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Begin Part 2 of 2

THE PLAYS:

Note for reading plays: A "prior high" refers to the high at the start of a base.

All prices are current as of the close of trading Monday.

Best Plays:
1) TARO: Moving up on strong volume.
2) VZ: Is at support and can make its move up from here.
3) UCOR: Great-looking pattern.
4) BPRX: Breaking out.
5) KNDL: Good p/v action the last three days.
6) GOTO: Still consolidating on very low volume.
7) DIGE: Looks ready to take a fall.

NEW PLAYS:

For Monday:

TARO (Taro Pharmaceuticals--$43.00; +3.35; optionable): Drug Manufacturers
http://biz.yahoo.com/p/t/taro.html
STATUS: Looking for a move up on the momentum created Monday. The stock broke out of a flying "w" pattern, moving out over the 50 day and short term MVAs; volume was sharply higher at 791,400 (avg. 696,000), but still not at breakout levels (that would have to be up to 940,000). We will see if the stock can muster that after today, and on the move we are looking for a trade up to 48 for the quick and aggressive play. TARO had a great run in June and July, corrected back to 35 and now looks ready to head back up again. We can adjust the initial target once the stock hits it. Money flow looks good, and relative strength is breaking out.
BUY POINT: Aggressive: Above 43 on 700,000 or higher volume. Stop: 40
POSITION: Stock and/or October 37.50 calls to buy (QTT JU).

SCTC (Systems & Cptr Tech--$12.70; +0.03; optionable): Software
http://biz.yahoo.com/p/s/sctc.html
STATUS: SCTC broke out of a flat base late July, hit resistance at the 13 range and dropped back to test the 18 day and 200 day MVAs in early August. Up from those lows (10.50-11.00), the stock is once again tapping at 13 (after another attempt just over 2 weeks ago for a total of three tries), recently settling into a light bouncing range just above its 10 day MVA (12.41). Volume has been quite the volatile scene, though it has decreased over the last 2 days (to Monday's 287,100; avg. 183,000); earlier in the pattern it was dropping off nicely. Looking for a breakout over resistance at 13, hit 5 times since late July. Target: 15-16
BUY POINT: 13.13, on minimum breakout volume of 247,000 or better. Stop: 12.50
POSITION: Stock and/or November $10 calls to buy (YQS KB).

New Plays from the weekend:

New High Breakout:

BBI (Blockbuster--$20.35; -1.60; optionable): Specialty Retail
http://biz.yahoo.com/p/b/bbi.html
STATUS: Made its breakout move Friday from a cup with handle base, but pulled back Monday on a report that on demand viewing and web viewing may hurt sales of video rental shops. It tapped near the 18 day MVA on the low of 19.84, then closing above its 10 day MVA (20.16). Volume soared to 1.36 million (avg. 446,000), so it is a show of strength that the stock was able to bounce back and close above the support. We will look for a bounce back up and look at taking new positions on a strong move over 22. Target: 25-26.
BUY POINT: 22.13, on continued strong volume (or 775,000 or better if volume drops back). Stop: 20.99
POSITION: Stock and/or October $17.50 calls to buy (BBI JW).

A couple of rollers:

VZ (Verizon--$51.35; -0.76; optionalble): Telecom
http://biz.yahoo.com/p/v/vz.html
STATUS: Rolling between 52 and 57 and is currently at the dip in the pattern. The previous dip (in June) was to 51.10, and the stock bounced back up Monday after the low tapped at 51.09. Volume was lower on that move (4 million; avg. 4.3 million), so from here we are looking for that roll back up to the 57 range. On that move, we will look at buying positions with stock or options, and when VZ peaks out up around 57 (if it does), sell the stock or the options, or shorting it for a move back down to the 52 range.
BUY POINT: Aggressive: 53, on volume of 4.3 million or better. Stop: 51 (June lows). Selling point is on a move back down when the stock tops out at 57.
POSITION: Stock and/or October $50 calls to buy (VZ JJ).

KLIC (Kulicke & Soffa--$15.40; +0.20; optionable): Semiconductor
http://biz.yahoo.com/p/k/klic.html
STATUS: In a rolling pattern since mid-May, moving up and down, generally, between 14-15 to 18. The stock moved up and tried to post a gain over the 50 day MVA (15.54) but pulled off the high as volume shrank back to 602,800 (avg. 668,000). New positions can be taken on a move over the high of 15.60, for the roll back up to the 18 range. There is may meet resistance and then turn back down to eventually hit 14-15 again. We like these kinds of patterns because they allow us to play the stock up and down, buying stock or options at the low and selling them at the high and then puts on the move down.
BUY POINT: 15.70, on volume of 670,000 or higher. Stop: 15. Once the stock hits 18 and tops out (if it does), we can sell the stock and/or calls we bought and then look at the downside if the move stalls.
POSITION: Stock and/or October $12.50 calls to buy (KQS JV).

Double bottom:

HOTT (Hot Topic--$33.51; +0.51; optionable): Consumer non-durables
http://biz.yahoo.com/p/h/hott.html
STATUS: HOTT tried to make a good move Monday, hitting a high of 34.88 on strong volume (919,500; avg. 800,000), but pulled off of it as the sellers won the day. The stock bounced up from the 18 day MVA late last week after breaking over the middle peak in a double bottom pattern, and we are looking for a move over the most recent high at 33.80 (hit 8-20). The stock can pullback to test support at 32 from here, if it does not find it higher (32.50). Target: previous highs in the 2-month base: 38 (initial)
BUY POINT: Aggressive: 34.25, on volume of 900,000 or higher. Stop: 32.50
POSITION: Stock and/or November $30 calls to buy (UHO KF).

Three small caps:

UCOR (Urocor--$17.46; +0.01; no options): Health Services.
http://biz.yahoo.com/p/u/ucor.html
STATUS: UCOR made a huge breakout move in May and has since moved in a lateral range roughly between 15 and 17.50, holding generally at its 50 day MVA (16.36) until the last several days when the 18 day MVA moved into that role (at 17.06). The stock is in a tight lateral consolidation, and on its 6th consecutive doji on below average volume (still very low and slightly up Monday at 65,200; avg. 168,000). Super-looking pattern, and we look for a breakout. Target: 20.25.
BUY POINT: 17.81 on volume of 227,000. Stop: 16.90.
POSITION: Stock.

BPRX (Bradley Pharmaceuticals--$9.40; +0.75; no options): Drug Manufacturers
http://biz.yahoo.com/p/b/bprx.html
STATUS: BPRX is breaking out of a flying "w" pattern, breaking over resistance at 9 Monday on stronger volume of 582,300 (avg. 414,000). The stock ran to a July high of 10.77, then sold back to the 18 day MVA and from there formed the pattern. Remains a buy on the move up to 10.10 on continued strong volume. From thereabouts we may see the stock begin to form a handle to the 6-week base. Showing strong money flow and buying. Initial target: 12
BUY POINT: 9.50, on continued rising volume (600,000 or better). Stop: 8.80.
POSITION: Stock.

SEM (General Semi--$13.35; +0.10; optionable): Intergrated Circuits
http://biz.yahoo.com/p/s/sem.html
STATUS: The stock formed a short cup with handle base of 15 weeks, pulled back to the 18 day MVA early last week, and broke out over the handle high on Friday (buy point was 13.13). Volume was strong on that move, but shrank Monday to 289,600 (avg. 358,000), resulting in just a short move up for the stock. We are looking for a stronger move up into the mid-right side of the larger 18-month base (prior high in the smaller pattern is 13.65). Initial target: 15-16. Super money flow and good buying.
BUY POINT: 13.50 on 537,000 or higher. If the stock pulls back, look for a test of 13 before it reaches this new buy point. Stop: 12.50
POSITION: Stock and/or December $10 calls to buy (SEM LB).

From previous reports and back on this weekend:

PII (Polaris--$49.30; -0.05; optionable): Automotive
http://biz.yahoo.com/p/p/pii.html
STATUS: Is in the handle of its 6-month cup with handle, and pulled back Monday after Friday's stronger move up from support at 48 (the 18 day MVA is at 48.53). Volume was lower at 50,600 (avg. 76,000), causing PII to pull off the high of 49.97. It is showing a tight doji ("tombstone") so look for a pullback to support and possible bounce back up. Prior high in the base is 51.65; breakout is over 50.50 (handle high) on strong volume. Target: 58-61.
BUY POINT: 50.63, on minimum breakout volume of 114,000. Stop: 49
POSITION: Stock and/or December $45 calls to buy (PII LI; low open interests).

CCEL (Cryo-Cell--$9.25; -0.58; no options): Health services.
http://biz.yahoo.com/p/c/ccel.html
STATUS: Was looking good in the test of the breakout pullback Friday (volume was decreasing nicely as price dropped back gradually to support), but Monday volume surged back up to average levels (282,300) and CCEL sold back to close just under its 18 day MVA (9.35). Support looks pretty firm at 9, so we will look for a hold there for a bounce back and move over the recent high (10.90). CCEL last week broke out of a pennant-type handle to a cup base dating back to March 2000. Target over 10.90: 12.50
BUY POINT: Aggressive: Over 10.33 on above average volume (380,000). Stop: 9.60. Breakout: 11.02 on above average volume. Stop: 10.25.
POSITION: Stock only.

CONTINUED PLAYS:

Trading plays:

OEX (Standard & Poors--$604.22; -2.49; optionable): 605.25
STATUS: After breaking over the short term trendline, the OEX looked poised to use the stronger volume of Friday and make a move up to the 50 day MVA (616.70). However, the index reversed that move and slipped back below the 18 day MVA as volume dropped, too (851,200; avg. 1 million). The most solid support is at 600, and that is too close for playing the index down from here, unless the market begins to sell, then we can again look at puts below that support. If it does not sell, look for support from 600-602 for a bounce back over the 18 day MVA for an upside play.
BUY POINT: 599, on rising volume in market selling.
POSITION: September $610 puts to buy (XEO UB). Deltas unavailable at the time of this writing. Please check with your broker.

SOX (Phili Semi--$606.42; +11.51; optionable):
STATUS: Continued up today through our buy point and up to the target (200 day MVA at 615.28, along with the down trendline connecting late January, April and July closing highs) and retreated to close. We will see if it makes another move on the 200 day, will watch for that move to fail. On that failure, we can look to flip our positions and take advantage of the move, taking profits on the calls and looking at puts on the move down. The 50 day MVA is below at 593.86, and we will keep an eye on that level, but will look for the index to move back down to recent lows in the 535-540 range.
BUY POINT: After another failed move at the 200 day, a drop back through 600.
POSITION: September $610 puts to buy (SJX UB).

BREAKOUT TO A NEW HIGH (or getting ready to):

OMG (Om Group--$65.80; +0.61; no options): Chemicals
http://biz.yahoo.com/p/o/omg.html
STATUS: OMG broke out from its cup with handle last week, and after a brief pullback started another move Friday. It continued up today, but after hitting a high of 66.70 the stock pulled back to close, moving on continued strong volume (127,000; average 99,800). Off of this topping pattern we will look for a possible pullback to support (10 day MVA, which held on the last drop, is at 63.68), perhaps in this market exiting positions on seeing that move, and looking to play another good move up. Our target is 73-76.
BUY POINT: Pullback: A move back over 65.30 after holding 64 on a lower-volume pullback. Stop: 63. From here: Over 66.70 on continued strong volume. Stop: 63.75.
POSITION: Stock.

TESTING THE BREAKOUT:

Continued Plays:

AOC (Aon--$37.90; -0.58; optionable): Insurance
http://biz.yahoo.com/p/a/aoc.html
STATUS: AOC has been pulling back off the August high of 39.30 it reached after a nice breakout early in the month (that took it over its February high in the left side of a saucer). Has been looking good, but Monday pulled back through recent support of the 10 day MVA (38.21). Volume remained low, however, coming in at 672,000 (average 895,300), and AOC held the 18 day MVA to close. We will see if it can hold this support and make a breakout move. The high in the pattern is 39.30, with the high in the left side of a large cup (October 2000 high of 42.31). We will look at that target initially.
BUY POINT: 39.43, on volume in the range of 1.3 million. Stop: 38.
POSITION: Stock and/or October $35 calls to buy (AOC JG).

KNDL (Kendle Intl--$20.30; -0.20; optionable): Drug
http://biz.yahoo.com/p/k/kndl.html
STATUS: In a pullback and moving laterally above the 18 day MVA (19.90; 10 day at 20.24). KNDL made a nice move up from that support Friday, running on solid volume, but did not sustain it, tapping the 18 day again today before closing with a doji. Volume dipped back to 85,700 (average 74,500). Still showing solid action, so we are looking for it to hold the pattern and make a breakout move over 21.35. Excellent money flow and buying. Initial target: 25
BUY POINT: Over 21.35 on volume of 100,000 or higher. May pull back to test 21.35 once it gets over it; entry points on a move up from there. Stop: 20.
POSITION: Stock and/or November $17.50 calls to buy (KQR KW; 79 open interest).

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:

CHRW (C.H.Robinson Worldwide--$30.28; -0.55; optionable): Transportation
http://biz.yahoo.com/p/c/chrw.html
STATUS: Ascending wedge. CHRW made a breakout move last week, but disappointed by immediately pulling back. It looked as though it could be trying to hold on Friday, showing a doji over the 10 day MVA (30.67), but today dropped back again on increased volume (203,100; average 204,600). Not a promising turn of events, but we will see if the stock can hold recent lows (with the 50 day MVA, at 29.73). That will end the string of higher lows, but still leave it in decent shape. For positions we are holding out for another try at a breakout. Target: 36
BUY POINT: 31.72 on volume in the range of 284,000. Stop: 30.50 (18 day MVA).
POSITION: Stock and/or November $25 calls to buy (CJQ KE).

Pennants: CPC, on the Thursday update, is still holding the pennant, but on strong, above average volume Friday could not make it up to the upper resistance in the pattern. We will watch it from here (buy point is 20.28 on volume of 147,000).

STE (Steris Corporation--$22.04; +0.04; optionable): Health Services
http://biz.yahoo.com/p/s/ste.html
STATUS: Trying to break out of the ascending wedge pattern, but after a move up Friday from the 18 day MVA (21.40) the stock could only manage a loose doji today. Volume spiked up sharply to 380,600 (average 248,200), and we could get another test of support before we get a move. The stock hit a July high at 22.75, above other possible resistance in the pattern which in a more positive market would serve as the basis for the buy point, but we are playing it safe by using that previous high. Target: 26
BUY POINT: 22.88 on minimum breakout volume of 335,000. Stop: 21.27. A buy on the breakout up to 24.02.
POSITION: Stock and/or December $20 calls to buy (STE LD).

BASING/TRADING RANGES:

Continued:

GOTO (Goto.Com--$23.37; -0.31; optionable): Internet
http://biz.yahoo.com/p/g/goto.html
STATUS: Bouncing up its 50 day MVA, GOTO has moved laterally the past two weeks in a handle to its 11-week cup with handle. It is still well off of its all-time high, but the stock ran from $6 to $26 from April to June, and has corrected back into this pattern. Money flow remains huge as volume has virtually dried up on this lateral handle (289,000 Monday; average is 900,000). Continuing to look for a breakout over the July high of 25.15. Initial target: 30.
BUY POINT: Breakout: 25.28, on volume of 1.4 million or better. Stop: 23.51.
POSITION: Stock and/or November $20 calls to buy (GUO KD).

PUT PLAYS: IFIN gave us a good move down Monday. Please check with your broker in order to get the best deltas on put options (0.70 or higher).

QQQ (Nasdaq 100--$39.65; +0.05; optionable (QQQ):
STATUS: Closed a nickel higher than Friday's close after the index that day made a solid move up on higher volume. Volume dropped off Monday to 50.9 million (avg. 58 million), but if the market begins to sell back off that can rise, helping to drive the stock back down toward the August low of 36.54. The last time the QQQ hit the 18 day MVA, the resistance proved too much and the index traded back down to that low. That's over three points from here.
BUY POINT: Aggressive: 39, on rising volume in market selling.
POSITION: October $47 or lower (down to $40) puts to buy, with a strike that has a delta of 0.75 or higher. Deltas unavailable at the time of this writing; please check with your broker.

IFIN (Investors Fin Svcs--$62.48; -3.22; optionable): Assets
http://biz.yahoo.com/p/i/ifin.html
STATUS: A solid play as IFIN continued down with its sector, tanking from a consolidation under resistance (50 & 200 day MVA's at 70.86 and 71.92). The stock took out our buy point, moving on sharply higher, solid volume (538,100; average 293,000). The initial target is 59, but we could get a chance for new or additional positions if we get a bit of a reflex bounce, which is possible after such an abrupt drop.
BUY POINT: After a relief bounce that fails at the 64-65 range, a drop through 62.50 on continued strong volume for new positions. Stop: 66.
POSITION: October $80 puts to buy (FLQ VP).

TCB (Tcf Financial--$46.61; -0.99; optionable): Savings & Loan
http://biz.yahoo.com/p/t/tcb.html
STATUS: Tumbled back last week, and today gapped through the 50 day MVA (47.40) and dropped through our buy point, but after hitting a low of 45.15 it pulled back up to close. Volume was huge at 886,100 (average 335,800). The sector is very weak, and after a test up toward the 50 day, we can still look at playing it down to the 200 day MVA (41.45).
BUY POINT: New positions: After a failed test of the 50 day, a drop back through 46 on continued strong volume. Stop: 48
POSITION: October $50 puts to buy (TCB VJ).

COF (Capital One--$58.78; -0.37; optionable): Credit Services
http://biz.yahoo.com/p/c/cof.html
STATUS: Did not get a continuation of Friday's rebound (from a low of 57.70) back toward resistance of the 200 day MVA (60.73), as the stock dipped to as low as 58.28 before recovering a bit to close. Volume came in lower at 1.69 million (average 1.62 million) as the stock is using support from June-July lows. from here we will look for the stock to take out those lows for a play down to 51. There is some intermittent resistance in the 55 range on which we will keep our eye.
BUY POINT: Below 57, on continued above average volume. Stop: 61 (just above the 200 day MVA).
POSITION: December $70 puts to buy (COF XN).

Continued Puts:

CERS (Cerus--$58.94; -0.06; optionable): Biotech
http://biz.yahoo.com/p/c/cers.html
STATUS: Has been fighting the 200 day MVA (60.72) for almost two weeks, but after gapping back Monday the stock was able to push back up a bit. It still looks weak, with volume coming in much lower at 136,400 (average 107,500). We could get another test of the 200 day (or 10 day at 59.81), and will see how it handles that point for the possible disposition of existing positions. However, we are looking for a failure of that move, and on a drop back we can still look at a put play on the drop. The initial target is 55, and that is still an aggressive play that we would look for in a weak market. A drop through 55 could produce a drop through 50.
BUY POINT: Aggressive: After a test of the 60 range, a drop back through 58.50 on increased volume. Again, watch 55 as possible support. Stop: 200 day MVA.
POSITION: October $70 puts to buy (CEQ VN; 0 open interest).

DIGE (Digene--$28.70; -1.50; optionable): Drugs
http://biz.yahoo.com/p/d/dige.html
STATUS: DIGE made the move back from its 200 day MVA (30.35), running down on volume that increased over the levels of its weak move up of last week (110,400; average 116,500). Looks like we could get a continued play down to our initial target of 25, and we can look at new or additional positions on a move down and through 28.
BUY POINT: Aggressive: Below 28 on above average volume.
POSITION: October $40 puts to buy (QDG XH; 0 open interest).

MSCC (Microsemi--$56.93; -2.17; optionable): Chip
http://biz.yahoo.com/p/m/mscc.html
STATUS: Continues to struggle under the 50 day MVA (60.61), dipping back Monday on decreasing volume of 557,700 (average 814,400). It hit our aggressive buy point, but without the volume we were looking for. We would like to see more strength on a downside move, but our initial target is close by at 53-54 (from recent lows), not leaving much room to play. Below 53-54, however, the stock can drop on hard selling to 45 (200 day MVA).
BUY POINT: Aggressive: Below 52.50 on above average volume. Stop: 61.
POSITION: October $70 puts to buy (QMS XN; low open interest).

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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