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Begin Part 2 of 2
THE PLAYS:
Reading the Plays: Please note that when we reference the 10, 18, and 50 day moving averages (MVA), those are exponential moving averages (EMA). The 200 day moving average is always simple (SMA). We will note when we reference a particular MVA differently, e.g., a simple 50 day MVA. Please click on the Yahoo and chart links for company and charting information. A "prior high" refers to the high at the start of a base.
For conserving space on listings of stop losses, the symbol (7%) indicates that the stop is 7% below the buy point.
Good movers from the reports: PSFT and IPIC broke out! TSCO, covered in early November, broke out on strong volume today to hit a new all-time closing high. GDT is ready to break out after today's strong move up in the handle. Buy point is 51.63; the stock hit our aggressive buy point at 49 (closing at 49.55). Looks good!
Stocks/Indexes from the Monday report:
VRTS: Up on rising volume, closing just under the 200 day MVA resistance.
CBR: Tried to make its move but pulled back down into a doji in the handle. Volume was huge.
INRG: Sold back to support, the 200 day MVA (EMA) with volume falling back. Will look for the stock to hold here.
PSFT: Hit the buy point on rising volume; look for a continued breakout. A buy up to 44.26.
PXLW: Began its move up in the double bottom pattern, tapping the 200 day MVA resistance on the high. Volume was up. We will see if the stock can take out that resistance for the breakout. See last night's report for details.
Continuing plays:
EXTR (put): Still flirting with the underside of the 50 day MVA. Volume keeps dropping
LUV: Holding at support in the cup with handle. Buy point on breakout is 20.13 on strong volume.
NOK: Tightening up nicely in the ascending wedge.
UTSI: Hold at 28 on decreasing volume in the test of the breakout. Aggressive buy point at 28.70 on rising volume.
WMT: Checked the big bounce with a doji on higher volume. Look for a test of the 18 day MVA.
Indexes: The DJX and OEX can be forming bearish head and shoulders patterns here. May not complete the patterns, but we are watching them in case they do. The DJX was up on stronger (above average) volume, closing at 99.98 just over the level of the first shoulder's peak (which is at 99.93). If it moves back down we will look for the breakout below the 50 day MVA (buy point 97.25). OEX: Can move up from here until it hits potential resistance at the top of the first shoulder's hump at the 598 range. Aggressive buy point on a move down from there is 595 on continued strong volume.
SUBSCRIBER'S CHOICE:
AVID (Avid Tech--$12.48; +0.09; optionable): Consumer Durables: Electronics
http://biz.yahoo.com/p/a/avid.html
STATUS: Still in an overall downtrend but recently broke of a shorter term down trendline (connecting the May highs) on huge volume in a breakout from a cup with handle. AVID is in a huge base that dates back to 1998 but this year is in a smaller base with highs at 22 (January). Immediately after the break of the trendline and the 200 day MVA (converged at 12), AVID started to pull back, with volume falling back below average, forming a new handle. It has continued to consolidate above that support, making a small move up Tuesday though volume fell back again to 82,500 (avg. 95,363). Look for a continued hold here until the stock can make the breakout over the December high at 12.99. AVID has strong money flow and buying! Target: initially, 15-16
BUY POINT: 13.12 on volume of 143,000 or higher. Stop: 12.20 (7%)
POSITION: Stock and/or March $10 calls to buy (AQI CB).
http://www.investmenthouse.com/cd/avid.html
Best Plays: Some nice-looking patterns here.
1) NABI: Breaking out and still a buy!
2) BEAS: Up on stronger volume.
3) GDT: Moving toward a breakout.
New:
NABI (Nabi--$10.30; +0.70; no options): Biotechnology
http://biz.yahoo.com/p/n/nabi.html
STATUS: Breaking out of the handle to a large cup base (within another cup) of 16 months. The stock just made it over the buy point of 10.33 on today's move, shooting up on huge volume (744,500; avg. 184,000). Looking for a continued breakout with the stock remaining a buy up to 10.85 (5% over the buy point). Showing huge money flow and strong buying. Biotech has been hot the last few days. Initial target: 12 (highs at start of the bigger base)
BUY POINT: From here: 10.40 on continued strong volume. Stop: 9.67 (7%). A buy up to 10.85.
POSITION: Stock.
http://www.investmenthouse.com/cd/nabi.html
ISSX (Internet Security System--$32.91; +2.19; optionable): Software
http://biz.yahoo.com/p/i/issx.html
STATUS: Off the lows in a 21-month base (lows just above 9). The stock made a nice run up from the September lows, crossing over the 50 day MVA then bouncing off the 18 day MVA through November and earlier this month. After that, it needed a rest and tested back to the 50 day MVA (the last bounce up this month broke ISSX over its 200 day MVA, currently at 31.74). After testing the 50 day, the stock was back over the 200 and 18 day MVAs on a sharp rise in volume (2.6 million; average levels). Looking for a move up from this support on continued rising volume. December high is 38.85. Target: 45. Good money flow, strong buying.
BUY POINT: Aggressive: 34 on continued rising volume. Stop: 31.62 (7%)
POSITION: Stock and/or April $25 calls to buy (ISU DE).
http://www.investmenthouse.com/cd/issx.html
Previously covered:
GDT (Guidant Corp--$49.55; +2.58; optionable): Health Services
http://biz.yahoo.com/p/a/avid.html
STATUS: Making the breakout move from its 10-month cup with handle that is within the larger, 15-month base. Volume was strong at 2.94 million (avg. 2.4 million). The company announced a partnership with HeartCenterOnline. Handle high is 51.50, but aggressive positions can be considered on a move up from here. The stock shows strong money flow, and relative strength is breaking out ahead of price. Target: 62
BUY POINT: Aggressive: 47.20 on continued strong volume. Stop: 43.90(7%). Breakout: 51.63 on volume of 3.6 million or higher. Stop: 48.02 (7%)
POSITION: Stock and/or April $45 calls to buy (GDT DI).
http://www.investmenthouse.com/cd/gdt.html
BEAS (Bea Systems--$17.66; +1.15; optionable): Business Software
http://biz.yahoo.com/p/b/beas.html
STATUS: Got a strong dose of volume Tuesday (14.7 million; avg. 15.1 million) and moved up from the 18 day MVA (16.76). BEAS is in a flat base/lateral pattern that is moving above support of the 18 day and the 50 day MVA (16.10). At the bottom of a much larger base, BEAS recently crossed back over the 50 day MVA (early November) and entered the current consolidation. Looking for a breakout over resistance at the 18.50 range. BEAS is showing decent money flow, and buying is improving. Target: initial, 22. 200 day MVA is at 24.
BUY POINT: Aggressive: 17.75 on continued rising volume. Stop: 16.50 (7%). Breakout: 18.63 on volume of 20 million or better. Stop: 17.33 (7%).
POSITION: Stock and/or March $15 calls to buy (BUC CC).
http://www.investmenthouse.com/cd/beas.html
PORTFOLIOS: Each report, we look at these to see which is in a buy position. We don't cover them all each time, just the ones that look ready to pick up a few shares.
THE LEADERS: New Leaders (new list): ACS, NVDA, DGX, FRX, LLL, CACI, AJG, KRON, MIKE, BMET, APPB, LOW, IDPH, TARO, MYL, IGT, VRSN
ACS: Headed higher after yesterday's strong volume and move over resistance (upper channel line). A gain of almost three points, but volume was back down (still above average). Nice move!
MIK (formerly MIKE): Has been moving up for a few days and now is close to breaking over the December high. Moved up on rising volume today, but getting in here is aggressive. We will look for a test of 32.
UP & COMERS PORTFOLIOS: Here is the new portfolio list: BBBY, EPIQ, KKD, MMS, NDN, SRCL, CPRT, BJ, EBAY, THQI, KG.
BJ (Bj's Wholesale Club--$42.38; +1.63; optionable): Discount Retail
http://biz.yahoo.com/p/b/bj.html
STATUS: BJ was flying high this summer (near 57) but fell into a corrective base and by this month has formed a potential double bottom. The stock dropped to 40 (closing low for the month was 40.35) and Tuesday made a strong move up (volume was high at 2.2 million; avg.956,000) on no apparent news, crossing over its 10 day MVA and heading for the 18 day at 43.24. We are looking for the stock to move up to complete the last leg up in the pattern, eyeing an initial target at the range of the 200 day MVA (48.75 currently) for the possible formation of a handle. We will revise the target on a breakout. 50 day MVA is at 46.13. BJ shows money flow that hit bottom but is now trying to turn up; buying is looking much better. Aggressive.
BUY POINT: Aggressive: 43.30 on continued strong volume. Stop: 40.27 (7%)
POSITION: Stock and/or March $40 calls to buy (BJ CH).
http://www.investmenthouse.com/cd/bj.html
EBAY: Sold down after the news that the company's CCO was stepping down (out yesterday) but held above the 18 day MVA. Volume was strong on the move down, but so far support is holding.
KKD: Made that 2-day move then pulled back as volume fell back below average. Showing a tight doji and holding support at 40, so looks ready to move up.
MMS: Moved over the down trendline but could not make the move stick; the stock closed back down for a slight loss, showing a tight doji on higher volume. Tough resistance.
MEMBER PORTFOLIO: New portfolio as selected by the subscribers. Some of these stocks are still struggling to move higher in their bases, and will likely continue to trade in close ranges just like the market. We'll be ready to catch them when they are ready to move. The new list: BRCM, CHKP, AMAT, JNJ, MSFT, AOL, HGSI, BUD, PXLW.
Old members: BRCM, CHKP, CSCO, EMLX, IDTI, INTC, JDSU, MVSN, NT, PWER, SUNW, VTSS
BRCM: Holding at the 50 day MVA for the past four sessions. May try to make a move after this big handle, but the MU news will make that harder tomorrow.
BUD: Made a solid move up from the 50 day MVA in the handle to its double bottom with handle pattern. Buy point is 44.10 for a breakout over the handle high. The stock closed just under its short term down trendline (connecting July, September and November highs), so we will see if the strength continues and takes BUD over that.
MSFT: Edged higher after breaking over the down trendline Monday. Volume was lower so the stock may test the new support before making another move up.
Good Investing!
Jon L. Johnson and The Daily Staff
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 of 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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