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us stock market, trade stock
Begin part 2 of 3
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
Good movers Friday: GPRO; GSPN; INTU; PDLI; PKI; RINO; CGFW; CHINA; XING
Best Plays:
1) IMN: Outstanding accumulation.
2) ONXX: High volume bounce Friday; ready for a breakout.
3) ACS: Heading for a breakdown.
4) CGFW: Just needs volume.
5) CGNX: Nice test and doji.
6) LSCP: Nice volume Friday.
7) TSCM: Still very solid.
NEW PLAYS:
Upside:
Play Date: 07/19/2003
ALTR (Altera--$18.80; +0.59; optionable): Semiconductors
http://biz.yahoo.com/p/a/altr.html
STATUS: Cup w/handle. Despite the tech selling last week, many chip stocks hung doggedly in their patterns, showing solid resilience. After testing the 50 day MVA on the Friday low (17.70) ALTR shot higher on a strong volume surge to close higher. The stock has formed a short 7 week base after breaking out of a reverse head and shoulders that formed December to April. Money flow is very strong and ALTR sports solid relative strength. Looking for a breakout over the May and July highs to enter to make sure it clears that resistance.
Volume: 12.842M Avg Volume: 9.681M
BUY POINT: $20.12 Volume=15M Target=$24.55 Stop=$19.35
POSITION: LTQ IP - Sept. $17.50c (72 delta) or LTQ LD - Dec. $20c (44 delta) &/or Stock
http://www.investmenthouse.com/ct/altr.html
Play Date: 07/19/2003
IMN (Imation--$39.39; +0.26; optionable): Storage media, etc.
http://biz.yahoo.com/p/i/imn.html
STATUS: Cup w/handle. IMN made us a lot of money in 2002 with its strong run, but as with all strong moves, there has to be a new consolidation and base at some point. Well, IMN looks to be in the last stages of a 7.5 month base, pulling back the past two weeks on lower, below average volume to test the 18 day MVA (39.04). Accumulation in the base is simply outstanding at 12 up weeks on rising volume to 3 down weeks on rising volume. In short, there is a lot of ongoing buying of IMN during this base, and on a breakout it has a lot of support to move sharply higher.
Volume: 190.8K Avg Volume: 419.813K
BUY POINT: $41.12 Volume=630K Target=$50 Stop=$39.88
POSITION: IMN JH - Oct. $40c (50 delta) &/or Stock
http://www.investmenthouse.com/ct/imn.html
Play Date: 07/19/2003
MEDI (Medimmune--$39.43; +0.56; optionable): Biotechnology
http://biz.yahoo.com/p/m/medi.html
STATUS: Cup with handle. MEDI is in the last stages of a very large cup with handle base (19 months) showing solid 20 to 14 accumulation and strong money flow. Over the past two months it has formed a small cup with handle as the end to the long base. It has spent the past two weeks moving laterally on low, below average volume and in a very narrow range over the 10 and 18 day MVA (39.56 and 39.04, respectively). The solid accumulation over the long base alone is noteworthy, and we really like the high relative strength. We just need to be patient and let MEDI provide the breakout.
Volume: 2.743M Avg Volume: 4.13M
BUY POINT: $40.35 Volume=6.2M Target=$48.45 Stop=$37.53
POSITION: MEQ IU - Sept. $37.50c (68 delta) or MEQ LH - Dec. $40c (52 delta) &/or Stock
http://www.investmenthouse.com/ct/medi.html
Play Date: 07/19/2003
ONXX (Onyx Pharmaceuticals--$14.65; +0.89; optionable): Biotechnology
http://biz.yahoo.com/p/o/onxx.html
STATUS: Testing the 18 day MVA. ONXX has been very strong. It ran to 14 in early June but ran into trouble as the market stalled some there. It tested back toward the 50 day MVA near 12 and then rebounded back to the prior June high. It again stalled and slipped back to the 18 day MVA (13.74) last week in the selling, but volume was very low. Friday it turned, making a higher low as volume jumped back up. That is an indication that it is ready to break the June high and make us some money. Accumulation in the June to present pullback is excellent at 3 up weeks on rising volume to 0 down weeks on rising volume; the buyers used the pullback to accumulate stock and they were much more plentiful than the sellers.
Volume: 322.68K Avg Volume: 330.318K
BUY POINT: $15.38 Volume=495K Target=$18.55 Stop=$14.08
POSITION: OIQ KC - Nov. $15c (52 delta) &/or Stock
http://www.investmenthouse.com/ct/onxx.html
Downside:
Play Date: 07/19/2003
ACS (Affiliated Computer--$43.9; -0.3; optionable): Computer ITS
http://biz.yahoo.com/p/a/acs.html
STATUS: Descending triangle. ACS is back at the bottom of a bearish 2 month descending triangle, a pattern of lower and lower highs with a constant bottom at 44. The highs keep getting lower until the stock breaks through. When it breaks it can drop quickly, and we want to be ready to get in on that move. Tanking money flow is leading the way lower for a breakdown as ACS is trending lower below all of its moving averages.
Volume: 1.125M Avg Volume: 1.891M
BUY POINT: $43.45 Volume=2M Target=$40 Stop=$45.05
POSITION: ACS UI - Sept. $45p (-54 delta)
http://www.investmenthouse.com/ct/acs.html
Play Date: 07/19/2003
AT (Alltel--$46.94; +0.77; optionable): Telecom services
http://biz.yahoo.com/p/a/at.html
STATUS: Put. AT crashed the 200 day MVA (47.72) Thursday on a high volume breach that followed two prior high volume selling sessions after AT tried to move over the recent highs at 50. Friday the stock make a bounce back up toward the 200 day but fell well short and volume was much lower. Breakdowns are the reverse of breakouts: A breakout will move through resistance and then fall back on lower volume to test the break before rising again on stronger volume. With breakdowns the stock falls through support on strong volume then rallies back on weak volume. It then rolls over on stronger volume as it sells back. AT may still bounce higher to test the 200 day further. We will let it move up toward that level and then catch it on the way back down.
Volume: 1.081M Avg Volume: 990.454K
BUY POINT: A test of 47.75 then $47.45 Volume=1.5M Target=$44 Stop=$48.45
POSITION: AT JV - Oct. $50p (-72 delta)
http://www.investmenthouse.com/ct/at.html
CONTINUING PLAYS:
Upside:
CGFW (Cyberguard--$9.14; +0.64; no options): PC networking hardware
http://biz.yahoo.com/p/c/cgfw.html
STATUS: Testing the breakout. After blasting higher on strong volume a week back, CGFW topped just over 9.50 and has come back to test the move. Last week it found the 18 day MVA on the lows (8.42) and Friday started to bounce off of that level. It hit our buy point for new positions, but volume was well below average. Excellent accumulation and money flow is still showing a positive divergence. Looking for more volume this week to move in as CGFW continues the move.
Volume: 89.029K Avg Volume: 123.5K
BUY POINT: $9.22 (orig. $7.75) Volume=120K Target=$11.12 Stop=$8.44
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/cgfw.html
Play Date: 07/09/2003
CGNX (Cognex--$24.65; -0.17; optionable): Scientific & technical instruments
http://biz.yahoo.com/p/c/cgnx.html
STATUS: Testing the breakout. CGNX broke out of a 7 month ascending triangle in early July, rallied to 26, and then started to test as the market sold back. Volume was mostly lower as CGNX came back to test the breakout point at 24. Friday it showed a nice, tight hammer doji at that level, tapping 24 on the low and rebounding to recoup most losses. Volume was up some as it rallied back. Looking for positions on a strong volume surge higher. Safer is over the recent highs at 26.05 but if the volume is surging we can take some positions before that breakout.
Volume: 231.14K Avg Volume: 284.509K
BUY POINT: Aggressive: $25.25. Breakout: 26.12. Volume=465K Target=$30 Stop=$23.48
POSITION: QCG KE - Nov. $25c (61 delta) &/or Stock
http://www.investmenthouse.com/ct/cgnx.html
Play Date: 06/16/2003
EXLT (Exult--$9.83; +0.33; optionable): Internet software and services
http://biz.yahoo.com/p/e/exlt.html
STATUS: Surged up on volume a week back and in the recent selling drifted back on much lower volume to test the 18 day MVA (9.36). A very nice, orderly test of the move. Still excellent accumulation and strong money flow. Looking for a move back up over 10 for new or additional positions.
Volume: 196.844K Avg Volume: 806.294K
BUY POINT: New: $10.35 (orig. $9) Volume=1.1M Target=New positions: $12.45 (orig. positions $11) Stop=$8.94
POSITION: EQB JB - Oct. $10c (65 delta) &/or Stock
http://www.investmenthouse.com/ct/exlt.html
Play Date: 07/12/2003
FSII (FSI International--$4.5; -0.06; optionable): Chip equipment
http://biz.yahoo.com/p/f/fsii.html
STATUS: Cup w/handle. FSII broke higher last Monday but then spent the rest of the week giving the move back as the techs got boxed around. FSII pulled back, but it was orderly, coming back to tap the 18 day MVA on the Friday low (4.30) and then rebounding on some stronger trade. Still exhibiting strong money flow and accumulation, and this action has formed a new handle on the pattern. Looking at new positions on a breakout over the handle high.
Volume: 257.9K Avg Volume: 235.07K
BUY POINT: New: 5.05 (orig. $4.90) Volume=333K Target=$6.25 Stop=$4.45
POSITION: FQH IA - Sept. $5c (42 delta) &/or Stock
http://www.investmenthouse.com/ct/fsii.html
Play Date: 06/26/2003
GSPN (Globespan--$9.36; +0.81; optionable): Semiconductor integrated circuits
http://biz.yahoo.com/p/g/gspn.html
STATUS: Testing the breakout. GSPN broke higher last Monday as well and then it turned back as the chips and techs were pushed back. As with many techs GSPN held near support, tapping the 50 day MVA on the Thursday low (8) and rebounded. Friday it was up again on strong, above average volume. We like 50 day MVA that shoot the stock back up. Looking for more positions on a continued strong volume move.
Volume: 4.594M Avg Volume: 2.955M
BUY POINT: New: $9.78 (orig. $8.85) Volume=3.7M Target=New positions: $11.78; orig. positionsA: $10.75 Stop=$8.65
POSITION: GLQ KU - Nov. $7.50c (68 delta) &/or Stock
http://www.investmenthouse.com/ct/gspn.html
Play Date: 07/12/2003
IDT (IDT Corp.--$18.13; +0.04; no options): Telecom services
http://biz.yahoo.com/p/i/idt.html
STATUS: Cup w/handle. Still working in the handle of its 7.5 month base, moving in a very tight, lateral range. Price/volume action is very good with some recent volume spikes suggesting that we get ready for a break higher. Tried to make the break Friday but came back. Holding well at the 10 day MVA, tapping that level on the Friday low and rebounding (18.04). Just waiting for the breakout.
Volume: 156.4K Avg Volume: 180.662K
BUY POINT: $18.26 Volume=200K Target=$21.95 Stop=$17.25
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/idt.html
Play Date: 06/30/2003
LSCP (Laserscope--$8.5; +0.26; no options): Medical appliances
http://biz.yahoo.com/p/l/lscp.html
STATUS: Flat base. Working in an 8 week flat base, LSCP was up off the 18 day MVA (8.15) Friday on rising, above average volume. Very nice move in a market moving higher on lower volume, showing great money flow and accumulation. Relative strength is already breaking out ahead of the stock, a bullish technical indication.
Volume: 200.3K Avg Volume: 125.05K
BUY POINT: New: $8.78 (orig. $8.35) Volume=140K Target=$10.12 Stop=$7.96
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/lscp.html
Play Date: 07/16/2003
MDP (Meredith Corp.--$46.44; +0.24; optionable): Newspaper publishing
http://biz.yahoo.com/p/m/mdp.html
STATUS: Cup w/handle. Still working in the excelletn 8.5 month base showing outstanding 8 to 3 accumulation. Excellent money flow and accumulation, MDP is working on the breakout. It was up off of support at 46 on Friday, though volume did not climb as well. With these patterns we have to be ready for the breakout as they can lull us to sleep. If we see it on strong volume we get in.
Volume: 188.4K Avg Volume: 231.355K
BUY POINT: $47.12 Volume=340K Target=$56.55 Stop=$45
POSITION: MDP II - Sept. $45c (71 delta) &/or stock
http://www.investmenthouse.com/ct/mdp.html
Play Date: 07/15/2003
ORBK (Orbotech--$17.2; +0.2; optionable): Business software
http://biz.yahoo.com/p/o/orbk.html
STATUS: Cup w/handle. Still moving in the handle of an 8 month base showing solid accumulation. Friday ORBK tried to make a move toward the breakout on some rising, above average volume, but after hitting 16.95 on the high it fell back for a modest gain on the session. Still in the solid pattern, and we just need to be patient and wait for the breakout.
Volume: 89.9K Avg Volume: 77.37K
BUY POINT: $17.65 Volume=150K Target=$21.22 Stop=$16.41
POSITION: OKQ JW - Oct. $7.50c (48 delta) &/or Stock
http://www.investmenthouse.com/ct/orbk.html
Play Date: 07/14/2003
SCH (Charles Schwab--$11.48; +0.27; optionable): Brokerage services
http://biz.yahoo.com/p/s/sch.html
STATUS: Cup w/handle. Not bad action, holding in the handle of the 6 month base sporting solid 8 to 5 accumulation.and surging money flow. Thursday SCH fell to the 18 day MVA, but fridy it gapped higher, tested the 18 day MVA on the low (11.24) and then recovered. Still in the handle and we are just waiting patiently for a strong volume breakout.
Volume: 3.755M Avg Volume: 5.248M
BUY POINT: $11.92 Volume=7.5M Target=$14.45 Stop=$11.05
POSITION: SCN IB - Sept. $10c (87 delta) &/or Stock
http://www.investmenthouse.com/ct/sch.html
Play Date: 07/17/2003
TSCM (The Street.Com--$5.40; 0.00; no options): Internet information provider
http://biz.yahoo.com/p/t/tscm.html
STATUS: Reverse head and shoulders. Still on the verge of the breakout from its 7 week base showing solid 3 to 0 accumulation that formed on the heels of the breakout from its 5 month base sporting excellent 8 to 4 accumulation. Money flow is excellent, still moving up even as the stock moves laterally. Friday it announced a smaller than expected loss. That did not break it out but it did send volume higher as TSCM showed a doji over the 10 day MVA. Still looking for the breakout move on volume to enter.
Volume: 162.5K Avg Volume: 189.584K
BUY POINT: $5.82 Volume=210K Target=$7.55 Stop=$5.38
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/tscm.html
Play Date: 06/28/2003
UTEK (Ultratech--$22.05; +0.55; optionable): Chip equipment
http://biz.yahoo.com/p/u/utek.html
STATUS: Testing the breakout. UTEK continues to move laterally over the 10 day MVA (21.50) after a strong break higher 2 weeks back. Very solid action as the market overall faded back last week, particularly for a chip stock. Price has met up with the 10 day MVA, and that often leads to a break higher after the initial breakout. Outstanding money flow and relative strength is breaking out.
Volume: 371.882K Avg Volume: 452.361K
BUY POINT: $22.75 Volume=615K Target=$26.95 Stop=$21.16
POSITION: UQT KD - Nov. $20c (64 delta) &/or Stock
http://www.investmenthouse.com/ct/utek.html
Play Date: 07/04/2003
XRIT (X Rite--$11.01; +0.2; no options): Photographic equipment
http://biz.yahoo.com/p/x/xrit.html
STATUS: Cup w/handle. Working in a very nice, low volume handle to a 12 week base, holding the 18 day MVA (11.70) on the lows. Very nice handle forming on very low volume, just what you want to see in a pullback as that indicates very few sellers. Being patient and waiting for the next break higher on some serious volume.
Volume: 16.879K Avg Volume: 49.623K
BUY POINT: $11.22 Volume=75K Target=$13.45 Stop=$10.56
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/xrit.html
End part 2 of 3
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