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us stock market, stock watch
Begin Part 2 of 2
From Monday:
MIL (Millipore--$61.88; +0.92; optionable): Scientific & Technical Instruments
http://biz.yahoo.com/p/m/mil.html
STATUS: Broke out of the double bottom with handle on Tuesday, and increased the gains today with volume breaking above average to 366,200 (avg. 309,454). The move was smaller than that of the previous session on the stronger volume, so MIL may be ready to rest; the stock is also at resistance (62). If it can move over that on continued strong volume, good; MIL remains a buy up to 63.66 on this breakout. Target: 73. Money flow keeps rising.
BUY POINT: A buy up to 63.66 on continued rising volume (minimum breakout volume is 464,000). Watch for potential resistance at 62 and 62.10.
POSITION: Stock and/or January $55 calls to buy (MIL AK).
http://www.investmenthouse.com/ct/mil.html
IBI (Intimate Brands--$14.51; +0.46; optionable): Apparel
http://biz.yahoo.com/p/i/ibi.html
STATUS: Making its move up in the handle to the 3.5-month cup (type) base. Volume was up very nicely to 1.7 million (avg. 1.2 million) with price moving back over the 200 day MVA (14.25) and closing just below its down trendline from August. IBI is in a pennant-type handle with price pressured on the opening price by the 10 and 18 day MVAs (from both sides). Looking for a breakout over the high at 14.78 on continued strong volume. Target: 18. Super money flow. November sales report will be broadcast tomorrow morning before the bell.
BUY POINT: Breakout: 14.91 on volume of 1.6 million or higher. Stop: 13.87 (7%).
POSITION: Stock and/or January $12.50 calls to buy (IBI AV)
http://www.investmenthouse.com/ct/ibi.html
FLEX (Flextronics--$29.95; +1.97; optionable): Electronics: Circuit boards
http://biz.yahoo.com/p/f/flex.html
STATUS: FLEX broke out of the cup with handle Tuesday and added to the breakout with the strong market rally today. Volume was very strong at 20.8 million; avg. 10.3 million) with the stock just about equaling Tuesday's initial breakout move. The stock is now facing a long-term down trendline (the September/October 2000 and the January 2001 highs) at 31, so that may be the point where it takes a rest and tests this breakout. It is beyond 5% for buying on a breakout (28.60) so we are not looking at jumping in here, especially after a three-day move. Money flow shot up and relative strength is breaking out. Target: 33
BUY POINT: Over 28, after a pullback to test the buy point of 27.24.
POSITION: Stock and/or January $25 calls to buy (QFL AE).
http://www.investmenthouse.com/ct/flex.html
From the weekend:
IBM ($121.40; +4.76; optionable): Computer Hardware
http://biz.yahoo.com/p/i/ibm.html
STATUS: Broke out on excellent volume (14.5 million; avg. 8.7 million) from the 6.5-month cup with handle. The stock is almost at 5% above the buy point (123), but the limit is still 2 points ahead, and the stock can always move higher, perhaps to 125, where an upper channel line connecting Jan/Feb/May highs meets other potential resistance from the start of the base. This was a strong breakout. For a more conservative entry point, a drop back down to test the buy point of 117.13 (or high) then move back up.
BUY POINT: 122 on continued strong volume. Stop: 113.46 (7%). A buy up to 123 on the breakout.
POSITION: Stock and/or January $115 calls to buy (IBM AC).
http://www.investmenthouse.com/ct/ibm.html
CREE (Cree Inc--$26.98; +2.10; optionable): Semiconductor
http://biz.yahoo.com/p/c/cree.html
STATUS: Broke out today on solid volume of 2.8 million (avg. 1.5 million). The stock was in an ascending wedge pattern on low volume until today when volume ripped higher in the rally, led by the semiconductors. CREE remains within the 5% breakout limit, so entry points are still good for the breakout. There is potential resistance at 27.50-28.00, from which the stock pulled back at the end of the day. We will see if CREE picks up the positive action again tomorrow in a continued rally. Target: 36 Strong money flow.
BUY POINT: A buy to 27.75 on the breakout. 7 % stop on a buy point at 27: 25.11
POSITION: Stock and/or January $22.50 calls to buy (CVO AX).
http://www.investmenthouse.com/ct/cree.html
PHM (Pulte Homes--$42.90; +2.13; optionable): Materials & Construction
http://biz.yahoo.com/p/p/phm.html
STATUS: After Monday's doji (a breather after the previous session's strong move up in the stock's ascending wedge base), PHM took off in a breakout Tuesday, adding to the move today. Volume was near Tuesday's strong levels (788,900; avg. 547,000), slightly higher as PHM gapped higher and moved to a high of 43.70. Our 5% limit for buying on the breakout was 41.24, so the stock exceeded that and we will look for a pullback for new entry points. Target: 47
BUY POINT: Over 40 after a pullback to test the buy point (39.28).
POSITION: Stock and/or January $40 calls to buy (PHM AH). Delta unavailable at this time.
http://www.investmenthouse.com/ct/phm.html
Put Plays: LE and DRXR closed out. They never did give us the move down.
CMOS (Credence Systems--$19.53; +2.08; optionable): Semiconductor
http://biz.yahoo.com/p/c/cmos.html
STATUS: CMOS held support at 16 as expected and today broke out of the ascending wedge-type pattern on strong volume of 1.7 million (avg. 1 million). It closed a nickel below its 200 day MVA, and is technically over-extended (above the 5% breakout limit) on this move, so look for a pullback to test the 18 range (buy point in the pattern at 18.13 and the November high, 18). After the test we will look for CMOS to break the 200 day MVA. Target: 22. Money flow and relative strength sharply higher.
BUY POINT: 18.25, after a pullback to test the 18 range on lower volume. Stop: 16.97 (7%).
POSITION: Stock and/or January $17.50 calls to buy (CQS AT).
http://www.investmenthouse.com/ct/cmos.html
NETA (Networks Associates--$24.59; +1.65; optionable): Security Software
http://biz.yahoo.com/p/n/neta.html
STATUS: Got the bounce back up from the up trendline (referenced in Monday's report), and the stock followed through with today's breakout from its pennant pattern on good volume (7.4 million; avg. 3.5 million). Buy point was 23.63 so the stock remains a buy on this move, though it is close to our limit which is 24.81. Almost an aggressive play here, though the November high was at 24, giving the stock a bit more room to run (5% above that resistance is 25.20). High at the start of the cup with handle base (the pennant is the handle) is 27. Huge money flow and good buying. Target: 28
BUY POINT: A buy up to 24.81 to 25.30 on the breakout.
POSITION: Stock and/or January $20 calls to buy (CQM AD).
http://www.investmenthouse.com/ct/neta.html
MRVL (Marvell Tech--$37.73; +4.27; optionable): Semiconductor
http://biz.yahoo.com/p/m/mrvl.html
STATUS: Broke out of the 10-month cup with handle base on huge volume that has been building for a week (up today to 7.2 million; avg. 2 million). Our limit for buying on a breakout was 36.31 (buy point on the breakout being 34.58), so the stock is over-extended for taking new positions here. We will instead look for a pullback to test that buy point or the August high at 34.88 for new or additional positions. Highs at the start of the base are at the 42 range; MRVL pulled off the high of 38.75, but that doesn't mean a whole lot on such a strong move. Getting close to our initial target at 41-42. Money flow, buying and relative strength look good.
BUY POINT: Pullback: 35.25 after a pullback to test the buy point or the August high. Stop: 32.78 (7%).
POSITION: Stock and/or January $32.50 (UVM AZ; 11 open interests) or February $32.50 (UVM BZ).
http://www.investmenthouse.com/ct/mrvl.html
CONTINUED PLAYS:
BREAKOUTS:
JAKK (Jakks Pacific--$24.39; -0.03; optionable): Toys & Games
http://biz.yahoo.com/p/j/jakk.html
STATUS: After last week's pop on Thursday, JAKK has pulled back again and is holding support at 24; that price was our aggressive buy point, taken by the stock yesterday. Volume has been high for 2 days with price not much of a move in price; today's action ended with a star doji and a tap at support (10 day MVA, 23.77) on the low. JAKK can consolidation further at this support, and for a breakout we will look for a move over the November high at 25.38. Target: 29. Solid money flow and buying. JAKK is in a large base that dates back to the fall of 1999.
BUY POINT: New high breakout: 25.50 on volume in the range of 435,000 or higher. Stop: 23.25 (7%).
POSITION: Stock and/or January $22.50 (UFF AX; low open interests) or March $20 calls to buy (UFF CD).
http://www.investmenthouse.com/ct/jakk.html
TEST OF BREAKOUT:
IGEN (Igen Intl--$34.50; -1.00; optionable): Scientific & Technical
http://biz.yahoo.com/p/i/igen.html
STATUS: Still pulling back as it tests the breakout from its saucer/flat base. IGEN is holding at the 18 day MVA, but was selling down to that level today in a contrary move (to the market, that is). Volume was high at 274,700 (avg. 204,00). We would like to see IGEN hold here, but if it does not, can fall to the August high at 33.30 (or in that range), or the 50 day MVA at 32. 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--$30.88; +1.24; optionable): Consumer Durables
http://biz.yahoo.com/p/g/gmst.html
STATUS: GMST is continuing its run, but has now exceeded the limit for buying on a breakout, in this case 29.84 (buy point 28.42 in the ascending wedge). The stock has run up for three days, and volume dropped back below average Tuesday, though was slightly higher in Wednesday's trading (at 4.4 million; avg. 4.67 million). It can, of course, continue higher if volume keeps rising, but we are looking for a pullback for taking new or additional positions. The 200 day MVA is at 33.68, our target. GMST broke some interim resistance at the 30 range on today's move. Money flow and buying are solid.
BUY POINT: Pullback: Over 30 on a pullback to test that support level, or the range of the buy point.
POSITION: Stock and/or January $25 calls to buy (QLF AE).
http://www.investmenthouse.com/ct/gmst.html
CHEZ (Suprema Specialties--$13.60; -0.02; no options): Food (butter)
http://biz.yahoo.com/p/c/chez.html
STATUS: Still in the ascending wedge (handle to the 5-month base) and holding the 18 day MVA (12.86); CHEZ dropped to test the 50 day MVA (12.96) and the 50 day simple (on the low of 12.60). With the doji and recovery back above support, the stock still has a chance to break out. Volume was higher at 97,400 (avg. 97,000). Looking for a breakout over the high at 18. Not our favorite handle pattern for long sustained moves, but since it is a test of the October breakout and continues to tighten up well we will see if CHEZ can deliver. Target: initial 18 Good money flow.
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--$27.38; +2.84; optionable: Semiconductor
http://biz.yahoo.com/p/p/pmcs.html
STATUS: After a solid move Tuesday, PMCS broke out and kept going in the rally today. Volume was up and strong at 15.2 million (average 10.9 million) on the move out of its cup with handle. We are targeting the 200 day MVA (28.78), and with the market also looking forward to some resistance we could see a pullback from there. Besides taking profits, we can sell calls to make money on the retreat and hang onto the stock for the next run. We could sell the December $25 calls (currently 3.30, would be about 4.30 at the target), and buy them back if the stock catches support around the 25 mark, netting about 11% on the drop and continue holding the stock as it moves back up. We can do this on any stock that we want to hold long term.
BUY POINT: Riding positions toward the resistance at 28.78.
POSITION: On a drop back from resistance, December $25 calls to sell (SQL LE). We would look at buying them back upon catching support.
http://www.investmenthouse.com/ct/pmcs.html
BASING/TRADING RANGES:
SLOT (Anchor Gaming--$64.00; +2.05; optionable): Leisure
http://biz.yahoo.com/p/s/slot.html
STATUS: Broke out. SLOT made a nice bounce last week from the 18 day MVA (59.82) and today moved over the handle high (to a six-month cup base), moving on solid breakout volume of 527,900 (average 316,800). Still a buy up to 66.19, but it faces the left side high (May) at 66.75. 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: A buy up to 66.19 on continued strong volume. Stop: 59.50-61.50.
POSITION: Stock and/or January $60 calls to buy (QLT AL).
http://www.investmenthouse.com/ct/slot.html
WLP (Wellpoint Health--$120.41; +0.55; optionable): Health Services
http://biz.yahoo.com/p/w/wlp.html
STATUS: Hit the aggressive buy point but volume was not there, remaining low at 416,800 (average 715,000). It was not much of a move, edging up for the second consecutive day with a loose doji pattern. Off of this we could see a pullback, which we have been looking for anyway, and will see if it goes through the 10 day (118.60) and back to the 18 day (117.14). From there we will again look for a move back up, though stronger this time and pushing toward the breakout. WLP has strong money flow. Target: 148
BUY POINT: Aggressive: After a dip back to 117-118, a move back over 120 on volume of 1 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--$49.90; +2.20; optionable): Retail
http://biz.yahoo.com/p/h/hd.html
STATUS: HD blasted up again. It has made a strong bounce up from the 50 day MVA (43.60) over the past week (off of news of a solid outlook), turning around after it sold down out of a lateral pattern recently. It was having some doubts about moving out of that consolidation range, but volume on today's move was up to 14.6 million (average 8.5 million). A 20% move, and the stock is now up against resistance from its July-August highs (51), which was our initial target. We will see if it cannot break through again and watch for a possible test back to the 48 range. The next level of resistance is the May high at 54.
BUY POINT: From here (aggressive) or after a test back toward 48-49, 51.02 on continued strong volume. Stop: 47.45 (7%). The aggressive can also look at positions on a move back up from 48 on strong volume.
POSITION: Stock and/or January $45 calls to buy (HD AI).
http://www.investmenthouse.com/ct/hd.html
ORLY (O'reilly Automotive--$36.22; +3.55; optionable): Auto Parts
http://biz.yahoo.com/p/o/orly.html
STATUS: Wow. ORLY took off in the rally today, breaking from its 4-month cup with handle with huge volume of 2.77 million (average 475,000). Most likely it was riding AZO's coattails. In the process, ORLY made a new high as it cleared the left-side high at 35.54. The stock closed well off of its intraday high of 37.35, and since it has run beyond the point where like to chase breakouts, we will see if we get some profit taking. A bit of a pullback, from here or after a bit more of a surge until the market shows that it is resting or pulling back from resistance, can present another opportunity for new or additional positions. Our target is 41 for this move (again, perhaps with some profit-taking in there).
BUY POINT: After a dip back into the range of 35-35.50, a move back up on continued strong volume. Stop: 33.
POSITION: Stock and/or January $30 (OQR AF; 0 open interests).
http://www.investmenthouse.com/ct/orly.html
BORL (Borland Software--$16.07; +0.89; optionable):
http://biz.yahoo.com/p/b/borl.html
STATUS: BORL has made a nice breakout from its cup with handle, coming back after it could not hold its gain on the initial attempt last Friday. It has moved beyond where we normally want to chase a breakout (5%), but is now facing resistance from the left side of its cup at 16.39. After the strong move today (volume way up to 1.68 million; average 670,000), the aggressive can look at positions on a strong move over the left side highs. We have seen a lot of accumulation on this breakout, so we will be interested in new positions after some profit taking back toward 15-15.25. If we get a run over the left-side highs (and we would extend our initial target of 17 to 18), we will look at selling calls on a move back down.
BUY POINT: From here (aggressive): 16.52 on continued strong volume. Stop: 15.36 (7%). Pullback: After a lower-volume test of the 15.25 range, a move back up with market strength and strong volume. Stop: 14.30.
POSITION: Stock and/or January $12.50 calls to buy (BLQ AV). On topping and a start back down from 17-18, January $15 calls to sell (should be $2 or more), looking to buy them back as the stock finds support.
http://www.investmenthouse.com/ct/borl.html
VRTS (Veritas--$42.32; +2.75; optionable): Software.
http://biz.yahoo.com/p/v/vrts.html
STATUS: VRTS came back with the market, surging up in the wedging handle. Volume was weak Tuesday, but in the marvelous rally today VRTS found its legs, moving on volume of 20.9 million (average 14.9 million). It pulled back from its intraday high of 43.24, just short of the handle high of 43.89. We will see if it can break out, but we will need to see a strong move and be cautious with new options positions, given the potential for a pullback in the market as it reaches toward resistance (200 day at 48).
BUY POINT: Breakout: 44.02 on volume of 22 million. Stop: 40.94 (7%)
POSITION: Stock and/or January $40 calls to buy (VIV BH).
http://www.investmenthouse.com/ct/vrts.html
CHKP (Check Point Software Tech--$42.02; +2.85; optionable): Security Software
http://biz.yahoo.com/p/c/chkp.html
STATUS: A strong move in the rally. Volume was low Tuesday as CHKP climbed from the depths of its handle (to the 4-month cup base), but it started with a gap and continued to run today, with volume sharply up to 13.3 million (average 9.6 million). Still below the handle high at 43, and we will see if CHKP can continue up, still initially targeting the 200 day MVA (47).
BUY POINT: Breakout: 43.13 on 14.2 million or higher volume. Stop: 40.08 (7%)
POSITION: Stock and/or January $40 calls to buy (KEQ AH).
http://www.investmenthouse.com/ct/chkp.html
KLAC (Kla-Tencor--$56.96; +3.32; optionable): Semiconductor
http://biz.yahoo.com/p/k/klac.html
STATUS: KLAC followed Tuesday's strong move (that saw it break from its cup with handle) with a continuation in the rally, as semis had a huge day. Volume dropped back on the move, coming in at 10.5 million (average 9.6 million) as the stock closed just over a down trendline connecting September 2000 and May-August 2001 highs. We will see if it has some trouble with this level, and we could see some profit taking in the sector anyway. We will be ready for a pullback, watching for KLAC to test its breakout by tapping back perhaps to the 54 range. Beyond where we will chase a breakout. On continued strength, we will keep our eyes on the target of 60 but be ready for a test back.
BUY POINT: Test: After a low volume test of the 54 level, a move back up over 55 in a rally on increased volume. Stop: 51.15 (7%).
POSITION: Stock and/or January $50 calls to buy (KCQ AJ).
http://www.investmenthouse.com/ct/klac.html
Updating this covered call play:
BRCD (Brocade--$36.80; +2.97; optionable): Computer Peripherals
http://biz.yahoo.com/p/b/brcd.html
STATUS: BRCD took advantage of the rally, powering to a breakout on the good volume we were looking for (22.6 million; average 17.1 million). After the big run in the market, we will see how much more it has with current positions, continuing to watch our target at 39-40. With a slowing of the move and then a pullback with the market, we can look at selling calls on our stock positions, but with an eye toward keeping the stock. Currently, the December $30 calls are selling for $7, and that could go over $8 on a move to the target. On a drop in the stock to test the breakout, we sell the calls and then look at buying them back as BRCD finds support near the breakout level at 33.40.
BUY POINT: Beyond the point where we chase a breakout. We will look for some selling back from the target with a market dip, and buying them back at support.
POSITION: December $30 calls to sell (UBF LF).
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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