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Begin Part 3 of 3

Best Plays, Part 3: There are a lot, but they just look good as this market allows several stocks to set up well:
1) CARS: Still looks good in the ascending wedge.
2) WLP: Another doji at support, as volume decreases further.
3) SOX: Ready for a rally.
4) SMTC: Can rally after a pullback.
5) ODP: Oh so ready.
6) PER: Looking very ready as well!
7) PRX: Another stock that is setting up well.
8) RIT: Ditto.
9) GNSS: Breaking out and still a buy!
10) ARXX: Ditto!
11) SBC: Promising something.

CARS (Capital Automotive--$18.40; +0.01; no options): REIT
http://biz.yahoo.com/p/c/cars.html
STATUS: Showed another doji (as on Friday) as volume decreases further in the ascending wedge pattern (down to 48,300; avg. 158,000). It's a pretty pattern, and combined with the previous cup with handle breakout, we are looking for a nice breakout. Shows good money flow. Target: 22
BUY POINT: 18.63, on minimum breakout volume of 198,000. Stop: 17.56 (below the 10 day MVA, 18.06).
POSITION: Stock.

Back On (as of the weekend):

PLCM (Polycom--$30.55; +1.68; optionable): Telecom
http://biz.yahoo.com/p/p/plcm.html
STATUS: Got a move back up in the handle to the 8-month base (held support just above 28 as we predicted), and the stock almost made the buy point but volume just wasn't there in this day of overall low market volume (down to 2.66 million; avg. 1.2 million; still strong but steadily decreasing since last Thursday). We are looking for volume to surge back in and support the breakout over October's recent high at 30.93.
Huge money flow, good buying. Target: 37
BUY POINT: Breakout: 31.06 on minimum breakout volume of 1.8 million. Stop: 28.88
POSITION: Stock and/or January $25 calls to buy (QHD AE).

WLP (Wellpoint--$106.98; +0.19; optionable): Health Services
http://biz.yahoo.com/p/w/wlp.html
STATUS: Covered recently as a cup with handle, but after the stock didn't break out of that pattern, it is now bouncing between 100 and 110. Friday WLP showed a doji after a test of the 18 day MVA (106.13), and volume was even lower Monday, a positive action (294,300; avg. 559,000). Looking for a move up from here, followed by a breakout over the upper resistance. High relative strength. Target: 127-133
BUY POINT: 110.83 on minimum breakout volume of 755,000. Stop: 103.07
POSITION: Stock and/or January $100 or $105 calls to buy (WLP AT or AA). $105 strike has a lower delta at this point (0.61).

CONTINUED PLAYS:

Indexes:

Back on Monday:

SOX (Phili Semi--$426.55; +20.45; optionable):
STATUS: Rallied today, breaking over the 18 day MVA (420.98). We are looking for a continued move up as the chips rally. First potential resistance is 435.17; above that, 464.49. On a gap higher due to possible upside pressure on the open, we will look for a pullback and a subsequent hold, looking at taking positions on a move back up from there. If the index opens above 435.17, we will look for support there; if below it, look for support at or above the today's closing price.
BUY POINT: From a test of the 426 range: 427 in a continued chip rally. From 435: 436 on rising volume in a chip rally.
POSITION: From 426: October $420 calls to buy (SXX JD). From 435: October $430 calls to buy (SXX JF).

OEX (S&P 100--$544.88; -4.50; optionable):
STATUS: Did as expected and fell back to the 18 day MVA (542.17) as volume dropped to 965,300 (avg. 1.25 million). Looking for a bounce back up in a rally for aggressive positions. 558.58 represents first level of resistance for the initial target, then the 50 day MVA at 568.54.
BUY POINT: Aggressive: 545 on rising volume in a rally.
POSITION: October $540 calls to buy (OEB JH).

BREAKOUTS:

TECD (Tech Data--$41.82; -0.28; optionable): Computers Wholesale
http://biz.yahoo.com/p/t/tecd.html
STATUS: Made the breakout move Friday but volume sure was low on the move, and the stock did what we suspected it would absent of stronger volume. It pulled back, showing a loose doji on the closing price (volume down to 769,400; avg. 735,000). The low of 41.12 is testing support at 41, and TECD looks like it wants to hold here. Will look for a move back up on stronger volume after a hold here or just above the 40 range in a continued consolidation ahead of a rally. Target: 48-50
BUY POINT: Riding positions taken at 41.75. Stop: 35.50. Aggressive from the 40-41 range: 40.15 on volume of 750,000 or better. Stop: 38.18 (below the 18 day MVA, 38.68).
POSITION: Stock and/or December $40 calls to buy (TDQ LH).

TESTING THE BREAKOUT:

SMTC (Semtech--$33.92; +1.58; optionable): Integrated Circuits
http://biz.yahoo.com/p/s/smtc.html
STATUS: Popped higher as volume shrank lower (1.13 million; avg. 1.24 million) after holding support at the 50 day MVA for 2 days (32.25). the stock closed just under the 50 day MVA, simple at 34), so look for a pullback unless volume roars back. The chips are looking at a possible rally tomorrow, and if SMTC gaps open over the resistance, look for a test of that level and subsequent move higher. If it pulls back from the 50 day simple, look for the pullback to 32.50-33 and a bounce back. Initial target: 40
BUY POINT: Aggressive from a 32.50-33 level bounce, or from 34: Over 34.26 on volume of 1.3 million or higher. Stop: 31.86.
POSITION: Stock and/or December $30 calls to buy (QTU LF).

ODP (Office Depot--$13.89; -0.21; optionable): Specialty retail
http://biz.yahoo.com/p/o/odp.html
STATUS: Continued its pullback as it tests Wednesday's cup with handle breakout. Showing a doji at the 10 day MVA, volume dropped lower and well below average to 1 million (avg. 2.6 million). We look for a move up from here on strong volume, for a move up to breakout over the October high at 14.94. Great money flow and buying. Target: 17-18.
BUY POINT: Aggressive: 14.25 on volume around 2 million. Stop: 13.50 (below the 18 day MVA).
POSITION: Stock and/or January $10 or $12.50 calls to buy (ODP AB or AV).

GD (General Dynamics--$94.99; +2.39; optionable): Aerospace/Defense
http://biz.yahoo.com/p/g/gd.html
STATUS: We were looking for a pullback, but GD was boosted by the overseas strikes and surged again as volume did the same (3.4 million; avg. 900,000). We will just ride this one from here, and get ready to either take profits or ride a pullback when it is ready to pull back. Target: 100, not far away now (the intraday high was 96).
BUY POINT: After a pullback to 90 or higher.
POSITION: Stock and/or November or January $85 calls to buy (GD KQ or AQ).

GISX (Global Imaging Systems--$17.69; -0.30; no options): Specialty Retail
http://biz.yahoo.com/p/g/gisx.html
STATUS: In a short 5-week base with a prior high from August at 19.65. Friday the stock was moving up on higher volume and looked ready to try a breakout, but volume dropped back Monday, pulling price back in for a slight loss (volume down to 160,400; avg. 194,227). The low tapped 17.24, so we are looking for a pullback to that level as GISX now looks to be trying the formation of an ascending wedge pattern (except for the August high, a bit out of range at 19.65). Target on a breakout: 23. Big money flow and buying.
BUY POINT: Aggressive: 18.50 on volume in the range of 305,000. Stop: revised to 17.20
POSITION: Stock.

PULLBACK TO SUPPORT:

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.

Wedges:

UCOR (Urocor--$17.04; -0.18; no options): Health Services
http://biz.yahoo.com/p/u/ucor.html
STATUS: Back with a loose doji on lower volume of 89,500 (avg. 97,000). The low tapped at the 50 day MVA, but that has not been the pattern's lowest support level; instead, that claim is staked by the short term up trendline (August and September lows, currently at the 16.35 range). Breakout is over 18. Target: 21-22
BUY POINT: 18, on minimum breakout volume of 131,000. Stop: 16.74, just below the 50 day MVA at 16.86.
POSITION: Stock.

Pennants:

BASING/TRADING RANGES:

PER (Perot Systems--$15.55; -0.20; optionable): Software: Information Technology
http://biz.yahoo.com/p/p/per.html
STATUS: Still in a good-looking handle pullback as PER and many other stocks we are following continue to set up in their patterns. Volume was lower again at 128,700 in its gradual pullback (avg. 226,000), and the stock showed a tight doji right at support, the 10 day MVA. Looking for another move up (PER tried on a move up to 15.95 today) but this time with volume supporting. Money flow and buying look good. Target: 21-22.
BUY POINT: Breakout: 16.28 on minimum breakout volume of 330,000. Stop: 15.25
POSITION: Breakout: Stock and/or December $15 calls to buy (PER LC).

NEM (Newmont Mining--$23.74; -0.26; optionable): Metals & Mining
http://biz.yahoo.com/p/n/nem.html
STATUS: Consolidating in a rough handle to the 19-week cup base. The stock was back down in a test of the 10 day MVA on the low of 23.50 but bounced back and closed with a loose doji. Volume was higher. Continue to watch for a hold at the 10 day for an eventual move back up and breakout over the October high at 25.23. Potential resistance at 25 (hit twice recently). Shows strong money flow. Target: 29-30
BUY POINT: Riding aggressive positions taken at 23.70 (stop loss=22.46). Breakout: 25.13 on minimum breakout volume of 3 million. Stop: 23.75.
POSITION: Stock and/or January $20 calls to buy (NEM AD).

PRX (Pharmaceutical Resources--$36.20; -0.25; optionable): Generic Drugs
http://biz.yahoo.com/p/p/prx.html
STATUS: Continued the tight pullback in the handle of its double bottom. The stock showed another tight doji on the little pullback, and looks great as volume really fell back (to 163,100; avg. 542,000). Looking for a strong move back up for a breakout over Tuesday's (handle) high of 37.60 for aggressive positions, since the handle is over 2 points below the middle hump; that is a bit low. Breakout is over the middle hump. Target: 45
BUY POINT: Riding positions taken on the previous buy point of 37.12 (stop loss=35). Aggressive: 37.73 on rising volume. Stop: 34.75. Breakout: 40.12 on minimum breakout volume of 770,000. Stop: 34.75
POSITION: Stock and/or November $30 calls to buy (PRX KF).

RIT (Rightchoice Managed Care--$46.98; -0.46; no options): Health services.
http://biz.yahoo.com/p/r/rit.html
STATUS: Tested the 18 day MVA on Friday's low, then closed just below that support (47.04) as volume decreased further below average (volume has been shrinking for 4 days). Showing a doji, RIT is looking ready for a move up. The 50 day MVA is below at 46.53, so we look for that to hold price up until the stock can rally. RIT has been in a double bottom with handle pattern, which is now turning into another bullish pattern, a reverse head and shoulders. October high is 52.40. Target: 57
BUY POINT: Aggressive: Over 50 on a bounce from support on rising volume. Breakout: 52.53 on volume of 120,000. Stop: 48.85
POSITION: Stock only.

GNSS (Genesis Microchip--$35.30; +2.60; optionable): Chip: Integrated Circuits
http://biz.yahoo.com/p/g/gnss.html
STATUS: It was a short handle GNSS formed to its 13-week base, after a one-day pullback after the ascending wedge breakout. The stock lunged higher, buoyed by a sharp rise in volume (1.9 million; avg. 1.1 million). GNSS hit our buy point of 34.13, so look for a continued buying opportunity up to 5% over that price. A strong move! Target: 41 Super money flow and buying!
BUY POINT: Riding positions taken at the buy point of 34.13 (stop loss=31.70). Otherwise, a buy on the breakout up to 35.84 on continued strong volume.
POSITION: Stock and/or December $30 calls to buy (QFE LF).

MSCC (Microsemi--$30.85; -0.02; optionable): Chip: Integrated Circuits
http://biz.yahoo.com/p/m/mscc.html
STATUS: Remains a buy on the breakout from its double bottom (as of Thursday) up to 31.22, a price through which MSCC passed today on its way to the high of 33.09. The stock pulled back on lower, below average volume of 1.36 million (avg. 894,000), closing with just a tiny loss. Look for a pullback to 30, then a bounce back; the chips are in good standing for a rally tomorrow and if MSCC does not head up right off the bat, we are looking for the pullback. Initial target: 35
BUY POINT: Riding positions taken at 29.60, up to 31.22 (5% above breakout). Stop: 27.53. From a pullback to 30: 31, on 1.3 million volume or higher. Stop: 28.83
POSITION: Stock and/or December $25 calls to buy (QMS LE).

Trading Play:

ARXX (Aeroflex--$12.24; +1.28; optionable): Aerospace/Defense
http://biz.yahoo.com/p/a/arxx.html
STATUS: Broke out of the cup with handle today! The stock beat our buy point of 12.13, pretty price action, but volume definitely needs to follow since it was lower at 1.07 million (avg. 841,000). Still strong, but not at the minimum requirement just yet. Looking for a trade up to the 200 day MVA at the 14.50 range.
BUY POINT: Riding positions taken at 12.13. Stop: 11.28. A buy on the breakout up to 12.74. Look for volume in the range of 1.3 million.
POSITION: Stock and/or December $10 calls to buy (ARX LB).

IMNX (Immunex--$19.94; -0.17; optionable); Drugs - Biotech.
http://biz.yahoo.com/p/i/imnx.html
STATUS: Pulled back again after Friday's bounce up from support at the 10 day MVA (19.31). Showing a doji and lower volume (6.1 million; avg. 8.8 million), the stock is consolidating for a strong move up from here or the 10 day after pulling off the high of 21.45 (Thursday). IMNX reached that high on a nice breakout run started the end of September. The 200 day MVA is at 21.48 for a breakout. Target: 25
BUY POINT: Aggressive: 20.40 on sharply rising volume. Stop: 18.90. Breakout: Over 21.60 on volume in the range of 13 million. Stop: 20
POSITION: Stock and/or December $17.50 calls to buy (IUU LW).

SBC (Sbc Communications--$45.85; +0.97; optionable): Telecom
http://biz.yahoo.com/p/s/sbc.html
STATUS: Made move up from the possible base of the handle. SBC is in a 7-month cup with handle, and after pulling back below the 18 day MVA (45.36) Friday, has given us this nice recovery (back over the 10 day MVA,45.81). Looks like that tap of the 200 day did the trick for now. Just needs higher volume to back up a continued move up to a breakout; handle high is at 47.50. Strong money flow, positive buying. Target: 55-57.
BUY POINT: Breakout: 47.63 on minimum breakout volume of 8.4 million. Stop: 45.50. A buy on the breakout up to 50.01.
POSITION: Stock and/or November $45 calls to buy (SBC KI).

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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