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us stock market, top stock pick
Begin part 3 of 3
THE PLAYS
Good movers: LAB
Strong plays:
1) AGU: Nice breakout test.
2) LMNX: And another excellent breakout test in the market selling.
3) CHRW: Ready to take the plunge.
4) HLTH: Holding up very well, ready for the breakout.
5) KONG: Volume spike Friday.
6) CPO: Now it looks ready.
NEW PLAYS:
Upside plays:
Play Date: 05/13/2006
AGU (Agrium--$27.00; -0.38; optionable): Agricultural nutrients, etc.
http://biz.yahoo.com/p/a/agu.html
STATUS: Breakout test. We said we would look at AGU again when it made the test, and Thursday and Friday it used the market selling to make the test. Lower volume than the breakout. Volume was higher Friday as AGU reached down to the 18 day EMA (26.45) on the low and rebounded to close at the 10 day EMA. That shows buyers came in to pick it up on the fade. Excellent test of the early May breakout from its 11 week flat base formed above the 50 day EMA (25.61). Positive 3 to 1 accumulation in the base (3 up price weeks on rising volume to 1 down price weeks on rising volume) set up the breakout. Strong money flow as well. Relative strength broke out on the price move; that and the good action on the test shows its strength. Ready for the rebound.
Volume: 742.5K Avg Volume: 666.64K
BUY POINT: $27.38 Volume=750K Target=$32.75 Stop=$26.31
POSITION: AGU JE - Oct. $25c (67 delta) &/or Stock
http://www.investmenthouse.com/ct/agu.html
Play Date: 05/13/2006
FLSH (M-Systems Flash Disk--$35.81; +0.06; optionable): Semiconductor flash storage
http://biz.yahoo.com/p/f/flsh.html
After Hours: $35.70
STATUS: Cup w/handle. FLSH used the selling last week to come back to the 10 day EMA (35.17) and form a handle to its 18 week base. Roughly used the 200 day SMA (29.69) as support for the lows, a sign of institutional support. Accumulation is a solid 6 to 3, showing plenty of buying. Nice set up, ready for a 5.5 year high.
Volume: 837.924K Avg Volume: 1.292M
BUY POINT: $36.57 Volume=1.9M Target=$43.95 Stop=$35.00
POSITION: FFU JG - Oct. $35c (61 delta) &/or Stock
http://www.investmenthouse.com/ct/flsh.html
Play Date: 05/13/2006
LMNX (Luminex--$16.42; -0.38; no options): Medical instruments (biological testing)
http://biz.yahoo.com/p/l/lmnx.html
After Hours: $16.47
STATUS: Breakout test. Explosive move higher in late April and early May on strong earnings. The move took LMNX out of a 13 week base formed using the 50 day EMA (14.77) as support, making higher lows along that level. Nice break higher, nice test back to the 10 day EMA (16.33) the past week as the market sold off. An excellent set up for a resumed break higher from this leader looking for a new 4 year high.
Volume: 325.877K Avg Volume: 169.092K
BUY POINT: $17.05 Volume=250K Target=$20.50 Stop=$16.21
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/lmnx.html
Play Date: 05/13/2006
PRFT (Perficient--$12.50; +0.16; no options): Design of ebusiness solutions
http://biz.yahoo.com/p/p/prft.html
STATUS: Ascending base. A market leader that refuses to sell off as it works laterally the past 7 weeks above the 50 day EMA (11.67), consolidating the November breakout and run higher. Positive accumulation in the base is setting up the next move. Relative strength is breaking out ahead of price, a very good indication the stock will follow. Strong fundamentals. Have to like the way it has held up in the selling.
Volume: 144.241K Avg Volume: 187.8K
BUY POINT: $12.71 Volume=282K Target=$15.30 Stop=$12.00
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/prft.html
Downside:
Play Date: 05/13/2006
CHRW (C.H. Robinson Worldwide--$47.20; -1.66; optionable): Air delivery & freight
http://biz.yahoo.com/p/c/chrw.html
After Hours: $47.19
STATUS: Put. Nice breakout and run from November to early April, but then ran into trouble, falling through the 50 day EMA (47.28) in late April. It recovered to resistance at 50, but then rolled over again last week. It closed Friday just below the 50 day on a big volume spike, the biggest of the month. Money flow is diving ahead of price, and we expect price to follow it lower. A move to the target makes us in the neighborhood of 60%.
Volume: 1.96M Avg Volume: 1.174M
BUY POINT: $47.04 Volume=1.2M Target=$45.00 Stop=$47.87
POSITION: CJQ RI - June $45p (-32 delta)
http://www.investmenthouse.com/ct/chrw.html
CONTINUING PLAYS
Play Date: 05/10/2006
HCR (Manor Care--$45.54; +0.31; optionable): Long-term care
http://biz.yahoo.com/p/h/hcr.html
STATUS: Test breakout. Holding up very well in the market selling, continuing its lateral move Friday as it sets up for the next move higher in the breakout. Received a Moody's and S&P credit downgrade Thursday and priced a $250M convertible offering and yet tried to breakout on tremendous volume. Ready to move in as it continues higher. To recap: HCR broke from a short 5 week base last week, rising off the 50 day EMA (43.32) on strong volume. It faded the past three sessions, testing the move but holding most of the gain. Positive 3 to 2 accumulation as HCR made higher lows up the 50 day while it set up for the breakout to a new all-time high. Still may come back to the 10 day EMA (44.78) before it is ready to rebound, but has held its ground in a very weak market. Good leader.
Volume: 7.613M Avg Volume: 774.614K
BUY POINT: $45.65 Volume=750K Target=$52.50 Stop=$44.21
POSITION: HCR HI - Aug. $45c (55 delta) &/or Stock
http://www.investmenthouse.com/cs/hcr.html
Play Date: 05/01/2006
HLTH (Webmd Corp.--$11.90; +0.05; optionable): Healthcare information service
http://biz.yahoo.com/p/h/hlth.html
After Hours: $11.90
STATUS: Test breakout. Another stock holding up exceptionally well, tapping the 10 day EMA (11.70) on the Friday low and rebounding to post a modest gain. Still bumping its head against the breakout; this strong action indicates it is going to make the move. To recap: Announced strong earnings mid-April and surged higher on strong volume, making the breakout from its 6.5 month cup with handle base. Excellent 8 to 2 accumulation (8 up price weeks on rising volume to 2 down price weeks on rising volume) shows strong buying in the base. Ready to break to a new 5 year high. Volume started to return last week. Ready to move in as it continues higher.
Volume: 2.136M Avg Volume: 2.645M
BUY POINT: $11.98 Volume=3.5M Target=$14.38 Stop=$11.22
POSITION: HUT JB - Oct. $10c (72 delta) &/or Stock
http://www.investmenthouse.com/ct/hlth.html
Play Date: 04/29/2006
KONG (Kongzhong--$13.99; -0.06; optionable): Chinese wireless interactive entertainment
http://biz.yahoo.com/p/k/kong.html
STATUS: Cup w/handle. Still working laterally in a tight range, holding the 10 day EMA (13.89) as it does, setting up the breakout to a new all-time high. Volume, however, spiked to its highest level in two months on Friday, indicating it is just about ready to make the move. To recap: A new issue in mid-2004, KONG has set up a nice 17 week base just below a new all-time high. It formed the current base using the 200 day SMA (12.33) on the low as support. Positive accumulation is setting up the breakout. Nice pullback during the recent market selling has formed a low volume handle that held the 18 day EMA support. Just going to be patient and let it show us the break higher.
Volume: 517.943K Avg Volume: 261.96K
BUY POINT: $14.35 Volume=442K Target=$17.25 Stop=$13.35
POSITION: QKR IV - Sept. $12.50c (57 delta) &/or Stock
http://www.investmenthouse.com/ct/kong.html
Play Date: 05/08/2006
PDS (Precision Drilling--$35.39; -0.67; optionable): Oil and gas drilling & equipment
http://biz.yahoo.com/p/p/pds.html
STATUS: Test breakout. Faded Friday, but held the 18 day EMA (35.38) on the close on very low, below average volume. Looks like obligatory selling in the weak market. Doesn't change its nice pattern, just a shakeout to better set up the move. To recap: Nice breakout in mid-April sent PDS to a new high at 38. It came back to test the move the past week, moving in a lateral range over the 10 day EMA on low, below average volume. Nice, orderly test, preparing PDS for the continued move higher. Love the first tests of breakouts; a strong stock often moves well after this initial shakeout of the early profit takers.
Volume: 412.2K Avg Volume: 702.092K
BUY POINT: $36.75 Volume=1.1M Target=$44.00 Stop=$35.00
POSITION: PDS LG - Sept. $35c (57 delta) &/or Stock
http://www.investmenthouse.com/ct/pds.html
Downside:
Play Date: 05/10/2006
CPO (Corn Products--$27.10; -0.15; optionable): Starches, liquid sweeteners, etc.
http://biz.yahoo.com/p/c/cpo.html
STATUS: Put. CPO found some support at 27 last week, but the 10 day EMA (27.67) is pressing down on top of it, and it still looks ready to dump lower in its head and shoulders pattern. Money flow continues to dive lower, and we are looking to move in as CPO falls through the support at 27. To recap: Decent run through March but then started to get rocky in April and set up something of a head and shoulders pattern. The right shoulder was hardly apparent, with CPO only rising up to the 50 day EMA (28.12), well below the high at 30 of the left shoulder. That is a rather weak bounce attempt and indicates the selling will be more severe. Turned down sharply Wednesday from the 50 day as volume jumped way above average. Money flow is diving. A move to the target lands us a 40%ish gain. If it is selling hard at that point we will take some gain and let it continue falling.
Volume: 617.8K Avg Volume: 538.546K
BUY POINT: New: 26.95 (orig. $27.32) Volume=550K Target=$25.00 Stop=$28.25
POSITION: CPO RF - June $30p (-67 delta)
http://www.investmenthouse.com/ct/cpo.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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