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ITRI: From the hot technical and scientific sector, ITRI broke out in late September, fell back down the next session, but then recovered and formed another handle on very low, below average volume. It found the 50 day MVA and started climbing on higher volume. Today it cleared the 5 intraday highs at 23.95 over the past three weeks on some massive volume. It ran past the buy point fast, and with the other action going on, we missed the first break. Well, 40 minutes later it had pulled back and bounced right off the breakout point at 24. We had stuck in another type of buy order, a limit, to buy it above the breakout at 24. We were banking on it holding the breakout point based on the strong early volume. The order was set about 10 cents above the breakout point and the fill comes as the stock tests the breakout. It can work like a charm on strong breakouts and this was a good stock for that today.

THE PLAYS: SANG broke to a new closing high on stronger volume. For summaries of plays moved to a watchlist, see end of report.

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 Monday.

Best Plays: MCSI broke out!
1) LCBM: A good pattern and earnings are out tomorrow.
2) CELG: Moving on a breakout.
3) HRH: Moving up after testing the breakout.
4) MKT: A solid move up in the handle!
5) RHB: Making a move up in the handle.
6) MRX: Holding support at the apparent base of its handle.
7) LMT: Up on strong volume, the move we anticipated!
8) GD: Moving up from support after the pullback.
9) CAH: Moving up on stronger volume.
10) PER: Broke initial resistance as volume rises.
11) Keep the indexes in sight.

NEW PLAYS:

LCBM (Lifecore Biomedical--$12.85; +0.46; optionable): Biotechnology
http://biz.yahoo.com/p/l/lcbm.html
STATUS: Earnings are out after the bell Tuesday. In a bouncing trading range that looks like an ascending wedge that has formed on overall decreasing volume outside a volume spike earlier in the pattern. Today volume was on the move again (159,700; average levels) as the stock moved up from the 10 day MVA (12.39) where it has held support throughout the pattern. Looking for a breakout here; LCBM shows huge money flow and buying. This pattern formed upon consolidation after a strong run up from early September; at that time the stock gapped up and broke out on an upgrade and a favorable court ruling. Initial target: 16
BUY POINT: 13.17 on minimum breakout volume of 216,000. Stop: 11.75 (below support at 12).
POSITION: Stock and/or February $10 calls to buy (OLQ BB; low open interests).

CELG (Celgene--$30.78; +2.85; optionable): Biotechnology
http://biz.yahoo.com/p/c/celg.html
STATUS: A former splitter, CELG broke out of a trading range/flat base pattern today on big volume (2.27 million; avg. 984,000), just taking out resistance at 30.74. The stock remains a buy on the move up to 31.11. CELG is forming the right side of an 18-week base and can pull back in to a handle formation if resistance at 32 or the 34 range stops it on this run up. Showing good money flow, and relative strength is breaking out well ahead of price, a bullish indicator. Initial target: 36.48 (high at the start of the base).
BUY POINT: A buy up to 31.11 on this breakout move. Stop: 28.75
POSITION: Stock and/or November $30 calls to buy (LQH KE).
CELG

HRH (Hilb Rogal & Hamilton--$52.05; +1.25; no options).
http://biz.yahoo.com/p/c/celg.html
STATUS: Broke out from a short base earlier this month and ran to a high of 53.80. There was no handle, something that happens in a rapidly recovering market. Volume has pulled back with the stock as it tests the breakout, and Friday hit the 10 day MVA on the low. From there HRH made a solid move today as volume broke back above average levels to 144,400 (avg. 89,045). Looking for a continued move up and break to a new high. Target: 62
BUY POINT: Aggressive: 52.20 (over the intraday high of 52.15) on continued rising volume. Stop: 48.12 (under the 18 day MVA, 48.62).
POSITION: Stock.

CHBS (Christopher & Banks--$33.70; +0.65; optionable): Retail: Apparel
http://biz.yahoo.com/p/c/chbs.html
STATUS: After making a strong breakout move earlier this move, CHBS is now ranging up and down in a short pattern, with lows wedging higher as it tries forming the ascending wedge pattern. Support is currently at the 32.50 range, right at today's 10 day MVA, and volume is dropping back down below average. CHBS bounced up slightly today despite the lower volume (256,500; avg. 585,000), but support looks good. This pattern is just under mid-range in the right side of a 5-month cup base. Target on the breakout: 48
BUY POINT: 35.33 on minimum breakout volume of 790,000. Stop: 32.12 (below the 32.50 support).
POSITION: Stock and/or November $30 (URH KF) or December $35 (URH LG) calls to buy.

New Plays from the weekend: Several of these are looking very good!

SCSC (Scansource--$53.15; -0.15; no options): Computers wholesale.
http://biz.yahoo.com/p/s/scsc.html
STATUS: Continued the pullback in the handle to the double bottom pattern. The stock showed the slight loss as it held support at 52.25 on the low, with volume dropping back below average (35,400; avg. 54,200). Continue to look for a breakout over the handle high at 53.80. Huge money flow and strong buying. Target: 59.85, initial target at the middle hump in the pattern.
BUY POINT: 53.92 on minimum volume of 82,000. May test 50 one more time first. Stop: 50.25 (just below 10 day MVA).
POSITION: Stock only.

MKT (Advanced Marketing--$17.98; +0.38; no options): Wholesale basic materials.
http://biz.yahoo.com/p/m/mkt.html
STATUS: Bottomed out in the handle to the double bottom and began moving; volume was strong and up to 124,400 (avg. 64,227) as the stock closed at resistance (18). We are looking for a continued move up from here; MKT has to move to the handle high at 19.53 and beyond for the breakout. Huge money flow and buying! Target: 24
BUY POINT: Aggressive: Over 18.25 on continued rising volume. Stop: 17. Breakout: 19.65 on volume of 87,000. Stop: 18.50.
POSITION: Stock only.

MCSI (Mcsi Inc--$17.89; +1.44; optionable): Computers wholesale.
http://biz.yahoo.com/p/m/mcsi.html
STATUS: Broke out of the cup with handle (formed at the bottom of a big 2-year base) and beating our buy point of 17.27 as volume rose to 333,600. That still is not above the average of 400,000, but we will look for a remedy to that tomorrow on a continued breakout. Still a buy here, as long as we get that volume! Huge money flow and good buying. Target: 21
BUY POINT: Buy point was 17.27; remains a buy up to 18.13 on this move. Stop: 16.25
POSITION: Stock and/or January $15 calls to buy (QIP AC).

BDAL (Bruker Daltonics--$20.00; -0.49; no options): Scientific & Tech Instruments
http://biz.yahoo.com/p/b/bdal.html
STATUS: Looked like it was heading into a breakout as it gapped higher on the opening price of 20.90, but instead BDAL pulled back on lower (but still strong) volume of 975,700, closing at 20, a price hit several times in the 5-month cup with handle. Looking for a hold of support in this range until the stock can give it another shot. Huge money flow and buying. Target: 25
BUY POINT: Breakout: 20.87 on continued strong volume (minimum breakout volume is 162,000). Stop: 19.20. A buy on breakout up to 21.91.
POSITION: Stock.

RHB (Rehabcare--$44.60; +0.40; optionable): Health Services
http://biz.yahoo.com/p/r/rhb.html
STATUS: Opened at support (10 day MVA, 44) in the handle an moved up slightly on rising volume of 72,000; average is 168,227). We are looking for the move up from here for a breakout over the October (handle) high of 46.20. Money flow looks good and buying is strong. Target: 56
BUY POINT: 46.33 on minimum breakout volume of 252,000. Stop: 42.65
POSITION: Stock and/or November $40 calls to buy (RHB KH).

MRX (Medicis Pharmaceutical--$54.15; -0.18; optionable): Consumer Non-Durables
http://biz.yahoo.com/p/m/mrx.html
STATUS: MRX is in a year-long base (prior high near 75), and currently is testing the breakout from a double bottom it formed since mid-July. That test is functioning as a handle to a 5-month base within the larger base, and we like the gradually falling volume in the handle. Today volume rose slightly to 186,300 (avg. 220,000), MRX opening at support, the 10 day MVA at 53.63, and moving up a half-point despite the small loss on the day. Huge money flow and buying. Target: 69
BUY POINT: 57.60, on minimum breakout volume of 330,000. Stop: 53
POSITION: Stock and/or November $50 calls to buy (MRX KJ).

Back on:

LMT (Lockheed Martin--$47.30; +1.85; optionable): Aerospace/Defense
http://biz.yahoo.com/p/l/lmt.html
STATUS: Made a solid move off the 18 day MVA just as expected, beginning another run up from that support. LMT made the pullback to the 18 day after the October breakout run (copying the September breakout/pullback action), tapping it on today's low of 45.42 then surging up. Made the buy point of 46.30; aggressive positions can be taken from here; watch resistance at the 49.11 (hit twice at the last breakout highs). Strong money flow and buying. Target: 53
BUY POINT: Aggressive: Over 47.50 on continued strong volume. Stop: 45
POSITION: Stock and/or December $40 calls to buy (LMT LH).

RCGI (Renal Care Group--$31.80; +0.05; optionable): Health Services
http://biz.yahoo.com/p/r/rcgi.html
STATUS: Consolidating just off the bottom of base of 6 weeks and above the 50 day MVA (31.19) in a kind of wedging formation (outside of the late September shot up to 33 that retraced immediately next day). The action is holding support at an up trendline (connecting August, September and October lows); however, the trendline is below the 50 day MVA, above which we expect the stock to hold. RCGI tapped the MVA on the low of 31.14 then bounced back to close with a doji above the short term MVAs. Volume remained high but lower at 687,000 (avg. 383,000). Looking for a strong move back up and breakout of this base. Strong money flow. Target: 41
BUY POINT: Aggressive: 32.60 (32.55 hit three times in the base) on rising volume. Stop: 30.18 (just below the up trendline).
POSITION: Stock and/or December $25 calls to buy (NUQ LE).

CONTINUED PLAYS:

Indexes: Are consolidating on low volume, testing support as they trade in narrow ranges. They are looking very good for upside moves!

DJX (1/100 Dj Indu--$93.48; +0.04; optionable):
STATUS: Pulling back on lower volume and testing support on the low of 92.39 at the level of last week's consecutive opening and closing prices at 92.41 and 92.43. Showing a tight doji near the top of the intraday range, the index looks ready for a move back up. Aggressive positions can be taken on a strong move over Thursday's intraday high of 94.32 in a rally. The 50 day MVA is at 95.40 for moves over that resistance. Volume fell to 1 million (avg. 1.2 million). Initial target: 96
BUY POINT: Aggressive: Over 94.32 on strong and rising volume in a rally (the stock hit 94.09 twice recently). Stop: 91. Over the 50 day MVA: 95.45 on 1.2M or higher volume.
POSITION: November $88 or $90 calls to buy (DJX KJ or KL). Deltas unavailable.

OEX (S&P 100--$560.43; -0.35; optionable):
STATUS: Down slightly and holding on the opening and closing prices above 558.58, the September prices hit consecutively. Volume was down to 1 million (avg. 1.26 million). The low of 553.62 tested lower support, the 10 day MVA (551.19). The aggressive can look at taking positions on a move up over Thursday's high of 564.78 on rising volume, with "safer" positions being taken on a move over the 50 day MVA at 566.37. Initial target: 574
BUY POINT: Aggressive: 565 on rising volume in a rally. Over the 50 day MVA: 567 on rising volume in a rally.
POSITION: November $550 or $560 calls to buy (OEB KJ or KL). Deltas unavailable.

BREAKOUTS:

DRMD (Duramed Pharmaceuticals--$22.10; -0.16; optionable): Generic Drugs
http://biz.yahoo.com/p/d/drmd.html
STATUS: In more or less of a lateral, low-volume consolidation for the past three months, making a break over what appears to be a 2-week handle Friday. It was not a great handle, however, as it did not slope downward as measured by its intraday lows. Today DRMD opened near Friday's high (22.49) then pulled back for the slight loss; volume was down on the move to 161,300 (avg. 353,000). Looking for a hold of support at 21.80-21.85 until the stock can break out over the August high of 23, from what we are now calling a flat base. Huge money flow and high relative strength. Target: 27 (initial).
BUY POINT: Breakout: 23.13 on minimum breakout volume of 530,000. Stop: 20.50 (below the 18 day MVA, 21).
POSITION: Stock and/or December $20 calls to buy (DUQ LD).

TESTING THE BREAKOUT:

HCP (Health Care Prop--$37.80; -0.30; no options): REIT - healthcare propertites.
http://biz.yahoo.com/p/h/hcp.html
STATUS: Testing the September breakout from a flat base, off the October high of 38.75. HACP closed just a penny below the 10 day MVA as volume rose to 111,300 (avg. 164,000). It can, therefore, test the 18 day MVA again as it did Friday (at 37.45), and from there we will look for a bounce back and strong move over 39. Target: 45
BUY POINT: Aggressive: 38.25 on increased volume. Stop: 37. Breakout: 38.88 on minimum volume of 220,000. Stop: 37.
POSITION: Stock only.

CYTC (Cytyc--$28.45; +1.11; optionable): Scientific & Technical Instruments
http://biz.yahoo.com/p/c/cytc.html
STATUS: Made the move off of support at the 10 day MVA (26.89) with volume rising. A solid move up and over resistance (27.90 and just below), just the move we wanted after CYTC consolidated since the first of the month following a run up from below its 200 day MVA. The October high is still ahead at 28.93. CYTC made our buy point of 28 on this move, so we will look at riding the positions for now. Huge money flow and buying. Initial target: 32
BUY POINT: Riding positions taken at 28.
POSITION: Stock and/or November $25 calls to buy (YQK KE).

GD (General Dynamics--$89.95; +2.05; optionable): Aerospace/Defense
http://biz.yahoo.com/p/g/gd.html
STATUS: Hit the aggressive buy point of 89.65 as it made a move up from the 18 day MVA support (88.04) on rising, strong volume of 1.57 million (avg. 1.3 million). After the pullback, this is the turning point we wanted to see, and look for a continued move up. The October high is at 96. GD shows strong money flow. Target: 103
BUY POINT: Riding positions taken at 89.65. Aggressive from here: Over the intraday high of 90.27 on continued rising volume. Stop: 84.23 (below the 50 day MVA, 84.48).
POSITION: Stock and/or November or January $80 calls to buy (GD KP or AP).

IMNX (Immunex--$23.19; +0.67; optionable); Drugs - Biotech.
http://biz.yahoo.com/p/i/imnx.html
STATUS: After breaking out Wednesday and Thursday, IMNX tested the breakout Friday but headed up and over the breakout high of 23 Monday on a move up from what now looks like good support at 22.45 (that price was hit on the intraday lows of today and Thursday). Volume was lower and below average on the move (8 million; avg. 8.9 million), but we'll see if that can rally back to support this move up. IMNX hit our buy point of 22.95 on today's move. Target: 26
BUY POINT: Over 23.50 (intraday high) on volume of 9 million or higher. Stop: 21
POSITION: Stock and/or December $17.50 calls to buy (IUU LW). Deltas unavailable.

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--$17.09; +0.06; no options): Health Services
http://biz.yahoo.com/p/u/ucor.html
STATUS: Trying to tighten up the ascending wedge, but struggling to hold the 50 day MVA (16.90) as volume remains very low. Today the stock gapped down to 16.65 but made a move back up, with volume down at 31,600 (average 108,000). It closed just below the short-term MVA's (17.11). Still looking for the breakout over 17.98, pattern high. It is getting pretty deep in the pattern and does not look as if it is building energy, but we will give it some time. Target: 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.

RA (Reckson Assoc--$24.46; +0.21; optionable): REIT
http://biz.yahoo.com/p/r/ra.html
STATUS: Moved up and hit the buy point out of the ascending wedge, but moved on very low volume (189,500; average 331,000), and dropped back from its high of 24.61. It has been a wild one, but the pattern was rather solid. However, we will need more volume on a move up, and after this weak move we could get a drop back toward the prior highs in the 24 range or its 10 day MVA (at 24). If it can hold that support, it could still be solid play if it can catch more volume on a move back up. Showing outstanding money flow and buying. Target: 29
BUY POINT: After holding the 24 level on a pullback with continued low volume, a run back over 24.50 on minimum volume of 526,000. Stop: 22.77, below the 200 day MVA at 23.12.
POSITION: Stock and/or December $20 calls to buy (RA LD; low open interests).

ENDO (Endocare--$16.95; -0.05; no options): Health Services
http://biz.yahoo.com/p/e/endo.html
STATUS: ENDO was bouncing between 14 and 18, and the stock is now trying to narrow its trading range on very low, below average volume. It pulled back the last few sessions, but today showed a doji over the 10 day MVA (16.92) with continued low volume of 87,400 (average 195,000). We will see if it holds this doji and makes a strong move back to the upside. The pattern formed as part of a 12-week base that is in the upper right side of a much bigger, 20-month base. Continue to look for the breakout. Target: 22
BUY POINT: 18.43 on minimum breakout volume of 277,000. Stop: 16 (just under the 50 day MVA).
POSITION: Stock.

BASING/TRADING RANGES:

ARXX (Aeroflex--$12.05; -0.26; optionable): Aerospace/Defense
http://biz.yahoo.com/p/a/arxx.html
STATUS: Continues its very nice lateral consolidation on lower volume (dipping way back to 307,500 today; average 909,000). The consolidation formed immediately following a cup with handle breakout. The breakout was not on huge volume, so we need to see if it will kick in on the next move. It broke out and is now moving laterally toward the 10 day MVA (11.63), which it tested today at its low of 11.79. We expect it to blow higher soon.
BUY POINT: 12.85 on volume of 1.5 million or more.
POSITION: Stock

CAH (Cardinal Health--$75.00; +1.30; optionable): Drugs Wholesale
http://biz.yahoo.com/p/c/cah.html
STATUS: Moved back up today off of its 10 day MVA (73.78), in the handle of a double bottom. Volume was up on this solid move (1.84 million; average 1.38 million), and it is just under the handle high of 74.15. Looking for a continuation of this move with higher volume. With an initial morning move over the breakout point, we will carefully watch the volume, and will take positions on the move or on an intraday test. Target: 90
BUY POINT: Breakout: 75.27 on minimum breakout volume of 2 million. Stop: 71.95 (just under the 50 day MVA).
POSITION: Stock and/or December $65 calls to buy (CAH LM).

BBOX (Black Box--$49.52; +0.12; optionable): Computer Hardware
http://biz.yahoo.com/p/b/bbox.html
STATUS: Broke from a little cup with handle last Thursday that had formed at the bottom of a ranging pattern that started late December. BBOX has pulled back from that move, holding over its 50 day MVA (48.21) today as volume settled back a bit to 597,400 (average 640,000). Still looking pretty good, and we are looking for the stock to head up from here as it completes formation of the right leg of the large double bottom into which the ranging pattern has evolved. This is an aggressive play with lots of overhead supply. Looking for a move up from here; the 200 day can pose resistance at 53.78. Target: 70 (at the July highs, middle hump in the pattern).
BUY POINT: Aggressive: 50.25 on increased volume. Stop: 46.73 (just under the 10 day MVA at 47.34).
POSITION: Stock and/or December $45 calls to buy (QBX LI).

PER (Perot Systems--$16.80; +0.38; optionable): Software
http://biz.yahoo.com/p/p/per.html
STATUS: Almost hit the breakout buy point (16.88) as it moved back up in the handle to its 14-week cup base. The stock jumped off of its 10 day MVA (16.20), as volume spiked up to 258,700 (average 229,000). Looking for the completion of the breakout move now, looking for stronger volume and a run up from here. On quick move over the buy point in the morning we will need to pay close attention to the volume. We could easily get a move up or a gap up immediately, but it could be prudent to wait for a successful test of the move and catch it on a run back up on big volume. Target: 20
BUY POINT: 17 on minimum breakout volume of 339,000. Stop: 15.50. A buy on the breakout to 17.72.
POSITION: Stock and/or December $15 calls to buy (PER LC).

PRX (Pharmaceutical Resources--$34.90; -1.21; optionable): Generic Drugs
http://biz.yahoo.com/p/p/prx.html
STATUS: Still in the double bottom with handle, today gapping back below the short-term MVA's (10 day at 35.53), showing yet another doji. Volume spiked up a bit to 408,100 (average 530,300), and the stock is just below its down trendline at 35.75, drawn connecting the left side high and middle of the pattern. Still could be preparing for a solid move up, as the pattern is still looking pretty good (50 day MVA just below at 34.16). Despite last Wednesday's high of 38.80 we are keeping our aggressive buy point over the earlier October high at 37.60. Looking for a breakout as PRX shows super money flow and buying. 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).

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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