup 20.68 +0.24 19.9 23.75 193K 550K 20.09
Current. Still moving up the 10 day MVA but on below average
volume the past three weeks.
BLTI 02/10 Test BO 12.89 +0.36 7.2 13.45 1.1M 300K 11.78
Current. Another high volume move but closed off its high. Not
bad for the market.
C 04/18 Rv H&S 39.15 -0.3 40.54 47.55 16M 23M 38.45
Buy Not Issued. Still riding over the 18 day MVA. Volume jumped up
to average.
CELG 05/14 A Wedge 31.48 +0.38 30.98 37.12 2.1M 1.8M 29.04
Current. Excellent move last week as CELG broke out and continued
higher on stronger volume.
CLE 04/14 Cup hdl 26.2 -1.3 26.05 30 476K 567K 24.78
Buy Not Issued. Broke lower on some volume as retailers came under
pressure. We were waiting for it to come back with
a nice test after the breakout, but this is no test.
CNQR 04/22 Test 18 6.05 -0.07 6.28 7.58 178K 250K 5.84
Buy Not Issued. Still moving laterally over the 18 day MVA, showing
higher volume Friday. Still looking for the high volume
breakout. New buy point.
CTL 05/01 Cup hdl 33 +0.08 32 38 544K 1.3M 31.48
Current. Doji at 34 indicates it may test back some now.
CTXS 03/29 Cup hdl 20.51 +0.31 14.12 17.25 3.4M 5.3M 18.56
Current. Still moving higher in a down market Friday. Letting
this internet work for us, but with June options, after
another good move up we will take the rest of those
off the table.
CVC 05/17 Test 50 22 +1.4 22.35 26.84 3.2M 3M 20.79
New.
DCLK 04/26 Test BO 9.84 -0.16 9.04 11.35 1.6M 1.9M 9.11
Current. A bit volatile Friday, testing the 10 day on the low
but rallying back to close basically flat.
DKS 03/18 DB hdl 28.5 +0.19 23.81 28.42 188K 225K 28.35
Current.
DKS 02/19 DB hdl 28.5 +0.19 22.75 27.35 188K 225K 28.35
Current. Managed to recover 28, but not the 18 day MVA, moving
higher on lower volume. May be all it gets before testing
lower.
DRIV 05/08 Test BO 18.2 -0.7 17.62 20.95 1.2M 1.4M 16.96
Current. Strong breakout testing back toward the 10 day MVA,
tapping it Friday and then rebounding some.
DSPG 04/26 Test BO 23.67 -0.54 21.1 25.1 479K 300K 22.04
Current.
DSPG 04/09 Test BO 23.67 -0.54 19.35 23 479K 308K 22.04
Current. Great break higher late in the week, taking a breather
Friday.
EBAY 12/12 Test 18 99.19 +1.11 69.45 92 9.3M 12M 94.92
Current. Up yet again, hitting the century mark and fading back
some though volume was solid. 100 can be a sticky point
to get through near term.
EBAY 10/15 Test 50 99.19 +1.11 62.45 92 9.3M 12M 94.92
Current.
FDRY 04/29 Cup hdl 13.77 -0.1 10.9 13.15 3M 4.4M 12.34
Current. Strong move last week but took a breather Friday on
lower volume w/the market.
FFIV 04/23 A Wedge 16.68 -0.29 15.3 18.32 339K 750K 15.55
Current. Nice move last week on volume, taking a rest Friday
on lower volume.
FLSH 05/12 Rv H&S 10 -0.12 9.2 10.96 90K 195K 9.11
Current. Strong volume move last week then resting late in the
week on lower volume.
GRMN 11/06 Cup hdl 48.39 +0.75 22.34 37.45 314K 198K 44.44
Current. Starting higher again Friday though did not get the
volume. Just letting it work for us.
HAS 04/12 Test BO 16.15 +0.17 14.88 17.88 1M 1.2M 15.55
Current. Tested below the 18 day MVA Friday but rallied back
and posted a gain on rising volume.
HAS 03/31 Test BO 16.15 +0.17 14.65 17 1M 1.2M 15.35
Current.
IART 04/24 FlyPlat 25.69 -0.81 26.25 32 263K 485K 25.45
IBM 01/11 Cup hdl 88.99 -0.91 88.62 100 6.8M 14M 86.85
Current. Holding up pretty well on low volume. It needs to hold
up to keep the Dow in shape.
IGEN 01/11 A Wedge 36.3 -0.38 0 0 315K 375K 36
Trying to hold the 50 day MVA with a doji.
IGLD 04/21 Cup 4.7 -0.04 4.3 6.45 255K 543K 4.75
Exited. Exited this one Thursday as it moved through the 18
day MVA.
ILXO 04/15 Cup hdl 16.13 -0.62 11.6 15.32 612K 293K 14.18
Current. Super surge higher last week, taking a breather Friday
though volume was the highest of the move.
JNPR 04/15 Flat 13.16 +0.09 10.6 13.42 11M 17M 11.94
Current. Great gap higher last week, holding the move Friday
and starting back up.
MDCO 05/10 Test 18 21.5 -0.45 21.25 25.48 419K 825K 20.45
Current. Good price move Thursday though volume was not there.
Volume has been lowe but for that first move up off
the 18 day 6 sessions back. If it cannot generate some
more volume we are going to give it very little room.
MME 04/30 BO 46.8 +1.5 45.65 54.45 894K 634K 44.65
Current. Excellent bounce up off the 10 day MVA on stronger
volume. Nice.
MSFT 01/11 A Wedge 25.57 -0.22 26.62 30 60M 57M 25.55
Trying to hold the 50 day MVA, tapping it on the low
on rising, average volume.
MXIM 04/18 Rv H&S 38.15 -1.1 40.12 45 7.1M 1.2M 38.65
Current. Managed to hold the 50 day MVA on the close as volume
remained below average.
MYK 03/22 Cup hdl 8.45 -0.34 8.88 10.88 196K 180K 8.39
Current. Breaking down on higher volume, closing below the 18
day MVA.
NTES 04/01 Cup 28.36 +0.65 17 27 936K 1M 25.38
Current. Still moving up the 10 day MVA in a continued impressive
show.
NVDA 05/08 Cup hdl 21.26 +0.2 17.55 23.55 8.5M 11M 18.75
Buy Not Issued. Missed the test, looking for more than a tap at 20
before it started back up.
OVTI 02/24 Cup hdl 31.44 +0.71 19.05 31 875K 1.2M 28.25
Current. A market leader that continues to run up the 10 day
MVA though volume remains below average.
QCOM 04/16 Put 30.3 +0.07 32.56 29 17M 16M 30.28
QLGC 05/17 Test BO 46.21 -0.27 46.78 54 3.8M 8M 44.65
New.
QLGC 03/15 Test BO 46.21 -0.27 38.85 45 3.8M 11M 44.24
Current. Still in the nice, orderly test of the 10 day MVA,
showing another nice doji.
QLGC 11/07 Test BO 46.21 -0.27 41.4 50 3.8M 25M 44.24
QLGC 08/17 CCall 46.21 -0.27 36.48 0 3.8M 12M 44.24
Current.
RGEN 04/07 Test 18 5.53 -0.22 4.84 7.1 1M 132K 5.45
Current. Closed below the 18 day MVA on huge volume. Ready on
the sell button if it does not rebound.
RL 04/10 Cup hdl 23.51 -0.01 23.82 27.94 284K 433K 22.15
Buy Not Issued.
ROK 05/17 Cup hdl 22.74 +0.19 23.06 27.65 850K 1.3M 21.75
New.
SCSS 04/26 Cup hdl 15.05 0 12.22 16 621K 696K 13.94
Current. Another good week though closing it out with a doji
on above average volume. Still letting it work higher.
SFNT 05/12 Cup hdl 27.43 -0.38 28.5 32.75 136K 394K 26.5
Current. Still a nice handle on some very low volume.
SHRP 05/01 Cup hdl 20.58 -0.72 21.45 25.25 149K 293K 19.95
Buy Not Issued. Retail is suffering and SHRP is testing the 18 day
on lower volume. Not the best action as it turned down
from a gap higher Wednesday on stronger volume.
SIGM 05/06 Cup hdl 8.25 +0.2 7.58 9.55 259K 125K 7.35
Buy Not Issued. We missed the bounce up on this one.
SINA 04/12 Cup hdl 14.78 +0.39 9.35 13.45 3.5M 2.5M 12.38
Current. Up again Friday on continued above average volume.
SOHU 03/20 Dbl btm 22.83 +1.4 10.55 21.45 1.7M 800K 19.98
Current. Surging again Friday on strong volume. All week was
strong volume. Nice run.
SPLS 03/31 Test 50 19.98 -0.02 20.3 23.55 3.1M 5M 19.68
Current. Retail having a harder time of it, so wont let it slip
further.
SSYS 03/01 Cup hdl 29.37 +0.95 12.25 15.45 197K 110K 26.22
Current. Started back up Friday after a Thursday pause. Super
week for SSYS.
TEVA 01/11 A Wedge 47.96 -0.07 0 0 1.4M 5M 0
Moving more or less laterally over the 18 day MVA on
low volume.
THOR 04/05 Test BO 13.48 +0.13 13.5 16.26 510K 721K 12.98
Current. Holding the 18 day MVA on lower volume after thudding
down to that level following an early week gain. Has
to bounce here.
TLB 05/17 Put 26.51 -0.89 26.38 23 357K 375K 27.45
New.
TSCO 04/24 Cup hdl 43.45 -0.91 43.75 52 264K 603K 42.85
Current. Holding the 18 day MVA Friday on lower volume.
TSCO 04/03 Rv H&S 43.45 -0.91 38.6 44.38 264K 577K 42.85
Current. Holding the 18 day MVA Friday on lower volume.
TXN 05/10 Cup hdl 19.59 -0.01 20.45 24.55 10M 16M 18.96
Buy Not Hit. Very nice test of the 18 day MVA, working laterally
on lower, below average volume.
USAI 03/25 Cup hdl 36.16 +0.28 29.12 33.55 11M 8.3M 33.74
Current. Still working higher up the 10 day MVA on stronger,
above average volume at the end of the week.
UTHR 04/30 Cup hdl 18.63 -0.31 18.12 21.75 144K 226K 17.92
Current. Hard time getting over 19 all week. Needs to clear
it with some volume this week.
VIVO 05/07 BO 9.32 +0.05 9.56 11.25 84K 45K 8.94
Buy Not Issued. New buy point after showing strong volume Friday trying
to make the breakout.
VRTS 08/19 CCall 25.77 -0.12 19.76 20 7.3M 8.5M 22.05
Current. Still moving higher and higher up the 10 day MVA though
on below average volume.
VSTA 04/28 Cup hdl 23.85 -0.14 19.98 23.85 263K 156K 22.26
Current. Tight doji on lower volume as it tests back the move.
VTAL 04/23 Cup hdl 16.4 -0.39 14.25 17.12 152K 150K 15
Current. Nice test of the 10 day MVA on lower volume.
WMT 02/05 Put 52.92 -0.84 0 0 10M 8.2M 0
Broke the 50 day MVA with a gap down and could not
hold the attempt to retake that level.
XLNX 03/20 Test BO 28.41 -0.49 28.05 34.55 8.7M 14M 27.64
Current. Still holding the 10 day MVA on below average volume
even in the tougher chip environment.
XMSR 04/07 Test BO 10.06 -0.01 6.95 8.42 3.1M 6.5M 9.35
Current. Holding the 10 day MVA with a tight doji on lower volume.
YHOO 12/11 Test 50 27.75 +0.24 17.32 25 10M 20M 25.92
Current. Still moving higher last week though on lower volume.
Good Investing!
Jon L. 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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