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Begin part 3 of 3
THE PLAYS
Good movers Wednesday: CVC; MDRX; MTEX; PMTI
Best Plays:
1) OII: Looks ready to continue the breakout move.
2) CSX: Excellent, steady leader.
3) EPIC: Volume has started to rally as the stock moves off the bottom of the handle.
4) VRNT: Volume is surging; looking for the stock to follow.
5) ICF: Ready to fall further.
6) SLM: Low volume rally is setting up the next drop.
NEW PLAYS:
Upside:
Play Date: 02/23/2005
CSX (CSX Corp.--$40.68; +1.48; optionable): Railroads
http://biz.yahoo.com/p/c/csx.html
STATUS: Cup w/handle. Hardly sexy, but sexy in the market is solid patterns and strong moves. Volume surged Wednesday as CSX started the breakout move from its short 9 week base that formed over the 50 day EMA (38.92), an important support level where the big money steps in to support its stocks. Excellent 4 to 0 accumulation in the base (4 up price weeks on rising volume to 0 down price weeks on rising volume) shows strong buying even as the stock consolidated. Strong money flow and a relative strength breakout on the move is corroboration of its strength. Looking to move in on a continuation of this breakout.
Volume: 1.982M Avg Volume: 963.5K
BUY POINT: $40.88 Volume=1.1M Target=$45 Stop=$39.62
POSITION: CSX HH - Aug. $40c (68 delta)
http://www.investmenthouse.com/ct/csx.html
Play Date: 02/23/2005
GOOG (Google--$193.95; +2.58; optionable): Internet search
http://biz.yahoo.com/p/g/goog.html
After Hours: $194.20
STATUS: Test 50 day EMA. GOOG has moved in a trading range roughly from the 50 day EMA (189.59) and 205 the past 9 weeks. It bolted higher in early February on strong earnings, but fears about the lockup expiring sent it back down to the 50 day. It has held that level and has moved laterally between the 50 day and 200 the past week. Volume started to move higher this week, jumping Wednesday as GOOG tapped the 50 day EMA on the low and rebounded to close positive. Looking for a strong volume blast to take it through the buy point and break it higher.
Volume: 15.651M Avg Volume: 10.356M
BUY POINT: $196.12 Volume=16M Target=$210 Stop=$189.38
POSITION: GOU DS - Apr. $195c (54 delta)
http://www.investmenthouse.com/ct/goog.html
Play Date: 02/23/2005
OII (Oceaneering Intl.--$40.31; +0.31; optionable): Oil & gas drilling and exploration
http://biz.yahoo.com/p/o/oii.html
STATUS: Breakout test. OII broke out from a 4 month trading range to start the month, rallying up near 42 on the move. It has moved back to the 10 day EMA (39.85) the past week, testing the breakout but refusing to give up ground. Solid 4 to 2 accumulation in the base shows good net buying. The base also formed along the 50 day EMA (38.02), a key support level that shows committed holders. Ready for another volume spike to continue the breakout move.
Volume: 205.2K Avg Volume: 177.681K
BUY POINT: $40.62 Volume=267K Target=$46 Stop=$39.64
POSITION: OII GH - July $40c (58 delta) &/or Stock
http://www.investmenthouse.com/ct/oii.html
Downside:
Play Date: 02/23/2005
DELL (Dell Computer Corp--$39.90; -0.41; optionable): PC's, and other hardware.
http://biz.yahoo.com/p/d/dell.html
After Hours: $39.83
STATUS: Put. Yes we are looking to play DELL to the downside here. It gapped higher in early November and rallied to near 43 before peaking in December and January. It sold to the 50 day EMA (40.51), held, and started higher as it headed into earnings. It gapped below the 50 day on those earnings, then rallied back up to test that breach. It stalled, and then fell Wednesday on rising volume, the strongest since the gap down. We are looking to play the move down to fill the November gap higher; gaps have a habit of being filled. That move will net us a 50%ish gain.
Volume: 24.77M Avg Volume: 13.058M
BUY POINT: $39.68 Volume=20M Target=$38.15 Stop=$40.12
POSITION: DLQ PH - Apr. $40p (-46 delta)
http://www.investmenthouse.com/ct/dell.html
CONTINUING PLAYS:
Not yet entered:
Play Date: 02/19/2005
AFFX (Affymetrix--$41.31; +0.85; optionable): Genetic analysis systems
http://biz.yahoo.com/p/a/affx.html
STATUS: Flying plateau. AFFX eased back Friday and Tuesday, but it held the bottom of the current range at 40. Wednesday it started higher; though volume was lower it still looks solid and ready to continue the break higher. To recap: AFFX shot higher to end January on some excellent earnings. That move blasted it out of a 10 month cup with handle base, sending the stock up to 43 on the move. It has spent the past there weeks working laterally, consolidating the move but refusing to give much of it up as it holds the 18 day EMA (40.82) on the intraday lows. Accumulation in the base was an outstanding 13 to 3 (13 up price weeks on rising volume to 3 down price weeks on rising volume), showing solid buying and setting up the breakout and run higher. This first test of a breakout is one of our favorite entry points. Excellent money flow, and a relative strength breakout on the surge shows the stock has staying power. A perennial leader and it is doing just that once more.
Volume: 789.606K Avg Volume: 1.058M
BUY POINT: $42.65 Volume=1.6M Target=$50 Stop=$40.68
POSITION: FIQ HH - Aug. $40c (63 delta) &/or Stock
http://www.investmenthouse.com/ct/affx.html
Play Date: 02/15/2005
COGN (Cognos--$43.9; -0.05; optionable): Application software
http://biz.yahoo.com/p/c/cogn.html
STATUS: Cup w/handle. COGN is going to have to make the move pretty soon. It continues to mind its own business as it works laterally above the 10 day EMA (43.52), forming a very nice, tight handle. To recap: Currently in a short 7 week base that formed over the 50 day EMA (42.19). This breakout will take it to a new all-time high, something we like because there is no overhead resistance to push it back down. Accumulation is excellent at 3 to 0 (3 up price weeks on rising volume to 0 down price weeks on rising volume), showing all buyers as it sets up for the next breakout move. A perennial leader.
Volume: 495.309K Avg Volume: 777.318K
BUY POINT: New: $44.28 (orig. $44.11) Volume=1M Target=$50 Stop=$42.65
POSITION: CRQ EV - May $42.50c (68 delta) &/or Stock
http://www.investmenthouse.com/ct/cogn.html
Play Date: 02/14/2005
EPIC (Epicor Software--$15.39; +0.19; optionable): Application software
http://biz.yahoo.com/p/e/epic.html
After Hours: $15.44
STATUS: Double bottom w/handle. EPIC has formed two such patterns the past 13 months, the second one a 4 month base that is acting as the handle to the larger pattern. That shorter pattern shows solid 4 to 2 accumulation (4 up price weeks on rising volume to 2 down price weeks on rising volume). It also formed using the 200 day SMA (13.30) as support, another sign of good institutional support. Setting up for the breakout on volume as money flow surges higher ahead of the stock.
Volume: 521.947K Avg Volume: 522.045K
BUY POINT: $15.88 Volume=848K Target=$19 Stop=$14.89
POSITION: EUE FC - June $15c (63 delta) &/or Stock
http://www.investmenthouse.com/ct/epic.html
Play Date: 02/16/2005
VRNT (Verint Systems--$39.02; -0.1; optionable): Security and business intelligence software
http://biz.yahoo.com/p/v/vrnt.html
STATUS: Double bottom w/handle. After a low volume handle that held the 18 day EMA (38.75), volume surged the past two sessions. VRNT did not go anywhere, but volume jumped, and that is a signal for us to get ready because such action often precedes a breakout move. That is why we call them 'get ready' spikes. We are ready. To recap: Low volume for two weeks and then a strong surge. Nice handle to its nice 10 week base has formed. It used the 200 day SMA (37.77) as support on the second leg, an important institutional support level. Solid money flow, positive accumulation in the pattern. A breakout sends it toward another new high for this market leader. A good base that has given it a breather to make another run.
Volume: 207.521K Avg Volume: 143.868K
BUY POINT: $40.52 Volume=208K Target=$46.48 Stop=$38.89
POSITION: JOQ EH - May $40c (54 delta) &/or Stock
http://www.investmenthouse.com/ct/vrnt.html
New buy points on current plays:
Play Date: 01/25/2005
FFIV (F5 Networks--$53.03; +1.32; optionable): Internet traffic management products
http://biz.yahoo.com/p/f/ffiv.html
After Hours: $53
STATUS: Breakout test. Another nice doji Tuesday, tapping the 18 day EMA (50.66) on the low and rebounding as volume moved back up to average. Started higher again Wednesday, but needs a bit more volume. Looks good for the next move in the breakout.
Volume: 774.855K Avg Volume: 1.31M
BUY POINT: New: $53.25 (orig. positions: $49.29) Volume=1.9M Target=$56 Stop=$51.22
POSITION: FLK DJ - Apr. $50c (54 delta) &/or Stock
http://www.investmenthouse.com/ct/ffiv.html
Downside:
Play Date: 02/22/2005
FLO (Flowers Foods--$28.89; +0.03; optionable):
http://biz.yahoo.com/p/f/flo.html
After Hours: *
STATUS:
Volume: 164.7K Avg Volume: 161.59K
BUY POINT: $28.88 Volume=185K Target=$27.35 Stop=$29.22
POSITION: FLO PF - Apr. $30p (-66 delta)
http://www.investmenthouse.com/ct/flo.html
Play Date: 02/22/2005
ICF (Ishares Cohen & Steers--$127.20; -0.48; optionable): Financial services closed end fund.
http://biz.yahoo.com/p/i/icf.html
STATUS: Put. Starting down on lower though average volume. Still a buy on a further fall. To recap: ICF is trying to form up a reverse head and shoulders base, but it has a long way to go to do that. We will be happy to take part in some of the selling as it tries to form up that base, however. It broke through the 50 day EMA (129.43) on strong volume Tuesday, and it can give us a nice gain with a relatively modest further fall. A move to the target gives us a 50%ish gain.
Volume: 149.4K Avg Volume: 129.658K
BUY POINT: New: $127.05 (orig $127.55) Volume=165K Target=$124.48 Stop=$128.15
POSITION: ICK OX - Mar. $128p (-50 delta)
http://www.investmenthouse.com/ct/icf.html
Play Date: 02/19/2005
SLM (SLM Corp.--$47.47; +1.07; optionable): Student loans
http://biz.yahoo.com/p/s/slm.html
STATUS: Put. After a hard drop Tuesday on more strong trade, SLM rebounded Wednesday on much lower volume. This is a great entr e into the play once this lower volume bounce runs out of gas, most likely at 48 or the 10 day EMA (48.46). To recap: After a solid run from 42.50 to 55, SLM has rolled over as the last part of the move had no volume. Volume has spiked up on the selling, and after a low volume rebound to test the 50 day EMA (50.28) last week, it rolled over Friday on a big volume surge. Looking for a move toward the 200 day SMA (44.51). Our initial target nets us a 43%ish gain, but if it is selling hard at that time we will take some gain and see how far SLM really wants to go in testing that 200 day SMA.
Volume: 2.129M Avg Volume: 1.915M
BUY POINT: $47.68 Volume=1.8M Target=$45.55 Stop=$48.22
POSITION: SLM PJ - Apr. $50c (-65 delta)
http://www.investmenthouse.com/ct/slm.html
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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