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Begin part 2 of 2
SUBSCRIBER QUESTIONS
Q: I love the service from Investment House!! You are truly a great trader. I have ordered your three technical analysis CDs and can't wait to get them in the mail. I have a question about your target prices. How do you choose your target prices? So many of them seem to be right on target, pardon the pun. That question seems to stump me every time. I have found many stocks setup to move but never know where to set my target price.
A: First we look at market conditions. Is the market uptrending or downtrending, is the trend strong or modest? If we are playing upside in an uptrending market ourtargets will be different from an upside play in an overall downtrend. In the latter case we will shorten our initial targets simply because good moves attract short sellers.
We also look at the type of play we are looking at, i.e., is it a short term trade or are we looking to let it run as far as we can. In most cases we will let the stock continue to run as long as it keeps showing good action and is making enough gain relative to other plays we could be investing in (the opportunity cost factor), but there are some we enter strictly to take the short gain, something we do on the Technical Trader Report.
Then there are the factors particular stock. How far are its typical moves on each run (up or down)? Where is resistance or support (e.g., prior tops, upper channel, overhead suppy)?
We factor all of that in to set the target. Typically, if the marekt is trending higher and stocks are moving well, a breakout stock can move 15% to 20% before it takes a first rest. That is a general rule of thumb and it depends on the other factors above including just how expensive it is. It takes a lot less to drive a $5 stock with average volume of 200K 20% than a $65 stock with average trade of 20M. If a stock makes a fast 20% move on the breakout from a good pattern, it can potentially be a bigger winner. That is why we often use that 20% level as a litmus test or a first target if there are no other resistance areas or we feel the stock is strong enough that it should plow right through existing resistance.
From there we can take some partial profit. With options we often will do that because time is working against us, and if the stock comes back to test after the strong move (as is often the case) we lose not only value in our options but time as well. That makes it harder for the option to get back up to where it was on the first run. We can take a partial and let the rest run. Many stocks on the report now have hit the initial target where we took some gain, and then we let the run from there, looking for the next entry point as long as the stock remains solid.
THE PLAYS
Thursday night play results:
GRMN: Edged back up on lower volume and may test the 10 day before turning back down.
PHMD: Super break higher on volume. Very nice.
HPOL: Still looks very solid, moving over the 18 day MVA on very low, below average volume.
New Plays for Monday:
Downside:
Play Date: 07/19/2003
ADRX (Andrx Corp.--$18.81; -0.69; optionable): Drugs
http://biz.yahoo.com/p/a/adrx.html
STATUS: Put. ADRX topped at 24 in June and then fell to the 50 day MVA (19.27). It made a bounce higher to 22, but there was no volume on the move with trade well below average. Last week it started down again, Friday breaking below the 50 day once more on some rising though still below average volume. We are looking for a quick drop here to take it down to near the 200 day MVA and price support at that level as well.
Volume: 1.587M Avg Volume: 1.587M
BUY POINT: $18.62 Volume=1.8M Target=$16 Stop=$19.95
POSITION: QAX UD - Sept. $20p (-50 delta)
http://www.investmenthouse.com/cd/adrx.html
Upside:
Play Date: 07/19/2003
ILXO (Ilex Oncology--$19.87; +1.07; optionable): Medical laboratories
http://biz.yahoo.com/p/i/ilxo.html
STATUS: Cup w/handle. ILXO is moving in a big base that started in early 2002 when it started testing back from 30ish. During that long base it formed a nice 5 month cup with handle from November to May that broke higher and propelled ILXO higher. It is running up the 10 and 18 day MVA while periodically testing the 50 day MVA (17.45) before rebounding and moving back up the 10 and 18 day MVA. It has moved laterally the past month with a high at 21.66. Volume has backed off well below average as the stock has moved laterally and lower; that is the action you want in a handle to shake out the last sellers. Thursday it dipped down toward the 50 day MVA on the low. Friday it jumped back over the 10 day MVA on much stronger, above average volume. Strong money flow as this 50 day MVA test coincides with the periodic 50 day MVA test and has formed a handle as well. Ready for the breakout.
Volume: 434.594K Avg Volume: 400.385K
BUY POINT: $21.75 Volume=601K Target=$26.12 Stop=$19.96
POSITION: IUE KX - Nov. $22.50c (43 delta) &/or Stock
http://www.investmenthouse.com/cd/ilxo.html
Play Date: 07/19/2003
MU (Micron Technology--$14.3; +1.02; optionable): Semiconductor memory chips
http://biz.yahoo.com/p/m/mu.html
STATUS: Cup with handle. Chip stocks continue to build good patterns despite the pullback last week. MU is finisihing up the handle to its 9 month base. The base shows outstanding accumulation at 13 to 5 (13 up weeks on rising volume to 5 down weeks on rising volume) as MU has tested the 50 day MVA (12.20) in early July at the botom of the base and has started up toward the breakout. In the recent selling last week, MU came back to test the 18 day MVA on the lows (13.25) on lower volume. Friday it shot higher on a strong volume surge. Excellent money flow to go along with the strong accumulation in the base and we are looking for a breakout.
Volume: 15.602M Avg Volume: 10.55M
BUY POINT: $14.85 Volume=16M Target=$17.85 Stop=$13.74
POSITION: MU JC - Oct. $15c (46 delta) &/or Stock
http://www.investmenthouse.com/cd/mu.html
Play Date: 07/19/2003
VVTV (Valuevision Media--$15.9; +0.13; optionable): Catalog and mail order
http://biz.yahoo.com/p/v/vvtv.html
STATUS: Cup w/handle. VVTV is working on a very nice weeklong handle to a good looking 7.5 month base. The handle is where the stock approaches the old higher where the base or pullback originially started and then price starts to drop off. Those holding and hoping to get out 'even' at the old price get scared it is going to head into another plunge lower. They sell out. The stock does not tank, however, because all during the base it was under accumulation if the weekly accumulation numbers are positive. For VVTV they are at a solid at 9 to 6. That means most of the sellers are gone and most of the action has been big money accumulation. When the last sellers in the handle are gone there is not enough supply and then you have the breakout. Friday volume spiked higher as VVTV showed a sign that it was ready to move. Retailers look good and VVTV has a lot of positives.
Volume: 245.433K Avg Volume: 152.377K
BUY POINT: $16.38 Volume=250K Target=$19.75 Stop=$15.23
POSITION: UVR IC - Sept. $15c (71 delta) or UVR LC - Dec. $15c (61 delta) &/or Stock
http://www.investmenthouse.com/cd/vvtv.html
Continuing plays:
Play Date: 07/19/2003
KLAC (KLA Tencor--$50.27; -0.13; optionable): Chip equipment
http://biz.yahoo.com/p/k/klac.html
STATUS: Cup w/handle. KLAC has formed another neat little cup with handle in June and July on the heels of the breakout from another 6 month cup w/handle in early June. The stock has held up very well as the market struggled over that same time. Accumulation in the small base is a solid 3 to 1 with strong money flow and excellent relative strength. To end last week KLAC pulled back to the 10 day MVA on the lows (49.70) on much lower volume. A very orderly pullback to shakeout the last sellers. It looks really good but we need to see the strong volume breakout.
Volume: 8.366M Avg Volume: 10.682M
BUY POINT: $52.25 Volume=14M Target=$60 Stop=$49.85
POSITION: KCQ IJ - Sept. 50c (55 delta) &/or Stock
http://www.investmenthouse.com/cd/klac.html
CONTINUING/WATCHLIST:
LEGEND
DATE: date play first appeared on report.
PLAY: Denotes the type of pattern or play.
Upside play types: A Wedge=Ascending triangle/wedge; BO=Breakout; Cup=Cup base; Cup hdl=Cup w/handle; DB hdl=Double bottom w/handle; Dbl btm=Double bottom; Flat=Flat base; FlyPlat=Flying Plateau; Pennant=Pennant; Rv H&S=Reverse head & shoulders; Saucer=Saucer base; Test 18=Testing 18 day MVA; Test 50=Testing 50 day MVA; Test BO=Testing the breakout (could be 10 day MVA test, etc.)
Downside play types: CCall=Covered Call; DWedge=Descending triangle/wedge; Dbl Top=Double top; H&S=Head & shoulders; Put (generic downside);
PIVOT=Buy point
Tgt=Target stock price for the play. Applies to stock and options.
Vol=Volume for the most recent session.
TgtV=Target volume to enter the play.
Stop=Stop advisory point. This is advisory and we may or may not exit a play if it hits this level depending upon market conditions.
These still look ready: WWCA; NWRE; LIOX; WWCA; EBAY
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
ADRX 07/19 Put 18.81 -0.69 18.62 16 1.6M 1.8M 19.95
New.
AMZN 05/03 BO 34.97 -1.34 30.3 35.45 13M 12M 37.45
Current. Letting it test the 50 day MVA on the remaining stock
positions. Volume jumped as it hit and held the 50 day.
ASPM 06/30 FlyPlat 7.99 +0.19 8.33 10 38K 115K 7.72
Buy Not Issued. Trying to make the move last week but volume was not
there Friday. Moved up the buy point to make sure it
is clear the next time it rallies on volume.
ASTSF 07/12 Cup hdl 6.74 -0.03 6.5 8.25 280K 500K 6.25
Current. Nice pullback, holding most of the breakout. Letting
it rebound if it will.
ATSI 06/19 Cup hdl 4.26 +0.05 3.95 4.75 63K 225K 3.98
Current. Still moving laterally over the 10 day showing a doji
Friday.
ATYT 06/23 Cup hdl 10.76 +0.63 9.7 11.88 3.7M 2.4M 9.74
Current. Tested lower, held the 18 day MVA and surged back up
on strong volume.
BDY 07/16 Test BO 18.1 +0.33 19.06 22.88 224K 376K 17.73
Buy Not Hit. Held the 18 day MVA on the test. Needs to show some
life here.
C 04/18 Rv H&S 45.74 +0.92 41.25 48.55 12M 23M 44.62
Current. Tapped the 18 day MVA & recovered well.
CAL 07/12 FlyPlat 14.42 +0.31 16.02 19.25 2.5M 3.9M 14.82
Buy Not Hit. Is still in the pattern and may make the break in the
future, but the inability to move on the earnings indicates
it needs some more time. Dropping but will keep it
on the radar screen.
CBIZ 06/24 Cup hdl 3.44 +0.03 3.33 4.45 66K 212K 3.12
Buy Not Issued. After the breakout CBIZ has come back to test the 18
day MVA, just holding the breakout. On a volume move
higher from here it is ready.
CHGO 06/14 Test BO 11.1 +0.15 10.08 12.05 87K 140K 11
Current. Moved laterally all week over the 18 day. Held up and
preparing for the next move.
CSTL 07/09 Cup hdl 3.71 -0.05 4.2 5.2 111K 200K 3.94
Current. Bounced up off the 18 day Friday. If it does not improve
early this week we close it.
DGIN 06/30 Test BO 19.79 +0.54 20.97 26 190K 548K 19.5
Buy Not Issued. Testing teh break higher, holding the 18 day MVA. Will
continue to watch it but want to see a better consolidation
and dropping for now.
DKS 03/18 DB hdl 36.95 +0.23 23.81 28.42 136K 225K 35.94
Current.
DKS 02/19 DB hdl 36.95 +0.23 22.75 27.35 136K 225K 35.94
Current. Holding the 18 day MVA on very low volume.
DRIV 07/10 Test BO 21.98 +1.13 24.55 29.45 902K 1.8M 22.83
Buy Not Hit. Will keep an eye on it but the nice hold at the 10
day MVA fell through.
EBAY 12/12 Test 18 110.11 -0.1 69.45 92 5.3M 12M 105.55
Current. Holding well at the 18 day MVA. Good pullback that
it needed.
EBAY 10/15 Test 50 110.11 -0.1 62.45 92 5.3M 12M 105.55
Current.
EGO 06/25 Cup hdl 1.84 -0.01 1.88 2.45 55K 210K 1.78
Current. Holding the 18 day MVA on the close last week on a
low volume test.
FCN 06/19 Put 25.46 +0.81 25.44 23 736K 1M 24.55
Current. At the simple 50 day MVA.
FLSH 05/22 Test BO 12.74 +0.03 10.55 12.75 399K 195K 12.45
Current.
FLSH 05/12 Rv H&S 12.74 +0.03 9.2 10.96 399K 195K 12.45
Current. Tested the 18 day MVA and held. Will see if it can
bounce from here.
GRMN 07/17 Put 40.17 +0.42 39.54 36.48 479K 800K 40.72
Buy Not Issued. Edged up Friday on low volume. Lower volume bounce
is setting up another move lower.
HLR 06/28 Test BO 11.03 +0.04 11.55 13.78 82K 252K 10.94
Buy Not Issued. Still working laterally over the 50 day MVA for the
past 2 months. Will keep watching it for the breakout.
Dropping to make room for now.
HPOL 07/08 Test BO 7.24 +0.14 7.22 8.95 136K 541K 6.68
Current. Still a very nice lateral move on very low volume,
holding the short term MVA. Getting ready for that
next breakout.
HPOL 06/14 Test BO 7.24 +0.14 6.7 8.38 136K 541K 6.68
Current.
IACI 07/13 Test BO 38.49 -1.05 42.28 48.85 9.8M 12M 39.32
Current.
IACI 03/25 Cup hdl 38.49 -1.05 29.12 33.55 9.8M 8.3M 39
Current. Let it test the 50 day MVA since volume was lower.
Volume jumped as it tapped taht level and rebounded.
Good sign. If it moves over 40 on strong volume it
is a new buy.
IBM 06/14 Put 83.72 +0.39 0 0 8.6M 0 0
Buy Not Issued. Struggling below the 50 day MVA after the earnings results.
IGEN 01/11 A Wedge 33.89 +1.64 0 0 714K 375K 36
ILXO 07/19 Cup hdl 19.87 +1.07 21.75 26.12 435K 601K 19.96
New.
KFY 06/28 Cup hdl 9.38 +0.33 9.05 10.95 81K 130K 8.88
Current. Thudded back Thursday but then held some support at
9 and started to bounce.
KLAC 07/19 Cup hdl 50.27 -0.13 52.25 60 8.4M 14M 49.85
New. Very nice lower volume pullback to create the handle,
showing nice tight dojis.
LIOX 07/16 Test 18 5.79 +0.94 6.06 7.55 476K 400K 5.64
Buy Not Issued. Got wild Thursday but managed to recover with a nice
gap higher Friday. Now we see if it can hold and breakout
on volume.
LPSN 07/07 BO 1.9 +0.05 2.22 2.95 237K 320K 1.94
Current. Still holding the 18 day MVA, but cannot like that
reversal on Thursday. It moves this week or we will
shut it down.
MERX 07/15 Cup hdl 9.16 -0.38 10.26 12.45 96K 248K 9.54
Buy Not Hit. May be a shakeout on lower volume as MERX tests toward
the 18 day MVA at 9.
MKSI 07/14 Cup hdl 21.66 +0.52 22.8 27.95 510K 488K 21.12
Current. Held the breakout and over the 10 day MVA, starting
back up as volume started to rise.
MME 04/30 BO 53.87 0 45.65 54.45 598K 634K 56
Exited. Could not recover over the 18 day MVA.
MU 07/19 Cup hdl 14.3 +1.02 14.85 17.85 16M 16M 13.74
New.
NWRE 07/12 Test BO 17.58 +0.12 18.48 22.25 228K 900K 17.19
Buy Not Issued. Held the 18 day MVA and bounced some Friday. Now we
see if it has any backing.
ONNN 06/21 Test BO 3.29 -0.16 3 3.75 415K 900K 3
Current. Low volume pullback after the strong break higher
PDLI 06/19 Put 13.84 +0.17 14.75 12.04 2.5M 2.5M 14.75
Current. Gapped higher bug then turned lower again to close
below the 50 day MVA.
PGNX 07/04 Flat 15.79 +0.12 16.3 19.55 30K 112K 15.85
Current. Has tested the 18 day MVA and the breakout. Now looking
for a move back up off this doji. It was marked exited
Thursday but that was an error.
PHMD 07/17 Test BO 2.92 +0.28 2.9 3.75 676K 150K 2.68
Current. Excellent volume as PHMD broke higher with a gap up
on volume.
PLXT 07/13 Cup hdl 5 +0.08 5.8 7.35 160K 500K 4.95
Current.
PLXT 06/07 FlyPlat 5 +0.08 4.48 6.45 160K 281K 4.95
Current. Holding at the 18 day MVA on low volume, the point
where it made the strong Monday move higher. The reversal
was not good action, and if it does not jump early
this week we will close it.
POSS 06/28 Put 16.58 +0.43 13.4 11.75 400K 235K 14.75
Exited.
RATE 07/15 FlyPlat 14.21 +0.55 14.8 17.88 95K 312K 13.76
Current. Nice recovery Friday to hold the lateral consolidation
range.
RCII 01/11 Test BO 80.91 +1.21 0 0 270K 0 71.75
Breaking higher after the lateral move last week.
RNR 07/01 A Wedge 48.04 +0.54 47.32 55 465K 500K 45
Buy Not Issued.
SBUX 07/01 Cup 26.64 +0.31 26.3 30.94 3M 6M 25.85
Current. Has formed a nice handle, tapping the 18 day on the
Friday low and rebounding.
SIGM 06/26 Test 50 11.23 -0.03 10.94 12.98 162K 550K 11.25
Current. Deep doji but recovered well. Needs to make a move
early this week.
SINA 06/26 Test 18 29.02 +4.52 17.71 21.25 12M 4M 25
Current. Impressive recovery off the 18 day MVA on volume. One
of the leaders that took off already.
SKYF 06/21 Test 50 22.7 +0.26 21.78 25 279K 250K 20.95
Buy Not Issued. Volume is stronger. Lookign for a breakaway move this week.
SOHU 06/26 Test 50 40.9 +3.8 29.9 35.88 4.5M 2.5M 36.55
Current. Above average volume jump off the 18 day MVA as an
early leader races back up again.
STST 07/07 Test BO 16.32 -0.2 15.29 18.12 159K 103K 15.95
Current. Holding at the 18 day MVA with a big doji indicating
it could make the turn back up here.
STX 05/24 Test BO 20.03 -0.99 13.95 16.75 5.2M 2.9M 19.55
Current. Gapped lower but held some support at 20. Moved up
the stop.
STXN 07/02 Cup hdl 3.69 +0.23 3.9 5 251K 250K 3.58
Current. Up off the 18 day MVA test on above average volume.
Needs to get over 3.80 on volume.
TEVA 01/11 A Wedge 55.81 -0.15 0 0 2.1M 5M 53.75
TMWD 06/11 Test BO 2.91 -0.01 2.32 3.25 66K 140K 2.78
Current. Up off the 18 day MVA test but no volume. Needs to
clear 3 on a strong trade this week.
TPTH 06/18 A Wedge 6.97 +0.11 7.4 8.95 57K 352K 6.98
Current. Hit the 50 day MVA and bounded. Has to get some volume
and break 7.50 or we close it.
TSCO 06/03 Rv H&S 49.52 -0.15 46.85 55.25 351K 603K 48
Current. Tight doji at the 18 day MVA. Still in good shape.
TSCO 04/24 Cup hdl 49.52 -0.15 43.75 52 351K 603K 48
Current.
TSCO 04/03 Rv H&S 49.52 -0.15 38.6 44.38 351K 577K 48
Current.
UNTD 07/12 Test BO 27.51 -0.29 28.8 34.12 784K 2.1M 26.78
Current. Tested lower but an excellent recovery to hold the
18 day MVA.
UNTD 05/29 Flat 27.51 -0.29 23.45 28 784K 2M 27
Current.
VOCL 07/10 Cup 5.41 -0.49 5.25 6.45 150K 125K 4.88
Current. Holding the breakout on a lower volume test. Has tested
the breakout and this is where it needs to hold.
VRTS 08/19 CCall 27.64 -0.01 19.76 20 5.8M 8.5M 28
Current. Gapped to the 50 day Thursday and holding there Friday.
VVTV 07/19 Cup hdl 15.9 +0.13 16.38 19.75 245K 250K 15.23
New.
WMT 02/05 Put 57 +1.2 0 0 6.6M 8.2M 0
Nice tap of the 18 day MVA and bouncing. Looking for
a breakout over 57.70 as an entry point.
WWCA 05/22 BO 13.55 +0.05 11.42 13.85 1.2M 824K 12.42
Current. Nice lateral move and the 10 day MVA has moved up to
test. Ready to move up from here.
XING 07/02 Test BO 8.99 -0.28 11.2 13.55 573K 499K 11.94
Current. Volume jumped back as XING recovered to the 10 day
MVA. Needs to keep going from here.
YHOO 12/11 Test 50 29.9 -0.71 17.32 25 13M 20M 32.15
Current. Still testing the 50 day MVA at 30 that is also price
support.
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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