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Begin part 3 of 3

THE PLAYS

Good movers: MRVL; RADS; REDF

Thursday night play results:
BBY: Held steady on continued average-ish volume. Still set up for the breakout.
OIS: Volume remained strong but OIS could not move higher Friday.
THQI: Volume is edging higher, still right at the breakout point.

New Plays:

Upside:

Play Date: 12/10/2005
CERS (Cerus Corp.--$10.06; +0.43; optionable): Biotechnology
http://biz.yahoo.com/p/c/cers.html
STATUS: Cup w/handle breakout. Breaking higher on strong trade Tuesday, taking a pause Wednesday and Thursday, and then back at it Friday on solid trade. The move took it out of a nicely formed 11 week base sporting strong 4 to 2 accumulation (4 up price weeks on rising volume to 2 down price weeks on rising volume). Strong money flow as well, leading higher ahead of price. Relative strength broke out, an indication the move has some legs to it. Moving well and ready to step in as it continues higher this week.
Volume: 248.482K Avg Volume: 139.325K
BUY POINT: $10.38 Volume=209K Target=$12.48 Stop=$9.65
POSITION: QIJ EB - May $10c (55 delta) &/or Stock
http://www.investmenthouse.com/cd/cers.html

Play Date: 12/10/2005
MXWL (Maxwell Technologies--$15.67; +0.98; optionable): Energy storage and power delivery solutions.
http://biz.yahoo.com/p/m/mxwl.html
STATUS: Cup w/handle breakout. MXWL is making a volume breakout from a 10 week base, surging higher Friday on strong volume. This is part of a much larger 22 month cup with handle base. Outstanding 5 to 1 accumulation shows almost all buying during the base, and it has set up this breakout. Ready to move in as MXWL continues higher on this move. Strong money flow is leading higher. Relative strength broke out on the move as well, a good corroboration of the break higher.
Volume: 271.036K Avg Volume: 108.402K
BUY POINT: $15.83 Volume=125K Target=$18.99 Stop=$14.72
POSITION: QMW AC - Jan. $15c (54 delta) &/or Stock
http://www.investmenthouse.com/cd/mxwl.html

Play Date: 12/10/2005
NUAN (Nuance Communications--$6.77; -0.12; optionable): Application software
http://biz.yahoo.com/p/n/nuan.html
After Hours: $6.66
STATUS: Breakout test. Another market leading stock in fundamentals and technical position. NUAN broke out from a 3 month ascending flat base that is part of a much larger 21 month cup with handle (the recent flat base acted as the handle). Strong volume as it broke higher in November. Tested the 10 December 2005 (now at 6.45) early last week, then gapped higher once more Wednesday on huge trade. Very strong action as the breakout move continued last week. Strong money flow is leading the way higher and relative strength broke out on the move. Very strong move on a strong earnings result, and this test is s great place to pick it off.
Volume: 2.128M Avg Volume: 1.029M
BUY POINT: $6.91 Volume=1.5M Target=$8.31 Stop=$6.43
POSITION: SSQ DA - Apr. $5c (72 delta) &/or Stock
http://www.investmenthouse.com/cd/nuan.html

Play Date: 12/10/2005
WITS (Witness Systems--$21.37; +1.04; optionable): Contact center software
http://biz.yahoo.com/p/w/wits.html
After Hours: $21.40
STATUS: Ascending base. Volume surged Friday as WITS announced a stock offering. The move pushed WITS right to the breakout point of its 10 week ascending base that formed using the 50 day EMA (20.04) as support. This is a second consecutive base, a base on base as it where after an 8 month base immediately preceding the current one broke out in late September. Positive accumulation in the current base with surging money flow leading the way. Looking for a continued breakout move to start the position and then adding to the position when it makes the successful test and then again resumes higher.
Volume: 1.906M Avg Volume: 336.009K
BUY POINT: $21.55 Volume=450K Target=$25.55 Stop=$20.32
POSITION: UPJ CD - Mar. $20c (62 delta) &/or Stock
http://www.investmenthouse.com/cd/wits.html

New Buy Point on Current Position:

Play Date: 12/10/2005
RADS (Radian Systems--$13.59; +1.03; optionable): Retail and food service industry site operations management software
http://biz.yahoo.com/p/r/rads.html
After Hours: $13.65
STATUS: Breakout test. RADS is making another one of its patented surges, blasting off the 18 day EMA (12.62) Friday. It surged in mid-November as well, gapping higher to start the breakout from its 3.5 month double bottom with handle base. It partially filled that move on the late November, early December test, and then blasted higher Friday. Strong action and we are ready to move in as RADS continues higher.
Volume: 668.152K Avg Volume: 228.762K
BUY POINT: $13.72 Volume=211K Target=$16.48 Stop=$12.87
POSITION: QRC DV - Apr. $12.50c (63 delta) &/or Stock
http://www.investmenthouse.com/cd/rads.html

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, BR, COH, NVDA, PSYS, RTSX, STN, UNH

CELG: Still moving laterally over the 18 day EMA in the test of the low volume breakout.

BR: Working on a handle to a short 10 week double bottom with handle base.

PSYS: Holding tight over the 50 day EMA on low, below average volume. This is consolidating the prior move and setting up the next.

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.

LOGI: Makes computer accessories (mice, webcams, etc.). Broke out from a 13 week flat/ascending base that formed over the 50 day EMA in early November. It has run up the 10 day EMA since, taking a higher trajectory to start December. It immediately moved back, testing the 10 day EMA once more last week, gapping down to that level Friday. It was due for a bit deeper test, and this looks to have delivered it. Market leader and in the top 100 in terms of sales and earnings growth.

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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