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Begin part 3 of 3
THE PLAYS
Good movers: GME; TBL
Best Plays:
1) MCHP: Nice test showing signs of a rebound.
2) VAS: Strong upside volume moving in.
3) HCP: Failing at the 200 day SMA.
4) CMX: Just needs some volume.
5) FLSH: Really looks super.
6) IYR: High volume as fades from the 50 day EMA.
NEW PLAYS:
Upside:
Play Date: 08/17/2005
MCHP (Microchip--$31.02; +0.28; optionable): Semiconductors
http://biz.yahoo.com/p/m/mchp.html
After Hours: $31.23
STATUS: Test 50 day EMA. Broke out from an 8 month double bottom with handle base in early July and rallied near 33. After that move it has come back to test the 50 day EMA (30.69), moving laterally along that level the past two weeks. Money flow continues to move up ahead of the stock as it makes this test; that often means the stock is going to follow it higher. Started to move Tuesday but volume was not there yet. Expecting to see it, however, as MCHP breaks through the 18 day EMA (31.03).
Volume: 1.282M Avg Volume: 1.611M
BUY POINT: $31.22 Volume=1.7M Target=$35.95 Stop=$30.44
POSITION: QMT AF - Jan. $30c (61 delta) &/or Stock
http://www.investmenthouse.com/ct/mchp.html
Play Date: 08/17/2005
MFE (Network Associates--$30.67; +0.45; optionable): Security software
http://biz.yahoo.com/p/m/mfe.html
STATUS: Breakout test. MFE broke out from a 7.5 month cup with handle in late August, gapping higher on strong volume on good earnings news. It has some back in the selling this month to fill the gap, holding near the 18 day EMA (29.44) on the lows and rebounding the past two sessions on rising volume. Excellent 5 to 0 accumulation (5 up price weeks on rising volume to 0 down price weeks on rising volume) in June and July as it formed the handle, a cup with handle at the end of the bigger base. Excellent buying, and want to see continued rising volume as MFE continues the break higher toward a 4 year high.
Volume: 1.747M Avg Volume: 1.851M
BUY POINT: $30.85 Volume=2M Target=$35.95 Stop=$29.54
POSITION: MFE AF - Jan. $30c (62 delta) &/or Stock
http://www.investmenthouse.com/ct/mfe.html
Play Date: 08/17/2005
VAS (Viasys Healthcare--$24.76; +0.56; optionable): Medical equipment
http://biz.yahoo.com/p/v/vas.html
STATUS: Breakout test. A new issue in late 2001, VAS is preparing to break to another new all-time high. It broke out from a 9 week cup with handle base that formed over the 50 day EMA (23.65). It rallied to 25 on the first move and has come back to test and hold the 18 day EMA (24.43). Volume spiked higher Monday as VAS logged a gain. It fell Tuesday as it faded, and then leaped higher Wednesday as VAS posted another gain. With strong money flow leading the way and the 'get ready' volume spikes we anticipate VAS making the next breakout soon.
Volume: 562.2K Avg Volume: 164.636K
BUY POINT: $25.25 Volume=247K Target=$28.75 Stop=$23.97
POSITION: VAS AE - Jan. $25c (54 delta) &/or Stock
http://www.investmenthouse.com/ct/vas.html
Downside:
Play Date: 08/17/2005
HCP (Health Care Properties--$26.06; -0.21; optionable): Healthcare facilities REIT
http://biz.yahoo.com/p/h/hcp.html
STATUS: Put. HCP tried the breakout from a 9 month reverse head and shoulders base in early August but then collapsed on a surge in volume. That is the worst kind of action: a base that is on the cusp of a run higher but implodes as the owners dump it. HCP plummeted through the 200 day SMA (26.30), falling to 24.50 on the low. It has since rebounded the past two weeks, moving back up to the 200 day. Tuesday it showed a doji at that level and Wednesday it started to move lower. Looking for continued above average volume as HCP continues the move lower after this kiss goodbye at this key level. A move to the target lands us a 55%ish gain.
Volume: 509.8K Avg Volume: 451.76K
BUY POINT: $25.92 Volume=510K Target=$24.89 Stop=$26.44
POSITION: HCP VE - Oct. $25p (-37 delta)
http://www.investmenthouse.com/ct/hcp.html
CONTINUING PLAYS
Upside:
Not yet entered:
Play Date: 08/15/2005
BRCM (Broadcom--$41.70; -0.15; optionable): Semiconductor integrated circuits
http://biz.yahoo.com/p/b/brcm.html
After Hours: $41.67
STATUS: Flying plateau. Holding the 18 day EMA (41.81) on low, below average volume, holding its gain and refusing to give it up as the market sold back. Like to see that stinginess in a stock after a good move as it shows no sellers and usually portends a continued move higher. Being patient and letting it show us that move. To recap: BRCM made us some good money in July, and it is setting up to do so once more. A big gap higher in July on earnings and since then a 3 week lateral move on mostly low, below average volume. A pullback to the 18 day EMA looks like the final shakeout as BRCM. Excellent money flow is leading higher. Ready to move in as BRCM continues its move and clears the recent highs on above average volume. That is our buy point.
Volume: 4.628M Avg Volume: 7.638M
BUY POINT: Aggressive: 42.95; Clear resistance: $43.54 Volume=11M Target=$49.95 Stop=$42.25
POSITION: RCQ KS - Nov. $42.50c (57 delta) &/or Stock
http://www.investmenthouse.com/ct/brcm.html
Play Date: 08/13/2005
CMX (Caremark RX--$46.12; +0.38; optionable): Specialized health services
http://biz.yahoo.com/p/c/cmx.html
After Hours: $45.95
STATUS: Breakout test. Showed some life Wednesday, moving off the 18 day EMA (45.51). Volume, however, failed to follow it, indeed showing the lowest level of the month. That won't do it. Want to see strong trade as it makes the rebound move. CMX blasted out of a nice little 8 week double bottom with handle base to start August. This base followed directly on the heels of a 15 week trading range in May; a good base on base pattern that really works to weed out the sellers. Strong volume breakout and then a lateral move the past week to tap and test the 10 day EMA on the Friday low as volume turned low and below average Thursday and Friday. Nice test and looking for a strong break higher once more as CMX moves to another new all-time high.
Volume: 952.6K Avg Volume: 2.297M
BUY POINT: $46.35 Volume=2.6M Target=$52.08 Stop=$45.38
POSITION: CMX LI - Dec. $45c (62 delta) &/or Stock
http://www.investmenthouse.com/ct/cmx.html
Play Date: 07/30/2005
CVD (Covance--$49.55; -0.13; optionable): Research services
http://biz.yahoo.com/p/c/cvd.html
STATUS: Breakout test. Tightening up over the 18 day EMA (49.05) the past week on continued low volume as CVD consolidates, making higher lows and setting up for the next move in its breakout. Finding resistance at 50; will need some strong volume to make the breakout and make it stick. To recap: CVD continues to move laterally the past two weeks following the breakout from a 14 week double bottom with handle base that formed along the 50 day EMA (47.85). Holding up very well in the weaker market. Want to see a big volume surge as it makes the move through the buy point.
Volume: 114.9K Avg Volume: 371.192K
BUY POINT: $50.25 Volume=400K Target=$56.95 Stop=$48.68
POSITION: CVD KJ - Nov. $50c (52 delta) &/or Stock
http://www.investmenthouse.com/ct/cvd.html
Play Date: 08/15/2005
FLSH (M-Systems Flash Disk--$26.06; +0.78; optionable): Semiconductors
http://biz.yahoo.com/p/f/flsh.html
After Hours: $26
STATUS: Double bottom w/handle. Great volume Monday, backing off the past two sessions, but holding the 18 day EMA (25.09) as it continues forming the handle. Looks super with the strong money flow and relative strength ready for the breakout. To recap: FLSH has already made us some nice money, and now it is ready to do it again. Strong volume Monday as FLSH rallied off the 18 day EMA and broke out from the handle of its 23 week base. Solid pattern that used the 200 day SMA (21.10) as support for the two legs. Strong money flow is leading higher and relative strength broke out as well. Positive accumulation shows net buyers. Making a 5 year new high and ready to move in as it continues the breakout.
Volume: 661.978K Avg Volume: 639.322K
BUY POINT: $26.68 Volume=850K Target=$30.69 Stop=$25.41
POSITION: VUM AE - Jan. $25c (68 delta) &/or Stock
http://www.investmenthouse.com/ct/flsh.html
Play Date: 08/03/2005
MMSI (Merit Medical Systems--$17.94; -0.23; optionable): Medical instruments
http://biz.yahoo.com/p/m/mmsi.html
After Hours: $18.01
STATUS: Flying plateau. Volume has kicked up to average the past two sessions as MMSI flirts with a breakout from this lateral move after the strong break higher in mid-July. To recap: Broke out of its first base since the bottom in mid-July. Nice 7 month cup with handle base with a strong volume breakout preceded the current small base. Solid money flow is leading higher and relative strength is ready to make the breakout as well.
Volume: 182.621K Avg Volume: 161.963K
BUY POINT: New: 18.12 (orig. $17.74) Volume=235K Target=$20.44 Stop=$16.79
POSITION: RMQ AQ - Jan. $17.50c (54 delta) &/or Stock
http://www.investmenthouse.com/ct/mmsi.html
Downside:
Play Date: 08/13/2005
IYR (Dow Jones Real Estate Index--$64.25; -0.61; optionable): Closed end real estate ETF
http://biz.yahoo.com/p/i/iyr.html
STATUS: Put. Volume has jumped the past two sessions, moving above average as IYR tested the 50 day SMA (64.99). Wednesday it started back down on some strong volume. It held at 64 and rebounded some to close so we held off on starting the position. Looks ripe to fall and we will be ready to move in as it does. To recap: Real estate is starting to show signs of wear and tear, breaking down in the past week after strong runs. The IYR ETF broke out from a 20 week base in June and rallied to 69 to start the month. It then collapsed, plunging through the 50 day EMA. IYR managed a very low volume rebound, tapping at the 50 day MA. Still looking for that kiss goodbye and a rollover once more and give us the second downside run in this sell off. Money flow has flushed down the toilet and we are looking for IYR to follow it further. A move to the target lands us a 42%ish gain.
Volume: 3.068M Avg Volume: 1.959M
BUY POINT: New: $64.11 (orig. $63.91) Volume=2.5M Target=$62 Stop=$64.55
POSITION: IYD UL - Sept. $65p (-47 delta)
http://www.investmenthouse.com/ct/iyr.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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