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Begin Part 2 of 2

Best Plays, Part 2:
1) Puts: TMPW, after a possible bounce back up to resistance.
2) KNDL: Holding support and volume rose today.
3) UCOR: Still looks good.
4) AVP: Breaking out and still a buy.
5) BBI: Looks very ready!
6) Indexes: All are poised for moves up after today's reversal.

BYD (Boyd Gaming--$6.06; -0.04; no options): Resorts & Casinos.
http://biz.yahoo.com/p/b/byd.html
STATUS: In the handle of a 23-month cup, BYD has pulled into a lateral range since mid-July that is something of an ascending wedge. It has been moving more or less laterally the last three weeks over the support of its short-term MVA's (18 day at 5.98), but on a move up Tuesday got a huge spike in volume. Today the stock showed a loose doji, testing the 18 day at its low, moving on much lower, but continued strong volume (139,100; average 98,000). The volume points to a possible move, and we are looking for a jump over the pattern high at 6.30. Relative strength has broken out, and the stock is showing excellent money flow and buying. Target: 7.25.
BUY POINT: Over 6.30 on continued strong volume. Stop: 5.86.
POSITION: Stock only.

New Plays from the weekend:

ESCM (Esc Medical--$28.51; -1.54; optionable (QFC): Medical Equipment Wholesale
http://biz.yahoo.com/p/e/escm.html
STATUS: Made a nice move Tuesday on strong volume, moving higher in the right side of its 10-week cup base. That move was retraced, however, on Wednesday, as volume dropped lower, though still just above average at 746,100. The low tested support (10 day MVA at 28). We will look for a hold here for a move back up; the stock may enter a handle consolidation first. Target on a breakout: 35-37. Great money flow and strong buying.
BUY POINT: (new for breakout): 30.72 on minimum breakout volume of 1 million or better. Stop: 28.50.
POSITION: Stock and/or October $25 calls to buy (QFC JE).

KR (Kroger--$26.60; -0.76; optionable): Grocery store.
http://biz.yahoo.com/p/k/kr.html
STATUS: Broke out of the ascending wedge on Tuesday, but dropped back on lower volume to first the 18 day MVA (26.30), then bounced back to close on support at the 10 day MVA. Volume as mentioned was lower but still strong and above average (3.2 million; avg. 2.5 million). We will look for a bounce from here or the 18 day MVA again, and will catch it on a strong move over Tuesday's closing high of 27.36. Strong money flow. Target: 31.
BUY POINT: Over 27.36 on volume in the range of 4 million. Stop: 26.
POSITION: Stock and/or October $25 calls to buy (KR JE).

Revisited:

ATVI (Activision--$34.58; -1.23; optionable): Software
http://biz.yahoo.com/p/a/atvi.html
STATUS: ATVI is in a double bottom with handle pattern, and Wednesday slipped just below its 50 day MVA (34.70) even as volume dropped even lower below average (485,100; avg. 1.1 million). This is farther than we wanted for a handle pullback, so if it cannot recover pronto, we are going to drop the play. The stock may find support at 34, where there is other price support since May. Strong money flow and good buying. Target: 44-46
BUY POINT: Aggressive: Over 36 on rising volume. Breakout: 38.63, on volume of 1.5 million or higher. Stop: 36.50
POSITION: Stock and/or November $30 calls to buy (AQV KF).

IDPH (Idec Pharmaceuticals--$58.56; -0.71; optionable): Biotechnology
http://biz.yahoo.com/p/i/idph.html
STATUS: Still pulling back from the late August breakout run, and is now at support, the 10 day MVA (58.05), showing a doji on volume that remains just under average levels. That volume was decreasing very nicely on the pullback until Tuesday when the stock tried to make an stronger upside move. It dropped back today, and volume was barely higher (3.6 million; avg. 3.7 million). We will look for the move up from here (the low of 57.68 tested just under the 10 day before IDPH bounced back into the doji).
Good buying. Target: 75.
BUY POINT: Over 62.49 on 4.5 million or higher. Stop: 58.50
POSITION: Stock and/or October $55 calls to buy (IDK JK).

Trading Plays:

Thinly traded:

URBN (Urban Outfitters--$16.40; +0.58; optionable): Apparel Stores
http://biz.yahoo.com/p/u/urbn.html
STATUS: Continued the breakout from its cup with handle Wednesday after taking a quick "breather doji" the previous day. The stock cleared Tuesday's high, but volume while higher was still well below average at 25,400 (avg. 54,000). That gives volume some room to move, and if it does, URBN can head higher. However, the stock has reached 5% above the buy point of 15.63, so we will look for a pullback for new entry points. Money flow and buying are strong. Target: 18
BUY POINT: After a pullback, new or add-to positions can be taken on a move back over the breakout high (for now, 16.75).
POSITION: Stock and/or December $15 calls to buy (URQ LC; low open interests).

SMTL (Semitool--$13.90; +0.15; optionable): Chip Equipment
http://biz.yahoo.com/p/s/smtl.html
STATUS: Pulled back from Friday's breakout move from the ascending wedge pattern, hitting a low of 13.17 before bouncing back up to close with a tight doji near the upper levels of the pattern. Volume was lower again for the second day, dropping to 41,900 (avg. 54,000). We will continue to look for the breakout, with the possibility of test of the 13.50 range (10 day MVA, 13.60) ahead of that move. Strong money flow and decent buying. Target: 17-18
BUY POINT: 14.63, on minimum breakout volume of 73,000). Stop: 13.25. A buy on a breakout up to 15.36.
POSITION: Stock only.

DSPG (Dsp Group--$23.68; -1.17; optionable): Telecom Equipment
http://biz.yahoo.com/p/d/dspg.html
STATUS: Fell out of the handle of the double bottom, with a move below the 18 day MVA (24.21). Volume was lower, so we may get a bounce back from the 50 day MVA at 23.04, but the pattern is trashed for now. No new positions.

ILUM (Illuminet Holdings--$34.49; +0.41; optionable): Telecom
http://biz.yahoo.com/p/i/ilum.html
STATUS: ILUM continued its breakout Wednesday, moving up slightly on higher volume (495,900; avg. 309,277) and nearly hitting our 5% limit for buying on a breakout (that would be 34.94). After the strong move up Friday ahead of the breakout, ILUM gapped higher to open Tuesday but held a doji at that level as volume dropped back slightly. If the stock does not head higher from here, look for a pullback to test the buy point of 33.28. Great money flow and buying. Target: 40
BUY POINT: After a pullback to 33.28: 35, on volume in the range of 350,000.
POSITION: Stock and/or October $30 calls to buy (ILU JF; low open interests).

New Puts from the weekend: These have done well this week. TMPW got started Tuesday, and may yet deliver a move down.

GNSS (Genesis Microchip--$27.00; -2.10; optionable): Chip
http://biz.yahoo.com/p/g/gnss.html
STATUS: A nice move down with the put play. GNSS behaved classically, moving up to test resistance again on the high (29.81, and the 10 day MVA), then headed down on the "kiss good-bye". We are looking at a target near the July low of 24.15, and on this move that undercut late August lows and was on stronger volume (1.16 million; avg. 797,000), we will continue to ride it down.
BUY POINT: Too close to support from here for new entry points. If the stock hits support at 25 and bounces, a new entry point can be on a move back down from resistance for the move down to our target around 24.
POSITION: Aggressive: October $35 puts to buy (QFE VG; low open interests, delta 0.65).

FEIC (Fei Company--$31.60; -1.88; optionable): Electronics
http://biz.yahoo.com/p/f/feic.html
STATUS: Another move down for FEIC today as the stock performed as expected, falling from resistance at its 18 and 50 day MVAs. It is close to possible support at 30, so watch that from here; if it breaks that, look for a test of the support then continued move down to the 200 day MVA at the 28 range. A bit tight for taking new positions from here. If FEIC bounces from 30 and moves back up to the 35 range (10 day MVA), we can look at playing it back down from there with new positions.

TMPW (Tmp Worldwide--$42.78; -0.43; optionable): Media
http://biz.yahoo.com/p/t/tmpw.html
STATUS: Showed a tight doji after a Tuesday move down from the 10 day MVA on stronger volume. Volume fell back to average levels Wednesday (2.28 million), so we may get a bounce back here for a test of 45 (at the level of the 10 day MVA and several August prices there). We can then see if the stock will head back down more earnestly. Otherwise, if the stock cannot move back over 43.76, the intraday high, look for a move down from here.
TMPW can 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: After a move back up to 45, on a move down from there after a failure to take out the resistance. Aggressive positions from there. Stop: 46.50. From here: 41.50, on rising volume. Stop: 45.25
POSITION: December $50 puts to buy (BSQ XJ).

CONTINUED PLAYS:

TESTING THE BREAKOUT:

Continued Plays:

KNDL (Kendle Intl--$20.40; +0.10; optionable): Drug
http://biz.yahoo.com/p/k/kndl.html
STATUS: In an extended lateral pattern that formed after a breakout run to the August high of 21.35. The pattern is holding right at the 10 day MVA (20.31), today showing yet another tight doji. We got a volume surge last Friday, putting us on notice that something could happen here, but it has stayed pat and volume has dipped back down (24,200 today; average 68,300). As long as the stock can hold the pattern above the moving average, it has the chance to break out. Looking for that move over 21.35. KNDL shows strong money flow, and relative strength has broken out. 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; 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:

UCOR (Urocor--$17.65; +0.28; 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. The pattern has been a lateral consolidation but has taken dips to the 18 day and then the 10 day (17.39) in quick succession, today moving back up on volume that continued to be quite low at 27,700 (average 166,600). If UCOR 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--$49.30; +2.79; optionable): Personal Products
http://biz.yahoo.com/p/a/avp.html
STATUS: Explosive breakout, moving out of its ascending wedge pattern with huge volume behind it (3.4 million; average 864,000). The company gave a positive outlook Tuesday, and gave us a 'get ready' spike of volume, and just took off today. It is now facing the late-December high in the left side of a cup pattern, and we will look carefully at that level as the stock moves up toward our target of 54.
BUY POINT: Still a buy up to 49.61. Stop: 46.13.
POSITION: Stock and/or October $45 calls to buy (AVP JI).

BASING/TRADING RANGES:

Continued:

BPRX (Bradley Pharmaceuticals--$9.49; +0.43; no options): Drug Manufacturers
http://biz.yahoo.com/p/b/bprx.html
STATUS: In a choppy cup base. BPRX has made a move up from its test of support at the 18 day MVA (8.48), but the move has not generated much volume, and today the stock gapped up and showed a loose doji. It closed just under its late-August high (our breakout point), and it looks like BPRX could be headed back for another test of support. We will see if it can make another higher low by holding the 18 day again, looking for more low-volume selling like we got on the last retreat. From there, we will see if we can get some more volume on a move back up. Good 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--$21.98; +0.39; optionable): Specialty Retail
http://biz.yahoo.com/p/b/bbi.html
STATUS: After its recent breakout attempt from its 13-week cup with handle, BBI has been holding its 10 day MVA (21.14), steadily making its way up along that support as it reaches closer to the breakout high (21.99). Today it closed just under that level as it finally got a surge in volume 561,700 (average 484,000). A promising move, and we are looking for a continued surge in volume to push the stock to another breakout. Relative strength has broken out. Target: 25-26.
BUY POINT: 22.13, on volume in the range of 726,000 Stop: 21.
POSITION: Stock and/or October $17.50 calls to buy (BBI JW).

SCTC (Systems & Cptr Tech--$13.60; -0.11; optionable): Software
http://biz.yahoo.com/p/s/sctc.html
STATUS: The stock has continued a less-than-stellar move out of an ascending wedge/lateral consolidation. It hit our buy point last Friday (13.33), and after gapping back to the 10 day MVA (13.07) it ran back up again, but volume was never solid and it pulled back after making a high at 14.19. It matched that high today, but again pulled back, this time on lower volume at 176,500 (average 210,600). Off of today's move we could see another test of the 10 day, and if so we will watch for that level to hold and for more volume to kick in on a move back up. If we get a strong breakout, we can look at new or additional positions for a move on our initial target at 16-17.
BUY POINT: After a pullback on continued low volume that holds the 10 day, a run back over 14 on volume of 285,000. Stop: 13.10. From here: 14.31 on volume of 285,000. Stop: 13.30.
POSITION: Stock and/or November $10 calls to buy (YQS KB).

AMGN (Amgen--$65.20; +1.06; optionable): Biotech
http://biz.yahoo.com/p/a/amgn.html
STATUS: Has been a bit erratic since making its strong, late-August move over the 50 and 200 day MVA's (62.02 and 63.67, respectively). It hit our buy point Tuesday as it moving up to an intraday high of 65.80, but pulled back to close. It triggered stops today as it tested all the way back to its 50 day MVA, but was able to take advantage of the market surge and move back up strong to close, running on increased volume at 7.7 million (average 7.5 million). It is perhaps in a ragged ascending wedge here, and we will see if it can continue the momentum in a good market and break out over the recent highs. Relative strength broke out, and money flow and buying are decent. Our target is the June highs at 70.
BUY POINT: Aggressive: 65.92 on volume of 10 million. Stop: 63.50.
POSITION: Stock and/or October $60 calls to buy (YAA JL).

TARO (Taro Pharmaceuticals--$38.85; -1.70; optionable): Drug Manufacturers
http://biz.yahoo.com/p/t/taro.html
STATUS: TARO had formed a 6-week cup with handle base, but has fallen back out of the pattern the last two sessions. Today it gave up its 50 day MVA (39.41), continuing to move on very light volume (416,100; average 685,200). It is now just above support from its July low at 37.50 and the August consolidation lows at 35, so we will see where it catches support for a move back up. A strong performer that has made quite a run in 2001 before pulling back into this base. However, not much of a play from here, with the handle high way out at 44.30.
BUY POINT: Aggressive: If it can hold 37.50, a strong move back over 41 on above average volume. Stop: 39.25.
POSITION: Stock and/or October 37.50 calls to buy (QTT JU).

Trading Plays:

ENZN (Enzon--$64.63; -1.23; optionable): Biotech
http://biz.yahoo.com/p/e/enzn.html
STATUS: In a descending lateral pattern since early August, finally showing a hint of a move Tuesday as it jumped off of its 50 day MVA (62.92) on decent volume. The move could not continue, however, as the stock dropped back again today, but held its short-term MVA's to close (10 day at 64.66), moving on lower volume (939,600; average 1.53 million). Still looking for a sustained move up on strong volume and breakout over the August high at 67.92 (pattern high). Strong money flow and decent 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.
POSITION: Stock and/or November $60 calls to buy (QYZ KL).

SEM (General Semi--$12.12; -0.33; optionable): Integrated Circuits
http://biz.yahoo.com/p/s/sem.html
STATUS: Broke out of a 13-week cup with handle but fell back quickly into the range of its handle, and today it gapped back and tested its 50 day MVA (30.97) before bouncing up a bit to close. Volume was not strong on the selling (up to 289,600; average 120,000), but the failed breakout, one of many we have seen in this market that quickly takes us out of positions, does not bode well for a recovery. We will see if it can hang on and try a move back up if we get a strong market rally, but the breakout high is way up at 13.42. Not a play from here. Target on a breakout: 16.

PUT PLAYS:

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--$578.89; +0.85; optionable (OEY):
STATUS: Stopped the slide and held rather steady the last three sessions, but today it made the big drop, hitting 568.92 at its low, and then the big reversal, coming all the way back up to close with a 'hammer' doji. Volume was up and strong at 1.36 million (average 1.1 million). Off of this pattern we will look for a bounce up, and will look at upside plays toward the 18 day MVA (593.29). There is additional resistance there from recent levels, and if we see the index slow and turn over there, we can again look at it to the downside, back to support in the 570 range. Upside target: 593.
BUY POINT: Upside: 581.50 with continued strong volume in a rallying market. Put: After resistance is hit at the 593 range; on selling back from there (593 buy point).
POSITION: Upside: October $580 calls to buy (OEB JP). Put: from 572, October $580 puts to buy (OEB VP). Deltas unavailable at the time of this writing; please check with your broker for those.

SOX (Phili Semi--$534.56; -9.10; optionable):
STATUS: Headed down and hit a low of 513.35 before reversing with the market. A solid put play on the latest leg down, but now we are changing focus with a possible market bounce. We will look for the SOX to make a move up toward its 18 day MVA (570.49) for an upside play in market strength. A move up toward that resistance would be a solid move and could be all we get, so from there we will look at the index to turn over, and look again at a put play back down toward the 535 level.
BUY POINT: Upside: A move over 540 in a strong market. Downside: After a move up toward the 18 day, a drop back from resistance in market selling.
POSITION: Upside: October $530 calls to buy (SJX IF). Downside: October $570 or $580 puts to buy (SJX UN or SJX UP).

DJX (1/100 Dj Indu--$100.33; +0.36; optionable (DJV):
STATUS: A reversal today on strong volume (1.36 million; avg. 1.1 million). We are looking for a move up from the doji (formed near the intraday high of 100.66; the index surged up from a low of 98.86) for a run to 102, level of previous support and resistance. Once there, if the index does not move higher (the 18 day MVA is also adding to potential resistance), we will look at playing it back down to 98-100.
BUY POINT: Upside aggressive: 100.50 on continued rising volume. Stop: 98
Put: On a move down from 102 in market selling.
POSITION: Upside aggressive: October $100 calls to buy (DJV JV). Put: October or November $102 puts to buy (DJV VX or WX). Deltas unavailable at the time of this writing. Please check with your broker.

DIGE (Digene--$28.25; -0.47; optionable): Drugs
http://biz.yahoo.com/p/d/dige.html
STATUS: Has been in a steady downtrend since late-June, finally going through its 200 day MVA (30.18) in mid-August. The stock has been consolidating a bit under that level, and tried a move up Tuesday, hitting 32.72 before pulling back to close, moving on big volume. We were expected a test upward to 30, but the move was wilder than expected. It dropped back through our buy point of 29.50, and is still just under a confluence of resistance at its down trendline (30), the 200 day and 50 day (30.97), dropping back a bit more today, still moving on above average volume of 126,600 (average 121,000). We will see if it will continue down after a possible market bounce, watching recent lows at 26-27.50 with existing positions. If we get some stronger selling, we can look at new or additional positions for a possible move down to a target of 24.
BUY POINT: After a test of the trendline at 30, a move below 27.50 on increased volume.
POSITION: December $40 puts to buy (QDG XH; 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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