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SUBSCRIBER QUESTIONS

Q: I've been trading for almost 10 years, and I had never heard of an
18 day moving average until I subscribed to you service. Is it a "trader's secret" or something? It just seems kind of odd when compared to the 10,50,and 200. Do you have any information about it?

A: We developed our system of looking at stock movements after reading and trying everything we could get our hands on and then holding onto what worked. We found that the 18 day exponential moving average is often a much more accurate indicator of shorter term support for stocks moving out of solid patterns than other moving averages. It is quite simply a case of trying many and focusing on the one that worked for us. These change over time depending upon market volatility and changing attitudes. That is why we always look at other MVA's to see if there is any change. Some stocks will adhere to the 20 day MVA more than the 18 day, but we find them to be the minority at this stage.

Q: What do you think the dangers are of a European economic slow down prolonging the US recovery of earnings for another year?

A: As we said last week, Europe feeds off of the U.S., not vice versa. We make our own wake over here and had to do it all during the 1990's. It won't help, but we were not expecting any help from Europe. Indeed, as we said over a year ago, as the U.S. goes, so goes the world. That is what is happening, and as we have seen and heard from companies recently, the U.S. is improving but Europe is just slowing down. We were not counting on Europe when we made our projection of a second half recovery, and we are not counting on Europe now.

Q: Could you please tell me what " team trades " mean? Are you all trading at the same time ? Do you send members emails to trade those?

A: Well, with all of the flooding, our trading has been taking a bit of a back seat of late as we here at the newsletters are working round the clock to get our households up and running when not preparing the reports. I have some buy stops in on some breakouts we are tracking and some split plays, but my off time right now is trying to get life back to normal.

To answer your question, Team Trades are trades we make on the plays that we have written about in the reports. The purpose is to show subscribers how we go about acting upon the plays that we have set up, i.e., what we look for, when we get in, what positions we take and at what points. It helps provide another tool to see how we utilize the information we prepare. The plays are very similar to the thought process (actually almost identical) that we go through in deciding if we want to make the trade.

Now, we are going to introduce another service very soon (in the next two weeks or so) for all of the reports that is an alert service that will notify you by email, pager, or cell phone when we see a breakout move or other move we are looking for and are ready to make the trade. It is going to give you the information we use to make the decision: the alert will be triggered at a price just below the pivot point or buy point so we have time to check the play again, it will provide the actual buy point where we would get in, the current volume, and what percent of average volume the current volume is. We will also include any comments we feel are important for the trade, if any. It is quite an undertaking to do this, but it is a service that many of you want, and it will easily pay for itself each month by getting you into the right trades at the right time without requiring you to watch the market at all times. Needless to say, we are very excited about this service.

For a review of frequently asked questions, please use the link below:

http://www.investmenthouse.com/1questions.htm

Investment House subscribers are offered a special from eSignal for those
interested in a realtime service. Contact:
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800-322-1875
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www.esignal.com

THE PLAYS:

Reading the Plays: Please note that when we reference the 10, 18, and 50 day moving averages (MVA), those are exponential moving averages (EMA). The 200 day moving average is always simple (SMA). We will note when we reference a particular MVA differently, e.g., a simple 50 day MVA. Please click on the Yahoo and chart links for company and charting information.

Best Plays: All the stocks covered on the report tonight look good for upside moves (with the exception of the put play).

Best Plays:
1) EBAY: Good volume and pushing at resistance.
2) MCHP: Moving up on strong volume.
3) NVDA: Ever present the last few days, and ready to move.
4) THQI: A strong move.

New:

KG (King Pharmaceuticals--$53.82; +1.57; optionable (KG): Drugs
http://biz.yahoo.com/p/k/kg.html
STATUS: Moving up from the base of a handle to its cup base of 24 weeks (previous high 55.50). The stock dropped back off the (handle) high of 56.26 after running up to that price from its 50 and 200 day MVAs mid-May. The move Friday was determined, but we want to see volume catch up it was strong at average levels (1.06 million), maintaining volume levels from Thursday. Look for the breakout over the high. The stock shows great money flow and relative strength has broken out, which is a bullish indicator. Target: $62-65.
BUY POINT: 55.63, on minimum volume of 1.6 million. Stop: 51.74 (just above the 18 day MVA, 51.32).
POSITION: Stock and/or October $50 calls to buy (KG JJ).

http://www.investmenthouse.com/cd/kg.html

EBAY (Ebay Inc--$65.12; +1.06; optionable (QXB): Internet Software
http://biz.yahoo.com/p/e/ebay.html
STATUS: Moved higher in the wedging pattern set up above the 18 day MVA (62.09) as volume rose again, this time to 8.6 million (avg. 5.9 million). The company's CEO on Friday said that the business was "recession proof". The stock is right at resistance at the 65 level, but we are going to look for a move over the May high of 66.50 for the breakout. The stock is in a 9-month base with the wedging pattern just above mid-range in the right side. Big money flow and high relative strength. Target: $77-78 (highs at the start of the base).
BUY POINT: Breakout: 66.63, on volume of 8 million or better. Stop: 61.96 (18 day MVA, 62.09).
POSITION: Breakout: Stock and/or October $60 calls to buy (QXB JL).

http://www.investmenthouse.com/cd/ebay.html

A covered call sale play:

MCHP (Microchip Tech--$26.25; +2.92; optionable (QMT): Semiconductor
http://biz.yahoo.com/p/m/mchp.html
STATUS: The stock is ranging roughly between 22 and 30, and on Friday's strong move (crossing over the 50 day MVA at 25.82 on big volume), looks ready to make the run back to the upper ranges again. The 200 day MVA is at 28.31. On a continued move up, we will look at buying stock in order to set up a covered call play on a move back down from the potential resistance (30). On a turn back down from there, we will look at selling the July $25 calls (with a current premium bid at $2.60). If the stock tops out around 30, the calls should be worth about $4.16, at which point we can sell them and let the stock fall for a roughly 15% return.
BUY POINT: Up from here on continued strong volume. For the covered call play, look for 30 as resistance to turn the stock back down, the point at which we sell the calls.
POSITION: From here, stock. July $25 calls to sell on the move back down (QMT GE).

http://www.investmenthouse.com/cd/mchp.html

THE PORTFOLIOS: Each report, we look at these to see which is in a buy position. We don't cover them all each time, just the ones that are looking as if they are ready to pick up a few shares.

THE LEADERS:
New Leaders: CPN, SGR, ESRX, NATI, LLL, ACS, NVDA, BRKS
Previous Leaders: ADBE, AMCC, ARBA, BEAS, BRCD, CIEN, EMC, EXTR, GLW, JNPR, NEWP, NTAP, PMCS, SCMR, SEBL, VRSN, VRTS

ESRX showed its amazing strength Friday by plowing to a new high on surging volume. We continue to look for a pullback for entry points; the stock is splitting June 25 and it is unlikely to run all the way up to that date. We'd rather see a correction before that, then get in and ride it to the split.

NVDA (Nvidia--$95.05; +1.46; optionable (RVU): Semiconductor
http://biz.yahoo.com/p/n/nvda.html
STATUS: Added to Thursday's move off the 18 day MVA (92.24), as volume moved higher to 4.56 million (avg. 5.5 million). We are looking for a shorter term move up to the May high at 100. The stock tried to break out of a wedging pattern several days ago but the market just wasn't supportive, and NVDA pulled back. Now we will see what it can muster after this test. The stock is holding up beautifully, showing good price volume action in the face of the current market.
BUY POINT: Aggressive: Up from here on stronger volume. Stop: 88.40. New high: Over 100 on above average volume. Stop: 93 (18 day MVA, 92.24).
POSITION: Aggressive: Stock and/or September $80 calls to buy (RVU IQ). New high: Stock and/or September $90 or $95 calls to buy (RVU IR or IS).

http://www.investmenthouse.com/cd/nvda.html

UP & COMERS PORTFOLIOS: Newer members of the portfolio are LNCR, BJ, ANF, LOW, HI and THQI. Currently existing members are EXDS, TQNT, BVSN, SANM, PKI and GMST.

THQI (Thq Inc--$54.93; +23.83; optionable (QHI): Multimedia & Graphic Software
http://biz.yahoo.com/p/t/thqi.html
STATUS: Bounced from the 18 day MVA (50.89) and on strong volume headed up to close at resistance. The June high is at 56.49, so we are looking for a move over that level for taking new positions. The stock climbed steadily since mid-May and was due a pullback, but what happened was some profit-taking Thursday after the stock hit a new closing high (previous all-time high is 56.72, back in 1992). The stock is showing great strength now, though, and the strong buying boosted it right back up. Looking for a new all-time closing high. We will see if the stock can take it from here. Money flow is outstanding and relative strength has broken out. Target: $60.
BUY POINT: Aggressive: Up from here on continued strong volume. Stop: 51.08 (18 day MVA, 15.89).
POSITION: Stock and/or September $50 calls to buy (QHI I; low open interests).

http://www.investmenthouse.com/cd/thqi.html

MEMBER PORTFOLIO: BRCM, CHKP, CSCO, EMLX, IDTI, INTC, JDSU, MVSN, NT, PWER, SUNW, VTSS

No reports on stocks in this portfolio tonight.

Puts: We are looking for some put plays to set up if we get a weak market bounce.
SEBL is an example.

SEBL (Siebel--$40.07; optionable (SGW): Application Software
http://biz.yahoo.com/p/s/sebl.html
STATUS: The stock sold down hard Thursday, then Friday held up at support (39) showing a doji after the previous 2 days it fell. Volume was still strong but lower at 24.3 million (avg. 17 million). We are looking for a weak bounce back in the market, so the stock can move back up from here, but we are looking for a failed test of the 50 day MVA (45.29), if not lower possible resistance at 43. If the stock cannot bounce, and moves below the low of 38 from here, we will look at playing it down to 31-32.
BUY POINT: On a failed test of the 50 day MVA (45.range) or the 50 day MVA (simple, at 43-44). On a move back down from either level, puts in a selling market, or, below 38 on continued strong volume in market selling.
POSITION: August $55 puts to buy (SGW TK).

http://www.investmenthouse.com/cd/sebl.html

Good Investing!
Jon 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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