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Begin part 3 of 3

THE PLAYS

Monday night play results:
BEAV: Still working on the handle on below average volume.
CHS: Low volume pullback to the 10 day EMA, still forming the handle.
IVIL: Solid volume as IVIL started higher, ready for the breakout.
SMSC: Fell through the 18 day EMA on lower volume. Looks as if it is going to fill the gap.
TRI: Doji right below the 10 day EMA on low volume. Ready to turn back down and resume the downtrend.

Upside:

Play Date: 10/11/2005
AME (Ametek--$42.83; +0.10; optionable): Industrial electrical equipment
http://biz.yahoo.com/p/a/ame.html
STATUS: Breakout test. AME blasted higher in late August and early September, moving out of a 12 week double bottom with handle base. Solid pattern that formed using the 200 day SMA (39.33) as support for the two legs. Nice run in 2003 and 2004, needing a breather to consolidate the move. A 16 week base from March to June could not yield a strong breakout. It then fell into the current base, sporting solid 3:1 accumulation (3 up price weeks on rising volume to 1 down price weeks on rising volume) and strong money flow. Nice price breakout and relative strength moved with it, showing us AME's strength in a down market. It used the recent selling as a test of its breakout; like it when a stock shows strength even in overall market weakness. Nice doji on the candlestick Tuesday, and after a pullback that can signal the move back up is ready to begin.
Volume: 0 Avg Volume: 316.755K
BUY POINT: $43.65 Volume=475K Target=$50.32 Stop=$42.05
POSITION: AME CH - Mar. $40c (66 delta) &/or Stock
http://www.investmenthouse.com/ci/ame.html

Play Date: 10/11/2005
PCP (Precision Castparts--$50.73; 1.18; optionable): Steel and iron
http://biz.yahoo.com/p/p/pcp.html
STATUS: Test 50 day EMA. Broke out from a 4.5 month base in mid-July, gapping higher on strong volume. It then rallied higher up the 18 day EMA (50.54) as a strong stock will. It used the recent market selling to come back to the 50 day EMA on low volume, also what a strong stock does. Volume then jumped back up on Tuesday as it tapped at the 50 day on the low and rebounded for a nice gain. Those are all attributes of a stock ready to move higher. Want to see solid trade continue as PCP continues the rebound move to start the next leg.
Volume: 998K Avg Volume: 904.726K
BUY POINT: $51.12 Volume=1.2M Target=$58.75 Stop=$48.22
POSITION: PCP CJ - Mar. $50c (58 delta) &/or Stock
http://www.investmenthouse.com/ci/pcp.html

Play Date: 10/11/2005
SWN (Southwestern Energy--$71.25; 1.95; optionable): Independent oil and gas. Forecast to announce a split 10-27-05 after the close
BACKGROUND: Last announced a 2:1 split on 5-11-05 at $67.50.
http://biz.yahoo.com/p/s/swn.html
After Hours: $70.80
STATUS: Test 18 day EMA. Strong mover in late 2004 and all of 2005. SWN broke out in May and rallied up the 18 day EMA (69.52) and then came back to test the 50 day EMA (62.33) in August after that run; typical action. Broke higher again in September and shot over 80. It then got caught in the selling and fell to the 18 day EMA. Unlike many of the energy stocks it has held the near support. Showing relative strength most of the energy sector is not showing. Volume started to move higher as it held the 18 day and moved higher Tuesday. Looking for a break over the 10 day EMA on stronger volume to start the play.
Volume: 2.82M Avg Volume: 1.859M
BUY POINT: $71.78 Volume=2.8M Target=$85.95 Stop=$69.12
POSITION: SWN CO - Mar. $75c (51 delta) &/or Stock
http://www.investmenthouse.com/ci/swn.html

Downside:

Play Date: 10/11/2005
XLE (Spdr Energy Sector--$49.95; +1.17; optionable)
http://biz.yahoo.com/p/x/xle.html
After Hours: $50.04
STATUS: Put. Oil stocks may be ready to continue basing, but that does not mean they won't continue to have ups and downs. XLE peaked at the end of Q3 and dove lower to start October. Strong volume as energy was sold off hard. It bottomed Thursday and bounced back to the 50 day EMA (50.37), tapping at that level on the Tuesday high. Volume has been lower o n the bounce than the selling, showing less enthusiasm as it moves up for the test. We are looking for a modest drop to take it back near the recent low. A move to the target lands us a 43%ish gain.
Volume: 17M Avg Volume: 14.918M
BUY POINT: $49.78 Volume=18M Target=$47.85 Stop=$50.48
POSITION: XBT WX - Nov. $50p (-46 delta)
http://www.investmenthouse.com/ci/xle.html

Good Investing!
Jon L. Johnson and your IH Alerts 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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