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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: Well, it was looking better and today BUD confirmed that with the nice breakout move! See the Member portfolio for details. Other good movers: IPIC in a very nice breakout!
Stocks/Indexes from the Wednesday report:
IDNX: Lower volume and a 3-cent loss. Can form that handle here.
TOL: Moved over the previous high but couldn't hold it. Can test the 10 day MVA at the 42 level.
UTSI: Lost support, falling through the 18 day MVA to lower support at 26. Volume lower and below average.
AJG: Tapped the 50 day MVA again and moved down, hitting the aggressive buy point at 34.50. Volume was lower; AJG still has support at the 34 range.
EMLX: Sold back; volume lower but strong as the stock closed just above the 18 day MVA.
Continuing plays:
AVID: Still looks good in the test of the breakout; showed a hammer doji on rising volume.
EXTR: Hit the buy point (13.20) in the put play, closing with a shooting star doji after moving down 2 days; that can mean an end to the selling.
GDT: After Tuesday's breakout move, the stock is holding (on decreasing volume) above the 18 day MVA. Aggressive buy point is 49.65; for the breakout, 51.63.
INRG: Continued to hold at the 200 day MVA (EMA) on low volume, in the test of the breakout.
SIB: Dropping back a bit steeply today; we want it to form a handle but in a more gradual fashion. Still okay for now.
WMT: Hit the buy point for a breakout from the cup-type base, but pulled back with a tombstone doji. Can drop back again.
SUBSCRIBER'S CHOICE:
CFLO (Cacheflow--$2.55; -0.14; optionable): Internet Software
http://biz.yahoo.com/p/c/cflo.html
STATUS: Still crawling along the bottom of a 15-month base, but recently back over its 50 day MVA and currently consolidating above the short term moving averages in a forming pennant pattern. Volume is dropping steadily from the high levels on the move over the 50 day MVA, finally below average Thursday at 575,300 (avg. 815,000). The decreasing volume on the pullback today is good action. We like the huge money flow coming in to the stock and the volume spiking so high last week. Combined with this lower volume consolidation above support, CFLO looks ready to make a run up to 4 at least, where it can encounter resistance at its 200 day MVA. Beyond that, perhaps 5. A sector that is showing improvement.
BUY POINT: Over 2.84 on above average volume, 1.1 million or higher. Stop: 2.64 (7%)
POSITION: Stock (options out of the money).
http://www.investmenthouse.com/cd/cflo.html
Best Plays:
1) NVLS: Broke the 50 day MVA on strong volume; put play.
2) CBR: Looks promising in the handle; volume was huge!
3) QQQ: May break its 50 day MVA tomorrow.
4) ACS: Ready for a pullback.
Put Play:
NVLS (Novellus--$38.70; -2.88; optionable): Semiconductor
http://biz.yahoo.com/p/n/nvls.html
STATUS: NVLS broke through its 50 day MVA (39.25) on strong volume, selling with the sector today (volume was up to 9.3 million; avg. 8 million). The stock was holding the 18 day MVA at the close of treading Wednesday, but volume was rising. From here, price can continue to drop to 35, near the range of the November lows.
BUY POINT: 38.60 on rising volume as the market continues to sell back.
POSITION: January $45 puts to buy (NQL MI).
http://www.investmenthouse.com/cd/nvls.html
RFMD (RF Micro--$18.22; -1.95; optionable): Semiconductor
http://biz.yahoo.com/p/r/rfmd.html
STATUS: Has fallen for 2 days after breaking below support at its 200 day MVA (22.70). Volume has been high and rising (up Thursday to 13.9 million; avg. 10 million). We are looking for a continued drop to the September/October lows at 13.40-13.80.
BUY POINT: 18.10 on continued selling.
POSITION: January $25 puts to buy (RFZ ME).
http://www.investmenthouse.com/cd/rfmd.html
Previously covered:
CBR (Ciber--$9.05; +0.36; optionable): Software
http://biz.yahoo.com/p/c/cbr.html
STATUS: CBR made a move up in the lateral-type handle to its 5-month cup base. Volume shot through the roof to 627,700 (avg. 149,000) on no news at least that was available at the time of this writing. The move up was small, but CBR managed to break through some resistance at 9 as it did so; we will see if that sets up a strong move Friday. The stock tried to make its move Tuesday, running up to a high at 9.39 after hitting the buy point at 9.12. It dropped back to a test of the 10 day MVA Wednesday to set up today's bounce. For new entry points we have set a new buy point. Huge money flow, strong buying. Target: 11
BUY POINT: 9.27 on continued strong volume. Stop: 8.62 (7%)
POSITION: Stock and/or January $7.50 calls to buy (CBR AU).
http://www.investmenthouse.com/cd/cbr.html
Index:
QQQ (Nasdaq 100--$38.79; -1.72; optionable):
STATUS: The index sold down to close just above the 50 day MVA (at 38.65). Volume was higher, strong at average levels, 83 million. On continued selling, the QQQ can break the support, for a move down to an initial target in the 35 range. The index held at 18 day MVA Wednesday but gapped below that level on the opening today.
BUY POINT: 38.60 on continued rising volume in market selling.
POSITION: January $47 puts to buy (QQQ MU).
http://www.investmenthouse.com/cd/qqq.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
A covered call sale play:
ACS (Affiliated Computer--$102.00; -0.50; optionable): Info Technology (software)
http://biz.yahoo.com/p/a/acs.html
STATUS: After a nice run up since last Friday where the stock broke above its upper channel, the stock has pulled back the last 2 days, showing fairly tight dojis. Volume was up and above average Thursday (at 658,100; avg. 715,000), and with that the stock looks ready to fall back. Stocks that break above that channel tend to fall toward the lower channel. For a move down to the 18 day MVA (98.24; even down toward the 50 day MVA at 95), we can look at selling some January $100 calls (selling for $5.20 at the close of trading). We will keep an eye on the 10 day MVA in the 99.86 range for potential support, but on the strong volume today ACS can drop to the lower support, which nearly coincides with the November high (97.45). When the stock finally does hold, that is the point at which the calls would be bought back at the lower price.
BUY POINT: 102 on a pullback to the 98 range.
POSITION: January $100 calls to sell (ACS AT).
http://www.investmenthouse.com/cd/acs.html
IGT: Pulling back the last 2 days with volume decreasing nicely. Can find support near 65.50-66.
NVDA: Today's market had the stock selling back to its 18 day MVA. Volume was just higher but still below average. NVDA might be able to hold the 18 day.
IDPH: Sold below its 18 day MVA but volume fell. Support in the 67 range or lower at the 50 day MVA.
CACI: Tapped the 18 day MVA on the low with volume down sharply and well below average. It bounced to close above some support at 40; look for a hold there or the 18 day until it can rally back over the December high (43.20).
APPB: After a nice run on the breakout from its ascending wedge, is selling back toward support (18 day MVA, 34.90).
UP & COMERS PORTFOLIOS: Here is the new portfolio list: BBBY, EPIQ, KKD, MMS, NDN, SRCL, CPRT, BJ, EBAY, THQI, KG.
EBAY: May hold the 50 day MVA; that is where it is headed, but volume is falling rather than rising on the move.
KKD: Added over a point to the Wednesday breakout move; may not move much higher here, however. Volume still strong but lower, and the move up was smaller and off the high (44.74), showing a doji.
NDN: Has formed an ascending wedge above its short term moving averages, and on low volume. Breakout point is 40 on greater than 500,000 in volume.
BJ: Moved higher in the right leg of the double bottom, breaking above and holding the position above the 18 day MVA. Volume lower but still above average.
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
BUD: Almost cleared the July high (44.95), tapping 45 on the intraday high as the stock broke out of the double bottom with handle base. Next hurdle will be near 47, at the March high. BUD is in a 13-month cup base with a high at 49.88, and has been moving up for three days. Remains a buy on the breakout up to 46.31, stock and/or March $40 calls to buy (BUD CH).
CHKP: Selling on sharply stronger volume, breaking the 18 day MVA and headed for the 50 day MVA, a couple of points lower.
MSFT: A reversal of the move up, selling back on strong volume. It broke the 18 day MVA, has an up trendline at 65.70, and the 50 day MVA at 64.50.
AMAT: Continued to fall after gapping below its 18 day MVA yesterday on the MU news. The stock today broke through the 50 day MVA on rising volume. Can fall to the 37.50 range for possible support (the stock closed at 39.56). Below that, 35.
BRCM: No quick move back over the 50 day. Another seller, dropping to its 200 day MVA on decreasing volume (about average levels, so still strong). Will present another buying opportunity once the market ends this selling round.
JNJ: Has been performing well after consolidating at the 56 range. The stock was back over the 50 day MVA Wednesday, and moved higher today on a slight rise in volume (still below average). It needed the correction, and is looking much better now.
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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