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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.

SUBSCRIBER'S CHOICE:

IFIN (Investors Fin Svcs--$79.75; +0.25; optionable (FLQ): Financial services
http://biz.yahoo.com/p/i/ifin.html
STATUS: In a cup with handle base of 6.5-months. The stock is currently in the handle, which has shown upward movement over the last 4 days while volume has gradually pulled back down, not the greatest action, but this is a great-looking stock. Volume is down to 175,000 Monday (avg. 315,000) with IFIN showing a tight doji near the handle high of 80.75. We are looking for volume to surge in to break the stock out; it is showing a doji on today's close at the top of its intraday range and looks ready to move. Money flow is simply huge. Target: 93-97.
BUY POINT: 80.88, on volume of 473,000 or better. Stop: 74.41 (18 day MVA, 74.29).
POSITION: Stock and/or October $80 calls to buy (FLQ JP).

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

BEST PLAYS: GMCR from last week's report made its breakout on huge volume! TGH continues to look good in its cup with handle (as does COST, from 7-16). Other stocks that are holding patterns are IXX, GGG, BPFH, LUV. HDI is testing its breakout and looking good, and MRCY's ascending wedge is worth watching.

Best Plays:
1) EMBX: Ready to mount another run in its base.
2) FRED: Getting ready to move up from support in its pattern.
3) AEOS: A good-looking pattern for sure.

New:

This one trades on low average daily volume, but we like the sector on the whole, and this stock has been getting some heavy buying.

EMBX (Embrex--$18.00; +0.47; no options): Biotechnology
http://biz.yahoo.com/p/e/embx.html
STATUS: Testing the recent breakout from a big double-bottom pattern that formed inside a larger, 16-month cup base. Currently EMBX is testing the breakout, and after showing a tight doji (a "shooting star" at the bottom of a 2-day pullback) Friday on very low volume, tried to take out the breakout high of 18.35 on a super volume surge (to 120,500; avg. 31,000). It did, reaching a high of 18.55, but pulled back as the market retraced some of the earlier gains intraday. We are looking for a move over the high, and for this stock to head up to the highs near 20 to complete the base. Target from there: 23-24. Strong money flow and buying, and relative strength has broken out ahead of price. Earnings are out July 31.
BUY POINT: 18.68, on continued strong volume (100,000 or better). Stop: 17.19.
POSITION: Stock only.

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

Updated:

LUV (Southwest Airlines--$19.21; -0.20; optionable (LUV): Transportation
http://biz.yahoo.com/p/l/luv.html
STATUS: Back to our favorite of the airline stocks. It was covered 7-12 after making a nice run up from the June lows (17 range) and closing back over its 200 day MVA. Now it has pulled back from the July high of 20, hit just after a short little bouncing pattern that formed after the run, and is testing that 200 day MVA again (19.06, the low of 19.10 tapping near it). Volume decreased again, down to 1 million and well below the average of 2.3 million), falling for the last two days right along with price, forming a handle to the 6-week cup. This pattern has formed at the bottom of a larger, 6-month+ pattern. Looking for the 200 day to hold for a strong move up and breakout. LUV shows good money flow and decent buying. Target: 23-24. The company matched expectations on earnings (out July 19), and reported higher revenues.
BUY POINT: Breakout: 20.13, on volume of 3.4 million or better. Stop: 18.52. A buy on breakout up to 21.14.
POSITION: Stock and/or September $17.50 calls to buy (LUP IW).

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

Retail stocks are looking good lately:

FRED (Fred's Inc--$$25.02; +0.02; no options): Discount/variety stores
http://biz.yahoo.com/p/f/fred.html
STATUS: Save for a low-volume drop on July 11 that tested the 50 day MVA (from which the stock rebounded quickly and with conviction on strong volume), FRED is in an ascending wedge pattern and is currently holding support at the 10 day MVA (24.91). Volume was up over the last 2 days including Monday (to 52,500; avg. 90,409), but still low as the stock showed 2 dojis right on top of the support. We are looking for the breakout over upper resistance in the pattern at 26.10, hit twice (the June high is a bit farther out at 26.75). Shows big money flow, good buying, and high relative strength.
Initial target: 32.
BUY POINT: 26.23, on volume of 122,000 or better. Stop: 24.13. A buy on breakout up to 27.54.
POSITION: Stock.

http://www.investmenthouse.com/cd/fred.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 look ready to pick up a few shares.

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 in which we are still interested: ADBE, SEBL, VRSN, VRTS

DGX looks pretty good in its current ascending wedge pattern. Volume continues to drop lower in the pattern, so that stock is getting ready to make a move if it can hold support.

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

UP & COMERS PORTFOLIOS: We have revamped the Up & Comers portfolio, and are dropping EXDS, TQNT, BVSN, SANM, PKI and GMST for now, adding BBBY, IGT, RCII, CHS, KG and AEOS.

LNCR, BJ, ANF, LOW, HI, THQI, BBBY, IGT, RCII, CHS, KG, AEOS.

We are keeping a watch on HI; it bounced off the 50 day MVA Friday and on lower volume Monday held above the 10 day MVA. It is readying for a move over the recent high, and the May high (69.98).

AEOS (American Eagle Outfitter--$39.89; -0.10; optionable (AQU): Apparel stores
http://biz.yahoo.com/p/a/aeos.html
STATUS: Showing even another tight doji in the handle of its 7-week cup base, and we really like the action of the tight handle holding support on steadily decreasing volume (down to 1.2 million Monday; avg. 1.7 million). Continue to look for a breakout over the handle high of 41.19; highs at the start of the base are at 43. Specialty retail is a sector that has been doing better, and AEOS is showing good money flow and buying, and relative strength has moved out ahead of price, a bullish indicator to back up this bullish pattern. Target: 48-50.
BUY POINT: Breakout: 43.13, on volume of 2.5 million or better. Stop: 39.68. A buy on breakout up to 45.29.
POSITION: Stock and/or November $35 (AQU KG; low open interests but delta of 0.732) or November $40 (AQU KH; sufficient open interests but delta of 0.583 currently) calls to buy.

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

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

We still like BRCM's ascending wedge pattern at the bottom of its base. It has refused to die.

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

Good Investing!
Jon L. 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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