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us stock market, top stock pick
Begin part 3 of 3
THE PLAYS
Thursday night play results:
GRMN: Nice doji at the 10 day EMA, showing excellent relative strength.
ILMN: Solid break higher on strong volume.
NVDA: Holding the 18 day EMA on lower, average volume.
Upside:
Play Date: 10/08/2005
BRCM (Broadcom--$46.47; +0.58; optionable): Semiconductor integrated circuits
http://biz.yahoo.com/p/b/brcm.html
After Hours: $46.76
STATUS: Test 18 day EMA. Taking another run at BRCM. It is showing real strength as the market sold off, dropping on higher volume Thursday, but holding the 18 day EMA (45.86) after just cracking through it. This is the second test following the early September break higher from a 6 week flat base. Bigger picture this is a test of the breakout from a much larger 14 month cup with handle. Again, very strong pattern and very good relative strength as the market sold off last week. Just looking for volume to pick up as BRCM continues higher after this shallow test.
Volume: 4.434M Avg Volume: 6.882M
BUY POINT: $46.92 Volume=8.8M Target=$55.95 Stop=$45.45
POSITION: RCQ AI - Jan. $45c (62 delta) &/or Stock
http://www.investmenthouse.com/cd/brcm.html
Play Date: 10/08/2005
BVN (Compania De Minas--$30.64; +1.06; optionable): Gold mining
http://biz.yahoo.com/p/b/bvn.html
STATUS: Cup w/handle. BVN has spent the past 3 weeks moving laterally above the 18 day EMA (29.49), forming the handle to a 22 month base that has seen within it a several smaller bases. After a strong run in September when gold and BVN rallied to form the right side of its base, this lateral move is setting up the next run higher. Strong money flow and relative strength breaking out shows the underlying strength of the stock. Bounced Friday on rising but still below average volume. Looking for that volume to kick back in as BVN heads for the breakout. A top rated gold stock in terms of sales, earnings and pattern.
Volume: 378.8K Avg Volume: 394.897K
BUY POINT: $31.64 Volume=592K Target=$37.95 Stop=$29.43
POSITION: BVN CF - Mar. $30c (59 delta) &/or Stock
http://www.investmenthouse.com/cd/bvn.html
Play Date: 10/08/2005
MFLX (Multi-Fineline Electronics--$27.04; +0.29; optionable): Printed circuit boards
http://biz.yahoo.com/p/m/mflx.html
After Hours: $27
STATUS: Breakout test. A new issued in June 2004, MFLX formed a nice 6 month cup with handle base, breaking out in August. It moved in a trading range through the end of September and then shot higher. That was just in time for the market selling, and that pushed MFLX back down to the 18 day EMA (27.00) last week, but volume was lower and below average as it made the test. That shows few sellers and that keeps MFLX ready to continue the breakout move after this pressure is off the market. Solid accumulation and money flow. Waiting for volume to ramp up as MFLX resumes the breakout move.
Volume: 93.084K Avg Volume: 187.497K
BUY POINT: $27.48 Volume=281K Target=$32.95 Stop=$25.72
POSITION: FUX BX - Feb. $25c (68 delta) &/or Stock
http://www.investmenthouse.com/cd/mflx.html
Play Date: 10/08/2005
MUSE (Micromuse--$7.40; +0.10; optionable): Application software
http://biz.yahoo.com/p/m/muse.html
After Hours: $7.43
STATUS: Test 18 day EMA. MUSE is a top rated stock for earnings and sales, and it is making a nice test of its late August breakout. During last week's selling MUSE pulled back as well, but it held the 18 day EMA (7.23) on very low, below average volume. A nice 14 week cup base sporting solid 3 to 1 accumulation (3 up price weeks on rising volume to 1 down price week on rising volume). This is the second test of the breakout move, and strong stocks typically make four to five such jumps off the 18 day EMA on their runs. That leaves us plenty of upside to make money on MUSE. Held up extremely well in last week's selling.
Volume: 510.598K Avg Volume: 971.058K
BUY POINT: $7.57 Volume=1.3M Target=$9.15 Stop=$7.17
POSITION: QUM AU - Jan. $7.50c (56 delta) &/or Stock
http://www.investmenthouse.com/cd/muse.html
Play Date: 10/08/2005
PFWD (Phase Forward--$10.47; +0.44; no options): Integrated software for pharmaceutical, biotech, medical device companies.
http://biz.yahoo.com/p/p/pfwd.html
STATUS: Breakout test. Another strong stock that used last week's selling to test its explosive breakout. PFWD eased back on low volume, indicating few sellers. A new issue in July 2004, PFWD broke out of its first real base in September, a big 11 month cup with handle. Accumulation in the base was a strong 12 to 8, showing plenty of buying. Surging money flow as well. Relative strength broke out on the move as well, a good corroboration of the breakout. Love the first bases of new issues, especially the test of those breakouts. Looking for solid volume as it continues higher.
Volume: 135.208K Avg Volume: 180.485K
BUY POINT: $10.75 Volume=250K Target=$12.95 Stop=$10.11
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cd/pfwd.html
SUBSCRIBER PORTFOLIO: These are stocks subscribers suggest by vote that we put in a portfolio to track and move into the stocks if they perform well. If you have any suggestions for additions or deletions, email us. We don't cover them all each report, just when something interesting is developing.
AAPL, CELG, BLUDE, BR, COH, HW, PSYS, RTSX, STN
AAPL: Held support at 50 intraday and then rebounded for a modest loss. A test to the 50 day EMA (48.74) would be a solid new entry point, but it may not make it back to that point.
CELG: Doji below the 50 day EMA after crashing through that level on strong volume Thursday. Some support at 47.50 where it tapped on the low the past two sessions.
PSYS: Modest bounce on low volume tested the 10 day EMA. Still in decent shape but would like to see a full test of the 50 day EMA (50.61) to set up the next run.
RTSX: Another nice tight doji on the 18 day EMA on low volume. Setting the next move higher.
AAPL: Sold on strong volume, undercutting the 18 day EMA. Rebounded some but still closed below the 18 day. Just about time for it to test the 50 day EMA. That should proved an new entry point.
CELG: Diving through the 50 day EMA on rising, above average volume.
BR: Gapped below the 50 day EMA, managing a rebound but not a recovery over that level.
RTSX: Holding up very well, holding at the 18 day EMA and showing a doji on rising, above average volume.
SUBSCRIBER WATCHLIST
We continually receive ideas for potential plays from subscribers. Many times they are already on our watchlists, other times not. We always take a look and sometimes find a gem or two, or more. We don't necessarily endorse these, but want to provide a forum for subscribers with ideas that may appeal to other subscribers. We may just put on the ticker or we might describe our thoughts as to why or why not we think it is a buy or sell. This is a way we can all learn a bit more and maybe find a few more candidates to make us some good money.
DBRN: A nice leader on our radar screen as well, forming a short double bottom the past three weeks and bouncing on strong volume last week as it reported strong retail sales. Cleared the 50 day EMA and showing strength, but would like to see a bit better formation to buy into.
IM: Trying to make the breakout from a 10 month cup with handle base. Strong surge Wednesday but it reversed and sold off to the 10 day EMA on the close. Still in the handle to the pretty solid pattern.
Good Investing!
Jon L. Johnson and The Daily Staff
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 of 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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