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Begin part 3 of 3
THE PLAYS
Good movers Friday: AFFX; CRYP; INFY; LRCX; MATK; STLD; TSO; USNA; XXIA; MFE
Best Plays:
1) CPHD: Nice volume as it breaks higher from a nice base.
2) CHT: Surging toward an all-time high on volume.
3) OTIV: Nice base on base.
4) EPIC: Money flow continues to surge ahead of the stock.
5) OII: Still a very nice test still underway.
NEW PLAYS:
Upside:
Play Date: 02/26/2005
CAKE (Cheesecake Factory--$34; +0.66; optionable): Restaurants
http://biz.yahoo.com/p/c/cake.html
After Hours: $34
STATUS: Breakout test. CAKE broke out from a 12 month cup with handle base three weeks back in an explosive gap higher. It has spent the past two weeks testing that move and filling the gap, easing back on very low volume. It ended last week rebounding back up on rising though still below average volume. The handle to the base is a nice pattern of its own sporting 3 to 1 accumulation (3 up price weeks on rising volume to 1 down price weeks on rising volume). A leader, CAKE is ready to break to another new all-time high as it rebounds from the test of that blast higher. Restaurants are enjoying a nice surge in traffic, a very good sign of the overall economy.
Volume: 497.842K Avg Volume: 598.136K
BUY POINT: $34.32 Volume=650K Target=$39 Stop=$33.11
POSITION: CZK GX - July $33.38c (66 delta) &/or Stock
http://www.investmenthouse.com/ct/cake.html
Play Date: 02/26/2005
CHT (Chunghwa Telecom--$22.13; +0.31; optionable): Chinese wireless telecom
http://biz.yahoo.com/p/c/cht.html
STATUS: Ascending base. CHT is moving to another new high (a new issue in 2003) as it forms a 7 week ascending base. It is using the 50 day EMA (21.15) as support, showing continued institutional support of this stock. Accumulation is a strong 3 to 0 during this recent more or less lateral move. Volume started to swell toward the end of the week and then exploded higher Friday as it moves toward that all-time high.
Volume: 682.5K Avg Volume: 310.09K
BUY POINT: $22.32 Volume=400K Target=$26.75 Stop=$21.55
POSITION: CHT FX - June $22.50c (48 delta) &/or Stock
http://www.investmenthouse.com/ct/cht.html
Play Date: 02/26/2005
COHR (Coherent--$30.18; +0.37; optionable): Lasers, laser based systems, precision optics
http://biz.yahoo.com/p/c/cohr.html
After Hours: $30.18
STATUS: Double bottom w/handle. COHR is working on its second base after coming off the bottom of a long, long 5 year correction. The current 13 month pattern is nicely formed with the right leg dipping below the left and the handle holding the 50 day EMA (29.47). The 50 day EMA is a good point to hold as it is a key institutional level; now that COHR has recovered it in the base it is holding it. Good low volume in the handle is the action you want to see as it shows very few sellers as the stock fades slightly. Strong 13 to 7 accumulation in the base shows solid net buying during the base and is setting the foundation for the breakout. Money flow is excellent, continuing to rise higher even as the stock has moved laterally and lower in this handle. That positive divergence makes us look for a breakout ahead.
Volume: 90.556K Avg Volume: 158.894K
BUY POINT: $31.05 Volume=238K Target=$36.88 Stop=$29.55
POSITION: HRQ HF - Aug. $30c (58 delta) &/or Stock
http://www.investmenthouse.com/ct/cohr.html
Play Date: 02/26/2005
CPHD (Cepheid--$11.19; +0.31; optionable): Genetic analysis systems
http://biz.yahoo.com/p/c/cphd.html
STATUS: Cup w/handle. Nicely formed 14 month base that looks to have worked to weed out the sellers. Strong 18 to 11 accumulation in the base shows the buyers have been accumulating the stock, preparing it for the breakout and run. A new issue back in 2000, this is the second big base for CPHD, and a breakout sends it toward a new all-time high. Showing very good action the past couple of weeks with a strong volume break higher, a low volume test, and another solid volume move Friday that is starting the breakout move.
Volume: 312.35K Avg Volume: 228.227K
BUY POINT: $11.38 Volume=342K Target=$13.65 Stop=$10.58
POSITION: QHY FB - Dec. $10c (74 delta) &/or Stock
http://www.investmenthouse.com/ct/cphd.html
Play Date: 02/26/2005
OTIV (On Track Innovations--$12.39; +0.22; no options): Semiconductors
http://biz.yahoo.com/p/o/otiv.html
STATUS: Double bottom w/handle. OTIV has formed this nice 8 week pattern over the 50 day EMA (11.50), an important institutional support level. This short base is acting as the right shoulder to a much larger 14 month reverse head and shoulders base. Outstanding 16 to 6 accumulation in the larger base, showing a lot of buying as the stock consolidated and weeded out the weaker holders. Excellent money flow is leading higher even as the stock moves laterally the past two months. Volume dried up the past three weeks as it formed the handle, another sign that there are few sellers, and it often is the quiet before the storm. Looking for strong volume as it surges through the buy point.
Volume: 101.371K Avg Volume: 116.217K
BUY POINT: $13.05 Volume=174K Target=$15.65 Stop=$12.14
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/otiv.html
CONTINUING PLAYS:
Not yet entered:
Play Date: 02/14/2005
EPIC (Epicor Software--$15.55; +0.2; optionable): Application software
http://biz.yahoo.com/p/e/epic.html
STATUS: Double bottom w/handle. No real change from the last report as it holds above the 10 day EMA (15.22). Still set up for the breakout, just needs to show us the move. To recap: 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 (13.33) 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: 353.625K Avg Volume: 512.727K
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: 02/14/2005
JCOM (J2 Global Communications--$37.45; +0.25; optionable): Global communications systems
http://biz.yahoo.com/p/j/jcom.html
After Hours: $37.43
STATUS: Double bottom w/handle breakout. Testing the breakout from a nice little 7 week base has formed at the tail end of a much larger 17 month cup with handle. Excellent volume as it broke higher to start February, and then a lower volume lateral move to form the handle. Monday volume was back above average as JCOM started the breakout above this handle. Accumulation in the short base is 2 to 1 and an excellent 18 to 6 in the overall base. A nice pullback to the 18 day EMA (36.45) has set up the next move. Need to see volume as it makes the move through the buy point.
Volume: 367.442K Avg Volume: 480.545K
BUY POINT: $38.35 Volume=800K Target=$45 Stop=$37.72
POSITION: JQF FG - June $35c (73 delta) &/or Stock
http://www.investmenthouse.com/ct/jcom.html
Play Date: 02/23/2005
OII (Oceaneering Intl.--$39.82; -0.33; optionable): Oil & gas drilling and exploration
http://biz.yahoo.com/p/o/oii.html
STATUS: Breakout test. Still in the nice test, holding above the 18 day EMA (39.40) to close the week. Volume surged Friday as OII traded in a very narrow range. After a pullback to near support that can indicate the stock is ready to begin the rebound. To recap: 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 test the 10 and 18 day EMA 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 (38.17), a key support level that shows committed holders. Ready for another volume spike to continue the breakout move.
Volume: 342.4K Avg Volume: 177.818K
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
Play Date: 02/16/2005
VRNT (Verint Systems--$39.50; +0.27; optionable): Security and business intelligence software
http://biz.yahoo.com/p/v/vrnt.html
STATUS: Double bottom w/handle. Closed out the week on very, very low volume as it moved laterally in a very narrow range over the 18 day EMA (38.67). Holding up well and setting up the breakout move. To recap: Low volume for two weeks and then a strong surge. Nice handle to its nice 10 week base has formed and then volume spiked Tuesday and Thursday as VRNT held flat, and that can be a signal for us to get ready because such action often precedes a breakout move. That is why we call them 'get ready' spikes. It used the 200 day SMA (34.73) 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: 27.912K Avg Volume: 142.486K
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
Downside:
Play Date: 02/23/2005
DELL (Dell Computer Corp--$40.2; -0.01; optionable): PC's, and other hardware.
http://biz.yahoo.com/p/d/dell.html
After Hours: $40.18
STATUS: Put. DELL ended the week with a modest bounce back to tap the 10 day EMA (40.34) on lower and lower below average volume. After the strong volume selling Wednesday, the lower volume rebound does not give us a lot of confidence, and we are looking for it to roll back over. To recap: DELL gapped higher in early November and rallied to near 43 before peaking in December and January. It sold to the 50 day EMA (40.48), 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: 10.765M Avg Volume: 13.298M
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
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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