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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: Huge breakout from CBR! BUD looked awesome Friday, heading higher in its breakout. NCEN, covered at the end of October in its cup with handle, broke out today on above average volume. The stock has been moving up for three days; if volume keeps moving it can continue the breakout (a buy up to 13.42; closed at 12.80). WMT was a surprise, strong volume breaking it out over the November high. Can head higher from here!

Stocks/Indexes from the Thursday report:
CFLO: Tightening up in the pennant.
NVLS: The Nasdaq held at the 200 day MVA, and NVLS followed suit by holding at the 50 day MVA. Both the Nasdaq and the stock closed just under those support levels (respectively) Thursday.
RFMD: Held up, too, with a doji on lower volume. Another put play from last night.
CBR: Thursday's huge volume cued us to this breakout. Nice move out of the cup with handle for this small stock!
QQQ: You guessed it; the index held the 50 day MVA, bouncing up with a doji on low volume.
ACS: Tapped the 10 day MVA on the low, as volume dropped below average. Still looking for a move down, and we would like to see ACS test the 18 day MVA.

Continuing plays:
AJG: Still watching the stock for a move down. It bounced from support at 34, but is still in position to fall. See the 12-19 report for buy point and other details.
AVID: Stronger volume Friday and a move up from support in the test of the breakout.
BRCD: Has pulled back to the 50 day MVA and is getting ready to move back up. Aggressive buy point 33.10 in a tech rally, stock and/or April $25 or $30 calls to buy.
EAT: Nice move up after testing the breakout from the double bottom with handle. Watch 31 for potential resistance on a move up (highs at the start of the base).
EMLX: Bounced on lower volume but appears ready for a move up in a rally.
GDT: Up on rising volume, taking out the aggressive buy point (49.65). Breakout pivot point is 51.63.
IDNX: We said it might need to form a handle before taking out the high, and that looks like what it is doing as it moves sideways above support (14). A subscriber's choice from 12-19.
INRG: Continued to hold at the 200 day MVA (EMA) on low volume, in the test of the breakout. Looks good.

Best Plays:
1) KEA: Close to support in the handle.
2) OLGC: Ready for a bounce.
3) RBK: Another bounce from support after a pullback.
4) RI: Nice volume and ready to move up after testing the breakout.

KEA (Keane--$18.75; +0.11; optionable): Software
http://biz.yahoo.com/p/k/kea.html
STATUS: In a 6-month cup with handle base and pulling back to support in the handle. KEA is working on a long base, but is well off the lows near 10. The stock tapped the 18 day MVA on Thursday's low, then held the 10 day MVA Friday as volume cut up to 293,000 (avg. 242,000). Looking for a move up and breakout over the handle high at 20.05. Aggressive positions can be taken ahead of that on a strong move up. Showing excellent money flow and strong buying. Target: 24
BUY POINT: Aggressive: 19.15 on continued rising volume. Stop: 17.81 (7%). Breakout: 20.18 on volume of 363,000 or higher. Stop: 18.77 (7%)
POSITION: Stock and/or February $15 calls to buy (KEA BC).

http://www.investmenthouse.com/cd/kea.html

OLGC (Orthologic Corp--$5.00; +0.16; no options): Health Services
http://biz.yahoo.com/p/o/olgc.html
STATUS: A moving average bounce play, post breakout. OLGC first broke out of a double bottom in June, then a cup with handle in mid-November. OLGC tested the breakout on a move down to the 18 day MVA, bounced, and now is back at that support and moving up again. On sharply higher volume (121,900; avg. 111,000), the stock looks ready to continue the bounce. Looking for a move up to 6.50 for an initial target. Excellent money flow and buying.
BUY POINT: Aggressive: 5.05 on continued strong volume. Stop: 4.70 (7%)
POSITION: Stock.

http://www.investmenthouse.com/cd/olgc.html

Previously covered:

RBK (Reebok--$26.44; +1.14; optionable): Apparel Footwear
http://biz.yahoo.com/p/r/rbk.html
STATUS: We recently covered RBK in the pullback (test) after the breakout over its 200 day MVA (26). RBK was back below that support level all week until Friday, when a boost in volume to 930,800 (avg. 848,000) broke the stock back over what had become resistance. News of an infringement suit by Converse against the company did not inhibit the stock's move as this sector rallied nicely. Look for a continued move up from here and breakout over the December high (26.95). Solid money flow and buying. Target: 32.
BUY POINT: Aggressive: 26.50 on continued rising volume.
POSITION: Stock and/or April $22.50 or $25 calls to buy (RBK DX or DE).

http://www.investmenthouse.com/cd/rbk.html

RI (Ruby Tuesday--$20.58; +0.33; optionable): Restaurants
http://biz.yahoo.com/p/e/eat.html
STATUS: Broke out of a double-bottom type base (8 months) and now is testing the move by forming a kind of ascending wedge pattern with good support at the 18 day MVA (20.08). The stock got a nice surge of volume Friday (386,700; avg. 234,000), and it moved up from the 18 day MVA, tapping upper resistance in the pattern at the 20.75 range. Looking for a move up and breakout over the December high of 21.65, the previous breakout high. Strong money flow, decent buying. Target: 25
BUY POINT: Aggressive: 20.90 on continued strong volume. Stop: 19.44 (7%).
POSITION: Stock and/or April $17.50 or $20 calls to buy (RI DW or DD). Deltas unavailable.

http://www.investmenthouse.com/cd/ri.html

Puts:

JPM (Jp Morgan Chase--$35.75; -0.77; optionable): Banks
http://biz.yahoo.com/p/j/jpm.html
STATUS: In a descending wedge and Friday moved slightly below some support at the 36 level; this after JPM dropped back below the 50 day MVA (37.66) Wednesday. Volume has been very strong the last 2 days (down slightly to 18.5 million Friday; avg. 8.7 million) with the stock selling down somewhat but trying to hold; it bounced back from a test of lower support at 35.02. If it falls back down below that, look for a drop to the range of the September lows near 29.
BUY POINT: 35 on continued strong and preferably rising volume.
POSITION: January $45 puts to buy (JPM MI).

http://www.investmenthouse.com/cd/jpm.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, MIK, BMET, APPB, LOW, IDPH, TARO, MYL, IGT, VRSN

FRX: It was indeed a short handle the stock formed over the last three sessions, but it was not the kind of descending price action we like to see. However, FRX shot higher with a rise in volume Friday, and if that continues it can break out of the 5.5-month cup-type base which has early resistance at 82. FRX broke over its down trendline (July and August highs), so just might make the move. For a breakout: 82.13, stock and/or February $75 or $80 calls to buy.
IGT: Looks ready to continue up from the 10 day MVA.
NVDA: Hit support at the 18 day MVA and bounced. Can hold here until a rally.
LOW: Took out the December high (47.14) on rising volume, and looks ready to head higher after a glancing pullback to the 18 day MVA. Support looks good at 46, just below the stock's intraday tap Friday.

UP & COMERS PORTFOLIOS: Here is the new portfolio list: BBBY, EPIQ, KKD, MMS, NDN, SRCL, CPRT, BJ, EBAY, THQI, KG.

BJ: Continues to march up the right leg of its double bottom.
EBAY: Almost made it down to the 50 day MVA Thursday, but held just above it for a bounce today. We will watch the stock for a move up from this range.
KKD: Topping on the breakout.
NDN: Stronger volume and a move up in the ascending wedge. Buy point 40.03.

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

CHKP: Back over the 18 day MVA Friday with volume falling back below average.
JNJ: Another nice move Friday; volume shot to high levels and the stock was up over a dollar.

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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