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yahoo stock, top stock pick
Begin Part 2 of 2
SUBSCRIBER QUESTIONS
Q: I don't know when a play is complete...for example, the other day, you mentioned a stock WM, telling the stop figure, the buy figure, and the target figure. The first and second day it did nicely, then it stated to fade. Do I stay, giving it a chance to hit target, and yet possibly having it go down further to the stop and losing money, rather than taking a small profit? In other words... when do I get out?
A: WM was a breakout from a 5-month cup with handle pattern that made the breakout on huge volume 8 sessions ago. The stock ran up to 30.38 and then has pulled back the last two sessions on much lower volume, holding above the pivot point and the 18 day MVA. This is known as a test of the breakout, and each stock that breaks out of such a pattern has a 50-50 chance of testing the breakout point. If it holds (and the good volume on the breakout is a sign that it should hold if the market as a whole does not roll over), the stock will rebound here, and many of the best gains a stock makes comes after a test of the breakout. In a choppier market we will take profit it if hits our target point and starts to turn back down. The market right now has been tougher even on breakouts. We tend to take some profits on our positions when they turn back after the initial breakout run, but keep others for the move back up off of the test. If it is successful, i.e., the stock starts back up on volume back at average or better, we can ad to positions again and take the ride back up.
Q: If one buys a stock at $30.90 then it drops to $30.00, goes to $31.00, goes to $29.00, to $31.38, to $30.50, but does not advance much over the purchase price, or just stays a bit below it. For how long does one hang on to such a frustrating stock, after all the indicators said it was a good buy? 2 days, 2 weeks?
A: If the play is a breakout play from a solid pattern but then just hems and haws and goes nowhere, we will consider exiting the play. After all, we were looking for a strong breakout move, and if the move stalls out in a hurry without making a decent advance, it may not have the interest from the institutions to make a strong move. In that case, we exit the play more often than not and look for better game while keeping an eye on a stock that still looks good but just may not be ready. Many times the overall market has something to do with that: a stock looks great, starts to make a move, but the market is topping near term or otherwise softening, and that stops the move for awhile. Many, many times we will see a stock start to move up in its pattern and the market decides to take a breather and the stock does the same. Then it bounds on out of the base when the market has its next good session. If the stock is still good, and if you would buy it again, then we will stay. If it has not made the move we want and we would not buy into the pattern at that point, we will get out.
TEAM TRADES
TUTR: This education stock started out again like a ball of fire Friday, but it was just flying early on, gapping higher and higher up over 29. We decided it could not hang on at that pace and decided to wait for a test of the breakout. We but in a limit order at 27.95, breakout point, in an attempt to pick it off if it tested the breakout. Well, it just shot higher, but then it did start to fall all through the session. We saw it start to move up with just over an hour to go, but then rolled over and started falling again. Right before the close the stock was 28.20 by 28.30. Volume was good for the session, it was holding above the breakout point, so we took a partial position, and we will look at adding to the position Monday if the breakout holds and the stocks starts back up from here.
For a review of frequently asked questions, please use the link below:
http://www.investmenthouse.com/1questions.htm
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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: TUTR broke out over its old high, and FHRX still looks good in its handle, inching higher on stronger volume Friday. We are excited to have cleaned out and added some new stocks to the New Leaders and Up & Comers portfolios please have a look at some good-looking stocks that have continued to sock away gains in the current market climate. They are not all at buy points right now, but we expect them to offer good entry points in the very near term.
Best Plays:
1) ESCM: An ascending wedge pattern.
2) ACS: A move up on stronger volume.
3) IGT: Consolidating on the 18 day MVA.
New:
ESCM (Esc Medical--$30.34; +0.89; optionable (QFC): Wholesale Equipment
http://biz.yahoo.com/p/e/escm.html
STATUS: In an ascending wedge, and Friday tried to make its breakout on very strong volume (2.4 million; avg. 446,000) but couldn't hold a high of 32.14. The pattern formed above the 50 day MVA (27.14). If the stock cannot recapture this move right away, we will look for a test of the 10 and 18 day MVAs (28.29 range) and subsequent move back up for the breakout. The stock shows huge money flow and buying. Target: $40.
BUY POINT: Aggressive, since the stock has already reached well above the buy point but pulled back below it): 30.48 (pivot point in the pattern), on continued strong volume (minimum breakout volume is 602,100). Stop: 27.62.
POSITION: Stock and/or October $25 calls to buy (QFC JE).
http://www.investmenthouse.com/cd/escm.html
BSML (Britesmile--$9.28; +0.74; no options): Health services
http://biz.yahoo.com/p/b/bsml.html
STATUS: The stock is in a 10-month cup with handle that is part of a much larger base, and tried to make its breakout mid-May but just missed the buy point. It pulled back and eventually tested the 50 day MVA (currently at 7.95), then moved up and across the short term MVAs until Thursday and Friday shooting up on strong volume (463,400; avg. 172,000). The stock is going to make another run for a breakout. Shows huge money flow, strong buying, and relative strength has broken out ahead of price. Target: $11-12.
BUY POINT: 10.12, on continued strong volume (minimum breakout volume is 258,000). Stop: 9.31 (10 day MVA, 8.49). A buy on the breakout up to 10.63.
POSITION: Stock.
Updated:
KKD (Krispy Kreme--$37.64; -0.49; optionable (KKD): Leisure
http://biz.yahoo.com/p/k/kkd.html
STATUS: The stock, after making its strong breakout run to 38, tested and then hit a new high at 43.50 and is now pulling back and testing support as it consolidates for another run up. The low Friday of 36.80 tested the 18 day MVA, from where the stock bounced back to close above the 10 day MVA, showing a tight doji. Volume was down again to 1.17 million (avg. 1.2 million). We are looking for a move back up, perhaps from another test of the 18 day MVA (36.28), since the stock closed just under the 10 day MVA and volume can certainly drop lower as it shakes out more stockholders. Money flow and buying look good. Target: $50.
BUY POINT: Up from here or the 36.28 range, on rising volume. Stop: 33.74.
POSITION: Stock and/or August $32.50 calls to buy (KKD HZ).
http://www.investmenthouse.com/cd/kkd.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. We are "weeding" the portfolios this weekend.
THE LEADERS: We have revamped this portfolio, dropping for now CPN, SGR, NATI and BRKS. Those stocks have, for the most part, dropped off and need to form bases or do some more work in ones already existing. To the New Leader section we are adding DGX, EBAY, FRX, PSFT, ADVS, and BMET. In the Previous Leader section, VRSN, VRTS, ADBE and SEBL are retained. Ones dropped include AMCC, ARBA, BEAS, BRCD, CIEN, EMC, EXTR, GLW, JNPR, NEWP, NTAP, PMCS and SCMR. All of these stocks will be kept on watch in context with improvement in their sectors and the market.
New Leaders: ESRX, LLL, ACS, NVDA, DGX, EBAY, FRX, PSFT, ADVS, BMET
Previous Leaders: ADBE, SEBL, VRSN, VRTS
ACS (Affiliated Computer--$76.18; +1.53; optionable (ACS): Computer Software
http://biz.yahoo.com/p/a/acs.html
STATUS: Moved out of the three-day lateral consolidation upon hitting support again at the 18 day MVA (74.48). This time the bounce was accompanied by stronger volume of 411,000 (avg. 491,000), and the stock looks ready to challenge the June high at 77.68. A solid move. ACS continues with strong money flow, and relative strength broke out ahead of price, which is bullish. Target: $81.
BUY POINT: Up from here on continued rising volume. Stop: 70.84 (50 day MVA, 71.72).
POSITION: Stock and/or October $70 calls to buy (ACS JN).
http://www.investmenthouse.com/cd/acs.html
FRX (Forest Labs--$72.10; -0.64; optionable (FRX): Drugs
http://biz.yahoo.com/p/f/frx.html
STATUS: Uptrending since fall of 1999, with the strongest of three of corrections finishing this March. More recently the stock pulled back from its new all-time closing high of 76.09 (6-04), tested support at 70 then bounded back up, and is currently showing a doji between the 10 and 18 day MVAs (the latter is at 71.73; 10 day MVA is 72.16). Volume was lower at 1.1 million, thus we look for a hold at the lower support for a move back up. Looking for the stock to run up to the June high, then to an initial target of $85. Good money flow, and relative strength is out ahead of price. Average volume is 1.4 million.
BUY POINT: Aggressive: Up from the 10 day MVA (72.16 range) on rising volume. Stop: 67.11.
POSITION: Stock and/or August $65 calls to buy (FRX HM).
http://www.investmenthouse.com/cd/frx.html
UP & COMERS PORTFOLIOS: We have revamped the Up & Comers portfolio, keeping LNCR, BJ, ANF, LOW, HI and THQI. We are dropping EXDS, TQNT, BVSN, SANM, PKI and GMST for now, and adding BBBY, IGT, RCII, CHS, KG and AEOS.
IGT (International Game--$62.98; -0.47; optionable (IGT): Diversified Electronics
http://biz.yahoo.com/p/i/igt.html
STATUS: Formerly featured in New Plays. The stock broke out in May, and headed for a new all-time closing high in June at 65.31, at the top of a steady uptrend dating from early 2000. Currently the stock is off that new high, in a consolidation pullback along its 18 day MVA (at 62.67). It is bouncing in a little range and trying to settle down for another move back up after its recent breakout. The low tested support of the moving average as the stock closed just under the 10 day MVA (63.17). We will look for the 18 day to provide support for a strong move back up in a rally. Volume continued to drop, falling much lower Friday to 347,100 (avg. 805,000). Shows great money flow and high relative strength.
BUY POINT: Aggressive: From a bounce off the 18 day MVA (62.67) on strong volume. Stop: 58.28 (50 day MVA, 59.47).
POSITION: Stock and/or October $55 calls to buy (IGT JK).
http://www.investmenthouse.com/cd/igt.html
RCII (Rent A Center--$49.80; -1.11; optionable (RQG II): Diversified Services
http://biz.yahoo.com/p/r/rcii.html
STATUS: This stock has been in an uptrend since March of 2000, correcting a couple of times but continuing up each time. Presently the stock is in a 2-day pullback off the new all-time closing high of 51.50, and having broken out of a short cup with handle base three weeks ago. Volume is dropping right along with the pullback (down Friday to 199,700; avg. 465,000). The stock recently tested the 18 day MVA (currently at 47.54), but the low tested the 10 day MVA at 49.40. We will see if this higher support can bounce the stock back to another new high, or if the Nasdaq lets it pull back down to the 18 day MVA, which looks like firm support for now. Good place to enter. The stock shows steady money flow and excellent buying. Initial target: $55.
BUY POINT: Up from the 10 day MVA (48.90 range) on stronger volume, if not from the 18 day MVA (47.54 range). Stop: 44.21 (just above the 50 day MVA at 44.03).
POSITION: Stock and/or September $45 calls to buy (RQG II).
http://www.investmenthouse.com/cd/rcii.html
MEMBER PORTFOLIO: BRCM, CHKP, CSCO, EMLX, IDTI, INTC, JDSU, MVSN, NT, PWER, SUNW, VTSS
We are going to conduct another subscriber survey so we can flush out this portfolio and rebuild it with your new choices.
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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yahoo stock
top stock pick
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