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Begin Part 2 of 3

TEAM TRADES

SOX: The rest of the market was rallying on the GDP, but we were watching the SOX fall from the open. It did not take long to hit the first buy point at 588. The September $600 options were trading at 32.50 bid by 35.50 ask. We jumped in with two orders to see which would get hit, 35 and 35.50. We got some action on both of them surprisingly. We anticipated a strong downdraft, so we were okay with having both positions taken. Well, the SOX tanked to 570 in the first hour. We anticipated an attempted bounce; that always happens. We were not ready to sell on just that first bounce. It then made a series of lower highs all afternoon, tanking to the low at 566 in the last hour. On the low in the index we saw the options in the 45 range. The index bounced at the close, but not a lot. We anticipate some more downside tomorrow morning, and with that we will look at taking some profits on this position. Downside positions tend to accumulate profits fast if taken when there is a turn down from resistance. That was the case today, and we will look to bank some profits tomorrow and look at the other indexes form some more action.

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 Wednesday.

Best Plays:
1) AVP: Looking for a bounce from support to head into a breakout.
2) ATR: Breaking out and still a buy.
3) CPC: Wants to break out.
4) GP: Worth a watch on this strong volume.
5) SCTC: At least it LOOKS ready to explode.
6) BPRX: In good position for a move up.
7) KNDL: Still a decent pattern even on a possible test of the 18 day MVA.
8) CHRW: Still looks good in the ascending wedge.
9) GOTO: A possible put play now.
10) TCB: Looks ready for more downside.
11) MSCC: Still a put play below 26.

NEW PLAYS:

AVP (Avon--$46.14; -0.06; optionable): Personal Products
http://biz.yahoo.com/p/a/avp.html
STATUS: Has formed an ascending wedge pattern in the upper right side of a 8-month base (prior high 49.75), with upper resistance at the 47 level. Volume has been rising over the last week, as the stock makes a move back up in the pattern, but has done a fair job of staying below average throughout (up Wednesday to 938,800; avg. 840,000). The pattern is in a smaller base that's part of the larger one, with a previous high at 48.26. Looking for a breakout! Strong money flow, and relative strength is out ahead of price, which is bullish. Target: 54
BUY POINT: 47.11 on minimum breakout volume of 1.1 million. Stop: 45.50 (just below the 18 day MVA). A buy on the breakout up to 49.47.
POSITION: Stock and/or October $40 calls to buy (AVP JH).

ATR (Aptargroup--$36.90; +1.12; optionable): Consumer non-durables: Packaging
http://biz.yahoo.com/p/a/atr.html
STATUS: Breaking out of a cup with handle pattern of 15 weeks. Volume was higher at 91,100 (avg. 71,000) as the stock beat the buy point of 36.73. The stock shows good money flow and buying, and relative strength has broken out. Reached a new all-time closing high on today's move. Target: 42
BUY POINT: Remains a buy on the breakout up to 38.57 on minimum breakout volume of 107,000. Stop: 36.
POSITION: Stock and/or October $35 calls to buy (ATR JG).

From Tuesday's Update:

CPC (Central Parking--$20.16; +0.25; optionable): Consumer services
http://biz.yahoo.com/p/c/cpc.html
STATUS: Made a move up in the ascending wedge pattern, closing just cents below the buy point on rising volume (83,800; avg. 109,136). Looking for the breakout from here; the pattern is in the lower right side of a 7-month cup base. Strong money flow and good buying. Initial target: 23
BUY POINT: 20.28, on volume of 147,000 or better. Stop: 19.50 A buy on
the breakout up to 21.29
POSITION: Stock and/or December $17.50 calls to buy (CPC LW).

Back on:

GP (Georgia Pacific--$36.92; +0.31; optionable): Materials and construction
http://biz.yahoo.com/p/g/gp.html
STATUS: Made a move up from support at the 18 day MVA (36.51) as volume shot sharply above average (1.56 million; avg. 1.5 million). GP is in a handle to a 15-month saucer with handle base. It broke out earlier this month and reached a high at 37.47 then entered a handle characterized by a short ranging pattern above the 18 day. On the strong volume move today, we are looking for a breakout to a new high. Showing super money flow, and relative strength has broken out ahead of price. Target: 43
BUY POINT: 37.78, on continued rising volume. Stop: 36.
POSITION: Stock and/or $35 calls to buy (GP JG).

From Monday:

TARO (Taro Pharmaceuticals--$42.99; +0.85; optionable): Drug Manufacturers
http://biz.yahoo.com/p/t/taro.html
STATUS: Continued to pull back from Monday's promising move. Showed a tight doji on very low volume, up from a low of 41.40. The stock can move up from here or test the lower support again (the low tested the 50 day MVA, simple). 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--$12.92; +0.07; optionable): Software
http://biz.yahoo.com/p/s/sctc.html
STATUS: Remains in the short bouncing range just above the 10 day MVA, part of a pattern that started end of July and resembles an ascending wedge if you count the August 10 intraday high at 13. Whatever you call it, the pattern is squeezing down here, and is really fighting it out judging from the steady heavy volume (surging up today to 568,000; avg. 189,000) and the series of dojis. Resistance at 13 like a lid on a pressure cooker. We will see if things resolve to the upside. 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--$21.62; +0.46; optionable): Specialty Retail
http://biz.yahoo.com/p/b/bbi.html
STATUS: Bounced back from Monday's sell back to the 10 and 18 day MVAs (on news), rising the last 2 days but on decreasing volume, and BBI could not make it to Friday's high at 21.99, reached on a strong move up that day. Look for a pullback to 21, then bounce back up for taking new positions on a strong move over 22. Target: 25-26.
BUY POINT: 22.13, on volume in the range of 650,000 Stop: 20.99
POSITION: Stock and/or October $17.50 calls to buy (BBI JW).

A couple of rollers:

VZ (Verizon--$50.00; -0.57; optionalble): Telecom
http://biz.yahoo.com/p/v/vz.html
STATUS: Dropped back below the previous lows in the ranging pattern (51 range). We were looking for a run back up to the 57 range for upside positions with stock and/or options for the purpose of selling at the top of the run either stock, options, or covered calls. The stock hit the lower support on Monday, and even here at 50 may find support, but volume was higher at 5.6 million (avg. 4.4 million), and VZ may head lower if that momentum sustains. No new positions.

KLIC (Kulicke & Soffa--$14.66; -0.11; 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, but despite our intentions to play KLIC back up, the stock is currently unable to take out the 50 day MVA (15.48) and has dropped back, Wednesday tapping lower support at the 200 day MVA (14.25). We will see if the 200 day MVA holds again as it did in May and June for a move back up in the pattern. The pattern is still in tact thus far. If it runs to 18, we can sell the stock or the options we bought. Should rally with the Nasdaq's oversold move higher. Volume was higher at 468,000 (avg. 662,000).
BUY POINT: Aggressive: from here or a further test of the 200 day MVA at 14.25. Next 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: Either: Stock and/or October $12.50 calls to buy (KQS JV).

Double bottom:

HOTT (Hot Topic--$34.09; -0.04; optionable): Consumer non-durables
http://biz.yahoo.com/p/h/hott.html
STATUS: Has made a run up from the 18 day MVA since last Thursday, but appears ready to top out here. The intraday high of 34.93 tapped near Monday's high of 34.88, so that is now the stock's next resistance level. Volume was lower at 610,000 (avg. 717,000), so we look for a pullback to 32.50-33 before the stock mounts another move up. HOTT broke above the middle peak in a double bottom pattern August 16, pulled back, and made it back over the August 20 high of 33.80 on this run. Target: previous highs in the 2-month base: 38 (initial)
BUY POINT: Aggressive: 34.25, after a lower volume pullback to support. Stop: 32.50
POSITION: Stock and/or November $30 calls to buy (UHO KF).

Three small caps:

UCOR (Urocor--$17.33; -0.03; no options): Health Services.
http://biz.yahoo.com/p/u/ucor.html
STATUS: Tuesday's attempt to break higher in the recent and tight lateral pattern (and move back down) was a bit worrisome and Wednesday UCOR did head lower on rising volume, showing a doji at the bottom of its intraday range on rising volume (still quite low at 64,300; avg. 168,272). The stock may try a test of the 18 day MVA at 17.12), but we would certainly like to see it hold there. Super money flow and buying. Target on a breakout: 20.25
BUY POINT: 17.81 on volume of 227,000. Stop: 16.90.
POSITION: Stock.

BPRX (Bradley Pharmaceuticals--$8.78; -0.10; no options): Drug Manufacturers
http://biz.yahoo.com/p/b/bprx.html
STATUS: Pulled back from Monday's high at 9.54, and Wednesday showed a tight doji on a pullback that started Tuesday. Volume decreased over the two days, down to 258,400 today (avg. 428,000). The low of 8.39 tapped support at the 10 day MVA, and with the other price support at or near the level of today's closing price (and the low volume), BPRX is in good position to make a move up. Strong money flow and buying.
Initial target: 12
BUY POINT: 9.55 (over Monday's high), on average or better volume. Stop: 8.88
POSITION: Stock.

SEM (General Semi--$12.90; -0.35; optionable): Intergrated Circuits
http://biz.yahoo.com/p/s/sem.html
STATUS: SEM broke out of its short cup with handle base of 15 weeks last Friday, but after a couple of loose dojis, it dropped back today. The stock closed just below its prior breakout point (13), but above the 10 day MVA (12.80), moving on low volume (224,000; average 375,000). It had looked like a strong breakout, and had very solid volume behind it, so we will see if SEM can hang on here. We are typically taking profits on stocks that breakout and start to show weakness, but if we are still in one that drops back toward the breakout point, we are quick to get out if they take out that support. This pattern formed in the right side of the larger 18-month base (prior high in the smaller pattern is 13.65). Our initial breakout target was 15-16. Still shows good money flow and buying.
BUY POINT: After holding here, a move back over 13.42 on above average volume. Stop: 12.65.
POSITION: Stock and/or December $10 calls to buy (SEM LB).

From previous reports and back on this weekend:

PII (Polaris--$50.33; -0.57; optionable): Automotive
http://biz.yahoo.com/p/p/pii.html
STATUS: Broke out of its 6-month cup with handle Tuesday, but today turned right back around. Not the action we like to see on a breakout, but we have seen numerous stocks make a nice initial move and then immediately reverse. The selling back today was on increased volume (207,600; average 78,500), another negative, but on the plus side it did hold its recent pattern highs after tapping down to 50 at its intraday low. The breakout high hit 51.36, and the prior high in the base is 51.65. Target on a revived move: 58-61.
BUY POINT: After holding the 50 level, a move back over 51.36 on continued strong volume. Stop: 49.75.
POSITION: Stock and/or December $45 calls to buy (PII LI; low open interests).

CCEL (Cryo-Cell--$8.75; -0.25; no options): Health services.
http://biz.yahoo.com/p/c/ccel.html
STATUS: Another breakout gone bad. CCEL pulled back Monday and then continued down, now holding the mid-range of its July-August consolidation and over its 50 day MVA (8.25). Nothing to play from here, and we will see if, off of the last two sessions' tight patterns, it can make a recovery.

End Part 2 of 3

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