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TEAM TRADES

BRL: The stock has been hot and we liked the pattern it had formed, a sideways move after a strong rally in early July. At least a good point to take positions for a short term gain. The stock moved higher early, fell shy of our buy point and then pulled back for an hour. Then it exploded higher and hit our buy just after 10:00. We sent out the alert and the stock raced to 90 as we tried to get in. We missed on an order when we thought it was slowing its move, trying to shave the spread too much. It then rolled back down and tested the buy point again and moved up from there. We did not want to miss it this time, so the order was put in at the ask and that was done at 87.50. The stock then moved sideways for three hours before running again at the close. Not bad.

IVX: For the second time in a week, IVX has another competitor in its generic cancer drug field. It took another hammering today on the news, gapping lower at the open and just floundering there. We thought about selling right away, but then decided it was one of those 'hammer it on the news' situations. It was able to hold above its April high and moved up a bit from there. What we are going to do? We know stocks tend to test their breaks below support levels, in this case around 36 that is also right at the 50 day MVA. We are going to see if it can test that level. If it does but cannot break over it and hold, at that time we will exit the position. Not all plays work, but we need to keep calm, keep our heads, analyze what is going on, and then act.

STNR: New on the Daily over the weekend, STNR was high on our list after a solid move Friday toward a breakout. It gapped higher on the open, and after about a half hour hit our buy point. We sent out the alert and then tried to catch the move, but were unable to get it until it paused at 27 and pulled back to 26.75 to test the move a bit. The early volume was big, so when it did slow down, we went ahead and entered at the ask. The stock shot up to 27.60 about 15 minutes later and we were stoked. Then it immediately fell to 27. Fortunately it held there and started higher. A 10% move in a day is good, but we cannot get too wrapped up; we will watch our target level and resistance at 34 and take profits if we have to in order to protect the gains.

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: From the weekend report: STNR broke out! It is beyond our 5% limit for buying on breakouts, so we will look for a pullback. PPDI continues to move in the handle of its double bottom; it dropped back to test lower support, but recovered nicely and moved a bit higher in the handle on rising volume. It could be ready to make its move here. EASI is moving up to our buy point on higher volume, so we will see if it can make the ascending wedge breakout here. DHI is holding above its 18 day MVA. RI looks to be shaking out the last of the sellers in its handle.

Best Plays:
1) HDL: Ready for a strong move off the 50 day MVA.
2) LIZ: Testing the breakout.
3) FRED: A volume spike in the ascending wedge.

New:

Cup with handle:

HDL (Handleman--$14.98; -0.03; optionable (HDL): Basic materials wholesale
http://biz.yahoo.com/p/h/hdl.html
STATUS: In the handle, and at support (50 day MVA, 14.65), in the handle to a 21-month cup base. Handle high is from July 2 at 17.89. The 50 day MVA has provided strong support for HDL since February of this year, and after the more or less lateral movement above that level over the last few days (on low volume), we are looking for a move back up. HDL shows strong money flow. Target: 21-22. Volume was lower in the handle at 74,800 (avg. 160,000).
BUY POINT: Breakout: 18.02, on volume of 240,000 or more. Stop: 16.58. Aggressive: 16.25 on above average volume. Stop: 15.12
POSITION: Stock and/or September $12.50 calls to buy (HDL IV).

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

A test of the breakout:

LIZ (Liz Claiborne--$53.24; +0.27; optionable (LIZ): Consumer non-durables: Apparel
http://biz.yahoo.com/p/l/liz.html
STATUS: LIZ made an earnings breakout July 19 after correcting down to the 200 day MVA (46 range) after a nice May run to the June high of 53.50. The stock reached a high of 54.95 on the breakout, then pulled back the last week on steadily decreasing volume save a strong, above average volume spike Friday. On that spike LIZ held support at the 10 day MVA (52.61), a level tested consecutively on the lows since Thursday. Volume was down again Monday to 318,500 (avg. 448,454) on the slight gain, and LIZ showed its 4th doji in as many days in the hover above support. We are looking for a strong move back up after this test of the breakout. Initial target: 60-62.
BUY POINT: Aggressive: 53.63, on volume of 430,000 or better. Stop: 49.34 (50 day MVA, 50.52).
POSITION: Stock and/or October $50 calls to buy (LIZ JJ; low open interest).

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

Updated:

Ascending wedge:

FRED (Fred's--$25.36; +0.31; no options): Discount, variety stores
http://biz.yahoo.com/p/f/frx.html
STATUS: Last covered on the July 23 report. FRED is in an ascending wedge pattern, and Monday got a spike in volume to 182,500 (avg. 90,000). The stock itself continued to stick to its recent support levels, the 10 and 18 day MVAs (25.11, 24.89, respectively), but made the small move up. We are looking for a pop here, perhaps the breakout move from the pattern, over upper resistance at 26.10. FRED shows great money flow and good buying. Target (initial): 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/easi.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

Another test of the breakout:

FRX (Forest Labs--$78.45; +0.47; optionable (FRX): Drug manufacturers
http://biz.yahoo.com/p/f/frx.html
STATUS: FRX broke out of a short base about 2 weeks ago (which formed after the stock broke out of an earlier cup), pulled back to test the 18 day MVA at about 75, then popped back over the 10 day MVA (77.24). It has moved laterally there in a test of the breakout, for the last 2 days on very low volume. Volume was up slightly Monday with the stock, which tested just below the 10 day on the low of 76.71 before closing nearer the high of 78.77 and showing a doji. That is a bullish move, and if FRX can get the volume, it is ready to break higher, a move for which we'll peg an initial target in the range of the July high of 82.33. For a breakout, we will look for the stock to tuck away gains on a move to 87.
BUY POINT: Aggressive: 79, on volume of 1 million or better. Stop: 72.68
POSITION: Stock and/or November $70 calls to buy (FRX KN).

http://www.investmenthouse.com/cd/frx.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 still like LOW, as volume drifts even lower in the ascending wedge. We are watching BBBY; it didn't go as far to test the 50 day MVA, but is holding at the 18 day MVA. It looks ready for a bounce.

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

MEMBER PORTFOLIO: We have tallied the results, and are adding the stocks subscribers voted into an updated portfolio. Two of the former members have retained their position in the mix, BRCM and CHKP. The new stocks are AMAT, JNJ, MSFT, AOL, HGSI, BUD, and PXLW.

New portfolio as selected by the subscribers: BRCM, CHKP, AMAT, JNJ, MSFT, AOL, HGSI, BUD, PXLW.

Old members: BRCM, CHKP, CSCO, EMLX, IDTI, INTC, JDSU, MVSN, NT, PWER, SUNW, VTSS

JNJ (Johnson & Johnson--$52.92; -0.09; optionable (AYH): Drug manufacturers
http://biz.yahoo.com/p/j/jnj.html
STATUS: JNJ broke out of 5-month "v-bottomed" base mid-June, pulled back to test the 50 day MVA, then made another run up, hitting a new all-time closing high of 54.91 on July 17. The stock has pulled back from that, too, testing the 52 level 3 of the last 4 days (the 50 day MVA is at 51.64) and closing at the 18 day MVA over the last three days. Showing a doji Monday (at the top of move off the intraday low of 52.15) on volume slightly higher at 5.3 million (avg. 6.1 million), we are looking for a move up since JNJ looks ready to hold the support for now. Volume has been largely below average volume on the pullback, so we like the general price-volume action we are seeing. The stock is showing strong money flow. Target (initial): 60.
BUY POINT: Aggressive: 53.60 (to beat Friday's high of 53.53) on continued rising volume in a rally.
POSITION: Stock and/or October $50 calls to buy (AYH JJ).

http://www.investmenthouse.com/cd/jnj.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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