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Begin part 3 of 3
THE PLAYS
Good movers: AGE; CC; FMD; FVE; PMTI; SMSI
Strong plays:
1) FORR: Excellent lateral test of its break higher.
2) LMIA: Ready to run higher this week after the test.
3) BJS: Ready to fall from the 200 day SMA.
4) PGNX: Doji at the 18 day EMA indicating it is ready to continue its downtrend
5) PKE: Nice recovery and set up for this week.
NEW PLAYS:
Upside plays:
Play Date: 05/27/2006
FORR (Forrester Research--$25.83; -0.04; no options): Research services re impact of technology on business and consumers
http://biz.yahoo.com/p/f/forr.html
STATUS: Test breakout. FORR is in the process of digging itself out of a 6 year correction. It has formed two bases over the past 9 months, blasting higher in late April out of an 8 week flat base, running to 27 on the high. It used the market selling to test the breakout. Fading back to the 18 day EMA (25.42) on very low volume, working laterally along that support level the past two weeks. Excellent action and we are looking for it to deliver a high volume break higher this week as it resumes the move. Sold 4 to 2 accumulation in the most recent base (4 up price weeks on rising volume to 2 down price weeks on rising volume) shows plenty of buying; nice complement to the strong money flow.
Volume: 32.8K Avg Volume: 115K
BUY POINT: $26.48 Volume=172K Target=$31.75 Stop=$25.28
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/forr.html
Play Date: 05/27/2006
LMIA (LMI Aerospace--$20.45; +0.90; no options): Aerospace/defense
http://biz.yahoo.com/p/l/lmia.html
STATUS: Breakout test. Excellent test of the early May breakout from a nicely formed 17 week base that used the 50 day EMA (18.29) to make higher and higher lows. Big volume on the breakout and then used the market selling to make a nice, easy pullback to the 50 day EMA, showing a doji at that level Wednesday before the modest (and low volume) bounce to end the week. That does not worry us. We like the 4 to 2 accumulation in the base, the surging money flow, and the relative strength, ready to breakout to a new high yet again. Very strong and excellent fundamentals growth to go along with the excellent technical pattern. Looking for the rebound to continue to with some volume to start the play.
Volume: 89.5K Avg Volume: 225K
BUY POINT: $20.75 Volume=265K Target=$24.95 Stop=$19.65
POSITION: - Stock (No option chain)
http://www.investmenthouse.com/ct/lmia.html
Play Date: 05/27/2006
UARM (Under Armour--$34.40; +0.22; optionable): Sports garments
http://biz.yahoo.com/p/u/uarm.html
STATUS: Test 50 day EMA. A new issue in November 2005, UARM surged to 40 after its IPO. It then fell into its first base, a 3 month cup with handle that broke out in late April with a rocket launch on its earnings report. Big gap, and the move higher that day used up all of the gas in the tank. UAMR spent the next 5 weeks fading to test that move, coming back on low volume (shows no heavy selling) to test the 50 day EMA (34.06) during all of the market selling. It threatened to break lower but held up in the worst of the selling. Friday UARM showed a doji on a big jump in volume as it priced 7.3M share secondary offering. Looking to start the play as UARM jumps off this doji at the 50 day EMA.
Volume: 3.439M Avg Volume: 900K
BUY POINT: $36.12 Volume=1.4M Target=$43.50 Stop=$33.88
POSITION: UWG JG - Oct. $35c (55 delta) &/or Stock
http://www.investmenthouse.com/ct/uarm.html
Downside: Want to be ready to move the other way if this rebound fails.
Play Date: 05/27/2006
BJS (BJ Services--$35.33; +0.27; optionable): Oil and gas service company
http://biz.yahoo.com/p/b/bjs.html
STATUS: Double top. BJS was one of those hit energy stocks, surging in January, selling off, then surging back up in April. It set up a very nice cup with handle base but when it came time to deliver the breakout it reversed. It sold off hard, down to 32 on the low. Last week it bounced back, modestly retaking the 200 day SMA (35.27). Volume was lower, however, and intraday BJS tapped the 50 day SMA (36.25) and faded. Looks as if this rebound attempt has just about run out of gas. Looking to move in to the downside move as it rolls back over. A move to the target lands us a 50%ish gain.
Volume: 5.104M Avg Volume: 5.25M
BUY POINT: $35.09 Volume=5.5M Target=$32.50 Stop=$35.55
POSITION: BJS SG - July $35p (-40 delta)
http://www.investmenthouse.com/ct/bjs.html
Play Date: 05/27/2006
PGNX (Progenics Pharmaceutical--$21.79; +0.10; optionable): Drugs
http://biz.yahoo.com/p/p/pgnx.html
STATUS: Put. PGNX double topped in late February and started the current ongoing downtrend. It has used the 18 day EMA (21.98) as resistance, bouncing up to that level and then starting another $3+ decline. Last week it used the overall market rebound to rebound itself, coming back to the 18 day EMA on stronger volume Tuesday but then declining volume to end the week. A tight doji at the 18 day EMA Friday indicates PGNX is ready to make the next move lower in its trend. A move to the target lands us a 44%ish gain.
Volume: 174 Avg Volume: 265K
BUY POINT: $21.59 Volume=300K Target=$20.00 Stop=$22.05
POSITION: GUB SX - July $22.50c (-56 delta)
http://www.investmenthouse.com/ct/pgnx.html
Play Date: 05/27/2006
SIGM (Sigma Designs--$13.09; +0.16; optionable): PC peripherals
http://biz.yahoo.com/p/s/sigm.html
STATUS: Test 200 day SMA. SIGM formed a broad top in January and February as it peaked its run and rolled over. It has trended lower since, using the 50 day EMA (13.72) as resistance as it bounces lower in its downtrend. It tried to make a break higher in mid-May but rolled over, undercutting the 200 day SMA (13.09) for the first time in 9 months. It rebounded after the strong volume drop, closing Friday just below the 200 day SMA on lower trade. Looking for this bounce to fail and SIGM to make another run lower. A move to the target lands us a 65%ish gain.
Volume: 265.1K Avg Volume: 525K
BUY POINT: $12.73 Volume=575K Target=$11.30 Stop=$13.15
POSITION: MQN SV - July $12.50p (-39 delta)
http://www.investmenthouse.com/ct/sigm.html
CONTINUING PLAYS
Play Date: 05/24/2006
AXE (Anixter International--$49.26; +0.22; optionable): Electronics
http://biz.yahoo.com/p/a/axe.html
STATUS: Test 50 day EMA. Still the nice test, showing a pair of dojis to tend the week just over the 50 day EMA (48.37). Didn't bounce with the market, but continues its orderly test to fill the gap from the breakout of its 11 week trading range in late April. Top notch fundamentals growth. Solid 3 to 1 accumulation in the base shows net buying. Solid on all fours and still ready to show us the move.
Volume: 235.5K Avg Volume: 236.167K
BUY POINT: $49.65 Volume=400K Target=$57.00 Stop=$47.78
POSITION: AXE KJ - Nov. $50c (52 delta) &/or Stock
http://www.investmenthouse.com/ct/axe.html
Play Date: 05/25/2006
DRIV (Digital River--$47.00; +0.23; optionable): e-commerce outsourcing solutions (design, hosting, optimization, etc.)
http://biz.yahoo.com/p/d/driv.html
After Hours: $47.03
STATUS: Ascending base. Bounced modestly higher Friday, but no volume to really push it. That took it closer to the breakout from its base, but it is still working on that move. Just being patient to let this strong stock show us the move. To recap: DRIV broke to a 6.5 year high in mid-March as part of a 3.5 month run off of the lows hit in November 2005. After that move it formed the current 10 week base that has moved roughly laterally in a range from 42.50 to 47.50, making higher lows as the 50 day EMA (44.24) rose to meet it. Excellent 4 to 0 accumulation in the lateral base (4 up price weeks on rising volume to 0 down price weeks on rising volume) shows buyers still want the stock. Moved up toward the top of the range this week but volume has remained below average. Nice pattern but we are not going to rush it. Just going to let it show us the break higher with some strong volume to show us the buyers are piling in again.
Volume: 644.842K Avg Volume: 966.428K
BUY POINT: $47.55 Volume=1.5M Target=$57.00 Stop=$45.57
POSITION: DQI II - Sept. $45c (63 delta) &/or Stock
http://www.investmenthouse.com/ct/driv.html
Play Date: 05/23/2006
LFUS (Littelfuse--$35.02; -0.08; optionable): Circuit protection products for electronics, automotive, electrical markets
http://biz.yahoo.com/p/l/lfus.html
After Hours: $35.13
STATUS: Reverse head and shoulders. Closed the week out right at the neckline of its base, still setting up the breakout as it goes about the business of completing its base. Like these stocks that take care of their business at their own pace and then breakout when they are ready. To recap: Holding up remarkably well in the selling, going about setting up the current 11 week base over the 50 day EMA (33.13). Strong money flow is leading higher a good complement to the strong 4 to 0 accumulation (4 up price weeks on rising volume to 0 down price weeks on rising volume). Solid action in the weak market, with good price/volume action on a day to day basis in addition to the accumulation.
Volume: 152.982K Avg Volume: 182.245K
BUY POINT: $35.65 Volume=270K Target=$42.00 Stop=$33.55
POSITION: GFQ IG - July $35c (54 delta) &/or Stock
http://www.investmenthouse.com/ct/lfus.html
Play Date: 05/20/2006
PKE (Park Electrochemical--$31.59; +0.39; optionable): Printed circuit boards
http://biz.yahoo.com/p/p/pke.html
STATUS: Test 50 day EMA. Nice hold at the 50 day EMA (31.02) after getting a bit dicey early last week. Tapped some support at 30 on the Wednesday low and reversed, closing the week just below the 18 day EMA (31.76). A full test and fill of the early May gap as PKE moved out of a 10 week ascending base, surging over 36 on the breakout move. It has now tested and held key support. That sets it up for the next run. Strong money flow, strong fundamentals growth. Looks ready but needs to show us the move.
Volume: 83.2K Avg Volume: 107.211K
BUY POINT: $31.97 Volume=145K Target=$39.00 Stop=$29.89
POSITION: PKE IF - Sept. $30c (68 delta) &/or Stock
http://www.investmenthouse.com/ct/pke.html
Play Date: 05/22/2006
VMSI (Ventana Medical Sys.--$47.40; +0.16; optionable): Medical instruments
http://biz.yahoo.com/p/v/vmsi.html
STATUS: Test breakout. Bounced early last week and looked ready to continue the breakout move after the test at the 50 day EMA (44.03) the week before, but it ran out of volume to end the week and wandered laterally below 48. Still solid, just a bit of a respite before continuing the breakout move. To recap: Tremendous breakout in late April, blasting out of an 11 month base on strong earnings. It came back to test the break over the next two weeks, but it held the move, rebounding before hitting the 50 day EMA. Moved up the past week as the market sold, showing some better volume. Money flow is running higher, and relative strength broke out ahead of price, a bullish indication for VMSI to follow it higher. Nice leader that last split in March 2005, set up in the new base, and is not ready for the next run.
Volume: 217.304K Avg Volume: 311.509K
BUY POINT: New: $48.05 (orig. $47.85) Volume=425K Target=$56.95 Stop=$45.32
POSITION: UMI II - Sept. $45c (65 delta) &/or Stock
http://www.investmenthouse.com/ct/vmsi.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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