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us stock market, stock watch
Being Part 2 of 2
TEAM TRADES
Today was a session we were skeptical of to begin with, and with the early gap higher, we were even more skeptical. Thus we were comfortable in waiting as long as we needed to let the indexes and stocks sort themselves out before committing funds to the market. When all else fails, patience is the key. As noted in the summary, as the early afternoon wore on, we noted a pattern of good volume in some leading names. The indexes were moving off of their lows but had run into a bit of resistance with two hours to go. It looked to us as if there would be a bit of a pullback and then an attempt to rally stocks home. We issued an alert to that effect, looking at BRCM, EMLX, etc. We watched and then in the last hour it started happening fast. IBI had already broken out, but pulled back nicely to test the move, and was trading on excellent volume. We issued the alert and stepped in at 15.42. EMLX was next as it hit 42.10 on strong volume. We stepped in at just below that level as it came back on us a bit, but it was a solid move on great volume. Then BRCM cleared a bit of intraday resistance at 43.25. We sent the alert and got in at the ask at 42.39. It ran up to close at 44.44. Then TUNE turned up and cleared intraday resistance at 24.95. We caught that one just over 25. It made a nice move into the close, closing at 25.98.
Today was a day of patience, knowing what we wanted to see to get us to take those upside positions, and waiting for that to happen. When it did we sent the alerts and acted. Volume was good on all of the stocks, and in this market that has yet to prove itself one more time at this level, that is what we want.
THE PLAYS:
Best Plays:
1) MCDT: Appears on the way to a breakout.
2) EMLX: Strong volume and upside today.
3) KANAD: Still holding up well.
4) LTD: Looking good after testing the breakout!
5) BLDP: Still tight in the pattern.
New:
MCDT (Mcdata--$27.71; +2.60; optionable): Hardware
http://biz.yahoo.com/p/m/mcdt.html
STATUS: Moving up on stronger volume in the handle to its 7-month saucer with handle base that is at the bottom of and part of MCDT's 15-month base. The stock moved back over its 200 day MVA (21.73) in mid-November in the midst of a nice uptrend from the October/September lows near 7. Now looks ready to break out of this pattern. Volume up to 1.3 million (avg. 1.7 million). Good money flow and relative strength just ahead of price. Target: 37
BUY POINT: Aggressive: 28 on continued strong volume. Stop: 26.04 (7%) Breakout:
30.43 on volume of 2.6 million or higher. Stop: 28.30 (7%)
POSITION: Stock and/or April $30 calls to buy (DMU DX). Delta unavailable.
http://www.investmenthouse.com/ct/mcdt.html
Put:
CVTX (Cv Therapeutics--$51.04; -0.98; optionable): Drug Manufacturers
http://biz.yahoo.com/p/c/cvtx.html
STATUS: A head and shoulders pattern, and currently at the neckline. The stock moved down on rising volume to close just above the 50 day MVA (50.78), but that volume is well below average (642,500; avg. 1.03 million). Lower volume on a test of the 50 day is not a great sign for the upside; institutions did not run in to buy it. But, it did hold and recover off of the low (49.39) so someone was buying it. On a move below the neckline, however, and with volume on track, we will look at buying puts on the breakout. Target: 45 (200 day MVA).
BUY POINT: 49 on volume in the range of 1 million.
POSITION: February $55 or $50 puts to buy (UXC NK or NJ). Deltas unavailable.
http://www.investmenthouse.com/ct/cvtx.html
Back On:
EMLX (Emulex--$42.06; +2.55; optionable): Computer Peripherals
http://biz.yahoo.com/p/e/emlx.html
STATUS: Hardware had a good day today. Volume was up sharply and strong at 12.4 million for EMLX (avg. 9.2 million), and the stock used the 10 day MVA (39.92) for support for the nice move up. The stock broke out of its 7-month cup with handle last week, but pulled back immediately. Volume was lower, however, which in part set up today's move. Has to take out the breakout high at 42.44, but with volume continuing to rally, we look for that move. Target: initial, 49. Strong money flow and good buying.
BUY POINT: Aggressive: 42.50 on continued strong volume. Stop: 39.53 (7%)
POSITION: Stock and/or February or April $40 calls to buy (JMQ BH or JMQ DH). Deltas unavailable.
http://www.investmenthouse.com/ct/emlx.html
New (from the weekend):
ERTS (Electronic Arts--$60.12; +0.17; optionable): Software
http://biz.yahoo.com/p/e/erts.html
STATUS: ERTS is trying to make a decisive move up from the 50 day MVA, action it started last Friday. However, it has not been able to move beyond that day's closing price, which was achieved on a move up from the stock's 50 day MVA (58.19 currently). Volume, after dropping back Christmas Eve, was back up Wednesday (2.5 million; avg. 3.2 million) but ERTS could not hold its move back over the 18 day MVA (at 60.30). The stock tapped 59.61 on the intraday low, above price support from July and August tops, so continue to look for the move up to the December breakout high (66.92), when ERTS broke out over its down trendline. Money flow is still strong as buying is solid. Target: 67 (initial)
BUY POINT: 62.25 (over Friday's intraday high) on continued rising volume. Stop: 57.89 (7%)
POSITION: Stock and/or February (EZQ BK; 0 open interests) or March $55 calls to buy (EZQ CK).
http://www.investmenthouse.com/ct/erts.html
FHRX (First Horizon--$28.07; -1.32; optionable): Drugs
http://biz.yahoo.com/p/f/fhrx.html
STATUS: We liked the move FHRX made Friday, breaking above the buy point of 29.88 in the 9-week cup with handle, but the stock did not hold the Monday high (32.20 on the breakout), selling back nearly all the way to the 50 day MVA (25.97; low was 26.45). The stock moved back over the 18 day MVA (27.37), but will now likely need a few days of consolidation before making another good-looking move such as on Friday if it can muster it. Not good, not good. Volume was still strong, though lower, at 665,000 (avg. 342,000). Target: 36.
BUY POINT: Aggressive: Over 30.90 (October top at the start of the base) on rising volume. Stop: 28.78(7%)
POSITION: Stock and/or April $22.50 or $25 calls to buy (FUF DX or DE).
http://www.investmenthouse.com/ct/fhrx.html
DKWD (D&K Healthcare--$54.67; -2.28; no options): Drugs wholesale
http://biz.yahoo.com/p/d/dkwd.html
STATUS: Another good moved being thrown out. Retraced the breakout from the recent 8-week cup with handle, starting the fall Monday on higher volume (as it tried to add to the breakout) but closing under the buy point Wednesday with volume falling back below average (89,4000; avg. 119,000). Tapped the 18 day MVA on the intraday low today, so that support looks as if it will hold. DKWD closed just under the 10 day MVA so may re-test the lower support, but we look for a hold there. DKWD broke out of an ascending wedge in late October then quickly formed the cup with handle, breaking out Friday. This quick reversal is not the action we like in our plays. High relative strength. Target: 67.
BUY POINT: Aggressive: Over 56 on a bounce from the 18 day MVA, on rising volume (120,000 or higher). Stop: 52 (7%). Over 58.18 on continued strong volume (179,000+). Stop: 54.11 (7%)
POSITION: Stock.
http://www.investmenthouse.com/ct/dkwd.html
MONE (Matrixone--$11.50; -1.49; optionable): Internet Software
http://biz.yahoo.com/p/m/mone.html
STATUS: Lost the nice little pattern the stock had formed (testing the breakout over its trendline with a flying plateau), dropping through its 10 day MVA (12.24) to close right at the 18 day MVA. Volume was high at 1.18 million (avg. 744,409) with the stock bouncing back from a low of 11.02. We will see if it can pull back up with a possible bounce from the support, but we wanted to see a breakout from the tightening pattern just under the 200 day MVA. That breakout will likely be delayed after today if it occurs at all. A pattern that goes south on you is not where you want to take chances as it does not give you that edge. Buying very strong. Initial target: 17
BUY POINT: Aggressive: 12.30 on continued rising volume. Stop: 11.44 (7%). Breakout: 14 on continued rising volume (in the range of 750,000). Stop: 13.02 (7%)
POSITION: Stock and/or February $10 calls to buy (MOU BB).
http://www.investmenthouse.com/ct/mone.html
VAST (Vastera--$15.95; -0.66; optionable): Information Technology Software
http://biz.yahoo.com/p/v/vast.html
STATUS: Moved down in the handle, selling as volume rose to 244,300 (avg. 271,000) and closing just above its 18 day MVA (15.68). VAST is in an 11-month cup with handle that is inside a larger, 15-month base. The move down to the support is okay, but the handle action should be calm and not herky-jerky. It could still form up, however, as it held, so we will look for that breakout. Strong money flow. Target: 22.
BUY POINT: Breakout: 18.73 on volume of 410,000 or better. Stop: 17.42 (7%)
POSITION: Stock and/or April $12.50 calls to buy (AQY DV).
http://www.investmenthouse.com/ct/vast.html
KANAD (Kana Communications--$18.71; -0.75; no options): Internet Software
http://biz.yahoo.com/p/k/kanad.html
STATUS: Deep in a 22-month base and moving in an ascending wedge pattern that developed after the stock completed a 15-week cup without handle. KANAD did not break out of the cup but formed this wedge immediately afterwards. It moved up the last 2 days but with volume falling Wednesday (267,600; avg. 3.4 million), pulled back and closed at the 10 day MVA (18 day MVA is at 18). Look for a hold here or at the lower support for a move back up after this next dip in the pattern. The 18 day MVA is right at the up trendline supporting the pattern. Target: 27. Outstanding money flow and buying.
BUY POINT: Aggressive: Over 20 on 3.4 million or higher volume. Stop: 18.60 (7%). Breakout: 22.26 on volume of 4.5 million or higher. Stop: 20.70 (7%)
POSITION: Stock.
http://www.investmenthouse.com/ct/kanad.html
Some small stocks:
DSTM (Datastream--$6.00; -0.17; optionable): Technical Systems Software
http://biz.yahoo.com/p/d/dstm.html
STATUS: DSTM broke over its down trendline and the 200 day MVA (5.93) just over a week ago in a strong volume move. We are looking for a hold of support at the 200 day, and after tapping just below that level today on the intraday low (5.85), DSTM bounced back up from the 10 day MVA to close back above it. Volume was much stronger after Monday's low levels (up to 186,500; avg. 82,000), but we like the move back up from the 200 day MVA on that volume as it is a possible indication that there was buying going on at that level. May re-test the 2oo day, but continue to look for the breakout over the December high at 6.61. This current pattern can be a handle to a 6-month cup base. Money flow and buying excellent. Target: 8
BUY POINT: Aggressive: Over 6.15 on continued rising volume. Stop: 5.72 (7%). 6.65 on continued strong volume. Stop: 6.18 (7%)
POSITION: Stock and/or February $5 calls to buy (DQK BA).
http://www.investmenthouse.com/ct/dstm.html
AWRE (Aware--$8.14; -0.16; optionable): Business Software
http://biz.yahoo.com/p/a/awre.html
STATUS: Still in its cup with handle pattern as it tested back to the 10 day MVA last week after a strong volume move over the 200 day MVA to complete the cup. The stock was moving up the previous 2 sessions but with lighter volume (still strong at 200,000; avg. 149,000) Wednesday pulled back slightly, holding support at 8, tapped on the low (the 10 day MVA is at 7.80). Want it to hold at 7.50, the low point in the handle, but would prefer it to hold at the 10 day MVA. Target: 11. Excellent money flow and buying.
BUY POINT: 8.76 on volume of 250,000 or higher. Stop: 8.15 (7%)
POSITION: Stock and/or April $5 calls to buy (WUQ DA).
http://www.investmenthouse.com/ct/awre.html
AGAM (Acres Gaming--$5.42; -0.28; no options): Computer Peripherals
http://biz.yahoo.com/p/a/agam.html
STATUS: Moved to 5.98 Monday on its breakout from a rolling pattern, but reversed today, falling back to test the move. Volume slid down to 138,100 (avg. 66,363), still above average, but much lower than the breakout volume. We want it to hold above the 5.13 breakout point, but it could test back to the prior tops at 5 with such a quick reversal. The stock tried to break out of a double bottom with handle in November, but when it could not, formed the rolling pattern. Looks as if it has the volume to continue the upside move. Target: 7. Money flow and buying look good; relative strength is high.
BUY POINT: Aggressive: On a move back up after testing the 10 day MVA (4.95 range): 5.15 on continued strong volume. Stop: 4.79 (7%).
POSITION: Stock.
http://www.investmenthouse.com/ct/agam.html
New Puts (from the weekend):
KLAC (Kla-Tencor--$52.30; +2.74; optionable): Semiconductor
http://biz.yahoo.com/p/k/klac.html
STATUS: Looked crappy, but held at the 50 day MVA (49.43) and bounced back over the 18 day MVA (51.54) on a decent (but not great) surge in volume to 6.1 million (avg. 9 million). Maybe it will shape up here; the chip news helped today, but the volume was not a strong surge. It has not cleared the left shoulder of late November, so we are not too eager to jump on the upside bandwagon, especially with today's volume. We will still see if it rolls over at that point (53.24 intraday). Downside target is 42-40 if the pattern completes and it rolls over.
BUY POINT: 49 on volume of 6 million or higher.
POSITION: February $60 puts to buy.
http://www.investmenthouse.com/ct/klac.html
QCOM (Qualcomm--$52.05; +1.55; optionable): Telecom
http://biz.yahoo.com/p/q/qcom.html
STATUS: QCOM hit our aggressive downside buy point of 51.50 on Monday, but held at 50, tapping at that level again Wednesday and with volume rising at it bounced back up to close just above its 10 day MVA (52.01). Volume was up to 9.3 million (avg. 15.6 million), still not great upside buying action. May try to reach the 18 day MVA at 53.20 on this move. It the stock can move over that, it has the 50 day MVA hurdle at 54.40. We can look at playing it back down from there if QCOM cannot move over that resistance. Target: 45.
BUY POINT: Aggressive from a failed test (below average volume rise) of the 50 day MVA (54.40): 54. Break of support: 28.
POSITION: February $60 puts to buy (AAO PL).
http://www.investmenthouse.com/ct/qcom.html
TXN (Texas Instruments--$28.82; +0.82; optionable): Semiconductor
http://biz.yahoo.com/p/t/txn.html
STATUS: The chip news got everyone excited, but the move was not that strong. TXN is still trying to move over the 18 day MVA (29.30), getting a strong surge in volume Wednesday (10.6 million; avg. 10 million) that pushed TXN up from its intraday tap at the lower 28 level support. That put the stock over the 10 day MVA (28.70), but the 18 day and 50 day MVA (the latter at 30.10) will be tougher resistance. We will see what the strong volume can do for TXN, but on a move back down from the 18 day MVA and break of the lower support, we can look at taking aggressive positions. Target: 23
BUY POINT: Aggressive from the 50 day MVA: 30 on continued rising volume. Breakdown: 28 on continued rising volume.
POSITION: February $35 puts to buy (TXN NG).
http://www.investmenthouse.com/ct/txn.html
SUNW (Sun Microsystems--$13.04; +0.74; optionable): Computer Hardware
http://biz.yahoo.com/p/s/sunw.html
STATUS: SUNW had a decent day, breaking back over the 50 day MVA (12.44) on a gap up to the opening price of 12.58. Volume was higher at 39.5 million (avg. 52.6 million) with the stock closing just under some potential resistance at the 13.15 range. We are watching 13.88, peak in the first shoulder of the head and shoulders pattern SUNW is trying to form (now trying to make the right shoulder), but today's move above the 50 day MVA made the weaker right shoulder less attractive. If we get a move up to that level (also at the down trendline connecting Aug/Dec tops), we will watch the strength of the move and if it is weak, look for the move back down. Buy point for a breakout is below the December low at 11.52.
BUY POINT: Aggressive: 13 on the way back down after a failed attempt to cross 13.88. Breakdown: 11.50 on rising volume (in the range of 50 million or higher).
POSITION: POSITION: February $15 puts to buy (SUQ NC).
http://www.investmenthouse.com/ct/sunw.html
CONTINUED PLAYS:
BREAKOUTS:
AUDC (Audiocodes--$5.81; +0.16; optionable): Scientific & Technical Instr.
http://biz.yahoo.com/p/a/audc.html
STATUS: Broke out of the ascending wedge last Thursday and crossed the 200 day MVA (5.57) to finish the week, and is now resting on some lower volume. Monday AUDC showed a tight 'tombstone' doji, typically a topping sign after a run up, but held on today after gapping up a bit to open. Holding the 200 day, and we are continuing to look for it to hold and set up a move toward the target of 6.75. Don't want it to cross back below the 200 day MVA on this move, however.
BUY POINT: For new or additional positions, after holding the 200 day, a move back over 6 on above average volume (364,000; today up to 396,400). Stop: 5.58 (7%)
POSITION: April $5 calls to buy (XRD DA).
http://www.investmenthouse.com/ct/audc.html
TEST OF BREAKOUT:
LTD (The Limited--$15.52; +0.80; optionable): Retail
http://biz.yahoo.com/p/l/ltd.html
STATUS: Good move today. LTD broke out of a pennant last week with a rather weak move, but after pulling laterally and testing the 200 day MVA (14.63), the stock made a nice run Wednesday, running on sharply higher volume of 1.77 million (average 1.69 million). Right at our usual limit on a breakout buy (from the pennant), and for new positions we will look for a bit of a test back towared the 200 day MVA and a start back up from there. Still targeting 18. High money flow.
BUY POINT: A buy up to 15.86 with continued strong volume. Stop: 14.47-14.75 (7%)
POSITION: Stock and/or February $12.50 calls to buy (LTD BV).
http://www.investmenthouse.com/ct/ltd.html
OO (Oakley--$16.01; -0.25; optionable): Sporting Goods (sunglasses)
http://biz.yahoo.com/p/o/oo.html
STATUS: We were looking for a possible test of the 18 day MVA (15.99), but OO gapped way down to 15.45 today before managing a recovery to push it back up to that level to close. OO has been moving more or less laterally along the 200 day (16.80) in a handle to a 5.5-month cup base, looking pretty good until today. It may be able to recovery here, but this is not the type of handle action we want to see; it should become less volatile, not more so. If it can quickly recovery we can still look for a move up to break out, but it has some work to do. Good money flow and strong buying. Target: 22
BUY POINT: Breakout: 17.99 on volume of 665,000 or higher (up to 443,300 today; average 441,600). Stop: 16.73 (7%).
POSITION: Stock and/or February $15 calls to buy (OO BC).
http://www.investmenthouse.com/ct/oo.html
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.
BLDP (Ballard Power--$29.84; +0.27; optionable): Manufacturing
http://biz.yahoo.com/p/b/bldp.html
STATUS: Patiently waiting. Deep in a 22-month base but off the lows (near14) and after moving back over the 50 day MVA in October. Formed an ascending wedge pattern with support at an up trendline (connecting November and December lows). BLDP continues to hold above the 18 day MVA (29.32) on low volume (down today to 346,800; avg. 955,000), and we look for a breakout for a run up to the 200 day MVA (36.02). Strong money flow.
BUY POINT: Aggressive: 30.25 on increased volume near the average. Stop: 28.13 (7%). Breakout: 32.76
POSITION: Stock and/or February $25 calls to buy (DUJ BE).
http://www.investmenthouse.com/ct/bldp.html
AZPN (Aspen Tech--$17.10; +0.30; optionable): Software
http://biz.yahoo.com/p/a/azpn.html
STATUS: Gapped up today but again found resistance at the 200 day MVA (17.60), pulling back to test recent support at the 18 day at its low of 16.11 before recovering to close. AZPN is still holding the lateral portion of the ascending wedge, but we want to see a strong break over the 200 day for positions. Good recovery, but we will see. Target: 20. Good money flow, decent buying.
BUY POINT: Breakout over the 200 day MVA: 17.75 on volume of 486,000. Stop: 16.51 (7%)
POSITION: Stock and/or February $15 calls to buy (ZQP BC)
http://www.investmenthouse.com/ct/azpn.html
BASING/TRADING RANGES:
MIL (Millipore--$59.29; -1.41; optionable): Scientific & Technical Instruments
http://biz.yahoo.com/p/m/mil.html
STATUS: Dumped lower on above average volume; not the move we wanted. MIL was moving in a more or less lateral pattern above support of the 18 day MVA, at 60, in the handle to a 5-month double bottom pattern (part of a larger 19-month base). Wednesday the stock sold back through support (the 18 day is at the level of the pattern center), dipping hard (volume up to 316,100; average 279,000) but recovering from an intraday test below the 50 day MVA (58.97). We will see if it can recover back into the consolidation range and try a breakout. The December (handle) high is at 63.36. Target on a breakout: 76.
BUY POINT: Aggressive: 61 on continued strong volume. Stop: 56.73 (7%). Breakout: 63.49 on volume of 428,000 or higher. Stop: 59.05 (7%)
POSITION: Stock and/or April $55 calls to buy (MIL DK).
http://www.investmenthouse.com/ct/mil.html
COHU (Cohu Inc--$19.99; +0.24; optionable): Semiconductor
http://biz.yahoo.com/p/c/cohu.html
STATUS: Still in the handle of its cup with handle, today it got a bit of a boost from the semiconductor news, but not much. Tested the 50 day MVA (19.26) but again recovered to close over the short-term MVA's (18 day at 19.81). Since pulling back in its handle (from a high of 21.93) in its 6-month cup, COHU held strong at the 50 day but is having trouble making a move back up. It looked like it would move after the initial bounce from support, but it is not showing much now and we need to see a big infusion of volume on a move toward the breakout. Money flow and buying are strong. Target: 26.
BUY POINT: Aggressive: 20.25 on volume in the range of 70,000. Stop: 18.83 (7%). Breakout: 22.06 on volume of 104,000 or higher. Stop: 20.52 (7%).
POSITION: Stock and/or February $17.50 calls to buy (QCH BW).
http://www.investmenthouse.com/ct/cohu.html
Continued Puts: We still like CLS, LLTC (these 2 were up on rising volume but are still at resistance), SPC, PPG, and ITG (made a strong downside move today triggering the buy point and the alert).
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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