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us stock market, trade stock
Begin part 3 of 3
THE PLAYS
Good movers: EZPW; ISE; MGI; MSTR
Strong plays:
1) AH: Super leader has now set up for the next move higher.
2) CTRP: A relatively new and hot stock setting up for the next run.
3) KG: Rebounded to resistance on lower and lower volume.
4) CRM: Sweet pattern has set up.
5) QUIK: Looks ready to breakout rather quickly.
NEW PLAYS:
Upside plays:
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/cs/ah.html
Play Date: 03/11/2006
COF (Capital One Financial--$89.92; +4.02; optionable): Credit services.
http://biz.yahoo.com/p/c/cof.html
STATUS: Cup w/handle. COF looks ready to put some money in your wallet. Nice break higher on stronger volume as COF moves to the breakout from its 12 week base that formed roughly around the 50 day EMA (86.14). A similar 5 month pattern formed from July to December, making this a nice base on base to shake out the sellers and send COF to a new all-time high. Positive accumulation in the current base has set the stage for the breakout along with some strong money flow. Relative strength broke out Friday ahead of COF, a very bullish indication. Looks very good here. This is a key point we were making last week: COF is what you call an interest rate sensitive' stock, i.e. it makes money as a result of consumer buying. The theory is if the cost of money goes up, COF would not do as well because consumers would stop buying. But, because the yield curve is righting itself with these interest rate gains, COF is in better position to make money on the money it loans. This is another example of where a properly inclined yield curve allows companies to make money.
Volume: 2.84M Avg Volume: 1.657M
BUY POINT: $90.21 Volume=2M Target=$103.75 Stop=$87.21
POSITION: COF IR - Sept. $90c (56 delta) &/or Stock
http://www.investmenthouse.com/ct/cof.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/ct/ctrp.html
New Downside Plays:
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/ct/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/ct/psti.html
CONTINUING PLAYS
Play Date: 03/09/2006
CRM (Salesforce.com--$37.83; +0.32; optionable): Customer relationship management
http://biz.yahoo.com/p/c/crm.html
STATUS: Cup w/handle. Another nice easy move laterally over the 10 day EMA (36.89) as CRM sets up its next break higher. Very tight range, just the way you want it in the handle. To recap: CRM is trying to set up a quick little 7 week base after a strong run from early November to mid-January. It dove lower in mid-February on a contract loss, but a week later earnings jumped and that started CRM back up the right side of its pattern. It moved to the early January gap up point and has started to slide laterally the past week on lower, below average volume. The range is tightening up as it works sideways, setting up the break higher. Positive accumulation in the pattern. May take another session or two to complete the move before showing us the breakout.
Volume: 1.149M Avg Volume: 1.884M
BUY POINT: $38.75 Volume=2.9M Target=$46.55 Stop=$36.32
POSITION: CRM HG - Aug. $35c (62 delta) &/or Stock
http://www.investmenthouse.com/ct/crm.html
Play Date: 03/08/2006
DIGE (Digene Corp.--$41.73; -0.5; optionable): Diagnostic substances
http://biz.yahoo.com/p/d/dige.html
After Hours: $41.68
STATUS: Cup w/handle. Still working laterally on low volume to end the week, holding near support at the 10 day EMA (41.57). Still setting up the next break higher. To recap: DIGE has used the market selling the past two weeks to work laterally over the 10 day EMA, forming a handle to a 29 month cup with handle base. It likely has more work to do on the handle, but Wednesday volume spiked higher as DIGE tested the 18 day EMA (40.53) and rebounded for a gain. That is a shakeout followed by buyers ready to move into the stock. Strong fundamentals. Strong stock.
Volume: 228.839K Avg Volume: 284.074K
BUY POINT: $43.65 Volume=427K Target=$51.95 Stop=$40.92
POSITION: QDG FH - June $40c (68 delta) &/or Stock
http://www.investmenthouse.com/ct/dige.html
Play Date: 03/04/2006
MER (Merrill Lynch--$77.75; +0.71; optionable): Investment brokerage
http://biz.yahoo.com/p/m/mer.html
STATUS: Flying plateau. MER continues to step sideways above the 10 day EMA (77.17) and below resistance at 78. Volume was up Thursday as MER showed a doji. Friday price was moving as volume backed off. Nice lateral move from this strong stock and looking for that more definitive break higher this week.
Volume: 4.438M Avg Volume: 4.616M
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
Play Date: 03/04/2006
ORCC (Online Resources--$12.89; +0.02; no options): Outsourced internet financial technology services to financial service providers
http://biz.yahoo.com/p/o/orcc.html
STATUS: Cup w/handle. The handle has slid lower, but has found the 50 day EMA (12.64) as of Friday. This is where it should logically make a stand and try the breakout if it is going to make the move. To recap: ORCC has formed a short but nice 6 week base on top of the 50 day EMA, 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 a week back 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. Solid leader with strong fundamentals ready to break to a 6 year high.
Volume: 59.33K Avg Volume: 123.962K
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--$4.98; -0.04; no options): Semiconductor integrated circuits
http://biz.yahoo.com/p/q/quik.html
STATUS: Double bottom w/handle. Veritable dearth of activity with QUIK as it stretches laterally along the 1o day EMA (4.97). No range in the trade the past three sessions as it looks all but dead. Perfect. That is exactly what you want to see in this pattern. The quiet before the storm. Just going to let it show us the move higher this week. 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 9 week base that formed using the 50 day EMA (4.66) 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. Low volume in the handle overall punctuated with a volume jump here and there. Solid action. 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: 120.629K Avg Volume: 248.307K
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--$48.2; -0.03; optionable): Semiconductors. Researching to pinpoint the date.
BACKGROUND: A new issue in 2000, SLAB has yet to split its stock.
http://biz.yahoo.com/p/s/slab.html
STATUS: Test breakout. SLAB has formed a short 7 week cup with handle after the late January breakout, setting up the next move higher. It ended the week moving laterally over the 18 day EMA (48.01) as many semiconductors headed lower. Very solid leadership-like action. Now we see if it can deliver the breakout for us. To recap: SLAB gapped higher in late January on a strong earnings prognosis. It rallied to 52.50 and then faded back the past 7 weeks to test the move and fill most of the gap. It held mostly near the 18 day EMA, 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: 723.24K Avg Volume: 1.231M
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
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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