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Begin Part 2 of 2

THE PLAYS:

All prices reflect prices at the close on Friday.

BEST PLAYS: Last week saw several stocks breaking out and making strong moves, like OCLR, OO, VAR, PX, GLGC, SNPS, BMET and others. Several stocks on the report are waiting for another rally to bring in volume; they are in good positions for moves up. Still waiting on some to make their move, like UNFI. We are looking at some good-looking new patterns (MMM, TXN) and as lots of stocks are breaking out, are looking to play some continued breakouts (LTBG, MIL).

Best Plays:
1) MMM: At support in its test.
2) PRGN: Ascending wedge.
3) TXN: Ditto.
4) BVF: Tightening up in the pattern.
5) LTBG: Still a buy.
6) MIL: Ditto.
7) XOM: Breaking out.
8) UNFI: Making a nice move but needs volume.

READY TO BREAK TO A NEW HIGH (or just did): Watchlist: RDN, LEN

OO (Oakley--$26.00; +1.16; optionable (OO): Sporting Goods
http://biz.yahoo.com/p/o/oo.html
STATUS: After testing its breakout, OO broke out Thursday on good volume, headed up Friday but saw lower volume (466,500; avg. 315,454) on the move. However, one day of lower volume won't kill the move, and if Monday is slow, the stock might just take a short breather before heading back up. OO can put together a strong run once it gets going money flow and buying are outstanding. Target: $31 is the first level.
BUY POINT: Aggressive: Up from here on stronger volume. Stop: 24.18 (or 10 day MVA, 23.78).
POSITION: Stock and/or August $22.50 calls to buy (OO HX).

TESTS OF THE BREAKOUT: Some of these stocks are moving back on low volume to test the breakout. We often take profits on option plays when they start to pullback on the breakout move and then get back in when the stock bounces up off of the breakout point. This second move is where some of the biggest gains are made.

New Play:

MMM (Minnesota Mining--$123.05; -0.66; optionable (MMM): Conglomerates
http://biz.yahoo.com/p/m/mmm.html
STATUS: Broke out Wednesday on good volume, then pulled back from a Thursday high of 127 to close lower at the end of the week. The stock is holding just above the highs at the start of the 20-week base (122.94), and on the lower volume just may hold there. Otherwise, we could get a test down to the buy point of 122.05 before the move back up. Huge money flow in to the stock. Target: $140-146.
BUY POINT: Aggressive: Up from 122 on average or better volume. Stop: 113.64 (50 day MVA is at 114.14).
POSITION: Stock and/or July $115 calls to buy (MMM GC).

Continued Plays:

LTR (Loews--$71.34; +0.28; optionable (LTR): Insurance
http://biz.yahoo.com/p/l/ltr.html
STATUS: Still consolidating about the 10 day MVA (70.21) as volume drops to the lowest in a month (449,500; avg. 650,772). The stock has formed a small ascending wedge that is a test of the May 4 breakout, and while it may pull back closer to the 10 day, we are looking for another breakout over the high of 72.40. Great money flow and buying. Target: 77-78. This stock has run far and may give us one more run.
BUY POINT: Breakout: 72.53, on volume of 879,000 or better. Stop: 67.45 (18 day MVA is at 68.48).
POSITION: Stock and/or September $65 calls to buy (LTR IM).

DVA (Davita--$19.58; +0.23; optionable (DVA): Health services
http://biz.yahoo.com/p/d/dva.html
STATUS: Moved up the last 2 days of the week but on lower volume (428,800 by Friday; avg. 516,045). The stock broke out to a high of 20.30 and tested the breakout back to the 10 and 18 day MVAs, and is ready to take out the high but is waiting for a rally. Money flow and buying look great. Initial target: $24.
BUY POINT: Breakout: Over 20.30 on volume of 579,000 or better. Stop: 18.69 (just under the 10 day MVA, 18.94).
POSITION: Stock and/or July $15 or $17.50 calls to buy (DVA GC or GW).

OCLR (Ocular Sciences--$21.67; -0.38; optionable (QLO): Health services
http://biz.yahoo.com/p/o/oclr.html
STATUS: Pulled back further in its test to close on a shooting start doji Friday (no difference between opening and closing price, and a strong indicator of a change in direction). Volume fell again, to 171,900 (avg. 129,363). That is still high, so there is a chance the stock will test the 10 day MVA (20.62), but that is well above the buy point of 19.68. Had a strong breakout last week, and shows great money flow and buying. New target over the breakout high of 23.87: $26-28.
BUY POINT: Aggressive: From here (stop loss at 20.15), or on a move back up after a test of the 20-21 range (stop loss at 19.18, just under the 18 day MVA, 19.74). POSITION: Aggressive: Stock and/or July $17.50 calls to buy (QLO GW).

COLM (Columbia Sportswr--$70.11; +1.88; no options):
http://biz.yahoo.com/p/c/colm.html
STATUS: Continued Thursday's move up after testing its breakout back to the 18 day MVA (65.75). Volume was lower though still well above average at 293,200 (avg. 194,000), causing the stock to break some resistance at 69.95 but holding it under an upper barrier at the 71 level. We are looking for a stronger rally next week to break the stock over that, and ultimately over the May high of 72.28. Money flow and buying are very strong. Target: $78-82.
BUY POINT: Over 71 on rising volume in a rally. Stop: 66.03 (10 day MVA, 67.94).
POSITION: Stock.

HOTT (Hot Topic--$33.29; -0.37; optionable (UHO): Textiles: Apparel
http://biz.yahoo.com/p/h/hott.html
STATUS: Still testing its recent breakout, consolidating above its 10 day MVA after bouncing off the 50 day MVA (just above 28 at that point) several days back in a huge show of strength. Volume continued to build up throughout the week (to 594,300 Friday; avg. 652,000) as the stock pulled back slightly and showed a doji above the low of 33.14. Resistance at 34 is still holding the stock back, but we are looking for a pop up and move over the April high of 36.20. Money flow is huge. Target: $40.
BUY POINT: Aggressive: Up from 32.90 (10 day) on above average volume. Stop: 30.60 (50 day MVA, 29.86).
POSITION: Stock and/or August $30 calls to buy (UHO HF).

WEDGES, PENNANTS, and FLYING PLATEAUS (AND FLAGS): These are some of our favorite patterns as the moves can be explosive. In this market, however, we need to see the move on the breakout on strong volume.

New Play: Watchlist: FMX because of its good move.

TWAV (Therma-Wave--$17.99; -0.01; optionable (TQB): Scientific & Tech Instr
http://biz.yahoo.com/p/t/twav.html
STATUS: In an ascending wedge that in the tail has moved over its 200 day MVA (17.60). The stock pulled back from a strong move Thursday, showing a tight doji at the top of the days range, as volume dropped back to 222,600 (avg. 392,000) and the low tested support at the 200 day. Looking for a breakout over the pattern's resistance at 18.50. The pattern is off the lows (around 8.50) in the stock's 15-month base. This is an attempt at a base within a base, and the handle is wedging higher. We can get good moves out of these plays, but we need to move stops up behind the move higher as they can reverse on us due to the wedging handle. Huge money flow. Initial target: $20-21.
BUY POINT: 18.63, on volume of 529,000 or better. Stop: 17.33 (just below the 10 day MVA at 17.49).
POSITION: Stock and/or July $17.50 calls to buy (TQB GW).

PRGN (Peregrine Sys--$27.10; -0.75; optionable (GQP): Software
http://biz.yahoo.com/p/p/prgn.html
STATUS: In an ascending wedge formed after the stock ran back up from an April low of 13. The pattern is holding support above the 50 day MVA (24.32), and has upper resistance at 28.72, the May high. Pulled back on lower volume Friday (1.4 million; avg. 3 million), showing a doji. The stock can retest the 10 day MVA (26.39) if it does not head up from here, but we are looking for a breakout. Down trendline is at 30. Initial target: $32-33.
BUY POINT: Breakout: 28.85, on volume of 4 million or better. Stop: 26.83.
POSITION: Stock and/or July $22.50 calls to buy (GQP GX).

TXN (Texas Instr--$39.71; -0.09; optionable (TXN): Semiconductor
http://biz.yahoo.com/p/t/txn.html
STATUS: In an ascending wedge since later March, upper resistance at 40, as it tries to move up out of the last leg down of its correction. The stock bounced from the 50 day MVA (36.54) Wednesday on stronger volume that increased through Friday (to 8.6 million; avg. 11.7 million). That day the stock tested the 10 day MVA on the low of 38.40 then closed on a tight doji at the top of its trading range. Bullish, so we may get a breakout here if volume rushes in, or only a slight pullback until a strong rally. May high is 41, so we're setting the buy point just above that to clear out other resistance prior to the pattern. Money flow looks good. Target: $45-47.
BUY POINT: 41.13, on volume of 15.8 million or better. Stop: 38.10 (just under 10 day MVA, 38.35).
POSITION: Stock and/or July $35 calls to buy (TXN GG).

Continued Plays:

BVF (Biovail--$39.06; +0.06; optionable (BVF): Drugs
http://biz.yahoo.com/p/b/bvf.html
STATUS: Still in the pattern, but on its last bounce up held back from hitting resistance at 40, instead showing a tight doji on slightly higher volume (537,400; avg. 910,000). Looks more like a pennant now, and if volume doesn't come in stronger Monday the stock can pull back, though will likely get support at the 10 day MVA (38.45) if not above that (low of 38.93). Look for the breakout over the April high of 40.45. Money flow looks good. Target: $50.
BUY POINT: 40.58, on volume of 1.2 million or better. Stop: 37.47, just below the 200 day MVA (37.72; 50 day MVA is at 37.70).
POSITION: Stock and/or July $30 or $35 calls to buy (BVF GF or GG).

BASING/TRADING RANGES: Lots of stocks pulling back to support. Make sure of the breakout (watch volumes) and then set stops just below the pivot point. Follow gains up with trailing stops.

New Plays:

LTBG (Lightbridge--$14.35; +1.65; optionable (LKQ): Telecom
http://biz.yahoo.com/p/l/ltbg.html
STATUS: Breaking out of a double bottom with handle on good volume (440,000; avg. 271,636). Buy point is 14.27, so remains a buy on this move. The stock formed the pattern after a decent run up from the December bottom at the 7.25 range (in its current 10-month base), and on Friday's move broke over a down trendline (connecting Oct/Feb/early May highs). That is bullish, and we look for a continued move up on the breakout. Huge money flow and good buying. Initial target: $16-17.
BUY POINT: Remains a buy on the breakout up to 14.85 on continued strong volume. Stop: 13.35.
POSITION: Stock and/or July $12.50 calls to buy (LKQ GV).

MIL (Millipore--$59.25; +3.25; optionable (MIL): Scientific & Tech Instr
http://biz.yahoo.com/p/m/mil.html
STATUS: Breaking out of a cup with handle base (that's inside an 11-month base). Just beat the buy point of 58.33 on stronger volume of 712,200 (avg. 494,272), so we are looking at a target of $67-70, above the previous high in the smaller base (at 64.19). The stock took out the March high of 59.20 on the move. Needs to hit minimum breakout volume to sustain the breakout. Money flow looks good.
BUY POINT: Remains a buy on the breakout up to 61.25, on volume of 741,000 (or better). Stop: 55.10 (just below 18 day MVA at 55.81).
POSITION: Stock and/or July $55 calls to buy (MIL GK).

Credit Spread: Oil stocks have been breaking out.

XOM (Exxon Mobil--$90.20; +1.47; optionable (XOM): Energy
http://biz.yahoo.com/p/x/xom.html
STATUS: Formed a wedge-type pattern in the mid to upper right side of a 6-month base, and moved over resistance (90 range) Friday on a stronger shot of volume (7.1 million; avg. 5.8 million). Looking for a continued move up and possible a breakout here, for an initial target of $99-104. Previous high in the base is 94.69. Energy stocks are offering lots of good plays recently, and this is one of the biggies. Money flow is looking good.
BUY POINT: Remains a buy on a breakout up to 94.64 (buy point is 90.13), if the stock gets good volume; minimum breakout volume is 7.8 million). Looks ready to get there.
Stop: 83.89.
POSITION: Stock and/or July $85 calls to buy (XOM GQ). Credit spread: We will look at writing a spread on the breakout, with June $85 puts to buy (XOM RR), and June $90 puts to sell (XOM RQ), for a net credit of $1.40 or better.

Continued Plays: Still watching MSFT for a strong move up; it's gotten higher volume but hasn't moved as we'd like recently. We will look for a pullback on GE. SNPS is forming a handle; we will alert for a move back up. KNT, BBC and AHAA are on a watchlist, too. They still look pretty good; just want to make room for other stocks that look more ready at this time.

DGX (Quest Diagnostics--$129.00; +0.74; optionable): Health services
http://biz.yahoo.com/p/d/dgx.html
STATUS: Made it to a high of 133.50 on stronger volume (708,400; avg. 353,000) to continue its breakout move, but pulled back off that high to close just under Thursday's high (129.50). The stock is trying to make a strong breakout from its cup with handle. We will see if the stock can rally back up on stronger volume next week. Look for support at the buy point of 125.63 if it pulls back further. Buying and money flow look good. Target: $144-150.
BUY POINT: Up from here: Remains a buy on the breakout up to 131.91. Stop: 119.97. Pullback: On a move up from the 126 range on strong volume. Stop: 117.18 (just below the 18 day MVA at 117.50).
POSITION: Stock and/or August $120 calls to buy (DGX HD).

GLGC (Gene Logic--$25.16; +1.16; optionable (CYV): Diversified services
http://biz.yahoo.com/p/g/glgc.html
STATUS: Continued to break out, volume rising to 535,200 (avg. 230,000). The stock has had a strong run and is now at the upper resistance in its 7-month ranging pattern. Volume was higher Friday (though well below the breakout volume) at 535,200 and well above the average of 230,000. It can break out here if it finds the strength (and with the rising volume it might); otherwise, look for a pullback to form another handle at this level.. The stock reached our target on this run (at 24), so we are happy with the result.
BUY POINT: Breakout: 26.26, on continued strong volume (minimum breakout volume is 311,000). Stop: 24.42.
POSITION: Stock and/or August $22.50 or $25 calls to buy (CYV HU or HV)

ZIGO (Zygo--$36.60; -0.20; optionable (UZY): Scientific & Tech Instr
http://biz.yahoo.com/p/z/zigo.html
STATUS: Made a breakout move Thursday on great volume but pulled back to show a doji Friday (moved up from the opening price of 36.13 to close). Volume thudded back to 201,300 (avg. 390,272). We are looking for stronger volume in a rally to head the stock back up; handle high in the cup base is 41. The 200 day MVA is at 43.86. Money flow is huge. Target on a breakout: $47-49.
BUY POINT: Aggressive: Up from here on average or better volume. Stop: 34.04 (10 day MVA, 34.46). Breakout: 41.13, on volume of 585,000 or better. Stop: 38.25.
POSITION: Both positions: Stock and/or July $30 calls to buy (UZY GF; low open interest).

UNFI (United Natural Foods--$17.55; +0.55; no options): Food Wholesale
http://biz.yahoo.com/p/u/unfi.html
STATUS: Popped up from the doji at the base of its handle (in the 17-week cup base) despite volume falling back to 112,700 (avg. 144,136). We are going to watch for stronger volume when the market rallies back up next week, for the breakout over the handle's high at 18.12. Buying and money flow look very good. Initial target: $21-22.
BUY POINT: 18.25, on volume of 216,000 or better. Stop: 16.97.
POSITION: Stock.

HD (Home Depot--$52.70; +0.70; optionable (HD): Retail
http://biz.yahoo.com/p/h/hd.html
STATUS: Broke out Wednesday on good volume, which immediately fell back then dropped below average through Friday (5.85 million; avg. 7.3 million). Despite that the stock just beat resistance at the start of this cup with handle (January high at 52.50) and other prior resistance. Still has quite a bit to take out, but the move Friday showed resilience. If the stock does pull back from here, look for support at the 52 range until it can rally back. The base is part of a larger, 14-month base. Target: $55-57.
BUY POINT: Remains a buy on the breakout up to 52.90 if it gets stronger volume (stop loss at 49.01; 10 day MVA is at 49.21); otherwise, a buy on a move back up from a test of the 52.40 range. Stop: 48.73.
POSITION: Both: Stock and/or August $45 calls to buy (HD HI).

Trading plays:

Continued Plays:

STT (State Street--$111.03; -0.72; optionable (STT): Banking
http://biz.yahoo.com/p/s/stt.html
STATUS: Made a breakout move Wednesday, but could take out the 200 day MVA (122.24) that day or Thursday simply because volume wasn't there. The stock is tucked up right under the resistance, showing a doji as volume dropped back to 630,800 (avg. 1 million). Support looks good at 110 (hit several times since last fall) or at the pennant pattern's high of 109 for a pullback from here; we will look for a strong move back up and break of the resistance for a true breakout. Huge money flow. Target: $125-131.
BUY POINT: Over 113.18 (Thursday high) on volume of 852,000 or better. Stop: 105.26 (just below the 18 day MVA, 105.86).
POSITION: Stock and/or August $105 calls to buy (STT HA).

QCOM (Qualcomm--$65.37; -0.98; optionable (AAO): Telecom
http://biz.yahoo.com/p/q/qcom.html
STATUS: Tapped near our target of the 200 day MVA on the high of 66.86 Thursday, but lower volume that continued into Friday pulled the stock back. Showing a tight doji at the end of the week, volume dropped back to 7.9 million (avg. 18.3 million). The pullback came after a strong move up Wednesday, but the stock is waiting for a strong rally. 200 day is at 69.35. Buying and money flow look good.
BUY POINT: Aggressive: Up from here on rising volume. Stop: 60.79 (just below the 10 day MVA at 61.95).
POSITION: Stock and/or July $55 calls to buy (AAO GK).

INDEX PLAYS: Look ready for a rally.

QQQ (Nasdaq 100--$48.04; +0.14; optionable (QQQ):
STATUS: In a 2-day lateral movement above the 50 day and short term moving averages, the 10 day MVA just under the intraday low of 47.09 Friday. Volume dropped off significantly to 41 million (avg. 75 million). The index has formed an ascending wedge/pennant pattern, with upper resistance at 51 (April high). Closer resistance is at the 49.44 range, but 51 is above a bit of congestion at late February/early March, making it a good buy point. Looking for a breakout in a market rally. Target: $60.
BUY POINT: Breakout: Over 51 on volume of 100 million or better. Stop: 47.43.
POSITION: September $50 calls to buy (QQQ IX). Please check with your broker Monday for deltas; they are unavailable at the time of this writing.

OEX (Standard & Poors 100--$668; +2.80; optionable (OEY):
STATUS: Looks ready to move back up but needs volume, which dropped back to 1.1 million (avg. 1.2 million) as the index made a small move up from support just above 664. Look for support there or at the low or the 661 range (highs from early this month that were tested on Friday's low of 661.67) should we get a pullback before a rally back up. Target: $727-760.
BUY POINT: Over Thursday's high at 670.42 on stronger volume in a rally. Stop: 623.49.
POSITION: June $660 (OEY FL) or July $670 (OEY GN) calls to buy.

Good Investing!
Your Technical Traders Report Team

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 in 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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