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top stock pick, stock strategy
Begin Part 3 of 3
CONTINUED PLAYS:
BREAKOUTS:
JAKK (Jakks Pacific--$23.89; -1.10; optionable): Toys & Games
http://biz.yahoo.com/p/j/jakk.html
STATUS: Succeeded in an almost complete retracement of Thursday's breakout, falling off Friday's doji. The only good thing is that volume was very low at 211,400 (avg. 322,409). Look for a test of the 10 day MVA; at the moving average is the upper level of JAKK's recent consolidation that tested the cup with handle breakout. We were looking for Friday's lower but still above average volume to pick back up and continue the stock on its breakout. Big money flow and positive buying. Target: 29
BUY POINT: Aggressive: 24, after a hold at the 10 day MVA (23.46 range) and bounce up on strong volume. Stop: 22.32 (7%). New high breakout: 25.50 on volume in the range of 435,000 or higher. Stop: 23.25 (7%).
POSITION: Stock and/or January $20 (UFF AD; 0 open interests) or March $20 calls to buy (UFF CD).
http://www.investmenthouse.com/ct/jakk.html
TEST OF BREAKOUT:
IGEN (Igen Intl--$35.12; -0.83; optionable): Scientific & Technical
http://biz.yahoo.com/p/i/igen.html
STATUS: Continued to pull back in the test of the breakout (from the recent saucer/flat base). The stock tapped the 18 day MVA on the low of 34.29, then bounced back up and almost closed on top of the 10 day MVA, but missed it by $0.12. Volume was lower at 143,000 and still below the average of 202,000). The stock continues to look good in this pattern; the question is whether it can continue higher from here (on stronger volume), or will fall back in another test of the 18 day. We will hold our current aggressive buy point at 37. Buying looks very good. Target: 46
BUY POINT: Aggressive: 37 on volume of 205,000 or higher. Stop: 34.41 (7%).
POSITION: Stock and/or January $35 calls to buy (GQ AG).
http://www.investmenthouse.com/ct/igen.html
WEDGES, PENNANTS, and FLYING PLATEAUS (AND FLAGS): These are some of our favorite patterns as the moves can be explosive. In this market, however, we need to see the move on the breakout on strong volume.
GMST (Gemstar-Tv Guide--$28.80; +1.07; optionable): Consumer Durables
http://biz.yahoo.com/p/g/gmst.html
STATUS: One of the few positive movers today, GMST made the breakout point of 28.42 with a nice surge in volume behind it (6.8 million; avg. 4.6 million). The stock broke out of the ascending wedge and though it pulled off the high of 29.40, remains a buy on the move up to 29.84. We are looking for a run up to the 200 day MVA from here. Money flow and buying look good.
BUY POINT: A buy up to 29.84 on the breakout, on continued strong volume.
POSITION: Stock and/or January $25 calls to buy (QLF AE).
http://www.investmenthouse.com/ct/gmst.html
CHEZ (Suprema Specialties--$13.85; -0.15; no options): Food (butter)
http://biz.yahoo.com/p/c/chez.html
STATUS: Holding the ascending wedge that formed in the range of where a handle should form in the stock's 5-month base, showing another doji and slight pullback as it maintains support at the lows, the 10 day MVA (13.74). This is not our favorite pattern for long, sustained moves; however, it is a test of the recent breakout, and with the short term moving averages encroaching from below, is tightening nicely and can potentially offer another nice move. We are looking for an initial target at the basing high (18) on a breakout. CHEZ has strong money flow, and buying looks good most recently.
BUY POINT: Aggressive: 14.20 on volume of 130,000 or higher. Stop: 13.21(7%).
POSITION: Stock.
http://www.investmenthouse.com/ct/chez.html
PMCS (Pmc-Sierra--$21.88; -0.91; optionable: Semiconductor
http://biz.yahoo.com/p/p/pmcs.html
STATUS: Continues to hold a nice pattern, a pennant with a strong lower leg that held support at the 10 day MVA last week; today PMCS tested back to the 18 day MVA (21.42) and showed a doji. Volume was even lower below average, which we really like to see on pullbacks like this (6.68 million; avg. 10.8 million). Looking for a breakout over the pattern high (24.51) with an initial target at the 200 day MVA at 29. A nice pattern. High money flow.
BUY POINT: Aggressive: 23.40 on strong, rising volume. Stop: 21.76 (7%). Breakout: 24.64 on volume of 14.6 million or higher. Stop: 22.92 (7%).
POSITION: Stock and/or January $20 calls to buy (SQL AD).
http://www.investmenthouse.com/ct/pmcs.html
BASING/TRADING RANGES:
SLOT (Anchor Gaming--$60.54; -0.36; optionable): Leisure
http://biz.yahoo.com/p/s/slot.html
STATUS: Made a strong move up Friday in the handle to the 6-month cup base, bouncing off of 'hammer' doji on the 18 day MVA (59.02). After that high-volume move, SLOT slowed to a loose doji Monday, resting on volume that was greatly reduced to 278,400 (average 316,400). Still looking for the breakout if the move can follow through. Money flow, relative strength and buying look good. Target: 76, but again, if we get the 10% move and the move looks like it's lost steam, we will look at taking profits there.
BUY POINT: Aggressive: 61.50 on continued rising volume. Stop: 57.20 (7%). Breakout: 63.17 on volume of 434,000 or higher. Stop: 58.75 (7%)
POSITION: Stock and/or January $55 calls to buy (QLT AK).
http://www.investmenthouse.com/ct/slot.html
WLP (Wellpoint Health--$119.35; +1.45; optionable): Health Services
http://biz.yahoo.com/p/w/wlp.html
STATUS: Made a bit of a move up in the handle to its 13-month cup. Volume was light on the move, down to 451,300 (average 721,000), so we could still get some more lateral to downward movement and consolidation in the handle, which would be just fine (especially given the length of the overall pattern). Ultimately, looking for a breakout. WLP has strong money flow and relative strength has broken out. Target: 148
BUY POINT: Aggressive: 120 on volume of 1.07 million or higher. Breakout: 123.03 on volume in the range of 1.07 million or higher. Stop: 114.42 (7%).
POSITION: Stock and/or January $115 calls to buy (WLP AC).
http://www.investmenthouse.com/ct/wlp.html
HD (Home Depot--$46.39; -0.26; optionable): Retail
http://biz.yahoo.com/p/h/hd.html
STATUS: HD has made a strong bounce up from the 50 day MVA (43.17) the last few days (on news that the company would meet projections for the 4th quarter), turning around after it sold down out of the lateral pattern last week. Today it held steady with a loose doji on sharply reduced volume (9.21 million; average 8.39 million), back in the range of the lateral consolidation. It is right at the down trendline that was resistance to the previous pattern (connecting 2000-2001 highs), and a break over the consolidation highs will take it through the trendline as well. Initial target is 51.
BUY POINT: 47.35 on volume of 12 million or better. Stop: 44.04 (7%).
POSITION: Stock and/or January $45 calls to buy (HD AI).
http://www.investmenthouse.com/ct/hd.html
ORLY (O'reilly Automotive--$32.44; -1.00; optionable): Auto Parts
http://biz.yahoo.com/p/o/orly.html
STATUS: Started up on Friday in the handle to its 4-month cup base, but promptly turned back today. Nothing catastrophic, as ORLY held the 10 day MVA (32.29) and volume pulled back to 270,900 (average 469,000). Still, it gave up more ground than we would have liked, and the breakout is out there a bit, with aggressive plays more aggressive with the volatile movement. We will see if it can keep a move up going. It is showing excellent money flow and good buying. Target: 41
BUY POINT: Breakout: 34.13 on volume of 704,000 or higher. Stop: 31.74 (7%)
POSITION: Stock and/or January $30 (OQR AF; 0 open interests).
http://www.investmenthouse.com/ct/orly.html
BORL (Borland Software--$14.45; -0.01; optionable):
http://biz.yahoo.com/p/b/borl.html
STATUS: After its strong attempt at breakout Friday, BORL held with a tight 'star' doji today over the former breakout point in the cup with handle (10 day MVA at 13.91). Volume dipped way back to 638,900 (average 670,300), so today was pretty solid action after Friday's pullback from an intraday high of 15. We will see if it continues to hold this range, but we are also watching for the stock to take off again in a tech rally. With stock positions we can look at a covered call play when the stock hits our target of 17, watching to sell January $15 calls on a move back down. Money flow and buying continue to look strong.
BUY POINT: Aggressive: 14.75 on volume in the 1 million range. Stop: 13.72 (7%). Breakout: Over 15 on volume of 1 million or better. Stop: 13.95 (7%).
POSITION: Stock and/or January $12.50 calls to buy (BLQ AV). On topping and a start back down from 17, January $15 calls to sell (should be $2-$2.25 by then), for a return of 13-17%.
http://www.investmenthouse.com/ct/borl.html
VRTS (Veritas--$36.91; -1.98; optionable): Software.
http://biz.yahoo.com/p/v/vrts.html
STATUS: VRTS was trying to form an ascending wedge pattern, but Monday it dropped back through the recent support of the 10 day MVA and closed back under the 18 day (38.54 & 37.43, respectively). Volume was not heavy on the selling, coming in only slightly higher than what we saw Friday (up to 11.76 million; average 15 million). VRTS has strong support below at the October high (34.90) and 50 day MVA (34.48), but we will see if it can stop the drop here and reverse. We know the stock can move well in a tech rally. When we first started looking at this pattern, we were considering a covered call sale play for a move up to the 200 day MVA, currently at 48.18. A bit out there now, but we will continue to look at that strategy if we get a run, selling calls on stock positions if the stock tops out.
BUY POINT: Aggressive: Over 40 on volume of 15.5 million or higher. Stop: 37.20 (7%)
POSITION: Stock and/or January $35 calls to buy (VIV BG). On topping, selling December $35 calls (VIV AG).
http://www.investmenthouse.com/ct/vrts.html
CHKP (Check Point Software Tech--$37.31; -1.04; optionable): Security Software
http://biz.yahoo.com/p/c/chkp.html
STATUS: Continues to pull back in the handle of its 4-month cup with handle base, formed below the 200 day MVA (47.09). Volume has dipped back with the recent drop, which saw CHKP close just below the 18 day MVA (37.70) on decreasing volume (5.94 million; average 9.6 million). We will see if today's doji pattern marks the end of this drop, looking for the stock to bounce back and rally to a breakout over the November highs, with aggressive players looking at positions on a strong move back up from here. Target: initial at the level of the 200 day MVA, 47.
BUY POINT: Aggressive: Over 40 on rising volume. Breakout: 43.13 on 14.2 million or higher volume. Stop: 40.08 (7%)
POSITION: Stock and/or January $30 or $35 calls to buy (KEQ AF or AG).
http://www.investmenthouse.com/ct/chkp.html
KLAC (Kla-Tencor--$49.93; -0.30; optionable): Semiconductor
http://biz.yahoo.com/p/k/klac.html
STATUS: KLAC is in a cup base and trying to settle out in a new handle after trying a breakout last week. It pulled back to the 10 day MVA (49.84) Friday on strong volume, but held today with a tight doji as volume dipped substantially (7.68 million; average 9.37 million). KLAC can pull back to the 18 day MVA (48.61) for a better handle, and would have a better base to run out of if it settled down. Looking for it to move in the next chip rally, and we could get a move from here in that event. Money flow remains high. Target: 60
BUY POINT: Breakout: Over 53.24, on volume in the range of 13 million. Stop: 49.51 (7%). Aggressive on a move back up from here or the 18 day MVA: 51.25 on above average volume. Stop: 47.66 (7%).
POSITION: Stock and/or January $45 calls to buy (KCQ AI).
http://www.investmenthouse.com/ct/klac.html
Updating this covered call play:
BRCD (Brocade--$31.24; -1.56; optionable): Computer Peripherals
http://biz.yahoo.com/p/b/brcd.html
STATUS: BRCD could not hold over the 200 day MVA (32.18), gapping down and pulling back with the market. Volume was light (10.7 million; average 17 million) and the stock held the 10 day (31.10; 18 day is at 30.23) to close, so we are looking for BRCD to resume upward movement in an upward Nasdaq move. Action has been a bit choppy, but BRCD can really move when given a chance, and the 200 day is not proving to be impenetrable, but it is having trouble holding the moves over it. If we can get a bit another move over the 200 day and recent highs with good volume, we have alternatives depending on the run we get. We are looking at a possible move to 40, and at that point if we get weakness we can either selling positions or sell calls on stock positions. Currently, the December $30 calls are selling for near $3, and for a breakout and run up to the 40 range (a $5-$6 move), the calls would be selling for around $7-$8. That is a gain of about 13-15%.
BUY POINT: Breakout: 33.40 on volume in the range of 22 million. Stop: 31.06 (7%).
POSITION: Stock and/or January $25 calls to buy (UBF AE).
http://www.investmenthouse.com/ct/brcd.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
stock strategy
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