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us stock market, top stock pick
Begin part 3 of 3
THE PLAYS
Good movers: AMLN; HAE; IRIS; MACR; SMTS; TSAI; UNH
Strong plays:
1) AQNT: Volume is back as the stock moves off the 50 day EMA.
2) SYKE: Ready to move higher after filling the gap.
3) CX: Ready to fall and give us a nice gain.
4) AME: Ready to go.
5) BEAV: Just needs some more volume.
6) DRRX: Rallying on volume toward the breakout.
7) INFA: Volume is up as INFA crouches for the breakout move.
8) KONG: Just needs some more trade.
NEW PLAYS:
Upside plays:
Play Date: 10/15/2005
AQNT (Aquantive--$19.17; +1.18; optionable): Digital marketing via internet
http://biz.yahoo.com/p/a/aqnt.html
After Hours: $19.16
STATUS: Ascending base. Volume has moved back above average the past two sessions as AQNT held support at 18 and rallied sharply Friday. We were watching AQNT for a buy point at the end of September but it was caught in the October selling that pushed it lower. Volume remained low and below average on the fade, showing few sellers. That looks to be the final shakeout in the 13 week base sporting solid 4 to 2 accumulation (4 up price weeks on rising volume to 2 down price weeks on rising volume). Strong money flow is leading higher. Looking for continued strong volume as AQNT moves through the buy point; that shows us the big money is really moving in after the early October shakeout. Market leader with excellent fundamental and technical characteristics.
Volume: 1.438M Avg Volume: 1.034M
BUY POINT: $19.38 Volume=1.6M Target=$23.35 Stop=$18.48
POSITION: QBT CD - Mar. $20c (53 delta) &/or Stock
http://www.investmenthouse.com/ct/aqnt.html
Play Date: 10/15/2005
HOM (Home Solutions of America--$4.85; +0.1; no options): Home interior restoration
http://biz.yahoo.com/p/h/hom.html
STATUS: Test breakout. HOM has formed a pennant the past 6 weeks after surging higher in August and September as the storms hit. Its business is tailor made for water damage and the like. A new issued in mid-2003, HOM came to life this summer. Excellent surge, nice test that has held the 18 day EMA (4.65), making higher lows up that support level. Money flow is surging back up ahead of price. Volume has dried up on the move the past two weeks; with all of the strong attributes this looks like the quiet before the storm of the continued break higher.
Volume: 456.6K Avg Volume: 1.322M
BUY POINT: $5.12 Volume=1.8M Target=$6.32 Stop=$4.76
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/hom.html
Play Date: 10/15/2005
INGR (Intergraph--$45.46; +0.10; optionable): Computer graphics software for commercial and government sectors
http://biz.yahoo.com/p/i/ingr.html
STATUS: Flying plateau. A strong year for INGR. After the run higher it needed a breather and has been working laterally the past 6 weeks, using the 18 day EMA (44.49) as support. Indeed, it has formed something of a mini double bottom with handle as it holds its gains even in the October selling. A strong leadership stock with topflight fundamental credentials to go along with its pattern. Friday INGR hit a new high but could not hold it into the close. Still looking good in its lateral move and has the ability to deliver us a nice gain even from this short pattern. Again, its ability to hold during the selling was impressive, sending relative strength to a breakout ahead of the price. Looking for price to follow.
Volume: 455.004K Avg Volume: 290.203K
BUY POINT: $46.31 Volume=435K Target=$53.55 Stop=$44.74
POSITION: IGQ AI - Jan. $45c (57 delta) &/or Stock
http://www.investmenthouse.com/ct/ingr.html
Play Date: 10/15/2005
SYKE (Sykes Enterprises--$13.53; +0.18; optionable): Outsourced customer contact management solutions
http://biz.yahoo.com/p/s/syke.html
After Hours: $13.53
STATUS: Breakout test. SYKE is a market leader with strong fundamentals to go along with its strong technical position. It broke out from a from a 20 month base in late June and has rallied since. It gapped sharply higher in early October as it upped its Q3 guidance (earnings November 8). During the recent selling it tested that move, filling the gap on three occasions as it tapped lower intraday and rebounded to the close. Money flow has resumed its strong rise ahead of the stock and we anticipate the stock to follow it once more and continue the breakout move.
Volume: 269.761K Avg Volume: 292.367K
BUY POINT: $13.69 Volume=439K Target=$16.55 Stop=$12.73
POSITION: UIK AV - Jan. $12.50c (62 delta) &/or Stock
http://www.investmenthouse.com/ct/syke.html
Downside:
Play Date: 10/15/2005
CX (Cemex SA--$47.58; -0.91; optionable): Cement
http://biz.yahoo.com/p/c/cx.html
STATUS: Double top. CX double topped in early October, making the second top after the early September storm higher. The second top had no volume. CX thudded down to the 50 day EMA (49.05) bounced in an attempt to recover, but then breached that support Thursday. Friday it tried the 50 day but then turned over and fell on strong volume; not good action as the market was rallying. Looking for a continued move lower to enter. Looking for a 40%ish gain on the move to the target. Like the play because it can give us this gain without even having to hit the late August low at 44.
Volume: 3.485M Avg Volume: 1.708M
BUY POINT: $47.42 Volume=1.8M Target=$45.38 Stop=$48.32
POSITION: CX WJ - Nov. $50p (-73 delta)
http://www.investmenthouse.com/cs/cx.html
Play Date: 10/15/2005
NETL (Netlogic Microsystems--$19.72; +0.09; optionable): Semiconductor memory chips
http://biz.yahoo.com/p/n/netl.html
After Hours: $19.74
STATUS: Put. Sold off hard in early October on strong volume, falling to 18 on the low. It managed to rebound last week but volume fell way off and NETL showed a doji Friday below the 50 day EMA (20.09). That combination often indicates a turn back down is coming. That pullback will give us a 40%ish gain on a move to the target.
Volume: 131.703K Avg Volume: 255.223K
BUY POINT: $19.61 Volume=383K Target=$18.05 Stop=$19.92
POSITION: LKT WD - Nov. $20p (-48 delta)
http://www.investmenthouse.com/ct/netl.html
CONTINUING PLAYS
Play Date: 10/11/2005
AME (Ametek--$42.91; +0.65; optionable): Industrial electrical equipment.
http://biz.yahoo.com/p/a/ame.html
STATUS: Breakout test. AME ended last week testing and holding the 18 day EMA (42.34) on lower, below average volume. It is setting up the continuation of its strong late September breakout, and this pullback is shaking out the sellers and setting up the continued breakout run. To recap: 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 (39.43) 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.
Volume: 266.5K Avg Volume: 315.332K
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/ct/ame.html
Play Date: 10/10/2005
BEAV (BE Aerospace--$17.53; +0.69; optionable): Commercial aircraft and business jet interior products
http://biz.yahoo.com/p/b/beav.html
After Hours: $17.53
STATUS: Cup w/handle. Strong price move Friday but volume did not follow the stock higher. BEAV is moving toward the breakout point from its nice base. Just want to see the volume pick up with the stocks move. To recap: Nice 9 week base looking for a 4 year high as it continues higher. Solid 4 to 2 accumulation (4 up price weeks on rising volume to 2 down price weeks on rising volume) shows solid buying in the base, preparing BEAV for the breakout. Strong surge two weeks back on volume as BEAV broke higher, and it is now forming a nice low volume handle. Strong money flow is moving higher and relative strength broke out on the move. Solid leader with great sales, great revenues, and a great technical pattern.
Volume: 519.347K Avg Volume: 638.429K
BUY POINT: $18.05 Volume=950K Target=$21.68 Stop=$16.85
POSITION: BQV AW - Jan. $17.50c (64 delta) &/or Stock
http://www.investmenthouse.com/ct/beav.html
Play Date: 10/13/2005
DESC (Distributed Energy Systems--$7.13; -0.03; optionable): Hydrogen fuel cells, etc.
http://biz.yahoo.com/p/d/desc.html
STATUS: Test 50 day EMA. Nice doji over the 50 day EMA on low volume Friday as DESC continues to set up over support for the next leg higher. To recap: DESC has come back to the 50 day EMA (6.87), its second test of that support level after a July breakout from a cup with handle base. After a strong move up the 18 day EMA (7.40) a stock will test the 50 day EMA before resuming the run. It is making this test of the 50 day on very low, below average volume during all of that nasty market selling. It made a test while the other stocks sold off. Strong money flow has held up during the pullback. Buyers are starting to show up on this test of the 50 day. Looking to move in as it continues higher on volume. A strong market leader with strong earnings and sales to go with the pattern.
Volume: 396.093K Avg Volume: 1.131M
BUY POINT: $7.55 Volume=1.2M Target=$9.45 Stop=$7.02
POSITION: DVU CU - Mar. $7.50c (49 delta) &/or Stock
http://www.investmenthouse.com/ct/desc.html
Play Date: 10/01/2005
DRRX (Durect--$6.88; +0.43; no options): Drug delivery platforms
http://biz.yahoo.com/p/d/drrx.html
STATUS: Test breakout. Volume was up Wednesday as DRRX moved below the 50 day EMA (6.27) but then was up even more Friday as the stock recovered and shot higher. Excellent recovery and looking for a breakout ahead after this shakeout. To recap: DRRX broke out from a long 24 month trading range in June, rallying up the 18 day EMA (6.53) into July. Another 6 week flat base led to an early September breakout. Another test took it back to the 50 day EMA two weeks ago and it is now starting to rebound to continue the breakout move. Volume has been low and below average since moving off the 50 day EMA and is now starting higher as it makes its move. Just what you want to see.
Volume: 435.901K Avg Volume: 360.767K
BUY POINT: New: 7.04 (orig. $6.98) Volume=500K Target=$8.38 Stop=$6.49
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/drrx.html
Play Date: 10/05/2005
INFA (Informatica--$12; +0.15; optionable): Business software
http://biz.yahoo.com/p/i/infa.html
After Hours: $11.99
STATUS: Cup w/handle. Strong volume has returned to INFA, rallying on Wednesday and Thursday as INFA flexed its muscles some in anticipation of an upside breakout. Looking ready and just needs to show us the move. To recap: INFA has formed a small cup with handle that is acting as the handle to a larger 21 month base. The small base shows solid 3 to 0 accumulation (3 up price weeks on rising volume to 0 down price weeks on rising volume), using the 50 day EMA (11.24) as support. Easing back, tapping at and holding the 18 day EMA on the lows. Strong money flow. Relative strength is breaking out ahead of the stock; very bullish. Another stock going about its own business as the market sold off.
Volume: 1.791M Avg Volume: 1.31M
BUY POINT: $12.05 Volume=1.5M Target=$13.98 Stop=$11.55
POSITION: UYF CB - Mar. $10c (72 delta) &/or Stock
http://www.investmenthouse.com/ct/infa.html
Play Date: 10/08/2005
KNOT (The Knot--$11.26; +0.56; no options): Internet marriage services
http://biz.yahoo.com/p/k/knot.html
STATUS: Breakout test. KNOT continues its lateral move along the 18 day EMA (10.84) with an occasional tap at the 50 day EMA (10.05) on the intraday lows. Good price action Friday following one of those tests of the 50 day Thursday that saw volume run in after the test. Looking for volume to continue as KNOT moves through the buy point. Held up during the selling; all that did was delay its continuation of the breakout move from its 5 month cup with handle base. Strong money flow and relative strength has already made the breakout move.
Volume: 117.711K Avg Volume: 104.767K
BUY POINT: $11.55 Volume=147K Target=$13.88 Stop=$10.72
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/knot.html
Play Date: 10/05/2005
KONG (Kongzhong--$13.51; +0.71; optionable): Chinese wireless interactive entertainment, etc.
http://biz.yahoo.com/p/k/kong.html
STATUS: Breakout test. A reach down to the 50 day EMA (11.82) intraday Thursday looks to have set the bottom of this breakout test. Friday KONG rallied but volume was not there; we think that will come this week as it continues higher. To recap: KONG was a new issue in July 2004 and formed its first base the past 10 months, a reverse head and shoulders. Big breakout in late September, and with the early October selling it came back to the 18 day EMA, holding that near support during the hard dump lower. Strong 12 to 4 accumulation in the base (12 up price weeks on rising volume to 4 down price weeks on rising volume) shows plenty of buying. Strong money flow, relative strength breakout, etc. In short it has all of the attributes you like.
Volume: 267.095K Avg Volume: 276.82K
BUY POINT: New: $13.65 (orig. $13.45) Volume=383K Target=$16.95 Stop=$13.11
POSITION: QKR CV - Mar. $12.50c (65 delta) &/or Stock
http://www.investmenthouse.com/ct/kong.html
Play Date: 10/06/2005
NVDA (Nvidia--$32.03; 0; optionable): Semiconductors
http://biz.yahoo.com/p/n/nvda.html
After Hours: $31.99
STATUS: Test 50 day EMA. NVDA spent the week at the 50 day EMA (32.52), holding that important support level after the early October selling pused it back from a nice but low volume move in late September. Held where it had to, the first step. Now it has to show some strong volume as it moves back up and through the 18 day EMA (32.71). Nice test of the breakout from a 6 month ascending triangle. Money flow remains strong.
Volume: 2.594M Avg Volume: 5.126M
BUY POINT: Aggressive: 33.11; orig. $33.55 Volume=6.5M Target=$40.45 Stop=$31.95
POSITION: UVA AT - Jan. $32.50c (60 delta) &/or Stock
http://www.investmenthouse.com/ct/nvda.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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