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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:

Best Plays:
1) ELN: In good position for a rally.
2) EBAY: Low volume consolidation.
3) BBY: Breaking out and still a buy.
4) ORI: A tight doji on low volume in a flat base pattern. New play.
5) SLC: A low volume pullback in the pattern.
6) BZH: Trying for a breakout.
7) BVF: A low volume pullback to a doji.
8) JKHY: Ready to move.
9) LH: At support on low volume.
10) EQR: Looking good; just needs volume here.

BREAKOUTS: Watch OCLR: it is now testing support on lower volume after its breakout (10 day MVA).

New (from the weekend): This sector is looking better again.

APOG (Apogee Enterprises--$11.55; -0.94; no options): Materials & Construction
http://biz.yahoo.com/p/a/apog.html
STATUS: Broke out from a short consolidation Friday but retraced the move Monday as volume fell back, still high at 879,000 (avg. 155,500). The stock is likely to test the 18 day MVA at 11.30; expect volume to drop off another significant amount on that move.
We are looking for a run to 14 after the stock moves back up to take out 12.72, today's intraday high. Lower price support is at 11.
BUY POINT: Aggressive: On a move back up on strong volume after a test of 11 or better. Stop: 10.12 (50 day MVA is at 10.47).
POSITION: Stock.

Continued Plays:

UNFI (United Natural Foods--$21.10; +0.15; no options): Food wholesale
http://biz.yahoo.com/p/u/unfi.html
STATUS: UNFI tried to add to Friday's move (and it did, but we'd like to have seen it stick to the high of 21.80). Volume surged, supporting Friday's pop, coming in at 556,000 (avg. 168,409). The closing price is just under 2 recent highs at 21.15. Look for a pullback to test 20 or better; that has been the pattern, a pop up followed by 2 or more days of lateral pullback. New target: $23-24.
BUY POINT: Over 21.15 after a pullback to the 20.38-20.50 range. Stop: 19.46 (18 day MVA, 19.30.
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.

Continued: FISV hit our target (64) and so we will look for a pullback after the strong 2-week run. Again, another candidate for covered call sales as it starts to pull back.

ELN (Elan--$61.78; +0.78; optionable (ELN): Drug delivery
http://biz.yahoo.com/p/e/eln.html
STATUS: The stock held support at the 10 day MVA, opening there (61) and moving up to close after a tap at resistance (62). Volume was lower at 900,200 (avg. 1.6 million), explaining the small move. We like the hold here (the stock hit a low of 60.51, just above the 18 day MVA at 60.16) and look for a stronger move up from here when the market rallies. Before then, a hold at the 10 or 18 day MVAs. Target from here: $70.
BUY POINT: Aggressive: On a move up from here on rising volume. Stop: 56.84.
POSITION: Stock and/or October $55 calls to buy (ELN JK).

EBAY (Ebay--$68.17; -0.32; optionable ( ): Internet Software
http://biz.yahoo.com/p/e/ebay.html
STATUS: Continues to pull back in the handle to the 9.5-month base, closing Monday just above support of the 10 day MVA (67.98), testing the stock's recent breakout from an ascending wedge it formed in the upper right side of the base. The buy point in that pattern was 66.63, which the stock can test; the buy point is just above the 18 day MVA (at 66.53). It just might do that if the ISSX warning ripples through software. That may not effect EBAY, but the close nearer the low (the stock showed a doji), and the short handle (thus far) to the long base, are enough to suggest that possible continued pullback. Volume dropped back again to 3.7 million (avg. 6.1 million). Target: $77-78.
BUY POINT: Aggressive: Up from the 18 day MVA (66.53) or higher, on average or better volume. Stop: 61.21. Breakout: 71.42, on volume of 9 million or better. Stop: 65.71.
POSITION: Aggressive: Stock and/or October $55 or $60 calls to buy (QXB JK or JL). Breakout: Stock and/or October $60 or $65 calls to buy (QXB JL or JM).

MOVING AVERAGE BOUNCES:

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: RCGI thudded back to support on lower volume. Closed just below the buy point (30.18) on the move.

Back on:

CRL (Charles River Labs--$34.22; +0.22; no options): Biotech
http://biz.yahoo.com/p/c/crl.html
STATUS: Hit the new all-time closing high, but just barely, pulling back from an intraday high of 36. At least it held that high. Volume was still high though down to 777,800 (avg. 183,363), so we are perhaps looking at another pullback in this ascending wedge-type pattern. Support on that move is at the 32 range (10 day MVA, 32.23). For a move up, look for a break over 35 on rising volume. Target: $42.
BUY POINT: Pullback: After a drop back to test the 32 range. Stop: 29.44 (50 day MVA, 29.75). Over 35 on continued strong but rising volume. Stop: 32.20.
POSITION: Stock.

Continued:

BBY (Best Buy--$67.01; +3.49; optionable (BBY): Retail
http://biz.yahoo.com/p/b/bby.html
STATUS: Broke out of the ascending wedge on slightly higher volume, though not breakout volume (Monday's volume was 2.7 million; avg. 2.6 million). We will see if that catches up with this move tomorrow; the stock remains a buy on this move, and is showing great money flow and high relative strength. Target: $70.
BUY POINT: A buy to 69.02 on the breakout, on minimum breakout volume of 3.5 million. Stop: 63.50.
POSITION: Stock and/or September $60 calls to buy (BBY IL).

Pennant:

New (from the weekend):

SLC (Sun Life--$23.30; -0.45; optionable (SLC): Insurance
http://biz.yahoo.com/p/s/slc.html
STATUS: Pulled back in the ascending wedge pattern (that formed after a cup with handle breakout), testing support on the low of 23.11, the 10 day MVA. Volume dropped well back to 82,400 (avg. 196,545), so we expect the stock to hold here or the 18 day MVA (22.97). Still looks good in this bullish combination of patterns, and showing strong money flow. Initial target: $29-30.
BUY POINT: Breakout: 24.48, on continued strong volume (min. breakout volume is 265,000). Stop: 22.52 (below the 18 day MVA, 22.93). A buy on breakout up to 25.70.
POSITION: Stock and/or August $20 or $22.50 calls to buy (SLC HD or HX).

RDK (Ruddick--$16.30; -0.65; no options): Retail
http://biz.yahoo.com/p/r/rdk.html
STATUS: Looked ready to break out of a pennant pattern on a volume surge Friday, but pulled back on lower volume Monday (67,500; avg. 67,090). We may begin to see an ascending wedge-type pattern form now. The low of 15.85 tested near some June price support at 15.75 (hit 3 times). The 18 day (16.19) has supported the stock well since early May, and that is the support above which the stock closed. The pattern is in the upper right side of a 19-month base (part of a larger base). Initial target: $19-20.
BUY POINT: Breakout: 17.33, on volume in the range of 91,000. Stop: 15.94.
A buy on the breakout up to 18.20.
POSITION: Stock.

BASING/TRADING RANGES: A reminder: We looked at XLNX week before last in its trading range between 40 and 50. It jammed up at resistance for a few days, but is still holding up above 40 and may be ready to make the move back up in the pattern.

New:

ORI (Old Republic--$29.01; +0.01; optionable (ORI): Insurance
http://biz.yahoo.com/p/o/ori.html
STATUS: In a flat base/ranging pattern that is forming part of the floor of a 6-month base (prior high 32), and showing a tight doji on lower, below average volume (300,900; avg. 377,000). The low tested support at the 10 day MVA (28.77). Potential resistance is at the April and June high (29.80 and 29.90, respectively), so look for the breakout over that level. The stock shows good money flow and decent buying. Initial target: Previous basing highs at 32.
BUY POINT: Aggressive: Up from here on rising volume. Stop: 26.69. Breakout: Over 29.90 on volume in the range of 406,000. Stop: 27.51 (200 day MVA, 27.37).
POSITION: Stock and/or October $25 calls to buy (ORI JE; no open interests).

New (from the weekend): Covering stocks in some improving sectors.

IVX (Ivax--$37.50; -1.50; optionable (IVX): Drugs
http://biz.yahoo.com/p/i/ivx.html
STATUS: Pulled back from Friday's stronger move when the stock looked ready to make a breakout play from its 11-month cup with handle. Closed at the 10 day MVA on lower volume of 688,400 (avg. 1.4 million), so look for a hold here or at the 18 day MVA (36.84) as volume stays low. Overall pattern high is at 39.60. Target: $46-48.
BUY POINT: 39.73, on volume of 1.9 million or more. Stop: 36.55 (just under the 18 day MVA). Remains a buy on a breakout up to 41.72.
POSITION: Stock and/or September $35 or $40 calls to buy (IVX IG or IH). Please check with your broker Monday morning for deltas; they were not available for this stock at the time of this writing.

BZH (Beazer Homes--$65.07; +1.58; no options): Materials & Construction
http://biz.yahoo.com/p/b/bzh.html
STATUS: Volume was lower (235,000; avg. 182,181) but the stock made a move up from the handle in its small double-bottom pattern. It beat our buy poing on the high of 66.85, but dropped back on the lower volume. We look for another move up on better volume (still strong today, above the average), but if the stock pulls back, look for support at the 63 range. Target: $76-79.
BUY POINT: 66.13, on volume of 273,000 or better. A buy on the breakout up to 69.44.
POSITION: Stock.

PMI (Pmi Group--$70.95; -0.70; optionable (PMI): Insurance
http://biz.yahoo.com/p/p/pmi.html
STATUS: In an 8-month base (prior high 74.94), and trying to settle down off the June high of 74.50, into a volatile handle pattern. Looked ready to make its move Wednesday, but sold back to support next session (18 day MVA, 70.93), and is holding there for the second day. Volume dropped back to 269,300 (avg 303,409). We are still looking for the breakout from here. Target: $86-90.
BUY POINT: 74.63, on volume of 455,000 or better. Stop: 68.66 (50 day MVA, 68.40).
POSITION: Stock and/or September $70 calls to buy (PMI IN).

Two thinly traded stocks in good-looking sectors:

CPJ (Chateau Communities--$31.20; -0.20; no options): REIT
http://biz.yahoo.com/p/c/cpj.html
STATUS: In a 6-month flat base that formed after the stock broke out of a similar base of last fall. CPJ showed a strong move Friday on high volume, but Monday volume was much lower and the stock pulled back after opening higher (32,000; avg. 53,000). The stock really couldn't move higher on that. The low tested footing at the 18 day MVA (which is at 30.94), so we are looking for a hold at the 10 day MVA (31) while it readies for another move up. The April high is 32.18, but if we see a strong move ahead of that we will look at taking positions on a move over Friday's high (31.75). Initial target: $36.
BUY POINT: 31.88, on volume of 80,000 or better. Stop: 29.33 (just under the 200 day MVA, 29.61).
POSITION: Stock.

A very thinly traded stock, but we like the pattern and sector:

GSOF (Group 1--$18.27; +0.02; no options): Software
http://biz.yahoo.com/p/g/gsof.html
STATUS: Inched higher in the tight handle to its 8-month cup base (prior high 23.44). Volume remains quite low even though it was higher today (7,700; avg. 16,000). We are looking for a breakout over the handle high at 19. This stock put together a few $3 runs before moving into this consolidation it was necessary after the quick ascent over the last 2 months. Huge money flow and high relative strength.
BUY POINT: 19.13, on volume of 24,000 or better. Stop: 17.60. A buy up to 20.09.
POSITION: Stock.

New plays continued:

EFII (Electronics For Imaging--$29.04; -0.46; optionable (EFQ): Software
http://biz.yahoo.com/p/e/efii.html
STATUS: Is in a flat base over the last 4 months, a base that is off the bottom (around 12) of a much longer cup with handle that it broke out of in March. The stock made a solid move up Friday, but pulled back to a loose doji today on very low volume (557,800; avg. 973,000) as resistance at 29.60 turned it back down. On a move over that level we are looking for a run up to the 33-36 range. This one is well off of its all-time high, but clearing 30 gives it room to run. Target: 35 is first resistance. If it clears that, we will let it run.
BUY POINT: Over 29.60 on volume in the range of 753,000. Stop: 27.23 (just above the 18 day MVA at 27.12).
POSITION: Stock and/or October $25 calls to buy (EFQ JE).

JKHY (Jack Henry--$31.14; +0.14; optionable (JKQ): Software
http://biz.yahoo.com/p/j/jkhy.html
STATUS: Beat the buy point in its ascending wedge (formed in the upper right side of the 6-month cup base) on Friday, but volume was low just like it was Monday (coming in at 331,800; avg. 505,000). The stock is ready to move, testing 29.90 (10 day MVA) on the low and moving above its opening price of 30.62. Just needs volume and a rally.
Target: $38-40.
BUY POINT: A buy on the breakout up to 31.90, but on minimum breakout volume of 682,000 or better. Stop: 28.52 (50 day MVA, 28.16).
POSITION: Stock and/or September $27.50 calls to buy (JKQ IY).

KEA (Keane--$19.80; -2.20; optionable (KEA): Software
http://biz.yahoo.com/p/k/kea.html
STATUS: Dropped back from the breakout move it was making Friday when volume was very strong. KEA made the move up from a handle to its 11-month base, that is part of a larger cup base of 18 months. The move took the stock back to the 10 day MVA on lower volume (313,000; avg. 195,045). Can test the 18 day MVA (19.38) as volume drops lower. We will look for a bounce back up in a rallying market. May not get that until after the holiday. Initial target: $24-26.
BUY POINT: Back over Friday's high of 22 on rising volume. Stop: 20.24 (above the 10 day MVA, 19.71).
POSITION: Stock and/or August $20 calls to buy (KEA HD). Please check with your broker for deltas; they were not available at the time of this writing.

Continued: Watching WPI.

BVF (Biovail--$43.39; -0.11; optionable): Drug delivery.
http://biz.yahoo.com/p/b/bvf.html
STATUS: A cup with handle pattern of 4 months, and the handle is holding over its 10 day MVA (42.97). After a bit of a pullback Friday, the stock showed a doji on low volume Monday (164,500; average 665,500). We will see if the stock can generate some volume on a move up, looking for a breakout. Initial target: $50-52.
BUY POINT: Breakout: 45.23, on volume of 1 million or more. Stop: 41.61 (50 day MVA, 40.45).
POSITION: Stock and/or October $40 calls to buy (BVF JH).

SRNA (Serena Software--$36.30; -0.04; optionable): Software.
http://biz.yahoo.com/p/s/srna.html
STATUS: Has made a nice move on its breakout from a cup with handle, but could be ready to test the breakout. The stock showed a doji on lower volume (839,000; average 643,000) today, and off of that pattern could test the former breakout point at 32 (10 day MVA at 32.03). After a successful, lower-volume test, we will look for a strong moveb back up as a second chance to get in on the breakout. Initial target: $40. After that, $44.
BUY POINT: Pullback: Up from 32 or higher, on rising volume. Stop: 29.66.
POSITION: Both buy points: Stock and/or August $30 calls to buy (NHU HF).

LH (Laboratory Cp Am Hldgs--$77.38; +0.48; optionable (LH): Health services
http://biz.yahoo.com/p/l/lh.html
STATUS: Popped back up from the 50 day MVA (73.57) last week, and is now holding at its 10 day MVA (77.08) in the handle to its cup. Today it made a move up to 78.90 but for the second time in three sessions pulled back from the 79 level to close. Volume was not there (down to 423,900; average 486,000), so we will see if it can gain some strength and move back up. Target on a breakout: $91-95.
BUY POINT: Aggressive: Over 79 on average or better volume. Stop: 73.40. Breakout: 82.63, on volume of 729,000 or more. Stop: 76.02.
POSITION: Stock and/or August $75 calls to buy (LH HO).

EQR (Equity Resident--$56.95; +0.40; optionable (EQR): REIT
http://biz.yahoo.com/p/e/eqr.html
STATUS: Continued to recover back up in the handle to its cup pattern, running up today from its 10 day MVA (56.46). Volume dipped but remained strong on this move, coming in at 468,700 (average 352,600). A solid move up after having sold back last Wednesday on strong volume. We continue to look for a breakout from the cup with handle. Money flow and buying are strong. Target: $63-66.
BUY POINT: 57.63, on volume of 530,000. Stop: 53 (50 day MVA is at 54.49).
POSITION: Stock and/or October $55 calls to buy (EQR JK).

ASN (Archstone Comm--$25.60; -0.18; no options): REIT
http://biz.yahoo.com/p/a/asn.html
STATUS: Formed a cup with handle of 6 months inside a longer, 11-month ranging pattern. Volume dropped off nicely in the handle but the stock started to show some volatility last week, testing its 50 day MVA (25.22) on big volume and then surging back up again Friday, hitting at the top of the range of its handle before pulling back. Today saw ASN pulled back a bit to close on its 18 day MVA (25.58) with much lower volume of 464,500 (average 526,100). We will see if it can settle down a bit, hold and make a breakout move. Target: $30-31.
BUY POINT: Over 26 on volume of 790,000 or better. Stop: 23.92.
POSITION: Stock.

CNA (Cna Financial--$39.24; -0.21; optionable (CNA): Insurance
http://biz.yahoo.com/p/c/cna.html
STATUS: Still in that long handle to that long base (11 months). The stock is using the 39 level as support (18 day MVA at 39.28), but sold back toward that level on very strong volume today (274,800; average 147,300). We will see if it can hold 39 again and make a move back up toward the breakout (handle high 40.24). Target: $44-46.
BUY POINT: Breakout: 40.37, on volume of 220,000 or better. Stop: 37.14 (just above the 200 day MVA, 36.80). A buy on the breakout up to 42.39.
POSITION: Stock and/or August $35 calls to buy (CNA HG; low open interests).

AVIR (Aviron--$55.30; -1.70; optionable (QCV): Biotech
http://biz.yahoo.com/p/a/avir.html
STATUS: After a wild day Friday, the stock made a mild pullback Monday, moving down from its 18 day MVA (56.19) on much lower, below average volume of 325,500 (average 487,000). Sill looking decent in its handle to a cup pattern (dating back to early January), having recently tested its 50 day MVA (53.05) before bouncing back up. Looking for the stock to hold on to the 50 day and make a move back up toward the handle high at 64.36. Target: $74-77.
BUY POINT: Aggressive: Back over 57 on above average volume. Stop: 54.42. Breakout: 64.49 on volume of 731,000 or better.
POSITION: Aggressive: Stock and/or August $55 calls to buy (QCV HK).

Good Investing!
Jon L. Johnson and 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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