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stock watch, stock recommendation
Begin Part 3 of 3
CONTINUED PLAYS:
TEST OF BREAKOUT:
IBM ($120.40; +0.26; optionable): Computer Hardware
http://biz.yahoo.com/p/i/ibm.html
STATUS: Broke out on excellent volume last week from the 6.5-month cup with handle, then pulled back the last 2 days as volume fell back right along with price (down Friday to 6.8 million; avg. 8.5 million), testing the breakout. Look for support, at the lowest, in the area of the buy point (117.13) and/or the 10 day MVA (117.43). The stock showed a loose doji Friday with another tap on the intraday high at resistance at the 121.50-121.70 range. If IBM can hold this support, reinforced by the May highs and encouraged by even lower volume, we will look at a buy point over Wednesday's high at 121.98. Upper channel line resistance still at 125. Target: 140
BUY POINT: Aggressive: On a move back up from a test of the buy point: 119 on rising volume in a rally. Stop: 110.67 (7%). Breakout: Over 122 on volume of 9 million or higher. Stop: 113.46 (7%)
POSITION: Stock and/or January $115 calls to buy (IBM AC).
http://www.investmenthouse.com/ct/ibm.html
MOVING AVERAGE BOUNCE PLAYS:
JAKK (Jakks Pacific--$24.40; +0.27; optionable): Toys & Games
http://biz.yahoo.com/p/j/jakk.html
STATUS: Made the tap back to the 18 day MVA Friday (23.17) then bounced on rising volume (295,800; avg. 309,000). JAKK looks ready to head up from here for its second bounce from the 18 day since it broke out of the cup with handle in early November. JAKK is in a large base that dates back to the fall of 1999. Strong money flow and good buying. Target: 31
BUY POINT: Aggressive: 24.75 on average or higher volume. 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
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.
BASING/TRADING RANGES:
SERO (Serologicals--$21.09; +0.04; optionable): Biotechnology
http://biz.yahoo.com/p/s/sero.html
STATUS: SERO broke out of a double bottom base in May before moving into this rather choppy cup with handle. Friday it continued to hold the pennant handle to the 6-month cup base, showing a doji up from a tap of support at the 10 day MVA (16.86). Volume was higher (187,900; avg. 246,090), up after a week of lower, well-below average volume. Continue to look for a breakout over the December high 22; previous high in the handle is from November (21.50). Excellent money flow and buying. Target: 27.
BUY POINT: 22.13 on volume of 381,000 or higher. Stop: 20.58 (7%).
POSITION: Stock and/or January $17.50 calls to buy (QEO AW; low open
interests).
http://www.investmenthouse.com/ct/sero.html
IBI (Intimate Brands--$14.36; -0.19; optionable): Apparel
http://biz.yahoo.com/p/i/ibi.html
STATUS: Still holding the pennant handle to the 19-week cup with handle base. The stock pulled back Friday with volume still falling (to 985,100; avg. 1.2 million), tapping at the 200 day MVA on the low of 14.30 (the support is at 14.23). It can hold there or the lower 18 day MVA (13.95, the main support in the handle), though we would like to see the 200 day MVA in that role. Look for the breakout over 14.78 (handle high from November). Excellent money flow. Target: 18.
BUY POINT: Breakout: 14.91 on volume of 1.6 million or higher. Stop: 13.87 (7%).
POSITION: Stock and/or January $10 calls to buy (IBI AB)
http://www.investmenthouse.com/ct/ibi.html
PHM (Pulte Homes--$42.50; +0.01; optionable): Materials & Construction
http://biz.yahoo.com/p/p/phm.html
STATUS: Taking a breather the last 2 days after the nice breakout run from the ascending wedge (at the bottom of the 4.5-month cup, part of a larger 7-month base). Volume dropped off but was back over average Friday (600,000; avg. 549,318) with PHM bouncing up slightly from 42, a level of potential support from prices scattered May through July. The stock looks ready to form a handle here, but if support remains firm at 42, it may be a short one with the stock heading higher more quickly and forming another handle somewhere between here and the previous high in this base near 48. Look for a hold at support and breakout over Wednesday's high at 43.70. Good money flow and high relative strength. Target: 53
BUY POINT: Breakout: 43.83 on volume of 800,000 or higher. Stop: 40.76 (7%).
POSITION: Stock and/or January $40 calls to buy (PHM AH). Delta unavailable.
http://www.investmenthouse.com/ct/phm.html
HD (Home Depot--$49.41; +0.26; optionable): Retail
http://biz.yahoo.com/p/h/hd.html
STATUS: Pulled back on quickly decreasing (and below average) volume after Wednesday's strong move up to the 50-51 level resistance. The stock is testing its breakout run over the down trendline and the resistance created by the mid-November lateral consolidation. We like this pullback on decreasing volume (down to 4.8 million; avg. 8.56 million), and with the stock making the small positive move up Friday, looks like it wants to hold support at 48 or higher. Look for a breakout over the high at 50.40 (and that other resistance from the July and August highs). Money flow is strong, and relative strength is breaking ahead of price. Target: 58
BUY POINT: Breakout: 50.53 on volume of 11.5 million or higher. Stop: 46.99 (7%)
POSITION: Stock and/or January $45 calls to buy (HD AI).
http://www.investmenthouse.com/ct/hd.html
ORLY (O'reilly Automotive--$36.04; -0.17; optionable): Auto Parts
http://biz.yahoo.com/p/o/orly.html
STATUS: Tried to move higher after breaking out Wednesday, but couldn't take out the breakout high at 37.35 and the rest of the week pulled back on quickly decreasing volume (to 333,600 Friday; avg. 521,409). The low of 35.68 tapped near support at the July highs (35.54) with the stock bouncing back up slightly. ORLY may hold that support for a quick move back up after testing the breakout. Look for a move back over the high on a sharp rise in volume. Super money flow and buying. Target: 41
BUY POINT: Aggressive: On a hold of support at the 35.50 range, 36.60 on 525,000 volume or higher. Stop: 34.04 (7%). New high breakout: 37.40 on above average volume. Stop: 34.78 (7%)
POSITION: Stock and/or January $35 calls to buy (OQR AG; low open interests).
http://www.investmenthouse.com/ct/orly.html
VRTS (Veritas--$41.46; -1.23; optionable): Software.
http://biz.yahoo.com/p/v/vrts.html
STATUS: Started pulling back again Friday after Thursday's slightly higher doji; both days volume was below average (up just slightly Friday at 9.6 million; avg. 14.8 million). The low tapped near 40, potential support for the stock if not the 18 day MVA at 38.93. VRTS is in a cup with handle base of 22 weeks, and since the handle was in a wedging movement on higher (though below average) volume, we like this attempt at a more orderly pullback. On a pullback and hold at the 40 range, we can look at taking aggressive positions on a strong move back up in a tech rally. Target: 53
BUY POINT: Aggressive: 42.75 on rising volume in a rally. Breakout: 44.02 on volume of 22 million. Stop: 40.94 (7%)
POSITION: Stock and/or January $35 or $40 calls to buy (VIV AG or AH). Deltas unavailable.
http://www.investmenthouse.com/ct/vrts.html
CHKP (Check Point Software Tech--$39.93; -1.12; optionable): Security Software
http://biz.yahoo.com/p/c/chkp.html
STATUS: Pulled back after trying for the breakout in Wednesday's rally. CHKP is showing a doji on low volume (which started falling Thursday and by Friday was at 6.7 million; avg. 9.6 million) and is at support, the 10 day MVA. The stock be able to hold here since the 10 day is reinforced by a string of prices throughout November. For the breakout, buy point is just over the handle high at 43. The 200 day MVA is at 46.11, so that can pose resistance unless we get a strong breakout. Moving our target up to 52 on a move over the 200 day MVA.
BUY POINT: Breakout: 43.13 on 14.2 million or higher volume. Stop: 40.08 (7%)
POSITION: Stock and/or January $35 calls to buy (KEQ AG).
http://www.investmenthouse.com/ct/chkp.html
KLAC (Kla-Tencor--$55.30; -1.11; optionable): Semiconductor
http://biz.yahoo.com/p/k/klac.html
STATUS: Pulling back the last 2 days after Wednesday's breakout from the cup with handle (breakout high was 57.60, the new December high). KLAC tapped 54 on its low, hitting expected support at the August tops (the 10 day MVA is at 53.05) and bouncing back up with a doji on the low volume (7 million; avg. 9.4 million). We will watch for a re-test of 54 as KLAC likely settles into a new handle in this test of the breakout. The length of the handle can depend on the extent of the market pullback; we would expect KLAC to surge back up in a chip rally. Target: 69
BUY POINT: Breakout: 57.73 on volume of 14 million or better. Stop: 53.69 (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--$38.10; -0.56; optionable): Computer Peripherals
http://biz.yahoo.com/p/b/brcd.html
STATUS: BRCD is pulling back after the strong breakout run of last week. Volume started falling off Thursday though the stock moved higher, then dropped below average Friday (16.2 million; avg. 17 million) as the stock posted the small loss. That was our cue to begin looking at selling calls for the move down, but the stock held with a doji and may not fall back as far as the buy point (earlier targeted support at 33.40). Depending upon what happens with the market Tuesday with the FOMC meeting, positions already taken for a covered call play may need to be closed if we get a market rally or if the stock hits support at the 36 range and moves back up (still a move of 2 points and the delta is high). Otherwise, we can continue to watch for another move down when the market shows it is ready for an earnest pullback. For a move back over the high of 39.20 for upside positions, look for the stock to catch support at 36 and give a strong move back up.
BUY POINT: Aggressive: Over 37 on above average volume.
POSITION: Stock and/or January $35 calls to buy (UBF AF).
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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stock watch
stock recommendation
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