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Begin part 3 of 3
THE PLAYS
Good Movers: Not many. DRIV
Strong plays:
1) BIDU: Strong volume Friday on a move up, not down.
2) LH: Excellent handle has formed.
3) TWGP: The test is just about over.
4) ADS: Excellent lateral test continues
5) BAMM: Still ready to move.
6) HMSY: Volume is up as HMSY trades in a narrow range.
NEW PLAYS:
Upside plays:
Play Date: 10/28/2006
BIDU (Baidu.com--$89.00; +4.05; optionable): Chinese internet search.
http://biz.yahoo.com/p/b/bidu.html
EARNINGS: 11-1-06
STATUS: Cup w/handle. Somewhat of a loose interpretation of this pattern but a nice 6 week lateral move above the 50 day EMA (83.90) has set up the move into earnings. Strong volume Friday as the Chinese stocks jumped. We have been eyeing BIDU for three weeks, looking for some volume to come in as it readied the move. That volume kicked in Friday and BIDU posted a solid gain. Looking for it to clear some resistance on this move and that will be our cue to move in.
Volume: 2.526M Avg Volume: 1.483M
BUY POINT: $90.05 Volume=2M Target=$100.95 Stop=$87.88
POSITION: BDQ CR - Mar. $90c (55 delta)
http://www.investmenthouse.com/ct/bidu.html
Play Date: 10/28/2006
CTRP (Ctrip.com International--$48.75; -1.35; optionable): Travel related services in China
http://biz.yahoo.com/p/c/ctrp.html
EARNINGS: 11-8-06
STATUS: Test 50 day MA. CTRP is ready to make a trip of its own, working through a 16 week base and after a good surge to start last week is working on making a higher low at the 50 day SMA (48.38). That type of action often precedes a breakout move. Strong volume as CTRP moved up off the higher low made in early October, and we are ready to move in this week as CTRP rebounds off this test of key support (a level it broke through last week).
Volume: 313.29K Avg Volume: 384.624K
BUY POINT: $50.55 Volume=577K Target=$60.50 Stop=$48.21
POSITION: QCT CJ - Mar. $50c (55 delta) &/or Stock
http://www.investmenthouse.com/ct/ctrp.html
Play Date: 10/28/2006
DSW (DSW, Inc.--$34.92; -0.03; optionable): Branded footwear stores
EARNINGS: Late November
http://biz.yahoo.com/p/d/dsw.html
STATUS: Cup w/handle. Working on a pretty flat three week handle to its 16 week base, DSW is setting up the breakout to a new all-time high. A new issue in June 2005, DSW still has plenty of upside ahead of it. Excellent 6 to 2 accumulation in the base (6 up price weeks on rising volume to 2 down price weeks on rising volume) shows the kind of buying needed to break it higher out of this pattern. Excellent pattern and accumulation along with some of the best fundamentals growth rates around. Just want to see that volume jump as it moves through the buy point. Looks ready to get its boots on.
Volume: 265.6K Avg Volume: 368.436K
BUY POINT: $35.55 Volume=553K Target=$40.65 Stop=$33.88
POSITION: DSW DG - Apr. $35c (52 delta, 175 OI) &/or Stock
http://www.investmenthouse.com/ct/dsw.html
Play Date: 10/28/2006
LH (Laboratory Corp.--$68.15; -0.19; optionable): Medical labs
http://biz.yahoo.com/p/l/lh.html
EARNINGS: Announced 10-24-06
STATUS: Cup w/handle. Sweet little 10 week pattern has formed that used the 50 day EMA (66.79) as support. Nice break higher on the earnings news and then an excellent low volume fade back to the 10 day EMA (67.87), showing a doji at that level Friday. Excellent action and looking for the volume to jump as LH makes the breakout this week.
Volume: 660.1K Avg Volume: 1.179M
BUY POINT: $68.80 Volume=1.5M Target=$78.75 Stop=$67.22
POSITION: LH BB - Feb. $67.50c (65 delta) &/or Stock
http://www.investmenthouse.com/ct/lh.html
Play Date: 10/28/2006
STLD (Steel Dynamics--$61.18; -0.41; optionable): Steel and iron
http://biz.yahoo.com/p/s/stld.html
EARNINGS: Reported 10-19-06
STATUS: Double bottom w/handle. STLD was part of the commodities run up through May and after that run needed to consolidate. It is doing so, forming a ranging 6 month pattern, spending the last week forming a lateral handle. May take some more time to form up a bit more, but the metals are on the move and if it breaks higher from here on a return of volume we will look to move in.
Volume: 858.44K Avg Volume: 1.383M
BUY POINT: $62.22 Volume=2.1M Target=$72.45 Stop=$59.95
POSITION: RQL BL - Feb. $60c (60 delta) &/or Stock
http://www.investmenthouse.com/ct/stld.html
Play Date: 10/28/2006
TWGP (Tower Group--$35.35; -0.15; optionable): Property and casualty insurance
http://biz.yahoo.com/p/t/twgp.html
EARNINGS: 11-2-06
STATUS: Flying plateau. The lack of major tropical storms and hurricanes this year has given all the P&I insurers more money in the bank: they raised premiums, took the money, and now they get to keep it. TWGP broke higher in September, clearing a 14 week cup base on strong volume. Nice rally from 30 to 36 and then the current lateral consolidation above the 18 day EMA (34.71). Volume surged Thursday and Friday as TWGP traded flat: crouching for that next leap higher to a new all-time high. Want to see a towering break higher.
Volume: 367.716K Avg Volume: 216.235K
BUY POINT: $35.88 Volume=275K Target=$42.95 Stop=$34.57
POSITION: PTQ DF - Apr. $35c (60 delta) &/or Stock
http://www.investmenthouse.com/ct/twgp.html
CONTINUING PLAYS:
Upside:
Play Date: 10/26/2006
ADS (Alliance Data--$59.95; +0.20; optionable): Credit services
http://biz.yahoo.com/p/a/ads.html
EARNINGS: Announced 10-18-06
STATUS: Breakout test. Still working laterally on below average volume as the 10 day EMA (59.07) comes up to meet it. So good it was worth putting on the report back to back. To recap: ADS made us a bit of money on its last move, and after a breakout last week from a nicely formed 3.5 month cup with handle it is set up to do it again. We like the first test of a breakout; when the stock moves back up on volume it shows the big money still wants it, 'proving up' the breakout. Preparing for that breakout to a new all-time high. Solid leader with strong fundamentals growth rates and a sweet pattern.
Volume: 786.1K Avg Volume: 856.582K
BUY POINT: $61.11 Volume=1.3M Target=$69.95 Stop=$58.38
POSITION: ADS CL - Mar. $60c (53 delta) &/or Stock
http://www.investmenthouse.com/ct/ads.html
Play Date: 10/23/2006
BAMM (Books-A-Million, Inc.--$19.76; -0.22; no options): Specialty retail, books
http://biz.yahoo.com/p/b/bamm.html
EARNINGS: 11-16-06
STATUS: Test breakout. Ended the week with some modest selling, fading to the 10 day EMA (19.72). No harm done at all as BAMM stands ready to continue the move after making this modest pullback and a higher low at near support. To recap: Nice shot of above average volume last Monday as BAMM resumes its breakout move. BAMM set up a nice 13 week base over the 50 day EMA (18.07) and broke out to start October. A good run to just over 20 and then the first test, coming back to the 18 day EMA (19.39) last week. A good doji Friday and a break higher Monday on that solid trade. Positive accumulation is taking BAMM to a six year high. Nice resumption of the breakout move and we are ready to buy as it continues.
Volume: 53.535K Avg Volume: 103.548K
BUY POINT: $20.24 Volume=150K Target=$24.45 Stop=$18.94
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/bamm.html
Play Date: 10/21/2006
HMSY (HMS Holdings--$13.68; -0.04; no options): Specialized health services
http://biz.yahoo.com/p/h/hmsy.html
EARNINGS: 11-1-06
STATUS: Cup w/handle. Still working laterally in the handle, testing the 10 day EMA (13.55) again on Friday as volume surged back to average. Set up very nicely to make the breakout move. To recap: A sweet little 8 week base has formed as HMSY sets up for a breakout to a 10 year high. Excellent action in the pattern, and money flow is running higher as the stock bases. Has been probing the breakout the past week with some solid intraday surges up near 14.30. Looking for the volume to kick in as HMSY makes the next such move.
Volume: 236.668K Avg Volume: 225.152K
BUY POINT: $14.41 Volume=331K Target=$17.38 Stop=$13.39
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/hmsy.html
Play Date: 10/25/2006
IIG (Imergent--$16.00; -0.02; optionable): eCommerce solutions to small businesses
http://biz.yahoo.com/p/i/iig.html
EARNINGS: 11-7-06
STATUS: Ascending base. Stalled out Thursday and Friday on lower, below average volume following the strong Wednesday break higher. Rapping at the door of the breakout as IIG readies to emerge. To recap: Strong above average volume break higher Wednesday as IIG tried the breakout from its 6 month base formed making higher and higher lows above the 50 day EMA (14.29). Solid action and a nice quiet period in October before the strong Wednesday break higher. Ready to move in as this solid market leader heads higher once more.
Volume: 154.7K Avg Volume: 160.123K
BUY POINT: $16.22 Volume=200K Target=$19.85 Stop=$14.79
POSITION: IIG DC - Apr. $15c (62 delta) &/or Stock
http://www.investmenthouse.com/ct/iig.html
Play Date: 10/23/2006
WST (West Pharmaceutical--$42.40; -0.54; optionable): Components and systems for injectable drug delivery, plastic packaging for healthcare, personal care, and consumer products.
BACKGROUND: Last announced a 2:1 split on 8-24-04 at $38.50.
http://biz.yahoo.com/p/w/wst.html
EARNINGS: 11-2-06
STATUS: Double bottom w/handle. Broke higher Wednesday on rising but below average volume, then tried to extend the move Thursday on very strong trade but stalled. Friday was a day of rest as it came back to the 10 day EMA (42.09) on very low volume. Nice test of the handle to its 7 week base, and looking for the rebound on strong volume to move in and make the play. Very solid pattern and we will look at some positions before the earnings announcement.
Volume: 162.5K Avg Volume: 256.783K
BUY POINT: $42.95 Volume=400K Target=$49.75 Stop=$40.94
POSITION: WST CH - Mar. $40c (65 delta, low OI) &/or Stock
http://www.investmenthouse.com/ct/wst.html
Good Investing!
Jon L. Johnson and 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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