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Begin Part 3 of 3
Best Plays, Part 2
1) SDS: Ready to move up in a rally.
2) AIV: Moving up nicely, but needs stronger volume.
3) MOND: Very tight pennant and showing a doji at support.
4) CYTC: Looking ready to breakout.
5) JPM: Looking for a continued move up in a rally.
6) BEC: A move up on rising volume.
7) PLT: Showing a second doji at support, on lower volume.
BOUNCE PLAYS: These plays are fast plays after a pullback to support.
New Plays (from the weekend):
CB (Chubb Corp--$82.25; +1.56; optionable (CB)): Insurance
http://biz.yahoo.com/p/c/cb.html
STATUS: Moved up from a shorter term up trendline, tested on Friday's intraday low, and where price opened Monday (80.69). Volume remained below average and slightly down to 807,200 (avg. 869,000). The high tapped resistance at the 10 and 18 day MVAs (83.43 and 83.33 respectively), so look for a move over that level for positions on stronger volume. CB will try to run back up toward the December high of 90.25, much as it did starting in late November prior to reaching that price.
BUY POINT: On a move over the 10 day MVA (over 84) on a break up from here, or, on from the 50 day MVA (81.47) on a pullback to that level, both moves on above average volume.
POSITION: From here or the 81 range, stock and/or April $75 calls to buy (CB DO). April $80 options had insufficient open interests (too illiquid for this stock).
Continued Play:
SDS (Sungard Data Systems Inc--$50.06; +1.25; optionable (SDS)): Computer software
http://biz.yahoo.com/p/s/sds.html
STATUS: Fell out of its ascending wedge pattern last week, but was able to again hold its 50 day MVA (47.87) for support, as it has done each of the last several months. The bounce up today stalled at the 18 day MVA (50.21) and the stock showed a loose doji pattern, so we will see if the stock can make another move that takes it over that resistance and its high of 52.75. Good money flow and decent buying.
BUY POINT: Over 52.75 on increased volume (921,400 today; average 875,000).
POSITION: Stock and/or April $50 calls to buy (SDS DJ).
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.
Wedges:
New Play: Another financial stock that can benefit from a possible rate cut
STT (State Street Corp--$125.48; +1.81; optionable (STT)): Banking
STATUS: Moving in a wedge for the last several weeks, and currently back down at the 50 day MVA (125) which is just above the up trendline marking the upward wedging of prices at the bottom of the pattern. The stock tried to move above its short term moving averages (10 day MVA at 127.80) on the high of 129 as volume rose slightly of 929,600 (avg. 612,500), but pulled back down to the support. Look for a move back up as the sector rallies on good news.
BUY POINT: Aggressive: On a move up from here on continued strong and rising volume. Safer: Over 128 on continued strong and rising volume.
POSITION: Stock and/or February $125 calls to buy (STT BE).
New Play (from the weekend):
DFXI (Direct Focus Inc--$41.56; -3.32; no options): Sporting goods
http://biz.yahoo.com/p/d/dfxi.html
STATUS: Dropped out of its ascending wedge pattern, closing back below support of its 50 day MVA (42.76), selling on higher, above average volume (272,600; average 191,600). The stock hit 39.56 at its low, near support from some October-November levels. We will see if the stock can recover back into the range of its pattern. No new positions.
Flying Plateau:
AIV (Apartment Invest & Mgmt--$49.06; +0.62; no options): Real Estate
http://biz.yahoo.com/p/a/aiv.html
STATUS: Made a move up in its flying plateau (also a handle in the stock's cup base), approaching our buy point on volume that was down, but still above average at 210,600 (average 129,000). We are wary of continued moves on lower volume, as the handle pattern was not particularly strong (moving gradually up instead of down). For the breakout, make sure the stock hits the buy point on the targeted volume. Strong money flow and buying, and relative strength has moved out higher and ahead of price, a bullish sign.
BUY POINT: 49.32, on volume of 190,000 or better.
POSITION: Stock.
Continued Play:
IGT (International Game Technology--$48.50; +0.81; optionable (IGT)): Diversified electronics
http://biz.yahoo.com/p/i/igt.html
STATUS: Moved up slightly in its latest lateral consolidation and closed at a new high, but volume was sharply lower and below average at 430,700 (average 601,700). The stock shows a consistent pattern of breaking upward and then pulling laterally or slightly down back to its short-term MVA's (10 day at 46.92). After tapping the 10 day Friday, we are looking for a stronger move here. Excellent money flow and relative strength, and good buying.
BUY POINT: On a move up from here on increased volume.
POSITION: Stock and/or April $45 calls to buy (IGT AI).
Pennants:
New Play: Average volume is lower than 100,000, but the sector has performed well in the recent market and we like the pattern.
MOND (Robert G. Mondavi--$49.94; -0.31; no options): Food and beverage
http://biz.yahoo.com/p/m/mond.html
STATUS: Continues in its tight pennant, holding right over its 18 day MVA (49.92) as the stock showed another doji. Volume continued to increase but remained below average at 48,400 (average 55,000). On the breakout, look for a move over the pattern high of 52.50. The pattern is functioning as a test of the breakout from the recent ascending wedge pattern. Outstanding money flow and high relative strength; buying is improving.
BUY POINT: 52.63, on volume of 74,000 or better. Remains a buy on the breakout up to 55.26 or better.
POSITION: Stock.
Continued Play: Another stock with average daily volume of less than 100,000 shares.
VITL (Vital Signs--$33.00; +0.06; no options): Medical Instruments and Supplies
http://biz.yahoo.com/p/v/vitl.html
STATUS: Gapped up but could not make a move as volume drew way back to 7,900 (versus the average of 86,000), but closed right on its 18 day MVA. VITL has been tightening up on very low volume over the last two weeks, shaking out the last holders of the stock. Continued strong money flow and high relative strength, with good volume.
BUY POINT: On a move over 34 on volume in the 50,000 range. Safer: 36.13, on above average volume.
POSITION: Stock.
BASING/TRADING RANGES:
New Play:
JPM (J.P. Morgan & Co--$166.63; +6.63; optionable (JPM)): Banking
http://biz.yahoo.com/p/j/jpm.html
STATUS: Has moved up the last two days on steadily higher volume (2.68 million Monday, avg. 2 million), continuing a move up from the bottom on its base at the 200 day MVA (currently at 139.65). The base shows a prior basing high of 187.25 and possible resistance at the October and November tops (171.63 and 168.88 respectively), but for now look for a continued move up in a sector rally on the heels (or ahead of) the FOMC meeting. Relative strength has broken out ahead of price, a bullish sign.
BUY POINT: On further upward movement on continued strong volume. On a pullback, look for support at 163.
POSITION: Stock and/or March $165 calls to buy (JPM CM).
New Plays (from the weekend):
Two rolling pattern/trading range plays:
BMET (Biomet Inc--$37.44; +0.44; optionable (BIQ)): Health services
http://biz.yahoo.com/p/b/bmet.html
STATUS: Back to this stock again. BMET is rolling in a trading range between 36 and 39; that isn't a big spread, but in this kind of market, the pattern can be played up and down with success. After pulling back down Friday the stock showed a doji today after touching back down below its 50 day MVA (36.52) at its low of 35.75. The doji signals a move back up in its range. As the stock approaches the 39 range, we will look for signs of topping at the resistance unless the stock breaks out.
BUY POINT: On a move up from here on increased volume (down to 1.13 million today; average is 1.47 million).
POSITION: Stock and/or April $35 calls to buy (BIQ DG).
MER (Merrill Lynch & Co--$63.75; +0.12; optionable (MER)): Brokerage
http://biz.yahoo.com/p/m/mer.html
STATUS: MER lost the handle to its double bottom pattern last week, but appears to have caught itself after tapping near its 200 day MVA (60.30) at Friday's low. The stock tried a move up Monday but could not hold its move over the 50 day MVA (64.56), hitting an intraday high of 66.13. The stock has made great moves from the 200 day, and on a stronger move over the 50 day MER can be a good momentum play, especially if we get a rate cut.
BUY POINT: Back over 65 on above average (4.5 million; down to 4.26 million today) volume.
POSITION: Stock and/or April $60 calls to buy (MER DL).
Continuing basing stocks
BEC (Beckman Coulter Inc--$40.31; +1.25; optionable (BEC)): Electronics (scientific/technical instruments)
http://biz.yahoo.com/p/b/bec.html
STATUS: Bounced back up from support in its 18 day MVA (38.82, in the range of its October high) in the handle to a cup pattern dating back to early September. Hit our buy point with its big volume move (353,200; average 201,800), and we are looking for a continued move up, with the recent high ahead at 41.88. Relative strength has broken out.
BUY POINT: 42, on continued strong volume.
POSITION: Stock. February options at the $40 strike were insufficient in open interests.
CYTC (Cytyc Corporation--$62.69; +2.25; optionable (YQK)): Electronics
(scientific/technical instruments)
http://biz.yahoo.com/p/c/cytc.html
STATUS: Moved up today on increased volume in its handle to its 5-month cup base, approaching our buy point of 63.63. The recent high in the handle is actually 67.13, but we are pegging the November top, closer in range at 63.50, as the high that determines the breakout point. Looking for a continued move. Relative strength has broken out, and money flow is very strong.
BUY POINT: 63.63, on volume of 1.2 million or better (702,700 today; average 780,700).
POSITION: Stock and/or February $60 calls to buy (YQK BL).
Continued Plays:
PLT (Plantronics Inc--$46.44; +0.06; optionable (PLT)): Telecom
http://biz.yahoo.com/p/p/plt.html
STATUS: Continued in the handle of a double bottom pattern, showing a second consecutive doji after having dropped back to its 10 day MVA (46.08). Volume cooled Monday to 342,100 (average 377,300), as the stock holds just below the center peak of the pattern (at 47.50). Still looking for a move back up from here. Handle high is 51.50. Showing strong buying.
BUY POINT: Aggressive: A move 47.38 on increased volume. Safer: 51.63 on volume in the range of 565,000.
POSITION: Aggressive Stock (too few open interests on February options). Safer Stock and/or February $50 calls to buy (PLT BJ).
PUT PLAYS: On any positions taken on downside plays, be ready to exit quickly in case the market bounces back up, letting the stock test its low once again before bouncing back up with the market.
DIGX (Digex Inc--$32.56; -1.63; optionable (UOM)): Internet software
http://biz.yahoo.com/p/d/digx.html
STATUS: After a two week climb, DIGX could not break resistance at its 50 day MVA (35.72) and down trendline, pulling back down but staying off of its low (30), which is near its 18 day MVA (29.06). The 18 day has been support the last four sessions, so we will need to see the stock break through that level on increased volume selling for additional put positions.
BUY POINT: On a move below the 18 day MVA on increased volume (up to 660,400 today; average 772,800).
POSITION: January $35 puts to buy (UOM MG).
New Put:
ALXN (Alexion Pharmacueticals--$64.50; -2.88; optionable):
http://biz.yahoo.com/p/a/alxn.html
STATUS: ALXN is having serious trouble, and after crashing through its 200 day MVA (74.71) last week the stock continues down, today dropping on very heavy volume (716,000; average 280,000). It touched near support from its July lows at its low Monday of 62.25, and we will see if it falls back through that level.
BUY POINT: A move below 62 on continued strong volume.
POSITION: February $65 puts to buy (XQN NM) (very low open interest, so when selling it is not advisable to rely on stops).
Good Investing!
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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