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Begin part 3 of 3
THE PLAYS
Good movers: AKAM; CRXL; ESLR; HOM; KNOT
Strong plays:
1) HITK: Market leader moving toward the breakout on strong volume.
2) NTES: Strong stock pausing at the 50 day EMA.
3) IWM: Want to be ready when it rolls back down.
4) SPY: Ditto
5) AME: Continues to look great.
6) DRRX: Took a pause
7) NETL: Volume keeps dropping as NETL makes a test of the 50 day EMA breach.
NEW PLAYS:
Upside plays:
Play Date: 10/17/2005
NTES (Netease.com--$80.17; +0.75; optionable): Chinese internet
http://biz.yahoo.com/p/n/ntes.html
After Hours: $80.16
STATUS: Test 50 day EMA. Blasted out of a 22 month base in August with a big gap higher. NTES then rallied up the 18 day EMA (82.95) with a strong run. In the recent selling NTES came back to test the 50 day EMA (78.51) on mostly below average volume. Not bad action and rather typical: breakout, run up the 18 day EMA, then test the 50 day EMA before starting higher once more. Looking for strong volume as it starts back up.
Volume: 895.205K Avg Volume: 1.219M
BUY POINT: $81.25 Volume=1.6M Target=$94.95 Stop=$78.39
POSITION: NGQ AP - Jan. $80c (51 delta) &/or Stock
http://www.investmenthouse.com/ct/ntes.html
Play Date: 10/17/2005
HITK (Hi-Tech Pharmacal--$31.71; +0.54; no options): Generic drugs
http://biz.yahoo.com/p/h/hitk.html
After Hours: $31.71
STATUS: Cup w/handle. Volume was up and above average Monday as HITK started the breakout move from its13 week base sporting solid 4 to 2 accumulation (4 up price weeks on rising volume to 2 down price weeks on rising volume). A strong leader with top flight fundamentals and a great pattern. Ready to breakout and move to a new all-time high.
Volume: 116.451K Avg Volume: 102.869K
BUY POINT: $31.85 Volume=154K Target=$38.38 Stop=$30.28
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/hitk.html
Downside:
Play Date: 10/17/2005
IWM (Ishares Russell 2000--$63.02; +0.11; optionable)
http://biz.yahoo.com/p/i/iwm.html
After Hours: $63.03
STATUS: Put. Crashed lower as the small caps led the selling lower in October. IWM blew through the 200 day SMA (63.08) last Tuesday and sold to 61.05. It rebounded with the market and showed a doji at the 200 day Monday, tapping the 10 day EMA (63.31) on the intraday high before sliding back. Lower volume Monday after a pretty strong volume session Friday. This is one of the plays that we catch for the next test that probes the recent October low. If it keeps falling we will let it run. A move to the target, however, lands us a nice 50%ish gain.
Volume: 32.204M Avg Volume: 25.562M
BUY POINT: $62.91 Volume=30M Target=$61.05 Stop=$63.34
POSITION: DIW WS - Nov. $63.50p (-51 delta)
http://www.investmenthouse.com/ct/iwm.html
Play Date: 10/17/2005
PIR (Pier 1 Imports--$10.93; +0.36; optionable): Home furnishings
http://biz.yahoo.com/p/p/pir.html
STATUS: Put. In a steady downtrend for most of 2004 and 2005, bouncing steadily lower below the 10 and 18 day EMA, coming up for air on occasion to test the 50 day EMA (12.19). Last did that in mid-September and then resumed the move downside. This is its second test of the 18 day EMA (11.13) since the bounce up to the 50 day EMA, and that means it has a couple more runs lower on this leg. A move to the target lands us a 40%ish gain.
Volume: 2.617M Avg Volume: 1.279M
BUY POINT: $10.81 Volume=1.3M Target=$9.29 Stop=$11.15
POSITION: PIR WV - Nov. $12.50p (-50 delta)
http://www.investmenthouse.com/ct/pir.html
Play Date: 10/17/2005
SPY (S&P Depository Receipts--$119.11; +0.44; optionable)
http://biz.yahoo.com/p/s/spy.html
After Hours: $119.10
STATUS: Put. Tumbled lower in the October selling from a lower high. It has rebounded the past three sessions to test the 10 day EMA (119.14) on declining volume. May find the strength to rally up to the 200 day SMA (120.03), but the entire market is looking pretty wobbly after this low volume rebound and we want to be ready to move in if it turns back down. A move to the target lands us a 44%ish gain.
Volume: 68.973M Avg Volume: 63.487M
BUY POINT: $118.97 Volume=70M Target=$117.15 Stop=$119.26
POSITION: SPY WO - Nov. $119p (-46 delta)
http://www.investmenthouse.com/ct/spy.html
CONTINUING PLAYS
Play Date: 10/11/2005
AME (Ametek--$43.11; +0.2; optionable): Industrial electrical equipment.
http://biz.yahoo.com/p/a/ame.html
STATUS: Breakout test. Volume was up Monday as AME edged higher, still ready to continue the run from its late September breakout. Looks solid, just need to make the breakaway to the upside. 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 (39.47) 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: 345.6K 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--$17.54; +0.01; optionable): Commercial aircraft and business jet interior products
http://biz.yahoo.com/p/b/beav.html
After Hours: $17.54
STATUS: Cup w/handle. Still forming the handle, tapping the 10 day EMA (17.13) on the lows and then rebounding. That works to shakeout the last sellers. Volume remains low, showing very few willing to give it up here. Just waiting for the break higher on strong volume. 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: 437.478K 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: 10/01/2005
DRRX (Durect--$6.75; -0.13; no options): Drug delivery platforms
http://biz.yahoo.com/p/d/drrx.html
After Hours: $6.75
STATUS: Test breakout. Low volume test of the two recent jumps higher, tapping at the 10 day EMA (6.57) on the lows and rebounding to recoup some of the loss. Still solid, still ready to move. To recap: DRRX broke out from a long 24 month trading range in June, rallying up the 18 day EMA (6.56) 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: 210.95K Avg Volume: 360.767K
BUY POINT: $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--$11.99; -0.01; optionable): Business software
http://biz.yahoo.com/p/i/infa.html
After Hours: $12
STATUS: Cup w/handle. Another nice tight doji along the 10 day EMA (11.89) as INFA continues to set up for the breakout. Very tight, flat range the past two weeks, waiting for the catalyst to send it higher. 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 (11.32) 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: 1.22M 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: 10/15/2005
MTIX (Micro Therapeutics--$6.49; +0.07; no options): Medical instruments
http://biz.yahoo.com/p/m/mtix.html
After Hours: $6.55
STATUS: Test breakout. Volume was up and slightly above average Monday as MTIX reached down to the 18 day EMA (6.04) on the low and rebounded for a modest gain. Big blast higher last Monday, gapping out of a 9 week double bottom with handle base. It surged over 7.50 and then fell back in the selling to fill the gap. It held the break and is now starting to work higher. Strong 4 to 1 accumulation in the base shows plenty of strong buying, and money flow. Looks ready to continue its move now that it has tested and volume is coming back in as MTIX moves higher.
Volume: 189.466K Avg Volume: 121.092K
BUY POINT: $6.65 Volume=182K Target=$7.98 Stop=$6.18
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/mtix.html
Downside:
Play Date: 10/15/2005
CX (Cemex SA--$49.3; +1.72; optionable): Cement
http://biz.yahoo.com/p/c/cx.html
STATUS: Double top. Rebounded Monday, but on much lower, below average volume as CX tapped the 10 day EMA (49.67) on the high. Still looks as if it is in the death throes to us. Looking for that same good shot of volume seen on Friday as CX dipped lower. Indeed, this rebound gives us a better entry point. To recap: 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 (49.06) 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: 1.598M Avg Volume: 1.708M
BUY POINT: New: $48.68 (orig. $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--$20.18; +0.46; optionable): Semiconductor memory chips
http://biz.yahoo.com/p/n/netl.html
STATUS: Put. Rallied a bit higher Monday, but volume fell sharply as it did. It is still ready to turn and drop, but we need to see the volume kick up as it does. To recap: 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: 87.594K 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
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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