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Begin part 3 of 3
THE PLAYS
Good movers Monday: CVC; MFE
Best Plays:
1) GMT: Starting toward a breakout on strong volume.
2) BRKT: Volume spiking as it holds tight in the handle.
3) VNO: Volume surging as VNO turns back down from resistance.
4) JCOM: Right at the breakout on stronger trade.
5) OII: Big doji and rebound has set up the move.
NEW PLAYS:
Upside:
Play Date: 02/28/2005
BRKT (Brooktrout Tech--$12.91; -0.03; optionable): PC networking and communication.
http://biz.yahoo.com/p/b/brkt.html
STATUS: Double bottom w/handle. A nice 12 week base has formed as BRKT comes off the bottom of a decline that started last April. This is the first base formed after the move off the bottom of the correction, and it is nicely setting up the next move. Excellent 4 to 1 accumulation in the base (4 up price weeks on rising volume to 1 down price weeks on rising volume) shows plenty of buying. Very nice, tight range is shaping up here in the handle over the 18 day EMA (12.59) as BRKT prepares for the next break higher. Volume surged Monday as BRKT showed a very tight doji. Looking for volume to continue this solid showing as it makes the break higher.
Volume: 158.353K Avg Volume: 73.363K
BUY POINT: $13.48 Volume=112K Target=$16 Stop=$12.64
POSITION: BUQ GV - July $12.50c (62 delta) &/or Stock
http://www.investmenthouse.com/ct/brkt.html
Play Date: 02/28/2005
DTPI (Diamondcluster Intl.--$17.13; +0.41; no options): Global management consulting firm.
http://biz.yahoo.com/p/d/dtpi.html
After Hours: $17.02
STATUS: Flying plateau. Volume jumped above average Monday as DTPI broke higher out of its 4 week lateral move over the 18 day EMA (16.40), continuing its run from the early December breakout. This is the second lateral test since the breakout and strong stocks tend to make 4 or 5 bounces from the 10 and 18 day EMA (18 is 16.40) before testing deeper. That gives DTPI plenty of upside to make us some money. Nice 2 to 0 accumulation in the plateau shows no sellers.
Volume: 383.803K Avg Volume: 239.136K
BUY POINT: $17.36 Volume=265K Target=$20.75 Stop=$16.45
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/dtpi.html
Play Date: 02/28/2005
GMT (GATX Corp.--$29.98; +0.19; optionable): Rental & leasing services
http://biz.yahoo.com/p/g/gmt.html
After Hours: $29.91
STATUS: Reverse head and shoulders. Volume surged Monday as GMT probed the breakout point from its 12 week pattern formed using the 200 day SMA (26.95) as support for the 'head'. The recent right shoulder sold to the 50 day EMA (28.78) and held that level as support, another important support level. Strong 5 to 2 accumulation in the base (5 up price weeks on rising volume to 2 down price weeks on rising volume) shows plenty of buying and has set up the breakout. Looks ready.
Volume: 541.3K Avg Volume: 311.681K
BUY POINT: $30.22 Volume=468K Target=$34 Stop=$29.88
POSITION: GMT FF - June $30c (56 delta) &/or Stock
http://www.investmenthouse.com/ct/gmt.html
Downside:
Play Date: 02/28/2005
VNO (Vornado Realty--$68.70; -1.55; optionable): Industrial REIT
http://biz.yahoo.com/p/v/vno.html
STATUS: Put. Volume surged Monday as VNO turned back over after tapping at the 18 day EMA (70.68). It reached this level in late January before it managed to rebound, so there is the potential for a double bottom here. Still, the volume has been quite distributive as it sold hard Tuesday and Wednesday last week, bounced modestly Thursday and Friday, and then turned back over Monday. Looking for it to continue lower on strong trade to move into the downside play. A move to the target grabs us a 42%ish gain.
Volume: 843.2K Avg Volume: 463.5K
BUY POINT: $68.48 Volume=500K Target=$66.39 Stop=$69.04
POSITION: VNO PN - Apr. $70c (-60 delta)
http://www.investmenthouse.com/ct/vno.html
CONTINUING PLAYS:
Not yet entered:
Play Date: 02/26/2005
CHT (Chunghwa Telecom--$21.80; -0.33; optionable): Chinese wireless telecom
http://biz.yahoo.com/p/c/cht.html
STATUS: Ascending base. Big volume Friday but CHT backed off Monday on lower though still above average volume. It held the 10 day EMA (21.74) on the low, holding near the breakout. To recap: 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 (21.18) as support, showing continued institutional interest in the stock. Accumulation is a strong 3 to 0 during this recent more or less lateral move. Volume expanded last week as it moved toward the high.
Volume: 521.7K Avg Volume: 320.454K
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--$30.35; +0.17; optionable): Lasers, laser based systems, precision optics
http://biz.yahoo.com/p/c/cohr.html
STATUS: Double bottom w/handle. Volume was up Monday as COHR managed a small gain. Not bad action considering the overall selling in the market. Money flow is strong, as COHR continues forming the handle to its base. To recap: 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 (29.51). 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: 176.56K Avg Volume: 156.5K
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: 02/14/2005
EPIC (Epicor Software--$15.48; -0.07; optionable): Application software
http://biz.yahoo.com/p/e/epic.html
After Hours: $15.39
STATUS: Double bottom w/handle. Another nice tight doji on top of the 10 day EMA (15.27) Monday as volume remained well below average. Setting up for the break higher with money flow running higher ahead of the stock. To recap: EPIC has formed two double bottom 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 (13.35) 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: 336.7K Avg Volume: 518.09K
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--$38.31; +0.86; optionable): Global communications systems
http://biz.yahoo.com/p/j/jcom.html
STATUS: Double bottom w/handle breakout. JCOM rallied Monday in a down market, moving higher on rising, average volume. Looks ready to continue the breakout run with relative strength ready to breakout once more as well in confirmation of the move. To recap: JCOM is 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 (36.65) has set up the next move. Need to see volume as it makes the move through the buy point.
Volume: 553.248K Avg Volume: 486.136K
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.--$39.90; +0.08; optionable): Oil & gas drilling and exploration
http://biz.yahoo.com/p/o/oii.html
STATUS: Breakout test. Big doji Monday as OII reached down through the 18 day EMA (39.46) and rebounded sharply to close with a modest gain, holding right at the 10 day EMA (39.89) on the close. Looks ready after this test and 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 (38.24), a key support level that shows committed holders. Ready for another volume spike to continue the breakout move.
Volume: 231.9K Avg Volume: 182.681K
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
Play Date: 02/26/2005
OTIV (On Track Innovations--$12.70; +0.31; no options): Semiconductors
http://biz.yahoo.com/p/o/otiv.html
STATUS: Double bottom w/handle. OTIV posted a modest gain Monday on lower volume. Even though it was still below average, volume has been much stronger the past two sessions as OTIV comes off the bottom of its handle. Getting ready. To recap: OTIV has formed this nice 8 week pattern over the 50 day EMA (11.55), 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: 84.484K Avg Volume: 120.227K
BUY POINT: $13.05 Volume=174K Target=$15.65 Stop=$12.14
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/otiv.html
Play Date: 02/16/2005
VRNT (Verint Systems--$39.46; -0.03; optionable): Security and business intelligence software
http://biz.yahoo.com/p/v/vrnt.html
STATUS: Double bottom w/handle. Another very tight doji right on top of the 18 day EMA (38.94) as VRNT continues to work on the handle to its nice base. Volume has backed off after the strong surge last week, but VRNT still looks ready to move. Like that it held up well in a weaker market Monday. 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 (34.79) 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: 45.293K Avg Volume: 135.272K
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--$40.09; -0.11; optionable): PC's, and other hardware.
http://biz.yahoo.com/p/d/dell.html
After Hours: $40.01
STATUS: Put. A hanging man doji below the 10 day EMA (40.30) as volume spiked Monday. Even with the volume it was not enough for DELL to punch back through near resistance. It did not sell as hard as the rest of the large cap techs, but it is still in a weak pattern. 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 (40.47), 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: 19.932M Avg Volume: 13.461M
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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