yahoo stock, stock recommendation

Begin Part 2 of 2

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.

All prices reflect prices at the close on Monday.

BEST PLAYS: ROOM broke out! Some of our new patterns continue to look good today (ASN and BORL, for example). We have seen that patience is key for waiting for breakouts from these and other patterns. XCAR, a play from last week, has been running for three days now, and DMRC is back on. The put plays look good if we see strong selling.

Best Plays:
1) EBAY: Broke resistance on stronger volume.
2) JNJ: At support with a doji.
3) RAD: Ditto.
4) OCLR: Got strong volume today.
5) BORL: Pennant looks good.
6) DMRC: Back on and showing strong volume today.
7) ASN: A classic handle in the cup base.

BREAKOUTS:

New (from the weekend):

ROOM (Hotel Reservations--$43.90; +4.78; no options): Leisure
http://biz.yahoo.com/p/r/room.html
STATUS: Broke out of the cup with handle pattern on huge volume (1.35 million; avg. 179,000). The cup base is part of a wide rolling pattern with resistance near 40 and support, 25; however, this breakout takes the stock out of that pattern as well. Has reached the lower end of our initial target, so we will wait for a pullback for taking new positions. Super money flow and high relative strength. Target: $44-46. Buy point was 40.38 for the breakout.
BUY POINT: Pullback: On a move back up after a test of the buy point (40.38). Stop from the buy point: 37.15.
POSITION: Stock.

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.

ELN (Elan--$59.36; -1.84; optionable (ELN): Drug delivery
http://biz.yahoo.com/p/e/eln.html
STATUS: Volume fell again Monday (2.1 million; avg. 1.6 million) and the stock gapped lower then moved below the 18 day MVA (59.56) to tap 58.55 on the low. It is holding above the buy point of 59.23. We'll look at taking positions for an aggressive play when the stock breaks back over the 10 day MVA (60.62). Good buying. Target: $72.
BUY POINT: Aggressive: A strong move over the 10 day MVA (60.62) on rising volume.
POSITION: Stock and/or October $50 or $55 calls to buy (ELN JJ or JK).

CTIX (Cheap Tickets--$16.19; -0.03; optionable (UEY): Diversified services
http://biz.yahoo.com/p/c/ctix.html
STATUS: After hours the company warned that second quarter earnings would come in significantly lower, and the stock tanked to about $10. The stock looks like dead meat from here.

Continued: Watching HET for a move back up after it fell below the pivot point.

EBAY (Ebay--$71.04; +3.25; optionable (QXB): Internet Software
http://biz.yahoo.com/p/e/ebay.html
STATUS: Moved up after Friday's lower volume pullback. The stock gapped up to 68.63 on the opening price and moved up from there on stronger volume (at average levels by the end of the day, 6.17 million). Look for a continued move up as volume rallies; often stocks will post strong gains after testing breakouts (this was a brief test). The stock is in a 9-month base, and shows strong money flow and buying. Relative strength broke out as well. Initial target: $77-78.
BUY POINT: From here on above average volume (in the range of 7.5 million). Stop:
65.36 (10 day MVA, 66.78).
POSITION: Stock and/or October $60 or $65 calls to buy (QXB JL or JM).

UNFI (United Natural Foods--$19.31; +0.06; no options): Food wholesale
http://biz.yahoo.com/p/u/unfi.html
STATUS: Opened at 19.25 and basically held at the level of Friday's closing price as volume dropped lower to 125,400 (avg. 152,000). We are looking for UNFI to hold at the 19 range at the lowest for a strong move back up; the stock is in a 21-week base and we are watching it in another shakeout as it steps up the right side of the base. Money flow still solid. Target: $21-22.
BUY POINT: Breakout from the cup with handle: 20.05, on volume of 228,000. Stop:
18.44 (8% below the buy point), which is right at the 18 day MVA.
POSITION: Stock.

FISV (Fiserv--$62.04; +1.39; optionable (FQV): Software
http://biz.yahoo.com/p/f/fisv.html
STATUS: Moved up after testing the breakout for 2 days and showing a doji Friday. The stock broke resistance at 62 (from the start of the 9-month base), but still faces the June high at 62.06, and the September and October highs at the start of the base (at 64.13 and 62.63, respectively). Volume dropped back to average, still strong. Look for support at the 60 or 60.65 levels on a pullback ahead of a strong move over 62.06. Buy point is 58.28. Target: $64.
BUY POINT: Pullback: On a move back up from a test of 58.28 or higher. Stop from the pivot point: 53.62.
POSITION: Stock and/or September $55 calls to buy (FQV IK).

DFXI (Direct Focus--$42.32; +0.42; optionable (DQF): Consumer durables
http://biz.yahoo.com/p/d/dfxi.html
STATUS: Still moving laterally after Wednesday's stronger pop, showing its third doji and a small move up, but volume was lower at 227,800 (avg. 307,000). Does not look as if the stock will take out the previous June tops at 43.50, but we will keep an eye on it. Low volume again on the doji. Monday flow and buying remain strong, but these are longer term signals. Maybe it will test the 10 day MVA at 40.71 and then rally. Target: $53-54.
BUY POINT: Over 44 on volume of 308,000 or better. Stop: 40.48 (10 day MVA, 40.71).
POSITION: Stock and/or October $35 calls to buy (DQF JG).

FITB (Fifth Third Bancorp--$61.75; -0.22; optionable (FTQ):
http://biz.yahoo.com/p/f/fitb.html
STATUS: Still pulling back after Thursday's breakout move from the cup with handle, testing the move. Volume is falling accordingly on the pullback, just below average Monday at 1.6 million (avg. 1.8 million). Look for a hold above the buy point of 61.24 on a continued pullback.
Great money flow, high relative strength, and good buying. Financials should be a leader in a better economy. Target: $65-68.
BUY POINT: Pullback: Up from a test of the pivot point of 61.24, on rising volume.
Stop: 56.34.
POSITION: Stock and/or August $55 calls to buy (TTQ HK).

MOVING AVERAGE BOUNCES: A couple of quick plays.

New:

JNJ (Johnson & Johnson--$51.60; -0.79; optionable (JNJ): Drugs
http://biz.yahoo.com/p/j/jnj.html
STATUS: The stock split June 12 and is currently at support (18 day MVA at 51.44), having moved down to that level Monday on slightly stronger volume (10.6 million; avg. 5.8 million). After pulling back from the June high of 54.30 over the last three days, the doji suggests a run back up, and we are looking at that previous high as our initial target. JNJ tested the 50 day MVA back at the end of May, and has had 2 runs since then. We can perhaps look for a couple more before the stock gain has to make a bigger correction.
BUY POINT: Aggressive: Up from the 18 day MVA (51.44 range) on continued rising volume. Stop: 47.32.
POSITION: Stock and/or October $45 or $47.50 calls to buy (JNJ JI or JW).

RAD (Rite Aid--$9.04; +0.02; optionable (RAD): Retail: Drugs
http://biz.yahoo.com/p/r/rad.html
STATUS: Is back at support (18 day MVA, 8.93) and showing a doji after pulling back the previous 2 days on low volume. Volume was up and above average Monday (5.1 million; avg. 4.2 million), and we are looking for the stock to pop up from the support. The June high, our target, is 9.99. Only a point from here, but on a large chunk of stock or options, can be lucrative. This is a quick play and not a long term hold at this point.
BUY POINT: Up from here on continued strong volume. Stop: 8.32 (50 day MVA is at 8.13).
POSITION: Stock and/or October $5 or $7.50 calls to buy (RAD JA or JU).

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.

Ascending wedges:

Continued:

BBY (Best Buy--$61.24; -0.58; optionable (BBY): Retail
http://biz.yahoo.com/p/b/bby.html
STATUS: Still in the ascending wedge, holding above support of the 10 and 18 day MVAs (both tested on the low of 60.20). Volume dropped back well below average on the move, to 1.2 million (avg. 2.75 million), so we will look for the move back up from these support levels in a rally. BBY tried to break out Wednesday of last week, but pulled back on the convertible bonds news. Holding up well despite that, and that is a really good sign. Target on a breakout: $70.
BUY POINT: Breakout: 63.54, on volume in the range of 3.7 million. Stop: 58.46 (just below the 18 day MVA, 59.54).
POSITION: Stock and/or September $55 calls to buy (BBY IK).

Pennant:

Continued:

OCLR (Ocular Sciences--$24.50; +0.15; optionable (QLO): Health Service
http://biz.yahoo.com/p/o/oclr.html
STATUS: Moved up from support (10 day MVA, 23.81) on solid volume that shot up to 173,100 (avg. 129,000). The stock is moving back up toward the resistance just under 25 that plagued it last week, so we will see if it move through that on the volume rally. The stock tried to break out of its lateral consolidation (on Monday) that formed as a test of the mid-May breakout. June high is smack at 25. Big money flow. Target: $30.
BUY POINT: New positions: Over 25 on volume in the range of 234,000. Stop: 23 (just under the 18 day MVA at 23.31).
POSITION: Stock and/or October $20 calls to buy (QLO JD).

BORL (Borland--$13.32; -0.04; optionable (BLQ): Software
http://biz.yahoo.com/p/b/borl.html
STATUS: Continued to hold above the 10 day MVA (tested on the low of 13.10) in the pennant the stock formed in its test of the breakout. Volume dropped back below average (784,000; avg. 913,000) on the slight pullback. Still looks good, and we'll look for a breakout over the previous highs at the 13.84 range. Strong money flow and solid buying
continues. Target: $18.
BUY POINT: 13.97, on volume in the range of 1.2 million. Stop: 12.85 (just below the 10 day MVA at 13.10).
POSITION: Stock and/or October $10 calls to buy (BLQ JB).

BASING/TRADING RANGES:

DMRC (Digimarc--$25.38; +0.78; optionable (DQT): Software
http://biz.yahoo.com/p/d/dmrc.html
STATUS: Tested support of the 10 day MVA on the low of 23.40, then headed back over the opening price of 24.60 on a strong shot of volume (221,700; avg. 138,000). Looking for a continued move up to beat the June high of 26.03 as the stock climbs up from the bottom of its 16-month base. Looking at a target of $34 for now.
BUY POINT: Aggressive: Up from here on continued strong volume. Stop: 23.35 (above the 10 day MVA at 23.18).
POSITION: Stock and/or August $22.50 calls to buy (DQT HX; low open interests).

New (from the weekend):

LH (Laboratory Cp Am Hldgs--$75.50; -3.80; optionable (LH): Health services
http://biz.yahoo.com/p/l/lh.html
STATUS: The stock is in a 6-month base, and while in the handle Monday dropped below support of the 18 day MVA (76.75) though volume remained low at 439,300 (avg. 488,363). The stock may be able to catch support at the 75 level, but if it doesn't, look at 74.18 (hit twice at the beginning of the month), or the 50 day MVA at 72.91. LH has been price-volatile in the handle, while volume has remained nicely below average for the most part. The medical/drug news is not helping. We want to see a quick move back over the 18 day MVA. The stock shows solid money flow and buying. Target on a breakout: $91-95.
BUY POINT: Aggressive: Back over 79.05 (intraday high) on volume in the range of 593,000. Stop: 72.68 (below the 50 day MVA, 72.91). Breakout: 82.63, on volume of 732,000 or more. Stop: 76.02 (18 day MVA is at 76.75).
POSITION: Stock and/or August $75 calls to buy (LH HO).

XOMA (Xoma--$15.04; +0.35; optionable (MBU): Biotech
http://biz.yahoo.com/p/x/xoma.html
STATUS: Tried for a strong breakout move, and got it early on a surge to 16.50, but the stock pulled back despite very strong volume (up from Friday's levels to 7 million; avg. 973,000). We will see if the stock can push it back up from here after this round of profit-taking gets worked through; the stock surged Friday on news that one of its drugs was beating out a rival drug made by Biogen. Huge money flow. Target: $17.
BUY POINT: 14.93, on continued strong volume. Stop: 13.88 (10 day. 12.99).
Remains a buy on the breakout up to 15.68.
POSITION: Stock and/or August $12.50 calls to buy (MBU HV).

EQR (Equity Resident--$56.23; -0.12; optionable (EQR): REIT
http://biz.yahoo.com/p/e/eqr.html
STATUS: In a cup with handle pattern of about six months, and has pulled back the to its 10 day MVA (56.28) now. It tapped 56 at its low before recovering, with higher volume of 275,400 (average 357,400), though much lower than we saw on the stock's recent move up. We are looking for it to hold this level (18 day MVA is back at 55.63), ahead of a move back up and breakout. The stock shows strong money flow and good buying. Target: $63-66.
BUY POINT: 57.63, on volume of 536,000. Stop: 53 (50 day MVA is at 54.03).
POSITION: Stock and/or October $55 calls to buy (EQR JK).

EDMC (Education Mngmt--$37.32; +1.14; optionable (UKN): Diversified services
http://biz.yahoo.com/p/e/edmc.html
STATUS: Formed a 15-week cup with handle base inside a larger 6-month base, and is now making a move in the handle, although volume is not inspiring. The stock continued Friday's move up from the 10 day MVA (35.73) today, but volume only edged up to 128,700 (average 192,400). Looking for a breakout over the handle high of 38.20 (June high), but we want volume. Relative strength has broken out, a bullish sign, and the stock shows huge money flow. Target: $42-44.
BUY POINT: 38.33, on volume of 288,000 or better. Stop: 35.26 (just below the 10 day).
POSITION: Stock and/or September $35 calls to buy (UKN IF).

ASN (Archstone Comm--$25.82; -0.03; no options): REIT
http://biz.yahoo.com/p/a/asn.html
STATUS: In a cup with a classic handle, a series of gradually falling dojis on volume that is dropping steadily farther below average in a similar, gradual fashion. Monday's volume was down to 164,100 (avg. 516,000). Approaching support of its 10 day MVA (25.76), and we are looking for a strong move back up and breakout over the high in the handle at 25.96. Tight pattern. Money flow looks good. Target: $29-30.
BUY POINT: 26.09, on volume of 774,000 or better. Stop: 24.
POSITION: Stock.

CNA (Cna Financial--$39.17; -0.30; optionable (CNA): Insurance
http://biz.yahoo.com/p/c/cna.html
STATUS: In a cup with handle of 11 months, previous high near 42, with a long handle that started in late-May. It is moving in a lateral-type pattern with the handle high at 40.24, reached mid-June. The stock pulled back to support of its 18 day MVA (39.24) today, with volume remaining light at 82,900 (average 145,300). This has been solid support, so we will look for a move back up and breakout. Target: $44-46.
BUY POINT: Breakout: 40.37, on volume of 218,000 or better. Stop: 37.14 (just above the 200 day MVA, 36.81). A buy on the breakout up to 42.39.
POSITION: Stock and/or August $35 calls to buy (CNA HG; low open interests).

Continued: Watching IDPH, WFMI (needs to move back over the short term MVAs).

GDW (Golden West--$66.03; -2.35; optionable (GDW): Savings & Loan
http://biz.yahoo.com/p/g/gdw.html
STATUS: Broke out last week, running to Thursday's high of 68.95 but made a big pullback today that gave back most of the breakout. The stock closed on its 10 day MVA and right at the high in the left side of the stock's recent saucer pattern (part of a larger cup with a high of 70.50). Volume was below average at 515,100 (average 678,600), so we will see if it can hold without further damage; its recent consolidation range is at 63-65 with the 18 day MVA at 65.09. It might need to consolidate and form another handle. Not what we like to see in breakouts. Still shows good money flow. Target on a move over 71: $78-82.
BUY POINT: Aggressive: After showing it can hold support in the 65-66 range, a move back over 68 on above average volume. Stop: 63.24.
POSITION: Stock and/or August $65 calls to buy (GDW HM).

AVIR (Aviron--$53.70; -3.84; optionable (QCV): Biotech
http://biz.yahoo.com/p/a/avir.html
STATUS: Gave up the 18 day MVA (56.72) and tapped the 50 day MVA at its low of 52.65, selling back with increased volume of 511,900 (average 514,300). AVIR is in a solid cup with handle pattern, but the drop back is becoming protracted (handle high at 64.36), and it needs to stop here. Do NOT like the higher volume drop.
BUY POINT: Aggressive: Back over the 10 day MVA (57.15) on average or better volume. Stop: 53.15.
POSITION: Aggressive: Stock and/or August $55 calls to buy (QCV HK).

WPI (Watson Pharmaceuticals--$62.48; -0.95; optionable (WPI): Drugs
http://biz.yahoo.com/p/w/wpi.html
STATUS: Has pulled back to its 10 day MVA (62.40) after falling back from a breakout attempt that took it up to 64.90 before pulling back. It is moving in the handle to its 8-month cup base (which is part of a larger base), and today's drop was on lower volume of 583,000 (average 903,300). We will see if the stock can mount a move back up to breakout after testing support. Huge money flow, solid relative strength and decent buying. Target on the breakout: $71-74.
BUY POINT: Breakout: 65.03, on volume of 1.35 million or better. Stop: 59.83 (just under the 18 day, at 61.33).
POSITION: Breakout: Stock and/or August $60 calls to buy (WPI HL).

BLPG (Boron Lepore--$14.50; -0.12; no options): Diversified services
http://biz.yahoo.com/p/b/blpg.html
STATUS: Still holding in the handle consolidation to the 4-month cup, dipping back with a volume spike today but holding support at the 10 day MVA (14.41). Not bad, and we are still looking for a breakout over the handle high of 14.75. Excellent relative strength and money flow. Target: $16-17. Be patient on this one. It is looking very interesting.
BUY POINT: 14.88, on volume of 135,000 or better (average 90,600; today 97,600). Stop: 13.69 (50 day MVA, 13.42).
POSITION: Stock.

PUTS: On index plays, be sure to check with your broker for deltas of 0.75 or better.

FLEX (Flextronics--$23.91; +0.35; optionable (QFL): Electronics.
http://biz.yahoo.com/p/f/flex.html
STATUS: Made a move back up last week, but has lost steam as volume drops and the stock shows tighter patterns, with a doji today just under its 18 day MVA (24.06). With the doji under support, looking for a move back down with increased selling volume. The target is the recent low at 20.
BUY POINT: A move back below the 10 day MVA (23.24) with increased volume near the average (5.55 million today; average 11 million).
POSITION: August $30 puts to buy (QFL TF).

NEWP (Newport--$25.38; +1.38; optionable (NZZ): Electronics.
http://biz.yahoo.com/p/n/newp.html
STATUS: After a severe drop two weeks ago, but an attempted move up last week has stalled at the 10 day MVA (25.44). The stock has shown consecutive dojis under that level as volume has peeled back (2.38 million; average 3.4 million). Looking for a drop back to the recent low at 21.
BUY POINT: A strong move back down, looking for increased volume near the average.
POSITION: August $35 puts to buy (NZZ TG).

PMCS (Pmc-Sierra--$27.66; +0.81; optionable (SQL): Electronics.
http://biz.yahoo.com/p/p/pmcs.html
STATUS: Another electronics stock that made a move up but has encountered resistance at its 10 day MVA (28.11). It showed a very tight doji Friday and then moved up slightly today, but volume dropped (6.56 million; average 9.15 million) as the stock could only show another doji under resistance. On a drop back in a weak Nasdaq, a put play down to last week's low of 23.34.
BUY POINT: A strong move down, looking for increased volume selling in a weak market.
POSITION: August $35 puts to buy (SQL TG).

OEX (Standard & Poors 100--$632.03; -4.12; optionable (OEY):
STATUS: Continued pulling back, dropping from the 10 day MVA (636.52) as volume dropped lower (1.03 million; avg. 1 million). The index may try a test of the 10 day, but not probably. Target is 625 on this fall.
BUY POINT: Further selling, but be quick about it.
POSITION: August $650 puts to buy (OEY TJ).

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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