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trade stock, stock watch
Begin Part 3 of 3
RECN (Rscs Connection--$26.40; -0.10; optionable): Business services
http://biz.yahoo.com/p/r/recn.html
STATUS: After Friday's attempt at a breakout from the 7-month cup with handle, RECN pulled back on sharply lower volume the last three days. It is hold support nicely at 26, tapped on the previous 2 days' lows, with volume falling again today, down to 58,000 (avg. 269,000). It is an orderly pullback, the kind we like to see, and while we are not wild about this forming ascending wedge where a handle should be, volume is shaking out well. Will look for a breakout over the high of 28.25. Target: 34
BUY POINT: 28.38 on continued strong volume (390,0000 is minimum for breakout). Stop: 26.39 (7%)
POSITION: Stock and/or February $25 calls to buy (QRG BE; 0 open interests).
http://www.investmenthouse.com/ct/recn.html
RCOM (Register.Com--$10.80; +0.03; optionable): Internet
http://biz.yahoo.com/p/r/rcom.html
STATUS: Still waiting for RCOM to break over the 18 day MVA after it bounced from the 50 day MVA on Friday. Volume was outstanding on the bounce, indicating buying by institutions, but volume has fallen back significantly since with price bouncing around between the 50 and 18 day MVAs. However, volume has built up over the last three days, and RCOM closed with a doji at the top of its intraday range Wednesday(and just under the 18 day at 10.94) with volume breaking above average to 355,000 (avg. 307,000). This may be what can push it over the resistance. On that move, looking at an initial target at 14. Excellent money flow and buying.
BUY POINT: Aggressive: Over 11 on continued strong volume. Stop: 10.28 (7%)
POSITION: Stock and/or February $10 calls to buy (RAU BB).
http://www.investmenthouse.com/ct/rcom.html
ACXM (Acxiom--$19.05; 0.00; optionable): Software
http://biz.yahoo.com/p/a/acxm.html
STATUS: Made a good move Tuesday as it hit the buy point of 18.80 in the handle to its 7.5-month cup base on strong volume. However, the move was short-lived and ACXM pulled back from its intraday high of 19.50 Wednesday in an early test of the breakout. Volume fell back to 1.26 million (avg. 1 million). Look for a test of the 18.50-18.80 range. Good money flow and buying. Target: 23
BUY POINT: Ride current positions taken at 18.80. A buy up to 19.74 on
the breakout. Stop: 17.72 (7%). New buy point on a move back over 19.50: 19.60 on volume of 1.3 million or higher. Stop: 18.23 (7%)
POSITION: Stock and/or February $17.50 calls to buy (UQA BW)
http://www.investmenthouse.com/ct/acxm.html
Two stocks that trade on average daily volume of 100,000 or less. It is interesting that our strongest moves came from these plays today:
LNOP (Lanoptics--$7.55; -0.95; no options): Software
http://biz.yahoo.com/p/l/lnop.html
STATUS: Broke out of the ascending wedge and we were expecting a test but not as sharp a drop as the stock gave today, falling just under the buy point of 7.63. Volume was lower, falling steadily since Tuesday (and down to 68,800; avg. 39,000), so we can get a hold at the 10 day MVA (7.24) or the combined support of the 18 and 200 day MVAs at 6.84-6.87). We will still be interested if we get a good rebound from either support. There was no news to explain the sudden drop (we would prefer the gradual pullback in smaller increments instead of the whole banana). At least it was on lower volume, but we want it to hold at the breakout. Target: 9 on the move back up.
BUY POINT: Aggressive: 7.70 on a strong bounce from the 6.90 range.
POSITION: Stock.
http://www.investmenthouse.com/ct/lnop.html
MFLO (Moldflow--$19.00; +1.17; no options): Software
http://biz.yahoo.com/p/m/mflo.html
STATUS: Whee-doggies! Continued the strong breakout, with volume pumping up even higher (294,400; avg. 63,000). However, MFLO pulled off the high of 19.65, so may get ready for a pullback and test of the breakout. This has been a super breakout from the ascending wedge, an excellent example of just how powerful a move these patterns can offer. Has passed our target of 18 on this move (reached Tuesday). The close off the high alerts us; if it gaps higher tomorrow and starts to sell back, we will most likely take at least half of the position off the table. If it opens lower, we will see if it can recover toward the prior close, and if it cannot take out that point, we exit at least half of our positions. Excellent money flow and buying.
BUY POINT: After a pullback to test the buy point of 15.10 (or higher, perhaps the 16 range).
POSITION: Stock.
http://www.investmenthouse.com/ct/mflo.html
Two very small stocks for a shorter term trade up to resistance:
PRSF (Portal Software--$2.45; +0.21; optionable):
http://biz.yahoo.com/p/p/prsf.html
STATUS: Broke out today, making a smashing run all the way up to 2.68 intraday, but it could not weather the late market drop, pulling back to close. Volume was the big breakout volume we like, coming in at 4.1 million (average 1.7 million). It closed back at the prior highs in its ascending wedge pattern (2.47), so we will see if it can hold here and try to continue the breakout move. Looks good. The target is the 200 day MVA, at 3.57.
BUY POINT: 2.60 on continued strong volume. Stop: 2.42 (7%)
POSITION: Stock; options out of the money for now.
http://www.investmenthouse.com/ct/prsf.html
EGOV (National Info Consortium--$3.78; +0.08; no options): Internet
http://biz.yahoo.com/p/e/egov.html
STATUS: After gapping down to open, EGOV stretched out to hit the buy point but pulled back. Volume was very solid at 175,500 (average 93,000), and the stock did manage to hold much of its gain in the face of the late drop in the market. EGOV is in a 22-month base though off the lows near 1.00 (fall 2000), and last week broke from a cup with handle within the larger base. Looking good, and we are looking for the move to continue toward the target of 5.
BUY POINT: 4 on above average volume. Stop: 3.72 (7%).
POSITION: Stock.
http://www.investmenthouse.com/ct/egov.html
New Puts from the weekend:
PCS (Sprint--$19.25; -1.86; optionable): Telecom
http://biz.yahoo.com/p/p/pcs.html
STATUS: Solid put! Made the move Monday, breaking down and out of a large descending wedge (started forming in early October), and then fell even harder today. It has been quite a drop from the above the 200 day MVA (24), so a bit depressed for new positions, and today it closed at the range of its June low (19.21). We will see if it tries to hold here; however, we are still looking toward a target of 17.50.
BUY POINT: Riding it down. After a test of the 22 range, a drop back through 21.50 on continued strong volume.
POSITION: February $25 puts to buy (PCS NE).
http://www.investmenthouse.com/ct/pcs.html
CL (Colgate-Palmolive--$56.25; +0.25; optionable): Consumer non-durables
http://biz.yahoo.com/p/c/cl.html
STATUS: Friday CL broke below the 200 day MVA (56.50) on strong volume, gapping below our buy point Monday. However, off of that doji the stock has made the test we were looking for, today gapping just over the 200 day but pulling back to close on continued strong volume (down to 1.99 million; average 1.35 million). Still looking for selling back from here; CL also has the resistance of a long-term down trendline just over the 200 day. Target: 51.50
BUY POINT: A drop back through 56 on continued strong volume.
POSITION: February $60 puts to buy (CL NL).
http://www.investmenthouse.com/ct/cl.html
CONTINUED PLAYS:
TEST OF BREAKOUT:
AUDC (Audiocodes--$5.26; -0.26; optionable): Scientific & Technical Instr.
http://biz.yahoo.com/p/a/audc.html
STATUS: Testing the breakout from the ascending wedge, but today it took out major support (that it had just cleared on the breakout) in the 200 day MVA (5.50). Volume was not very strong on the selling (259,300; average 347,900), but holding on would have showed some strength. From here we have the 18 day MVA (5.07), which is right at the former pattern highs. Looking for that to hold, with the aggressive play taking AUDC back over the 200 day. Strong money flow, solid buying. Initial target: 7
BUY POINT: Aggressive: For new or additional positions, a move back over the 200 day on above average volume. Stop: 5.12 (7%)
POSITION: April $5 calls to buy (XRD DA).
http://www.investmenthouse.com/ct/audc.html
DSTM (Datastream--$6.99; +0.76; optionable): Technical Systems Software
http://biz.yahoo.com/p/d/dstm.html
STATUS: Broke out! DSTM had made a strong move over the 200 day MVA (5.86) in late December before forming a handle to its 6-month cup base. After showing high volume Tuesday on an intraday test of the 200 day, DSTM continued upward today, blasting out of the pattern on continued strong volume (268,400; average 86,500). It did pull off of its intraday high of 7.20, but unlike much of the market, which gave up its gains as the market retreated, DSTM held on well. It is now just out of our 5% range for buying on a breakout, but this is a solid move and still a buy, particularly if we get a bit of a pullback tomorrow early on. Target is 8 for starters.
BUY POINT: If we get a pullback that holds over the breakout point at 6.61, we can look at new or additional positions on a move back up from there on strong volume.
POSITION: Stock and/or February $5 calls to buy (DQK BA).
http://www.investmenthouse.com/ct/dstm.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.
KANAD (Kana Communications--$26.95; -2.21; no options): Internet Software
http://biz.yahoo.com/p/k/kanad.html
STATUS: Wow, what a move! KANAD broke out of its ascending wedge on huge volume and made a nice three day run, finally pulling back to rest today after the stock tapped near its May intraday spike at 30 (Tuesday high 29.30). Volume was lower than on the buying but still strong (1.79 million; average 400,000). Shooting through our target of 27 and toward the resistance at 30 (almost a 30% move) on mega volume gap down is a flag to exit short term positions after a mega move. If it tries to open up tomorrow, watch for resistance at the recent high (29.20) as a sell point. From here we will see if it can make an orderly test back to the range of its May-June highs around 25, and if it can hold there we can look at new positions on a strong move up.
BUY POINT: After holding 25 on a lower volume test, a move back up on strong volume.
POSITION: Stock.
http://www.investmenthouse.com/ct/kanad.html
BASING/TRADING RANGES:
VAST (Vastera--$16.00; +0.46; optionable): Information Technology Software
http://biz.yahoo.com/p/v/vast.html
STATUS: VAST is in an 11-month cup with handle that is inside a larger, 15-month base. After dropping back from the handle high (18.60) in December, VAST has been bouncing along its 18 day MVA (15.78), today moving back over that level to close, but with huge volume kicking in (2.4 million; average 273,000). It is not readily apparent why there was such volume, but it could indicate a move is close at hand. We are looking for a bounce out of this consolidation that will take it back up to the handle high. VAST has strong money flow. Target: 22
BUY POINT: Aggressive: Over 16.50 on continued strong volume. Stop: 15.35 (7%). Breakout: 18.73 on volume of 407,000 or better. Stop: 17.42 (7%)
POSITION: Stock and/or April $15 calls to buy (AQY DC).
http://www.investmenthouse.com/ct/vast.html
Continued Puts:
QCOM (Qualcomm--$46.21; -1.98; optionable): Telecom
http://biz.yahoo.com/p/q/qcom.html
STATUS: After Monday's big drop we were anticipating a possible relief bounce to offer the chance for new or additional positions, and we got that move. Today QCOM tested as high as 49.26 (10 day MVA at 49.64) before tanking again, hitting a low of 45.99 as volume remained strong (down to 23 million; average 14.67 million). Riding positions down to the initial target of 45, but we could see a move down as low as 40.
BUY POINT: Aggressive: Below 45 on continued strong volume.
POSITION: February $55 puts to buy (AAO NK).
http://www.investmenthouse.com/ct/qcom.html
TTN (Titan Corp--$22.34; -1.18; optionable): Software
http://biz.yahoo.com/p/t/ttn.html
STATUS: Continued down, dropping through its up trendline (connecting October-November lows, at 23.50). The solid downward move we were looking for, as volume dropped on the day to 1.1 million (average 1.3 million), but it was still much stronger than we have typically seen of late. A bit tight with the target (200 day MVA, at 20.86) for new positions, but if we get a test of the trendline and a drop back again, the aggressive can add new positions.
BUY POINT: Aggressive: After a test of 23.50, a drop back through 23 on above average volume.
POSITION: February $30 puts to buy (TTN NF).
http://www.investmenthouse.com/ct/ttn.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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