us stock market, stock watch

Begin Part 3 of 3

DSPG (Dsp Group--$25.00; +0.01; optionable): Telecom Equipment
http://biz.yahoo.com/p/d/dspg.html
STATUS: In a 5-week double bottom with handle pattern that formed within a larger base of 7 months (previous high 29.63) and 13 months altogether. On steadily decreasing volume the stock is forming the handle off the recent high of 26.48, showing two consecutive dojis at week's end (volume down to 177,200; avg. 345,000). Lows of the previous 3 sessions tapped the 10 day MVA (24.59), and with the low volume pullback, DSPG looks ready to make a move up from this position. Money flow and relative strength are at high levels. Target: initial 30.
BUY POINT: 26.61, on minimum breakout volume of 518,000. Stop: 25
POSITION: Stock and/or October $22.50 calls to buy (DPQ JX).

ILUM (Illuminet Holdings--$33.20; +1.97; optionable): Telecom
http://biz.yahoo.com/p/i/ilum.html
STATUS: Making a breakout move from a saucer/flat base pattern, on a strong move Friday nearly hitting the buy point of 33.28 (just above the pattern's high at 33.15). Volume was strong on the move at 475,700 (avg. 307,000) as ILUM surged up from a 7-day sideways movement along its 18 day MVA (31.25). This 15-week flat base formed after the stock in April made a nice run up and over its 200 day MVA, off the lows in a much bigger base of 18 months. Super money flow and good buying. Target: 40
BUY POINT: 33.28 on continued strong volume (min. BO volume is 461,000). Stop: 31.50
POSITION: Stock and/or October $25 calls to buy (ILU JE; low open interests).

New Puts:

GNSS (Genesis Microchip--$29.95; +2.00; optionable): Chip
http://biz.yahoo.com/p/g/gnss.html
STATUS: The chip stock sold back below its 50 day MVA Wednesday, found support for the time being at 27.20 then Friday climbed back up to tap resistance at the 10 day MVA (30.45). It dropped off that to close just under stronger resistance at 30. Should the stock take out 30 (volume was still well above average despite being lower at 1.18 million (avg.797,000) and make it up to the 50 day MVA at 31.15, it can fall back down. For now we are looking for a move down from 30 for the potential put play. Target: July low at 24.15.
BUY POINT: 29.50 on rising volume in market selling. Stop: 31.50
POSITION: Aggressive: September $35 puts to buy (QFE UG). These options are risky since expiration is in less than three weeks. They do, however, have sufficient open interests and a good delta. October $35 puts to buy (QFE VG; low open interests, deltal 0.65).

FEIC (Fei Company--$34.83; -0.90; optionable): Electronics
http://biz.yahoo.com/p/f/feic.html
STATUS: The stock has been trying to hold onto a position just above 35 but may be losing a battle with resistance at the 50 day and 18 day MVAs (36.59 and 36.70, respectively). It started a move down from that range on Thursday, and Friday just broke some support at 30-30.16 as volume shot above average (574,900; avg. 566,000). The stock did bounce up from a low of 34.35, so we will look at playing it down once it breaks the August low at 34.01 in market selling. There is potential support at 30, but that still gives us room, and the stock can continue beyond that the to the 200 day MVA (28 current).
BUY POINT: 34, on rising volume in a selling market. Stop: 36.75
POSITION: December $40 puts to buy (FQE XH; low open interests).

TMPW (Tmp Worldwide--$44.85; +1.26; optionable): Media
http://biz.yahoo.com/p/t/tmpw.html
STATUS: Has been downtrending since early June, bumping back off of a down trendline (connecting June/July/August lows) until more recently when lower resistance has taken the stage, the 10 and 18 day MVAs (the latter at the current 46.99 just turned TMPW back down Tuesday). The stock is fighting to stay above support but Friday may have lost the battle at 45 after moving up from the low of 43.24 and closing just under the resistance. Volume was lower at 1.48 million (avg. 2.8 million). If we get more selling on the Nasdaq, this one could make its way down to 35, or even the April low at 27.50. Prices are thicker between here and 35, so look for a selling market.
BUY POINT: 43, on rising volume in a market sell-off. Stop: 44.50
POSITION: October $50 puts to buy (BSQ VJ; low open interests).

CONTINUED PLAYS:

TESTING THE BREAKOUT:

Continued Plays:

KNDL (Kendle Intl--$20.36; +0.06; optionable): Drug
http://biz.yahoo.com/p/k/kndl.html
STATUS: In an extended lateral pattern (of 2 weeks) that formed after a breakout run to the August high of 21.35. The pattern is holding above the 18 day MVA (20.05). Friday KNDL showed a tight doji just above the 10 day MVA, with volume shooting to a high 113,900 (avg. 70,000) after low levels the previous 3 sessions. We would expect to see a move on that, but the stock didn't budge, so it is 50/50 up or down from here. As long as the stock can hold above the moving average, it has the chance to break out. Looking for that move over 21.35. KNDL shows strong money flow. Initial target: 25
BUY POINT: Over 21.35 on continued high volume (or at a minimum of 78,000). Stop: 20.
POSITION: Stock and/or November $17.50 calls to buy (KQR KW; 76 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:

UCOR (Urocor--$17.44; +0.17; no options): Health Services.
http://biz.yahoo.com/p/u/ucor.html
STATUS: UCOR is in an ascending wedge pattern with upper resistance at 17.50. We were previously calling this pattern a lateral consolidation, but with the dip down to the 18 day MVA Thursday, the pattern has taken on the new appearance. Volume continues to shake out holders of the stock (down to a very low 10,300; average is 168,000), so if the stock can hang on, we continue to look for a breakout. Great money flow and buying. Target: 21
BUY POINT: 17.83, on volume of 227,000. Stop: 16.90.
POSITION: Stock.

AVP (Avon--$46.13; -0.31; optionable): Personal Products
http://biz.yahoo.com/p/a/avp.html
STATUS: In an ascending wedge pattern and trying to make it past upper resistance at 47 (hit on Friday's intraday high). The stock pulled back from that price Thursday and Friday, and testing the 46 level just above its 10 day MVA (45.91). By Friday volume fell back to 920,800 (avg. 857,000), so we are looking for support at 46 for a move back up. The 18 day MVA is at 45.68, which coincides with and up trendline connecting the July and August lows. Target: 54
BUY POINT: 47.25 (new buy point) on minimum breakout volume of 1.2 million. Stop: 45.50 (just below the 18 day MVA). A buy on the breakout up to 49.61.
POSITION: Stock and/or October $40 calls to buy (AVP JH).

BASING/TRADING RANGES:

Continued:

BPRX (Bradley Pharmaceuticals--$8.78; +0.45; no options): Drug Manufacturers
http://biz.yahoo.com/p/b/bprx.html
STATUS: In a choppy cup base, and for most of the week pulled back from the August high (9.54, reached on a nice little run up from the 50 day MVA, then at 7) to test support at the 18 day MVA (8.28). Showing a doji there Thursday, the stock bounced Friday but volume was low at 122,600 (avg. 433,049). The continued decreasing volume throughout the week represents a nice shakeout in this handle-type action, and while BPRX may test the 10 day (8.47), we are looking for a breakout over the August high. Great money flow and buying. Initial target: 12
BUY POINT: 9.67 (new buy point) on minimum breakout volume of 650,000. Stop: 8.75
POSITION: Stock.

BBI (Blockbuster--$21.46; +0.36; optionable): Specialty Retail
http://biz.yahoo.com/p/b/bbi.html
STATUS: Tried to make a breakout from the 13-week cup with handle 6 days ago but Monday sold back; however, after that one day of selling the move back up was on strong volume and for the rest of the week BBI showed some short bouncing action just above support at 21. Volume was below average for those three days (by Friday down to 350,200; avg. 486,000), so the stock is trying to consolidate in a handle. We will look for a breakout over 21.99 on strong volume. Relative strength is high. Target: 25-26.
BUY POINT: 22.13, on volume in the range of 729,000 Stop: 20.99
POSITION: Stock and/or October $17.50 calls to buy (BBI JW).

SCTC (Systems & Cptr Tech--$13.33; +0.28; optionable): Software
http://biz.yahoo.com/p/s/sctc.html
STATUS: Beat our buy point of 13.33, but the move above that tight resistance at 13 was not exactly an explosion as the stock inched higher with volume caving to 136,300 (avg. 198,045). The ascending wedge pattern from which we were looking for a strong breakout formed as part of a handle to a 9-month cup base (and part of a much larger base). Look for a pullback to 13, and we are plotting a new buy point over the July high of 13.72 for add-to positions. If we get a strong breakout over that (the actual handle high), our initial target is at 16-17.
BUY POINT: 13.85, on minimum breakout volume of 297,000. Stop: 12.75
POSITION: Stock and/or November $10 calls to buy (YQS KB).

AMGN (Amgen--$64.30; -0.27; optionable): Biotech
http://biz.yahoo.com/p/a/amgn.html
STATUS: After Thursday's strong move back over the 200 day MVA (63.69), AMGN pulled back on lower volume (6.58 million; avg. 7.5 million) and showed a tight doji near the top of the day's intraday range. It is holding just above some earlier August highs, and if the sector can continue to show this week's positive action, we look for this stock to break over the August high of 65.60. Our target is the June highs at 70 on that move.
BUY POINT: Aggressive: 65.30 on continued rising volume. Stop: 63.50
POSITION: Stock and/or October $60 calls to buy (YAA JL).

TARO (Taro Pharmaceuticals--$42.50; +0.16; optionable): Drug Manufacturers
http://biz.yahoo.com/p/t/taro.html
STATUS: TARO has formed a 6-week cup base and after Monday's nice move up from support at 40 is pulling back in a handle, and volume has been low (up Friday to 399,100; average is 711,227). The lows of the last three days have tapped at the 50 day MVA (simple, at 41.30), so the support looks solid for now. We look for a breakout move over Tuesday's high at 44.30. Money flow is good and relative strength is out ahead of price. Target: 51-53.
BUY POINT: 44.43, on minimum breakout volume of 1.1 million. Stop: 42
POSITION: Stock and/or October 37.50 calls to buy (QTT JU).

Trading Plays:

ENZN (Enzon--$63.84; -0.71; optionable): Biotech
http://biz.yahoo.com/p/e/enzn.html
STATUS: In a descending lateral pattern of about 11 days, and squeezing down to its 18 day MVA (64.04) below which it closed by cents Friday, showing a tight doji. Volume remains below average and lower Friday to 613,600 (avg. 1.5 million) as the stock tapped just below the 50 day MVA (62.73) before closing higher. It is holding above recent lows between 63.04 and 63.56, so we look for a move up on strong volume and breakout over the August high at 67.92 (pattern high). Strong money flow and good buying. Initial target: 78-79 (highs at the start of the 3-month base in which the pattern formed).
BUY POINT: 68.05 on minimum breakout volume of 2 million. Stop: 65 A buy up to 71.45 on a breakout.
POSITION: Stock and/or November $55 calls to buy (QYZ KK).

SEM (General Semi--$12.95; +0.33; optionable): Intergrated Circuits
http://biz.yahoo.com/p/s/sem.html
STATUS: Broke out of a 13-week cup with handle but could not punch a move over the previous highs in the base (at 13.60), instead pulling back this week to again test the 18 day MVA (support for the earlier handle pullback) by Thursday. Volume shrank back nicely throughout the week, down to a very low 57,000 by Friday even as SEM bounced from the 18 day. It stopped at the previous handle high (13), but that's not surprising on the low volume. We like the higher low posted since the first handle pullback, and will look for a stronger volume breakout over resistance at 13.35 (hit 4 times). The recent high is 13.42. Super money flow and buying! Target: 16
BUY POINT: 13.48, on minimum breakout volume of 566,000 (avg. vol=377,000). Stop: 12.75
POSITION: Stock and/or December $10 calls to buy (SEM LB).

PUT PLAYS: We are continuing to watch MSCC for the move below 26.26. It is hanging tough, but if the chips start to sell, it is in position for a fall. IFIN remains on our watchlist as well; it is holding on at 64 as volume decreases; on a move back up we will evaluate it for another shot at a put play. COF gave us a good move down throughout the week, but for now support looks good at 55. If it can move up, resistance at 57.50 can send it back down again, but we will have to see if it the has the momentum to break that support. CERN hit our initial target at 55, and broke that support Friday, so continue to watch for the move down to 50 (volume was lower but still above average). On a move back up to 22, we will see if GOTO looks weak enough to break 18. From 18 (Friday's low), not enough room for a put down to the 200 day MVA (15).

Continued:

Indexes: For upside positions described below, be ready to exit positions quickly; such aggressive plays are for nimble traders only, since we cannot be sure the indexes can rally much from here.

OEX (Standard & Poors--$577.40; +3.02; optionable (OEY):
STATUS: After gaining on the downside for three days, the index Friday slowed it down and showed a doji at the bottom of the slide, tapping a high of 582.20 but closing lower. Volume was down at 920,100 (avg. 1.1 million) along with the rest of the market. The index can move up from here to 588 or the 10 day MVA at 590.57 if it can make it that far, with aggressive positions being taken on that move. At resistance the index can be played down again. Otherwise, if it breaks lower from here (572, just under Tuesday's low), it is a potential drop to 554, an initial target at the April low.
BUY POINT: Upside: 578 on rising volume. Put: After resistance is hit at 588; on selling from here, 572.
POSITION: Upside: Aggressive: September $575 calls to buy (OEB IO). Put: from 572, September $580 puts to buy (OEB UP). Deltas unavailable at the time of this writing; please check with your broker for those.

DJX (1/100 Dj Indu--$99.50; +0.30; optionable (DJV):
STATUS: Found support the last 2 days of the week at the 99 range, after falling for three days. We may get a bounce back up from here to the July low at 101 (also tapped in August), and if the move is stronger, to 102 (level of recent support/resistance). From there the index can fall back down to 98-99 and lower. If the index cannot make that move, we will look at playing it down from here with a target at 93-94. Volume was down to 920,100 (avg. 1 million).
BUY POINT: Upside aggressive: Above 99.65 on rising volume in a market bounce. Put: From 101-102: 101, on rising volume. From here: 98.50, on rising volume in renewed market selling.
POSITION: Upside: October $98 calls to buy (DJV JT). Put: from 101 - 102, October $104 puts to buy (DJV VZ); from 98.50, October $102 or $100 puts to buy (DJV VX or VV). Deltas unavailable at the time of this writing. Please check with your broker for those.

SOX (Phili Semi--$562.72; +3.37; optionable):
STATUS: Showed a doji at the bottom of its 3-day drop, the low tapping 547.48, just above an up trendline connecting the April and August lows. The index, if we get a rally of any kind, can move up to 570 or 575 easily, but we are not looking for the upside play from here. Instead, we will watch for the index to halt at resistance then fall back down in market selling, looking at 548 (just above Friday's low) for our initial target from that resistance (below that, 520-523). Should the index stall out here, consider aggressive positions from Friday's doji, with safer entry points below 547.
BUY POINT: A move down upper resistance: 569, on rising volume in market selling. From Friday's closing price: Aggressive: 559 on rising volume. Safer: 547, on strong volume.
POSITION: From 569: September $590 puts to buy (SJX UR). From 559: September $570 puts to buy (SJX UN). Safer (below 547): September $550 puts to buy (SJX UJ).
Deltas unavailable at the time of this writing. Please check with your broker for those.

DIGE (Digene--$29.51; +1.27; optionable): Drugs
http://biz.yahoo.com/p/d/dige.html
STATUS: Stronger volume of 65,100 (avg. 122,000) pushed DIGE back up over its 10 day MVA (29.22), headed for resistance at 30 in the form of its 200 day and 18 day MVAs. If the stock cannot break through that, we will look for it to move down; on strong market selling, it can drop to 24. The stock hit an August low of 26.03, but the stock isn't pulling in the buying volume, and if the market begins a sell-off, it can take out that previous low.
BUY POINT: After a move up to test 30, buy point of 29.50 on a move down from there in market selling.
POSITION: December $45 puts to buy (QDG XI; 0 open interests).

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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