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Begin part 3 of 3

THE PLAYS

Monday night play results:
CVD: Sold to the 50 day EMA on low volume.
IVIL: Solid volume as IVIL started higher, ready for the breakout.
TOO: Sold a bit further on lower, below average volume, but still holding the breakout.

Upside:

Play Date: 10/11/2005
CG (Carolina Group--$40.02; 0; optionable): Cigarettes
http://biz.yahoo.com/p/c/cg.html
STATUS: Test breakout. When the economy gets tough or the market starts to get uncertain, the public (and investors) tend to turn to vices. Despite all of the negative publicity regarding cigarettes, CG (a new issue in 2002) has rallied well, forming bases and breaking higher. This is the second base this year, a 9 week pattern moving in a $2 trading range above the 50 day EMA (38.56). It broke higher to end September and start October, volume kicking in sharply in October. In the market selling it eased back to test the break higher, tapping at the 18 day EMA (39.51) on the intraday lows and holding the 10 day EMA (39.83) on the closes. Positive 3:2 accumulation shows net buying to go along with its strong money flow. Relative strength broke out with the stock, a good corroboration. Looking for the volume to return as CG starts higher.
Volume: 0 Avg Volume: 335.018K
BUY POINT: $40.39 Volume=425K Target=$46.45 Stop=$39.25
POSITION: CG CH - Mar. $40c (56 delta) &/or Stock
http://www.investmenthouse.com/cd/cg.html

Play Date: 10/11/2005
ORCC (Online Resources--$10.6; +0.05; no options): Outsourced internet financial technology services (web-based banking and payment systems).
http://biz.yahoo.com/p/o/orcc.html
STATUS: Cup w/handle. While the market has tanked lower, ORCC has formed a very nice 17 week base that used the 200 day SMA (9.52) on the August low as support. It skipped right up off that level without a hitch, indicating plenty of big money support for the stock. Indeed, during the recent market selling ORCC faded back to the 10 day EMA (10.54) on low volume to form the handle to the base. The low volume shows few sellers, and what it is doing is shaking out the last sellers. Money flow has held up well as ORCC makes this pullback. Positive accumulation shows net buyers. Tuesday volume shot higher as ORCC posted a small gain on top of the 10 day EMA; we call that a 'get ready' spike as the stock crouches ahead of a breakout move. Looks nice despite all of the negatives in the market. We are noticing that payment system stocks (GPN is another) are holding up very well and moving forward in the market selling. Despite the worries about the economies because of the Fed and energy prices, payment still ahs to be made.
Volume: 396.145K Avg Volume: 125.956K
BUY POINT: $11.25 Volume=189K Target=$13.55 Stop=$10.46
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cd/orcc.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/cd/xle.html

Still ready to move:

RBAK: Still looks very good as it moves up off the 18 day EMA.
GRMN: Nice test lower below the 18 day EMA and rebounds to hold that level on strong volume. That shows a lot of buying coming in on the test lower as buyers remain pretty eager to get into this stock.

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: Dove lower after hours on earnings that missed on revenues and units sold. Will test the 50 day EMA (48.92) on the open.

BLUDE: Was ready and is now tanking.

COH: Still at the 200 day SMA, holding that level.

PSYS: Looks good as volume starts back above the 10 day EMA and near a high.

RTSX: Volume jumped as it sold hard to the 50 day EMA.

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.

BTUI: In late July BTUI broke out from a 17 month base with a massive gap higher. It ran higher using the 18 day EMA as support on the run. It has made four bounced off the 18 day EMA after the breakout. A strong stock will make four to five such bounces before needing a lower test to the 50 day EMA. At this juncture in the move we would wait for the test before trying to get on this stock.

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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