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Begin part 3 of 3

THE PLAYS

Good movers: CRM; GYMB; MERX; PLCE

Wednesday night play results:
ASML: This ticker makes me laugh, but I am demented. Gapped higher but faded. Still solid in the pattern
CHINA: Surged on volume though it gave back quite a bit of the gain
DLLR: Tried to move higher but volume abandoned it.
VTIV: Gapped higher but could not hold the move, fading on lower volume. Nice test, giving us a better entry point.

New Plays:

Upside:

Play Date: 09/21/2006
BWS (Brown Shoe Co.--$34.32; -0.08; no options): Old brown shoes . . . but people seem to like them
http://biz.yahoo.com/p/b/bws.html
STATUS: Cup. Outstanding run from December to May after it broke out of a very similar base to the current 4.5 month pattern. It needed a rest after that, and now it is starting to move back up on strong volume, coming off the 200 day SMA (33.02) Wednesday after 10 weeks consolidating along that level. Money flow is running higher ahead of the price, a good complement to the outstanding 6 to 2 accumulation (6 up price weeks on rising volume to 2 down price weeks on rising volume). Very nice volume the past three weeks, swelling as BWS finished up the bottom of its base. Looks super for the break higher and run to the prior high (40) and beyond.
Volume: 306.4K Avg Volume: 197.586K
BUY POINT: $34.57 Volume=296K Target=$39.95 Stop=$33.88
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cd/bws.html

Play Date: 09/21/2006
JSDA (Jones Soda--$9.00; -0.33; no options): Soft drinks
http://biz.yahoo.com/p/j/jsda.html
STATUS: Double bottom w/handle. A new issue in November 2005, this is JSDA's first base after a nice run higher from the IPO through late May. It then started this 17 week base, forming up the two lows in the double bottom at what is the 200 day SMA (7.80). Nice surge last week to form the right side of the base and now fading this week on low volume tapping at the 90 day MA (8.90) on the Thursday low. Solid 4 to 2 accumulation shows buying in the base that is setting up the next move higher. Just waiting for it to complete this test and then show us the breakout move.
Volume: 162.4K Avg Volume: 294.043K
BUY POINT: $9.60 Volume=441K Target=$11.50 Stop=$8.93
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cd/jsda.html

Play Date: 09/21/2006
LEN (Lennar--$45.25; -0.44; optionable): Residential construction
http://biz.yahoo.com/p/l/len.html
STATUS: Test 50 day EMA. HOV kind of sagged on us, but LEN looks great, easing back to the 50 day EMA (45.15) the past week on lower, below average volume. This follows a nice gap higher last Friday after LEN came off a second low in its long pullback, making a higher low on that move. It is snugging up at the 50 day EMA, ready to make the rebound and continue its recovery. Beaten down just enough to need to come up for air, and making the right moves as it recovers.
Volume: 2.166M Avg Volume: 2.474M
BUY POINT: $46.48 Volume=3M Target=$52.50 Stop=$45.00
POSITION: LEN AI - Jan. $45c (57 delta) &/or Stock
http://www.investmenthouse.com/cd/len.html

Downside:

Play Date: 09/21/2006
CAT (Caterpillar--$64.54; -1.34; optionable): Heavy equipment that is right now too heavy for the market to bear
http://biz.yahoo.com/p/c/cat.html
STATUS: Descending triangle. A slower economy is not the best thing for CAT, and Thursday it broke lower through the bottom of a 3.5 month descending triangle, falling and staying down on very strong, above average volume. Money flow is in an impressive dive ahead of price. Now CAT has nine lives and it will land on its feet (cats always do), but we want to take advantage of this drop to make us some nice coin. A move to the target lands us a 43%ish gain.
Volume: 8.954M Avg Volume: 5.279M
BUY POINT: $64.21 Volume=5.3M Target=$61.45 Stop=$65.21
POSITION: CAT WM - Nov. $65p (-47 delta)
http://www.investmenthouse.com/cd/cat.html

SUBSCRIBER PORTFOLIO: These are stocks subscribers suggest by vote that we put in a portfolio to track and move into the stocks if they perform well. If you have any suggestions for additions or deletions, email us. We don't cover them all each report, just when something interesting is developing.

AAPL, AKAM, CCJ, CELG, FLR, GME, MGPI, MRVL, NVDA, SGMS, WM

FLR: If it breaks 75 it is heading to 70.

GME: Another nice move, gapping higher even though it could not hold all the gain on the session.

MRVL: High volume as MRVL turned down hard from the 90 day MA. Expected a test, but did not want to see this stronger volume as it shows that distribution that cropped up in the chips.

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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