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trade stock, stock recommendation
Begin part 3 of 3
THE PLAYS
Good movers: EZPW; MSTR; RNVS; WIRE; MGI
Thursday night play results:
ASEI: Started higher but fell back to flat on the close, showing another nice doji at the 10 day EMA.
CRM: Still setting up nicely.
ANF: Holding steady, continuing the lateral move.
SHW: Low volume move up to test the 10 day EMA. A better set up for the downside play.
New Plays: An excellent cross-section of solid plays.
Upside:
Play Date: 03/11/2006
AH (Armor Holdings--$56.93; +0.23; optionable): Body armor and vehicle armor
http://biz.yahoo.com/p/a/ah.html
After Hours: $57.51
STATUS: Test 18 day EMA. A steady supplier to the US war and security efforts with top notch fundamentals to match its technical pattern. AH broke higher out of a long, 13 month base to start February. It enjoyed a 2 year run up to that base and it needed the consolidation. It broke higher in February and surged as sales continued to grow. It is making its second serious test of the break higher, holding above the 18 day EMA (55.42) the past three weeks as AH eases back on lower, below average volume to test the last run higher. During this pullback money flow has remained strong. The low volume shows no big holders want to give it up. Looks ready to resume the breakout move after taking the pit stop to catch its breath.
Volume: 375.6K Avg Volume: 579.305K
BUY POINT: $57.55 Volume=750K Target=$68 Stop=$55.28
POSITION: AH HK - Aug. $55c (66 delta) &/or Stock
http://www.investmenthouse.com/ci/ah.html
Play Date: 03/11/2006
CHRW (C.H. Robinson Worldwide--$44.85; +0.77; optionable): Air delivery and freight
http://biz.yahoo.com/p/c/chrw.html
STATUS: Breakout test. CHRW has already made us some money this year, and it is setting up to makes us some more. It broke out from a 10 week cup with handle in early February and rallied to 46. It has spent March fading back to test that move, holding above the 18 day EMA (43.92) as it makes the lower volume pullback. No sellers given the low volume. A nice volume spike Wednesday as CHRW reached below the 18 day EMA but snapped back to close above that level. That volume reversal shows us the buyers using the dip to pile in. Friday CHRW started higher on rising but still below average volume. Looking for strong volume as it continues the breakout run. Excellent money flow is leading higher. Relative strength broke out with the price and it looks ready to do the same, a good bullish indication.
Volume: 682.525K Avg Volume: 876.356K
BUY POINT: $45.25 Volume=1.1M Target=$52.55 Stop=$43.69
POSITION: CJQ HI - July $45c (56 delta) &/or Stock
http://www.investmenthouse.com/ci/chrw.html
Play Date: 03/11/2006
CTRP (Ctrip.com International--$75.50; +2.05; optionable): Chinese travel services
http://biz.yahoo.com/p/c/ctrp.html
STATUS: Test breakout. Reported some strong earnings growth in late February, and that broke this 2 year old stock out of its 5 month cup with handle base. It surged just over 75 on strong trade and then spent the past two weeks coming back to test, holding roughly at the 10 day EMA (73.99) near support. Excellent 7 to 3 accumulation in the base shows strong buying. Money flow is racing higher as well, even as the stock consolidates. Strong stock that is just about finished with this breather before resuming the breakout run. The breakout test is one of our favorite entry points as it shows the big money is still interested even after the breakout and even at a higher price.
Volume: 123.332K Avg Volume: 288.687K
BUY POINT: $76.21 Volume=400K Target=$88.95 Stop=$72.38
POSITION: QCT FO - June $75c (56 delta) &/or Stock
http://www.investmenthouse.com/ci/ctrp.html
Play Date: 03/11/2006
STLD (Steel Dynamics--$48.69; +2.46; optionable): Steel and iron
http://biz.yahoo.com/p/s/stld.html
After Hours: $48.71
STATUS: Ascending base. Steel is again hot, and STLD makes hot rolled steel products, so it is even hotter. Weak attempt at humor. This is a nice base on base pattern setting up a strong run. It formed a 11 month base that broke out in late January and then ran up to February when it started this base; not much of a run, but this subsequent 7 week pattern is setting up the next move. You often see this pattern just before a bigger run. Nice 3:0 accumulation in the current base (3 up price weeks on rising volume to 0 down price weeks on rising volume) shows all buying as it takes this final breather and shakes out the last sellers. Strong money flow is zooming higher and relative strength is breaking out in front of the stock, a bullish indication. Excellent fundamentals to go with its strong technical pattern. A giant in its own sector.
Volume: 1.089M Avg Volume: 946.036K
BUY POINT: $48.96 Volume=1.4M Target=$58.75 Stop=$46.22
POSITION: RQL HJ - Aug. $50c (52 delta) &/or Stock
http://www.investmenthouse.com/ci/stld.html
Downside:
Play Date: 03/11/2006
KG (King Pharmaceuticals--$17.94; +0.05; optionable): Drugs
http://biz.yahoo.com/p/k/kg.html
STATUS: Put. The generics are coming, the generics are coming. For KG, the generics are here. The company posted pretty crappy earnings, a net loss, and was hammered like a cheap nail to end February. It is notable that KG had rallied to its 2004 high and was then led to slaughter. Still overhead supply at that point. It made a two week rebound and spent the last three days of last week below the 50 day EMA (18.04), unable to break back into more favorable territory for a stock wanting to advance. Volume fell lower and lower on the rebound. Money flow dove into the gutter. This pattern looks weak, but we want to see volume kick up as it moves lower to show it is resuming the downside move. Thus far it is the perfect weak rebound. Renewed selling volume here shows the sellers are not going to leave it alone. A move to the target is a pretty conservative move, keeping it above the recent lows, but still lands us a 55%ish gain. If it continues to drop we will take some gain and let the rest ride lower similar to PDS.
Volume: 1.328M Avg Volume: 1.958M
BUY POINT: $17.75 Volume=2M Target=$16.55 Stop=$18.11
POSITION: KG PW - Apr. $17.50p (-38 delta)
http://www.investmenthouse.com/ci/kg.html
Play Date: 03/11/2006
PSTI (Per-Se Technologies--$24.31; +0.22; optionable): Healthcare solutions to physicians and hospitals
http://biz.yahoo.com/p/p/psti.html
After Hours: $24.26
STATUS: Put. PSTI made a lower high in late February, but was not looking too bad until it reported earnings and declining net income. That sent the stock gapping lower to the 200 day SMA (22.24). That plunge occurred Tuesday, and it spent the rest of the week rebounding, filling most of the gap by Friday when it reached up and touched the 10 day EMA (24.60) on the intraday high. Volume has steadily declined on the move, falling below average late in the week. This is a classic gap fill and test of the breakdown, the old 'kiss goodbye' before the return to selling. We are going to move in when it shows a return to the downside and ride it to the target for a 40%ish gain. That keeps us above the 200 day SMA, and if it is heading lower through the target we will let it run to the 200 day SMA.
Volume: 260.165K Avg Volume: 559.782K
BUY POINT: $24.05 Volume=560K Target=$22.65 Stop=$24.65
POSITION: MQA PE - Apr. $25p (-48 delta)
http://www.investmenthouse.com/ci/psti.html
Good Investing!
Jon L. Johnson and your IH Alerts 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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trade stock
stock recommendation
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