stock watch, stock recommendation

Begin Part 2 of 2

THE PLAYS:

All prices reflect prices at the close on Monday.

BEST PLAYS: A great rally today, and we saw a lot of stocks respond, like HOTT, and the ascending wedges (see the list of plays just below). KNT flew up right after we removed it, but volume was low on the move. Another watchlist stock, AHAA, moved up on stronger volume.

Best Plays:
1) MMM: Looks ready for a move up from the doji.
2) HOTT: Making a strong move.
3) TWAV: Watch this one; moving out of the pattern.
4) PRGN: Breaking out and still a buy.
5) TXN: Ditto.
6) BVF: Another stock moving out of an ascending wedge.
7) QCOM: Broke resistance.

READY TO BREAK TO A NEW HIGH (or just did):

OO (Oakley--$25.15; -0.85; optionable (OO): Sporting Goods
http://biz.yahoo.com/p/o/oo.html
STATUS: Pulled back from Friday's lower-volume move up, and dropped back to test the 10 day MVA on the low of 24. Stronger volume (566,100; avg. 315,454) pushed the stock back up, a good effort. The stock showed a loose doji; we will likely see more consolidation ahead of a move back over the high of 26. Target: $31 is the first level.
BUY POINT: Aggressive: Up from here or 24 on rising volume. Stop: 23.39-22.32
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 (from the weekend):

MMM (Minnesota Mining--$123.09; +0.04; optionable (MMM): Conglomerates
http://biz.yahoo.com/p/m/mmm.html
STATUS: Still in the test of its recent breakout, moving up slightly and showing a tighter doji as volume fell again, down to 1.4 million (avg. 2.4 million). Looks ready to move back up once it gets strong volume backing it. The buy point is 122.05, but even the low of 122.26 didn't test back that far. Huge money flow. Target: $140-146.
BUY POINT: Aggressive: Up from here on volume of 1.9 million or better. Stop: 114.24 (just under the 50 day MVA, at 114.49).
POSITION: Stock and/or July $115 or $120 calls to buy (MMM GC or GD; better delta on the $115 options).

Continued Plays:

LTR (Loews--$71.20; -0.14; optionable (LTR): Insurance
http://biz.yahoo.com/p/l/ltr.html
STATUS: Tried to move up (hit a high of 72.50) but instead sold back down on slightly higher volume (572,000; avg. 650.772). The stock held at the 71 range, but a test of the 10 day MVA (70.39) is likely. Great money flow and buying. Target over the high: $77-78.
BUY POINT: Breakout: Over 72.50, on volume of 772,000 or better. Stop: 67.43 (18 day MVA is at 68.77).
POSITION: Stock and/or September $65 calls to buy (LTR IM).

DVA (Davita--$18.49; -1.09; optionable (DVA): Health services
http://biz.yahoo.com/p/d/dva.html
STATUS: The move up over the last two days on lower volume took its toll, and DVA fell back to the 18 day MVA (18.49) on stronger volume (680,300; avg. 516,045). We can look for a bounce, but we don't like the drop on stronger volume. Money flow and buying are in good shape. Initial target: $24.
BUY POINT: Breakout, if the stock can rebound: Over 20.30 on volume of 918,000 or better. Stop: 18.49 (18 day MVA).
POSITION: Stock and/or July $15 calls to buy (DVA GC).

OCLR (Ocular Sciences--$22.26; +0.59; optionable (QLO): Health services
http://biz.yahoo.com/p/o/oclr.html
STATUS: Bounced back up from the doji, but volume was even lower (77,200; avg. 129,363). The stock is testing its recent huge breakout, and looks ready to move once it gets the volume behind it. Look for support near the open at 21.65 (the stock closed at that level Friday showing a tight doji). Great money flow and buying. New target over the breakout high of 23.87: $26-28.
BUY POINT: New high: Over 23.87 (breakout high) on volume of 105,000 or better. Stop: 22.20.
POSITION: Stock and/or July $20 calls to buy (QLO GD).

COLM (Columbia Sportswr--$72.57; +2.46; no options):
http://biz.yahoo.com/p/c/colm.html
STATUS: Popped out nicely to a high of 75.15 but retraced the move, though closing above the opening price of 71.50 and the previous May high at 72.28. Volume was higher at 433,400 (avg. 194,000). We like the hold above support and will look for renewed strength in a continued rally. Money flow and buying are very strong. Target: $78-82.
BUY POINT: Up from here on continued strong volume. Stop: 67.49 (18 day MVA is at 66.47).
POSITION: Stock.

HOTT (Hot Topic--$35.98; +2.69; optionable (UHO): Textiles: Apparel
http://biz.yahoo.com/p/h/hott.html
STATUS: Made its move today after consolidating above the 10 day MVA for the last several days. The stock closed just under the April high of 36.20, with the high stretching to 36.48. We'll look for a move over that in a continued rally. Looks good, with huge money flow. Target: $40.
BUY POINT: Aggressive: Up from here on continued strong volume in a rally. Stop: 33.21, just below the 10 day MVA (33.46).
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 Plays (from the weekend): Watchlist: FMX because of its good move.

TWAV (Therma-Wave--$18.80; +0.81; optionable (TQB): Scientific & Tech Instr
http://biz.yahoo.com/p/t/twav.html
STATUS: Beat the buy point in the ascending wedge of 18.63 on stronger (but not yet minimum for a breakout) volume of 306,800; average is 392,000. 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: Aggressive: Up from here (remains a buy on a breakout up to 19.56) on volume of 592,000 or better. Stop: 17.48 (just below the 10 day MVA at 17.73).
POSITION: Stock and/or July $17.50 calls to buy (TQB GW).

PRGN (Peregrine Sys--$29.85; +2.75; optionable (GQP): Software
http://biz.yahoo.com/p/p/prgn.html
STATUS: Broke out of the ascending wedge on good strong volume (4.8 million; avg. 3 million). The stock closed right at the down trendline that connects July and January highs (noted in the weekend report), but on the strong volume we're looking for that to fade. There is another long-term down trendline at 31.50. Initial target: $32-33.
BUY POINT: Remains a buy on the breakout up to 30.29 (buy point is 28.85) on continued strong volume. Stop: 27.76.
POSITION: Stock and/or July $25 calls to buy (GQP GP).

TXN (Texas Instr--$41.86; +2.15; optionable (TXN): Semiconductor
http://biz.yahoo.com/p/t/txn.html
STATUS: Another stock that is breaking out on strong volume from an ascending wedge (1.18 million; avg. 11.7 million). Still a buy. The 200 day MVA is at 44.74. Strong money flow. Target: $45-47.
BUY POINT: Remains a buy on the breakout up to 43.19, as volume rises to the minimum breakout volume of 15.8 million or more. Stop: 38.73, just under the 10 day MVA at 38.98.
POSITION: Stock and/or July $35 calls to buy (TXN GG).

Continued Plays:

BVF (Biovail--$40.63; +1.57; optionable (BVF): Drugs
http://biz.yahoo.com/p/b/bvf.html
STATUS: Moved out of the ascending wedge on stronger volume (695,000; avg. 910,000), which needs to meet our minimum to qualify as a breakout. Buy point is 40.58, so the stock remains a buy on the breakout as long as volume is on track. Target: $50.
BUY POINT: Still a buy up to 42.61 (5% above the buy point), looking for volume of 1.2 million or better. Stop: 37.57 (just below the 50 day MVA at 37.82).
POSITION: Stock and/or July $35 calls to buy (BVF 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 (from the weekend):

LTBG (Lightbridge--$15.15; +0.80; optionable (LKQ): Telecom
http://biz.yahoo.com/p/l/ltbg.html
STATUS: Added to the breakout from the double bottom with handle as volume rose to 492,100 (avg. 271,636). The stock was a buy up to 14.85 so now we will look for a pullback to test the 14 range. The smaller move up on stronger volume indicates the stock is topping out on the breakout. Huge money flow and good buying. Initial target
back over the high of 15.25: $17-18.
BUY POINT: Back over 15.25 after a pullback to test the 14 range. Stop: 14.18.
POSITION: Stock and/or July $12.50 calls to buy (LKQ GV).

MIL (Millipore--$59.65; +0.40; optionable (MIL): Scientific & Tech Instr
http://biz.yahoo.com/p/m/mil.html
STATUS: Managed a small move up and showed a tight doji on lower volume (638.600; avg. 494,272). The stock broke out of a cup with handle Friday and remains a buy up to 61.25, but looks like it may turn back down here, if it doesn't get a strong shot of volume. We will look for that in a rally. Money flow looks good, and the stock remains above the March high of 59.20.
BUY POINT: Remains a buy on the breakout up to 61.25, on volume of 741,000 (or better). Stop: 55.47 (just below 18 day MVA at 56.21).
POSITION: Stock and/or July $55 calls to buy (MIL GK).

XOM (Exxon Mobil--$88.75; -1.45; 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 stronger volume. That move retraced as the stock closed just under its 10 day MVA (88.87). Volume dropped just under average to 6.1 million (avg. 5.9 million). The stock may retest the 18 day MVA at 88.17 before moving back up to the resistance.
BUY POINT: On a move up after a test of the 88 range, on rising volume. Stop: 87.60.
POSITION: Stock and/or July $85 calls to buy (XOM GQ).

Continued Plays: Watching MSFT, GE, SNPS, KNT, BBC and AHAA.

DGX (Quest Diagnostics--$124.92; -4.08; optionable): Health services
http://biz.yahoo.com/p/d/dgx.html
STATUS: Pulled back to test the 10 day MVA (121.91) on the low of 123. Volume dropped back to 4.1 million (avg. 353,000). Looking for some consolidation here before the stock breaks back over Friday's high of 133.50. Look for a retest of the 10 day MVA. The stock is trying to make a strong breakout from its cup with handle. Target on a move over the high: $144-150.
BUY POINT: Pullback: On a move up from the 122 range on rising volume. Stop: 113.46.
POSITION: Stock and/or August $120 calls to buy (DGX HD).

GLGC (Gene Logic--$24.19; -0.97; optionable (CYV): Diversified services
http://biz.yahoo.com/p/g/glgc.html
STATUS: Tried to take out the resistance at the top of its 7-month ranging pattern, but volume dropped back (371,200; avg. 230,000) as the low tested 23.44. The stock can retest the low, or, we may see a further drop back as the pattern continues (ranging between 25 and 15). For now, look for a pullback to 22.50.
BUY POINT: Pullback: On a move back up from a test of 22.50 (or higher). Stop: 20.93 (just below the 18 day MVA at 21.36).
POSITION: Stock and/or August $20 calls to buy (CYV HD)

ZIGO (Zygo--$37.64; +1.04; optionable (UZY): Scientific & Tech Instr
http://biz.yahoo.com/p/z/zigo.html
STATUS: Having a hard time mustering the volume to break out of its cup with handle after making a strong move last Thursday up from the base of its handle. Volume was higher (295,600; avg. 390,272) as the stock moved up to show another doji. If it gets strong volume in a continued rally, look for the breakout over the buy point of 41.13.
The 200 day MVA is at 43.74. Money flow is huge. Target on a breakout: $47-49.
BUY POINT: Aggressive: Up from here on average or better volume. Stop: 34.79 (10 day MVA, 35.04). 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--$17.51; -0.04; no options): Food Wholesale
http://biz.yahoo.com/p/u/unfi.html
STATUS: Taking its time trying to break out of its cup with handle. The stock shows a tight doji near its high of 17.65 but volume dropped back to 63,200 (avg. 144,136). The low of 17.17 tested just above the 10 day MVA (16.96) so the support is looking good. Just needs that volume. Buying and money flow look very good. Initial target: $21-22.
BUY POINT: 18.25, on volume of 216,000 or better. Stop: 16.71 (just under the 10 day).
POSITION: Stock.

HD (Home Depot--$53.38; +0.68; optionable (HD): Retail
http://biz.yahoo.com/p/h/hd.html
STATUS: Moved higher on stronger volume (6.8 million; avg. 7.3 million), continuing the breakout that started last week and is now beyond our limit for buying on a breakout (52.90). The stock is at that level where overhead supply from late summer and early fall of last year can pose a barrier (up to 58), so we can get a pullback to test the 10 day MVA near 51 since the stock's run for 4 days and volume isn't that great. Target: $55-57.
BUY POINT: Pullback: On a move back up from the 51 range. Stop: 47.43 (50 day MVA is at 46.84).
POSITION: Stock and/or August $50 calls to buy (HD HJ).

Trading plays:

Continued Plays:

STT (State Street--$113.31; +2.28; optionable (STT): Banking
http://biz.yahoo.com/p/s/stt.html
STATUS: The stock tapped support on the low of 110.55 then moved up in an interesting break of resistance (the 200 day MVA, 112.27). Interesting, since volume was lower at 509,000 (avg. 1 million). STT even took out Thursday's high (the previous May high) of 113.18. We will look for the stock to move up from here, or from the 200 day, but we will want to see plenty of volume on the move. Can't really call this a breakout from the pennant pattern, but the break of resistance is just fine. Target: $125-131.
BUY POINT: Aggressive: Up from here or the 200 day MVA (112 range) on volume of 687,000 or better. Stop: 104.16.
POSITION: Stock and/or August $105 calls to buy (STT HA).

QCOM (Qualcomm--$70.99; +5.62; optionable (AAO): Telecom
http://biz.yahoo.com/p/q/qcom.html
STATUS: Broke resistance (200 day MVA, 69.38) on stronger volume. The stock has moved up the last 4 days after a gradual pullback to its 50 day MVA, and the rally gave it the extra push it needed to clear out the resistance. A positive move; look for a continued climb on stronger volume, with the moving average providing support on a pullback. The move took out our target, so we have a new one: $76-80. Buying and money flow look good.
BUY POINT: Aggressive: Up from here (or the 69 range) on rising volume. Stop: 64.52.
POSITION: Stock and/or July $55 calls to buy (AAO GK).

INDEX PLAYS: Look ready for a rally.

QQQ (Nasdaq 100--$51.05; +3.01; optionable (QQQ):
STATUS: Broke out of the ascending wedge/pennant pattern on strong volume (85.3 million; avg. 75 million) in today's rally. The index just hit our buy point of over 51, breaking that resistance. Looking for a continued move up from here. Target: $60.
BUY POINT: Remains a buy up to 53.69 on the breakout. Stop: 47.48
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--$678.60; +10.22; optionable (OEY):
STATUS: Moved up nicely as volume rose accordingly, to 1.17 million (avg. 1.2 million). Approaching resistance at 682-683, so look for strong volume for continued upside plays on the index. Support on a pullback is likely at 665 (or the 10 day MVA at 660.58). Target: $727-760.
BUY POINT: Aggressive: Up from here on continued strong volume. Stop: 631.10.
POSITION: June $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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