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Begin Part 3 of 3

Note: We apologize for the confusion tonight concerning the parts of the report.

Best Plays, Part 3:
1) CARS: Breaking out and still a buy!
2) SOX, OEX: The indexes look ready to keep rallying.
3) TECD: Up at resistance on stronger volume.
4) GD: Looking for the doji to confirm a move back up after the test.
5) UCOR: Still a good pattern.
6) MSCC: Heading up.
7) IMNX: Breaking out and still a buy.
8) SBC: Wants to break out!

CARS (Capital Automotive--$18.90; +0.43; no options): REIT
http://biz.yahoo.com/p/c/cars.html
STATUS: Broke out of the ascending wedge on good volume (273,100; avg. 158,000)! Remains a buy, still within the 5% limit for breakout buying. Target: 22
BUY POINT: Riding positions taken at 18.63, and the stock remains a buy to 19.56, on continued rising volume. Stop: 17.56
POSITION: Stock.

Back On (as of the weekend):

PLCM (Polycom--$32.93; +1.37; optionable): Telecom
http://biz.yahoo.com/p/p/plcm.html
STATUS: Made the buy point of 31.06 Tuesday as volume roared up, but the stock didn't make much of a gain as it moved out of the cup with handle. Nevertheless PLCM headed higher again Wednesday, hitting a new closing high despite lower volume of 3.7 million (avg. 2.3 million). Watch for a pullback unless volume surges back. Support at the 30-30.55 range on decreasing volume. Target: 37
BUY POINT: A buy on the breakout to 32.61 on continued strong but rising volume. Riding positions taken at 31.06 (stop loss=28.88).
POSITION: Stock and/or January $25 calls to buy (QHD AE).

WLP (Wellpoint--$107.50; +0.45; optionable): Health Services
http://biz.yahoo.com/p/w/wlp.html
STATUS: Was bouncing in a range between 100 and 110, but over the last 4 days is holding support at the 18 day MVA (106.36). WLP tried to move higher but hit resistance on the high of 108.95 even as volume popped sharply to 1.03 million (avg. 609,000). Will watch tomorrow to see if the stock can try again on the strong volume momentum; breakout is over the October high of 110.70. Target: 127-133
BUY POINT: Aggressive: 108 on continued rising volume. Breakout: 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--$428.59; +27.07; optionable):
STATUS: Broke back over resistance (18 day MVA, 419.95). Looking for a continued move up to the 464 level, our initial target (50 day MVA is at 485.61). Potential resistance is at 435.17. If we get some early weakness, look for a test of the 18 day MVA, which would offer the lower entry point on a bounce back up.
BUY POINT: From here: 429, in a market rally. From a test of the 18 day MVA: 421.
POSITION: Both buy points: October $420 calls to buy (SXX JD).

OEX (S&P 100--$554.76; +12.92; optionable):
STATUS: Broke resistance on a strong move up from the 10 day MVA as volume rose to 1.3 million (avg. 1.25 million). Looking for a continued rally to our target at the 50 day MVA at 566.99. 557.16, the October high, may pose some resistance in the early market if the index pops higher off the bat. Otherwise, if it shows some weakness early, look for a pullback to 549.38 for a bounce back up in a continued rally (a good opportunity for new entry points).
BUY POINT: From here: 555, on continued rising volume in a rally. Aggressive from 549.38: 550
POSITION: From here: October $550 calls to buy (October $540 calls to buy (OEB JJ).
Deltas unavailable.

BREAKOUTS:

TECD (Tech Data--$42.11; +1.77; optionable): Computers Wholesale
http://biz.yahoo.com/p/t/tecd.html
STATUS: Pulled back from Friday's breakout move, forming another potential quick handle, and after hitting the 10 day MVA (40) headed up as volume rose a bit, still below average at 561,900 (avg. 820,000). We'll look for a breakout here on surging volume, but note that the stock closed at resistance. Will need that volume. Target: 48-50
BUY POINT: Breakout: 42.64 on volume of 1.2 million or higher. Stop: 39.50 (just under the 10 day MVA). Riding positions taken at 40.15 (stop=38.18).
POSITION: Stock and/or December $40 calls to buy (TDQ LH).

TESTING THE BREAKOUT:

SMTC (Semtech--$32.26; +1.66; optionable): Integrated Circuits
http://biz.yahoo.com/p/s/smtc.html
STATUS: Sold back below the 18 day MVA Tuesday, then bounced back up to close right on top of the 50 day MVA (32.19). That saved it; we will look for a move up from the support in a chip sector rally. Volume was lower for SMTC today at 1.5 million (avg. 1.4 million). Target: 40
BUY POINT: 33 on rising volume in a rally.
POSITION: Stock and/or December $30 calls to buy (QTU LF).

ODP (Office Depot--$14.42; +0.41; optionable): Specialty retail
http://biz.yahoo.com/p/o/odp.html
STATUS: Made a move up from support at the 10 day MVA (14) after three days of decreasing volume and dojis just above that level. We are looking for a breakout back over the recent breakout high of 14.94, reached when ODP broke out of the cup with handle. Wasn't a strong breakout, so we are waiting to see if the stock can muster a better move this time. Volume was slightly up at 1.2 million (avg. 2.5 million). Great money flow and buying. Target: 18.
BUY POINT: Made the aggressive buy point of 14.25; riding those positions from here. Breakout over the high: 15, on volume of 2 million or higher. Stop: 13.95

GD (General Dynamics--$90.00; -0.73; optionable): Aerospace/Defense
http://biz.yahoo.com/p/g/gd.html
STATUS: Pulled back to the 10 day MVA after the nice breakout run and closed there with a doji, as volume decreased to 1.8 million (avg. 1.3 million). GD can hold here judging from the lower volume, and price support from late September and early this month can reinforce the 10 day MVA here. New target: 103.
BUY POINT: Aggressive: 91, on rising volume. Stop: 86
POSITION: Stock and/or November or January $90 calls to buy (GD KR or AR).

GISX (Global Imaging Systems--$16.25; -1.42; 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. The stock held with a couple of dojis the previous 2 days, but sold back to the 18 day MVA on rising volume today (222,400; avg. 245,000). If GISX can bounce back from here, it is still in play for a breakout over the August high at 19.65. Target on a breakout: 23. Good 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--$17.28; +0.51; no options): Health Services
http://biz.yahoo.com/p/u/ucor.html
STATUS: Held support at the 50 day MVA (16.88) in the ascending wedge, and volume has again dropped back to very low levels Tuesday and Wednesday (today to 32,000; avg. 97,000). UCOR bounced from the strong support, and despite the low volume that is a positive move, since the stock continues to tighten the pattern and hold lower support. The lows are now holding above the up trendline which has been tested on the last 2 dips in the pattern. 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--$16.62; +0.18; optionable): Software: Information Technology
http://biz.yahoo.com/p/p/per.html
STATUS: Broke out yesterday and added a bit more Wednesday on rising volume of 332,900 (avg. 260,000). The move was small, and PER halted just under Tuesday's high of 16.75. We look for a hold of support at or above the buy point if we get some weakness ahead of a continued, stronger, move up. Buy point was 16.28. Target: 22
BUY POINT: A buy on the breakout up to 17.09. Nearly there, so can wait for a pullback to test the buy point of 16.28 for taking new or additional positions. For a move up from there: Aggressive: 16.50 on volume of 335,000 or higher. Stop: 15.35

NEM (Newmont Mining--$21.80; -1.07; optionable): Metals & Mining
http://biz.yahoo.com/p/n/nem.html
STATUS: Sold off to the 50 day MVA on heavy volume, losing the already volatile handle. No new positions.

PRX (Pharmaceutical Resources--$35.70; +0.20; optionable): Generic Drugs
http://biz.yahoo.com/p/p/prx.html
STATUS: Gave the breakout a try today as volume shot up to average levels, 572,200. The stock surpassed the aggressive buy point of 37.73 on the move, but retraced it all to close with a doji at the 10 day MVA. Look for a hold there until PRX can make another try. Breakout is over the middle hump in the double bottom with handle pattern, since the handle high is over 2 points below that higher hump. Target: 45
BUY POINT: 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--$45.60; -0.90; no options): Health services.
http://biz.yahoo.com/p/r/rit.html
STATUS: Lost the handle of the double bottom, selling below the 50 day MVA on rising volume. Still below average at 54,400 (avg. 81,000), but looks ready for more selling. No new positions.

GNSS (Genesis Microchip--$33.85; -0.26; optionable): Chip: Integrated Circuits
http://biz.yahoo.com/p/g/gnss.html
STATUS: Broke out after the test of the breakout from the ascending wedge, then pulled back for 2 days, showing a tight doji Wednesday. GNSS is in a 13-week base, and has moved up and nearly completed the right side in the 2 leaps up since last week. We are looking for a move up from this doji on continued rising volume. A new handle here, despite the higher volume today. Target on breakout from the base:
BUY POINT: 35.69 on continued strong volume (minimum breakout volume of 2 million (today's volume was 1.8 million; avg. 1.3 million). Stop: 33
POSITION: Stock and/or December $30 calls to buy (QFE LF).

MSCC (Microsemi--$33.48; +2.21; optionable): Chip: Integrated Circuits
http://biz.yahoo.com/p/m/mscc.html
STATUS: A nice move today with the stock breaking resistance at Monday's high of 33.09 on rising (but still quite low) volume of 1.06 million (avg. 1.7 million). MSCC never did make the pullback to 30 as we suggested it might; instead it has just headed higher until breaking the resistance today. Look for a continued move up but on much stronger volume for looking at positions. Can hold support at the 32.50 range if it sees early weakness. MSCC broke out of a double bottom last week. Almost at our initial target at 35.
BUY POINT: Aggressive on a pullback: 33 on volume of 1.7 million or higher. Breakout from the base: 36.75 on volume of 2.5 million or better. Stop: 34.25
POSITION: Stock and/or December $27.50 calls to buy (QMS LY). Breakout: Stock and/or December $30 calls to buy (QMS LF).

Trading Play:

ARXX (Aeroflex--$12.21; +0.25; optionable): Aerospace/Defense
http://biz.yahoo.com/p/a/arxx.html
STATUS: Moving laterally after making a nice breakout move from its cup with handle. Tapped the 12.78 two days in a row (today's intraday high) on high volume. We were looking for a quick trade to the 200 day MVA at the 14.50 range, but looks like we will get a pullback instead, and in that case we will drop the play. We are holding positions taken at 12.13 for now.
BUY POINT: Riding positions taken at 12.13. Stop: 11.28. A buy on the breakout up to 12.74.
POSITION: Stock and/or December $10 calls to buy (ARX LB).

IMNX (Immunex--$22.06; +1.27; optionable); Drugs - Biotech.
http://biz.yahoo.com/p/i/imnx.html
STATUS: Broke over resistance of the 200 day MVA in a fine move as volume broke above average to 11.1 million (avg. 9 million). The buy point was 21.58, so the stock remains a buy on the move. Target: 25
BUY POINT: A buy to 22.73 on continued rising volume. Stop loss=20
POSITION: Stock and/or December $17.50 calls to buy (IUU LW).

SBC (Sbc Communications--$46.92; +0.23; optionable): Telecom
http://biz.yahoo.com/p/s/sbc.html
STATUS: Moved higher as it headed up from the base of the handle to the cup base. Volume was higher at 6.15 million (avg. 6.5 million) rising as SBC first tapped near support on the low of 46.27 then made the higher move. Looks ready for a breakout!
Strong money flow, and relative strength is breaking out. Target: 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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