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trend trading stock, stock trading pick
Begin Part 2 of 2
TEAM TRADES
DAP is a stock covered on the Daily since August when it formed a pennant/wedge that turned into a flat base into September. Waiting for this stock to break out required patience, since the move didn't start until yesterday when DAP just broke across a down trendline on high volume. That was a cue that the breakout was imminent, so the stock was on the radar screen this morning.
The buy point (15.38) was hit at 8:37AM (CT) and DAP moved through the price with volume at 67,000. For the breakout we wanted 178,000, so it was well on its way (previous day's volume was up to 469,000). DAP hit a high of 15.50, and as expected began pulling back. Volume at that time was up to 88,400 (8:38) and with that move up and the nice increase in volume it looked like this was the breakout move for sure. On the pullback the stock fell back down to 15.07 (just above the August high) and moved back up pretty quick, but intraday volume had begun to taper off and sure enough, DAP fell back after moving up to 15.25. This time it looked ready to hold the support just above 15 (July's closing high is 14.80). It tapped 15.05 at 9:45 then made a nice surge higher on rising volume after a few minutes; bid and ask were at 15.06 by 15.20; went ahead with an order for partial positions at 15.20 and were filled just before 10:00. The stock ran to 15.34 then pulled back to 14.97. It bounced up and down all session, and on the close sold back to 14.90. Volume was 729,000, so we'll have to see if it can ramp back up again. A disappointing finish for the session as it closed below its session high, but still a new closing high. Still a strong volume breakout from a good flat base, so we will let it work for us.
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THE PLAYS: LMT pulled back with a doji on decreased volume as it tests the breakout. SVU inched higher today but volume was lower. From the Tuesday update, CPRT hit a new closing high but on lower volume. GNTA moved up on rising volume; check last night's report for buy point and other details. RA was up again today, but volume absolutely cratered after Tuesday's huge levels. The indexes moved higher on stronger volume, positive action.
Note for reading plays: A "prior high" refers to the high at the start of a base.
All prices are current as of the close of trading Wednesday.
Best Plays:
1) HCP: At support in a test of the breakout.
2) EPIQ is back on the report and looks ready to make a breakout if volume cooperates.
3) VZ: Still pulling back; looking for a rise from the 18 day MVA.
4) MMC: Back over the 200 day MVA on rising volume - a promising move!
5) ARG: A move up on a sharp rise in volume.
NEW PLAYS:
HCP (Health Care Prop--$37.82; -0.01; no options): REIT - healthcare propertites.
http://biz.yahoo.com/p/h/hcp.html
STATUS: The stock had been moving in a long lateral consolidation dating back to early May, but after peeling back with the market recently it made a strong breakout move toward the end of September. HCP has consolidated a bit since, making a nice, low volume pullback to the 10 day MVA (37.70), making something of a flag pattern although the consolidation is shaped more like a handle than a pennant. It tapped recent lows near 37.50 today before moving back up, showing sharply higher volume on the move (195,200; average 164,000). Could be ready to make another move, with the high (earlier this month) at 38.75. Target on a breakout: 45.
BUY POINT: Aggressive: A move to 38.25 on increased volume. Stop: 37. Breakout: 38.87 on minimum volume of 220,000. Stop: 37.
POSITION: Stock only.
MOGN (Mgi Pharma--$14.69; +0.13; optionable): Drugs.
http://biz.yahoo.com/p/m/mogn.html
STATUS: After suffering a drop from the 50's, the stock was trading in a lateral range since March, and finally broke out in early September only to be taken back down by the market. It caught the 50 day MVA (12.62) on that drop and has climbed back up, forming a bit of a consolidation the last week over its 10 day MVA (14.18). Volume has been low, and rose only slightly today (76,300; average 121,000) as the stock edged up with a second consecutive doji. The high in this consolidation is 14.99, with the prior breakout high ahead at 16.15. We will see if we can get a move out of the consolidation that can attack the recent high. On a breakout, we will target 18.50 on the trading play.
BUY POINT: 15.11 on above average volume. Stop: 14.05.
POSITION: Stock and/or January $12.50 calls to buy (QOG AV).
Back on:
EPIQ (Epiq Systems--$28.59; +0.59; optionable): Business software.
http://biz.yahoo.com/p/e/epiq.html
STATUS: EPIQ is moving in a cup with handle pattern formed since mid-June (prior basing high 37.39). It has pulled back to start a handle, and after a couple of dojis the stock today gapped down but managed a move back up off of the 10 day MVA (27.10), closing near the handle high of 29.48. Volume was back down on the move at 49,600 (average 117,400). Looking for volume to kick in a spur a breakout. Target: 34.
BUY POINT: 29.60 on volume of 176,000. Stop: 27.53.
POSITION: January $22.50 calls to buy (FQU AX; January $25 calls have low open interest).
From Monday:
CAH (Cardinal Health--$74.24; +0.74; optionable): Drugs Wholesale
http://biz.yahoo.com/p/c/cah.html
STATUS: Pulling back in the handle to a double bottom. After a tap of support Tuesday at the 10 day MVA, CAH bounced today but again hit resistance at the 75 range, the level of a few intraday highs of late. Volume was lower after Tuesday's strong spike; that can be a positive sign for a move up and breakout. High relative strength. Target: 90
BUY POINT: Breakout: 75.27 on minimum breakout volume of 2 million. Stop: 71.71 (just under the 50 day MVA).
POSITION: Stock and/or December $70 calls to buy (CAH LN).
BEC (Beckman Coulter--$44.48; -0.49; optionable): Scient & Tech Instruments
http://biz.yahoo.com/p/b/bec.html
STATUS: Made a move out of a lateral consolidation Monday but pulled back the next 2 days in a test of the breakout, hitting support at the 10 day MVA (on today's low of 44.30). Volume was higher as the stock bounced back up from the support; needless to say we were disappointed on the lack of follow through after Monday's move, but we will see if the stock can pick it up from here. August high is 47.60. Strong money flow and high relative strength. Target: 54
BUY POINT: Breakout: over 45.26 on continued rising volume (up to 306,100 today; avg. is 246,000). Stop: 42.75 (below today's intraday low that tested just under the 50 day MVA, 43.72).
POSITION: Stock and/or November $40 calls to buy (BEC KH).
KLAC (Kla-Tencor--$33.66; +0.74; optionable): Chip Equipment
http://biz.yahoo.com/p/k/klac.html
STATUS: We were looking for a Tuesday continuation of Monday's strong move up. The chips failed to rally that day however, and KLAC sold back down in a retracement of the entire move. Now KLAC is sitting on the 10 day MVA (33.72) having moved up from a test of support at 31.67 on rising volume. We'll have to see another strong move over the 18 day MVA (35.39). Previous target: 42 (50 day MVA)
BUY POINT: 36 on volume of 11 million or higher. Stop: 34.50
POSITION: Stock and/or December $30 calls to buy (KCQ LF).
Back On:
TERN (Terayon--$9.00; -0.25; optionable): Telecom
http://biz.yahoo.com/p/t/tern.html
STATUS: Pulled back with some profit-taking today after extending Monday's breakout move a bit higher Tuesday. Volume was up to 1.98 million (avg. 994,000) on the slight pullback; the low was down to 8.47 so the bounce back up to close at yesterday's low (and above Monday's closing price) is positive. That doesn't guarantee that TERN won't re-test today's low (at the level of some price support from last week) on lower volume. Look for a move back up after a test of that level if the stock does not hold at 9. Money flow is steadily improving and buying looks great. Target: 11
BUY POINT: Over 8.50, on a move back up after a pullback to 8.45. Stop: 7.90
POSITION: Stock and/or November or January $7.50 calls to buy (TUN KU or AU).
From the weekend:
PDG (Placer Dome--$11.75; -0.45; optionable): Metals & Mining.
http://biz.yahoo.com/p/p/pdg.html
STATUS: Sold down to the 50 day MVA on strong volume. Too drastic a move down in the test of the breakout; no new positions from here.
VZ (Verizon Communications--$54.10; -0.35; optionable): Telecommunications.
http://biz.yahoo.com/p/v/vz.html
STATUS: In a large base that started fall of 1999 (highs at 69.50) and currently in a big ascending wedge that formed since mid-2000. VZ is continuing the pullback (since last week) to support, tightening up the pullback pattern since Friday by showing 4 consecutive dojis. Volume remains below average but rising since yesterday (up to 5.2 million; avg. 5.3 million). Looking for a strong move back up from support (the 18 day MVA at 53.72) for a breakout over 56, level of the highs from which VZ is currently pulling back. Higher resistance in the pattern is at 57. Target: 65
BUY POINT: Aggressive: A bounce over 56 on increased volume. Stop: 52.50. Breakout: 57.52 on volume of 8 million or better. Stop: 54.
POSITIONS: Aggressive: Stock and/or January $50 calls to buy (VZ AJ). Breakout: Stock and/or January $55 calls to buy (VZ AK).
MMC (Marsh & Mclennan--$103.00; +2.87; optionable): Insurance Brokers
http://biz.yahoo.com/p/m/mmc.html
STATUS: Popped up today as volume rose to 1.6 million (avg. 973,000), after a pullback to a Tuesday doji. That doji closed right at support (100), at the base of what could be called a handle to a v-bottomed base. Last week MMC made a strong trend reversal move over its 200 day MVA, and the handle (October) high of 105.50 is the price reached on that move. Looking for a breakout from here. Target: 111
BUY POINT: Riding aggressive positions taken at 101.25. Stop: 99.50. Breakout: 105.63 on volume of 1.8 million. Stop: 100
POSITION: Stock and/or January $95 calls to buy (MMC AS).
ARG (Airgas--$13.63; +0.22; optionable): Industrial Equipmt Wholesale
http://biz.yahoo.com/p/a/arg.html
STATUS: Moved up from the gradual and tight pullback of the last week as it tries to set up the right shoulder in a bullish reverse head and shoulders pattern. The stock caught support at the 13.20 range as expected, and volume was up a bit sharply to 174,600 (avg. 219,000), a positive indication that ARG can break out here. Resistance is at the 13.70 level, a price hit 8 times since mid-August. Target: 17
BUY POINT: Aggressive: 13.75 (over 13.70, a price hit 8 times since mid-August) on volume of 199,000 or higher. Stop: 12.79 (just below the 18 day MVA, 12.87).
POSITION: Stock and/or January $10 calls to buy (ARG AB; 35 open interests).
DME (Dime Bancorp--$37.95; -0.38; optionable): Savings & Loan
http://biz.yahoo.com/p/d/dme.html
STATUS: Pulling back too far in the handle to the double bottom. The pattern just didn't play out with Tuesday's selling which broke DME below the 50 day MVA. That should have supported the handle for a move back up. No new positions from here, though DME may be able to hold here.
DORL (Doral Financial--$38.15; -1.23; optionable): REIT
http://biz.yahoo.com/p/d/dorl.html
STATUS: Still fighting resistance at the 39.30 range. Tuesday DORL made a promising move up from the 38 support and looked ready on stronger volume to break out of the little pennant/ascending wedge type pattern formed as a test of its recent run. However, it pulled back on slightly decreased volume (still strong at 688,300; avg. 550,000). Tapped support at the 10 day MVA on the low of 37.80, so we look for a hold there for the pattern to hold up. Huge money flow and good buying. Target: 47
BUY POINT: Breakout: 39.57 on minimum breakout volume of 666,000. Stop: 36.80 (just under the 10 day MVA, 37.02).
POSITION: Stock and/or November $35 calls to buy (QDL KG).
End Part 2 of 3
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trend trading stock
stock trading pick
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