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us stock market, top stock pick
Begin part 3 of 3
THE PLAYS
Good movers: BABY; ISE; LTR; OIS; PDS
Strong plays:
1) FFIV: Nice test by a strong leader.
2) TRMB: Testing last week's break higher.
3) NETL: Still coming back to test the move. Looks great.
4) ORCC: Tapped the 10 day EMA on the low on lower trade.
5) SLAB: Another solid test, tapping the 10 day EMA on the low and rebounding to recoup some of the loss.
NEW PLAYS:
Upside plays:
Play Date: 03/06/2006
ADBE (Adobe Systems--$38.43; -0.62; optionable): Application software
http://biz.yahoo.com/p/a/adbe.html
After Hours: $38.90
STATUS: Test 50 day EMA. ADBE is moving laterally over the 50 day EMA (38.01) the past three weeks on mostly lower, below average volume. ADBE broke out from a 7 month cup with handle base in early December, and rallied up the 18 day EMA (38.69) through the end of January. It made four bounces off the 18 day EMA and then needed a deeper test to support. This move back to the 50 day EMA is doing that, setting ADBE up for the next move higher. Strong upside volume Friday indicates ADBE is preparing to try the breakout move.
Volume: 2.927M Avg Volume: 5.878M
BUY POINT: $39.75 Volume=7.5M Target=$45.95 Stop=$37.89
POSITION: AEQ GU - July $37.50c (62 delta) &/or Stock
http://www.investmenthouse.com/ct/adbe.html
Play Date: 03/06/2006
FFIV (F5 Networks--$67.16; -2.05; optionable): Internet traffic management
http://biz.yahoo.com/p/f/ffiv.html
STATUS: Test breakout. FFIV was downgraded Monday, and that sent it down to the 10 day EMA (66.81) on continued slightly above average volume. It broke out from a 7 week ascending triangle in late February, a nice consolidation from the early January breakout from a 10 month reverse head and shoulders pattern. Strong stock that should survive this downgrade. May come back a bit more; the 18 day EMA is at 65.48, matching the high in the ascending triangle. Looking for a volume bounce to resume the breakout move. Strong leader in fundamentals and technical pattern.
Volume: 1.273M Avg Volume: 1.1M
BUY POINT: $67.65 Volume=1.4M Target=$80.95 Stop=$65.32
POSITION: FLK GN - July $70c (51 delta) &/or Stock
http://www.investmenthouse.com/ct/ffiv.html
Play Date: 03/06/2006
GME (Gamestop--$40.79; -0.21; optionable): Electronic game stores
http://biz.yahoo.com/p/g/gme.html
STATUS: Breakout test. GME is moving laterally along the 18 day EMA (40.51) on very low, below average volume. This is testing the breakout from a 6.5 month trading range. It broke higher in late January and is now testing that move. Strong money flow is leading higher. Strong fundamentals. Volume has yet to start spiking higher, a sign it is ready to make the move. We like, however, how it is holding up as the market fades back, minding its own business. After the market pullback is over it will be ready.
Volume: 570.7K Avg Volume: 1.336M
BUY POINT: $42.11 Volume=2M Target=$49.95 Stop=$39.65
POSITION: GME GH - July $40c (56 delta) &/or Stock
http://www.investmenthouse.com/ct/gme.html
Play Date: 03/06/2006
TRMB (Trimble Navigation--$42.51; -0.46; optionable): GPS devices. Tentatively forecast in late April.
BACKGROUND: Last announced a 3:2 split on 2-3-04 at $38.20.
http://biz.yahoo.com/p/t/trmb.html
STATUS: Breakout test. TRMB gapped higher in late January on good results, then formed a 5 week handle to its 7.5 month base. Last Thursday it jumped higher, breaking out of the handle on strong, above average volume as it announced a new product. Friday and Monday it started to test that move, easing back on very low, below average volume. Monday it tapped the January high on the low and rebounded to cut some of the losses. Strong 10 to 5 accumulation shows lots of buying during the nice base. Strong money flow. Relative strength broke out last week. May pull back to the 10 day EMA (41.45) before it is ready to rebound, but with the bounce off the January high on the Monday low we want to be ready to move in as it continues higher.
Volume: 250.475K Avg Volume: 392.067K
BUY POINT: $42.75 Volume=450K Target=$50.88 Stop=$40.58
POSITION: TUH HH - Aug. $40c (65 delta) &/or Stock
http://www.investmenthouse.com/ct/trmb.html
New buy point on current position:
Play Date: 03/04/2006
MER (Merrill Lynch--$77.24; -0.35; optionable): Investment brokerage
http://biz.yahoo.com/p/m/mer.html
STATUS: Flying plateau. Low volume fade back to the 10 day EMA (76.97) is setting MER up for the next move as it continues working laterally over the 10 day EMA in a nice, narrow range. Holding up very well as the market falls back. Getting ready.
Volume: 3.759M Avg Volume: 4.541M
BUY POINT: $78.25 Volume=6.5M Target=$88.95 Stop=$76.39
POSITION: MER GP - July $80c (51 delta) &/or Stock
http://www.investmenthouse.com/ct/mer.html
CONTINUING PLAYS
Play Date: 03/04/2006
NETL (Netlogic Microsystems--$37.55; -0.21; optionable): Semiconductor memory chips
http://biz.yahoo.com/p/n/netl.html
STATUS: Test breakout. NETL is continuing its test, moving slightly lower Monday on rising volume. This is exactly what we wanted to see, i.e. NETL setting up the next move higher. To recap: NETL broke out from a short 5 week cup base on Thursday, completing a test of and rebound off the 50 day EMA (33), the level that acted as support during the short base. Positive accumulation and surging money flow. Volume jumped last week as NETL made the move off the 50 day EMA, another indication of strong buying in this market leader. Friday NETL started easing back, starting the test of the strong run higher. It may come on back to test the 10 day EMA (36.34) before it is ready to continue the breakout move. This is a strong stock, however, and we want to be ready for when it turns back up on a solid volume shot. Again, a strong leader with strong fundamentals to match, and we want to pick it off as it rebounds. We will also look for positions quickly off the bounce if it tests the 10 day EMA.
Volume: 418.112K Avg Volume: 346.85K
BUY POINT: From the close: $38.55. Test 36: $36.55 on the rebound. Volume=500K Target=$46 Stop=$36
POSITION: LKT GG - July $35c (80 delta) or LKT GH - July $40c (49 delta) &/or Stock
http://www.investmenthouse.com/ct/netl.html
Play Date: 03/04/2006
ORCC (Online Resources--$13.05; -0.1; no options): Outsourced internet financial technology services to financial service providers
http://biz.yahoo.com/p/o/orcc.html
After Hours: $13.10
STATUS: Cup w/handle. Still making the nice test of the 10 day EMA (12.97), forming the handle to the short base. Working nicely and just waiting for it to complete the test and give us the breakout move. To recap: ORCC has formed a short but nice 6 week base on top of the 50 day EMA (12.58), this base forming right on the heels of the breakout from an 11 week base in January. Nice base on base pattern, and they really work to weed out the sellers and place the stock in the hands of strong holders. ORCC bounced off the 50 day EMA last Wednesday and is now testing that move, making the final shakeout. Strong 4 to 0 accumulation shows all buying in the current base. Strong money flow is moving higher ahead of the price. May take another day or two to complete the pattern, but a solid leader with strong fundamentals ready to break to a 6 year high.
Volume: 90.152K Avg Volume: 132.562K
BUY POINT: $13.55 Volume=199K Target=$16.25 Stop=$12.85
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/orcc.html
Play Date: 03/04/2006
QUIK (Quicklogic--$5.07; 0; no options): Semiconductor integrated circuits
http://biz.yahoo.com/p/q/quik.html
STATUS: Double bottom w/handle. Moved laterally Monday on much lower, below average volume following that strong volume spike Friday. Setting up nicely for the next breakout, minding its own business as the market sold back. Like to see that in a stock. To recap: QUIK is in one of the hotter sub-sectors of the semiconductor sector, and it is working on a weeklong handle to its 8 week base that formed using the 50 day EMA (4.60) as support. Price/volume action is great; volume died off in February as QUIK bottomed over the 50 day EMA and then surged as it formed the right side of the base. It trailed off in the handle and then shot higher Friday as QUIK showed a doji, setting the stage for the breakout move. This base consolidates the January breakout from a 7 month cup with handle as well. QUIK is not what you would call a serious market leader, but its sector is hot and QUIK has set up well to give us a breakout and a really nice gain in short order.
Volume: 130.396K Avg Volume: 254.228K
BUY POINT: $5.29 Volume=360K Target=$6.48 Stop=$4.92
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/quik.html
Play Date: 03/01/2006
SLAB (Silicon Labs--$49.32; -0.64; optionable): Semiconductors
http://biz.yahoo.com/p/s/slab.html
STATUS: Test 50 day EMA. Similar to other strong stocks, SLAB mostly ignored the market selling Monday, tapping at the 10 day EMA (48.68) on the intraday low and rebounding to recoup some losses on lower, below average volume. It is forming a new handle, setting up nicely for the next break higher. Love the way it is ignoring the market as it sets up for the next break higher. To recap: SLAB gapped higher in late January on a strong earnings prognosis. It rallied to 52.50 and then faded back the past 5 weeks to test the move and fill most of the gap. It held mostly near the 18 day EMA (47.99), testing toward the 50 day EMA on an intraday basis and then rebounding. Strong money flow continues to lead higher. Accumulation is positive. Looking to move in on a continued move higher on solid volume.
Volume: 1.102M Avg Volume: 1.207M
BUY POINT: $50.76 Volume=1.8M Target=$60.95 Stop=$47.68
POSITION: QFJ GJ - July $50c (60 delta) &/or Stock
http://www.investmenthouse.com/ct/slab.html
Play Date: 03/04/2006
VTAL (Vital Images--$31.94; -0.69; optionable): Software for clinical diagnosis and disease screening.
http://biz.yahoo.com/p/v/vtal.html
STATUS: Test 18 day EMA. Holding near the 18 day EMA (32.05) Monday, fading back on lower, below average volume. Still making the test of the strong February move. Looking for it to hold near this level and rebound on volume. To recap: We said we would look at VTAL when it bottomed on this test, and Friday VTAL undercut the 18 day EMA (32.07) on the low (31.60), and rebounded to post a gain. Volume was still below average, but it was up on the move, indicating the buyers were coming back to the stock. Money flow continues to lead higher, and the action Friday indicates it is ready to continue the breakout move after the late January break higher. Solid 3:1 accumulation in that pattern.
Volume: 128.178K Avg Volume: 179.33K
BUY POINT: $32.98 Volume=269K Target=$39.55 Stop=$31.89
POSITION: HXQ GF - July $30c (59 delta) &/or Stock
http://www.investmenthouse.com/ct/vtal.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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top stock pick
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