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Begin part 3 of 3

THE PLAYS

Good movers: IRIS; ORCC

Thursday night play results:
MPWR: Took the day off and still ready to continue the breakout move.
SMTS: Good price move but volume not there yet. Still ready.
MUSE: Held steady on low volume.
ORCC: Nice blast higher on continued solid trade.
PFWD: Held steady on continued below average volume

Upside:

Play Date: 10/15/2005
AOB (American Oriental Bioengineering--$5.24; +0.35; no options): Bioengineered products and traditional Chinese medicinal products
http://biz.yahoo.com/p/a/aob.html
STATUS: Double bottom w/handle. Sweet little 6 week pattern formed and it used the October selling to perfection. A double bottom is a 'scare them out' pattern in most instances where the second leg lower is violent and shakes out the remaining sellers after the recovery from the first leg. In short, just when the buyers thought it was safe to enter the stock tanks again and scares out the uncommitted (and we are not talking mental cases here). At that point the demand side takes over and the stock moves higher. AOD jumped higher Tuesday and then formed a handle, a lateral move that shakes out the very last sellers. Friday it tapped the 18 day EMA (4.65) on the low and rebounded. Strong 3 to 0 accumulation in the base (3 up price weeks on rising volume to 0 down price weeks on rising volume) shows all buying as it sets up for a breakout to a new all-time high. A new issue in September 2004, AOB just celebrated its first birthday, and this pattern and a breakout will be a good send off. Strong money flow is surging ahead of price. Nice.
Volume: 684.9K Avg Volume: 1.293M
BUY POINT: $5.51 Volume=1.9M Target=$6.75 Stop=$5.12
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cd/aob.html

Play Date: 10/15/2005
PQUE (Petroquest Energy--$10.50; +0.65; optionable): Independent oil and gas
http://biz.yahoo.com/p/p/pque.html
After Hours: $10.49
STATUS: Breakout test. Oil showed some life Friday, indicating it is going to recover despite the pretty impressive drop in oil prices last week. PQUE never really fell out of bed. It broke out from a 6.5 month cup with handle base in mid-September and surged to 11.25, gapping higher on the move. It came back quickly one session in the early October selling and filled the gap with one down session. It then recovered immediately and has held the 18 day EMA (9.91) the past week on low volume, setting up for the next break higher. Outstanding 9 to 3 accumulation in the base shows plenty of buying. Money flow remains strong, and unlike many energy stocks, PQUE held its relative strength and that is ready to breakout once again with the stock price. A market leader in pattern and fundamentals.
Volume: 1.168M Avg Volume: 1.027M
BUY POINT: $10.82 Volume=1.2M Target=$13.65 Stop=$10.06
POSITION: KUG AB - Jan. $10c (57 delta) &/or Stock
http://www.investmenthouse.com/cd/pque.html

Play Date: 10/15/2005
TEX (Terex--$51.95; +1.24; optionable): Big construction equipment
http://biz.yahoo.com/p/t/tex.html
STATUS: Double bottom w/handle. A sweet base on base pattern has formed the past 7.5 months with a double bottom the past 10 weeks putting the nice finishing touches on the larger pattern. Excellent 5 to 0 accumulation in the shorter pattern (5 up price weeks on rising volume to 0 down price weeks on rising volume) shows nonstop buying. Money flow is leading higher as well, and relative strength has broken out ahead of the stock, a most bullish sign. Ready for a new all-time high. Market leader with market leading fundamentals and technical characteristics.
Volume: 420.9K Avg Volume: 677.814K
BUY POINT: $52.52 Volume=1M Target=$60.55 Stop=$49.95
POSITION: TEX AJ - Jan. $50c (68 delta) &/or Stock
http://www.investmenthouse.com/cd/tex.html

Downside:

Play Date: 10/15/2005
AXL (American Axle & Manufacturing--$21.64; +0.01; optionable): Auto parts
http://biz.yahoo.com/p/a/axl.html
STATUS: Put. AXL is in what we call a continuing downtrend that started in September as AXL fell through the 200 day SMA (24.52). It rebounded, but could not break through the 10 day EMA (now 21.74) and started the current 6 week trend lower. Weak stocks will trend lower below the 10 and 18 day EMA after a breakdown just as a strong stock will trend above those levels after a breakout. AXL ended last week with a rally that tapped the 18 day EMA (22.15) on the intraday high before giving the move back. Money flow is leading lower, and we are looking for AXL to continue the trend lower after this test of near resistance. A move to the target lands us a 50%ish gain.
Volume: 1.187M Avg Volume: 921.182K
BUY POINT: $21.51 Volume=1M Target=$20 Stop=$21.78
POSITION: AXL WX - Nov. $22.50p (-62 delta)
http://www.investmenthouse.com/cd/axl.html

Still ready to move:
CCI
ADSK (note new buy point in play table)
MPWR
MUSE
NVDA
SMTS: A buy from the Friday close if it continues higher on some decent trade.

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

BLUDE, HW, STN are struggling. If you have any favorites with potential that you want ot see considered for replacing these that have turned to laggards, let us know.

CELG: Unlikely recovery as MER upgraded the stock.

PSYS: Working laterally with a mushy up and down consolidation. Low volume and holding the rising 50 day EMA. Will be ready in a week or so.

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.

NVAX: After a long downtrend that started in late 2003, NVAX is putting together a decent rebound. It cleared the 200 day SMA in early October on some explosive trade, and volume has remained strong as it continues to move higher. Still some upside on this move but questionable as for long term.

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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