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Begin Part 2 of 2
THE PLAYS: Man are there some hot looking stocks here tonight. They are shaping up well and look ready to rumble. Smaller stocks are taking the forefront as seen in the breakouts and the stocks that are starting good moves. Love it.
Good movers: EGOV gave a huge breakout, PRSF broke out, DSTM added to its breakout, CL broke support and hit the buy point for the put play (volume was lower while still just above average). KANAD is testing the breakout and looks like it will try to hold above 26.50, which it tapped today and yesterday on the lows. Volume dropped back very low, too. Previously covered: LTD was up on rising volume, but we are still looking for a pullback for new entry points.
Still looking good: IOM in the ascending wedge with volume even lower and price at support, COST was up and threw a big volume spike while the stock held a tight intraday range (bullish!) in its double bottom with handle. Also, MOSY was up again from the 18 day MVA after dropping back to that support again Wednesday; volume shot up to average on the move, so the stock looks ready to make its move in the ascending wedge. Please see the Tuesday update report for details on all three of these stocks.
Note: NMTC sold on heavy volume down to the 50 day MVA today, and is threatening to break the support on no available news.
Index: The SOX tapped the 10 day MVA on the low of 570.67, level of a down trendline (October and December highs) as well. Can hold there as long as the market continues the tight trading range.
Continued Plays:
RECN (Rscs Connection--$26.55; +0.15; optionable): Business services
http://biz.yahoo.com/p/r/recn.html
STATUS: RECN remains in the handle to its 7-month cup base, pulling back the last 3 days with volume dropping back to very low levels, but Thursday volume cranked up to 901,000 (avg. 268,000) as the stock showed a doji, up from a low of 25.15. The move back up was bullish with the stock closing at its high. Now the current handle is not our favorite kind, as it has developed into an ascending wedge. We can look for a good breakout and a quick run, but often the test of the breakout will fail with such handle patterns. When the breakout run looks ready to falter, that is when we take our profits.
Look for a breakout over the high of 28.25. Target: 34
BUY POINT: Aggressive: Over 27 on continued strong volume. Breakout: 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
Back on:
MONE (Matrixona--$14.39; +0.91; optionable): Software (internet)
http://biz.yahoo.com/p/m/mone.html
STATUS: We were watching MONE recently in the flying plateau pattern that had formed beneath the 200 day MVA. It fell out of the pattern but after testing the 18 day MVA moved back up and Thursday on nice volume (1.9 million; avg. 604,000) broke out of the consolidation and over the 200 day. Look for a continued move up; the stock remains a buy up to 15 on the move. Initial target: 17
BUY POINT: Over 14.51on continued strong volume. Stop: 13.39 (7%)
POSITION: Stock and/or February $12.50 calls to buy (MOU BV).
http://www.investmenthouse.com/ct/mone.html
DKWD (D&K Healthcare--$58.03; +1.93; no options): Drugs Wholesale
http://biz.yahoo.com/p/d/dkwd.html
STATUS: Covered last on 1-02. DKWD looks ready to try to break out of an ascending wedge-type pattern that formed since late October. Volume was higher Thursday though still below average at 77,700 (avg. 106,000) but the stock made a good move off of the 55 support level (in the range of the December highs). Looking for volume to ramp up for a breakout. Target: 71
BUY POINT: Breakout: 59.38 on volume of 143,000 or higher. Stop: 55.22 (7%)
POSITION: Stock.
http://www.investmenthouse.com/ct/dkwd.html
KLIC (Kulicke & Soffa--$19.79; -0.40; optionable): Semiconductor
http://biz.yahoo.com/p/k/klic.html
STATUS: Testing the breakout from the ascending wedge, pulling back on steadily decreasing volume right along with price, which is close to testing the 10 day MVA at 19.28. Buy point in the pattern was 19.10, so we would like to see the stock hold above that at the lowest level of support. However, the 10 day MVA may just do the trick, and we will look for a strong move back up from there on rising volume (lower Thursday to 640,800; average is 1.3 million). Trying to move up the right side of its 22-month base, and money flow and relative strength are outstanding. Initial target: 25
BUY POINT: Aggressive: 19.85 on volume in the range of 1.3 million or higher. Stop: 18.60 (7%)
POSITION: Stock and/or February $17.50 calls to buy (KQS BW).
http://www.investmenthouse.com/ct/klic.html
New:
URS (Urs Corp--$28.40; +1.38; no options): Diversified Services: Technical
http://biz.yahoo.com/p/u/urs.html
STATUS: Breaking out of a 7.5-month cup with handle base on strong volume (178,600; avg. 63,000). The stock formed this cup with handle after it did not break out of a big 20-month cup, and we consider this combo of patterns to be bullish. Buy point was 28.13, leaving the stock a continued buy on this move. URS has excellent money flow and buying. Target: 34
BUY POINT: 28.50 on continued strong volume. Stop: 26.51 (7%). A buy on the breakout to 29.55.
POSITION: Stock.
http://www.investmenthouse.com/ct/urs.html
PSFT (Peoplesoft--$40.69; -0.21; optionable): Software
http://biz.yahoo.com/p/p/psft.html
STATUS: PSFT is moving in a tightening pattern above its 18 day MVA (40.19). The stock broke out of a cup with handle mid-December and has tested in a sideways movement since and recently forming what looks more like a kind of tightening pennant pattern, another handle to a larger 6-month cup. Volume has been falling since the first of the month, and reached below average levels Thursday at 5.1 million (avg. 8 million) while the stock showed a tight, star doji off a tap at the support. We are looking for a breakout from this less-than-perfect pattern, but one that has formed up much better over the last week. Good money flow. Target: 52
BUY POINT: Breakout: 42.86 on volume in the range of 12 million. Stop: 39.86 (7%)
POSITION: Stock and/or February $37.50 calls to buy (PQO BU).
http://www.investmenthouse.com/ct/psft.html
Put:
PPG (Ppg Industries--$51.05; -1.69; optionable): Conglomerates
http://biz.yahoo.com/p/p/ppg.html
STATUS: Broke all the MVA support levels on strong volume on concerns about asbestos liabilities for this company and Dow Chemical. The stock bounced up from a low of 50.54, but if it moves below that on continued strong volume, we will be looking at the put play again. PPG had moved back over the support/resistance a week ago (it didn't hit our buy point for the previous put play) but its long-term down trendline (connects May and December highs) turned it back down and now this. Volume was strong at 811,900; average is 645,000. Target: 46
BUY POINT: Aggressive: 50.50 on continued rising volume. Break below support: 49.75 on continued rising volume.
POSITION: January (aggressive) $55 or February $60 puts to buy (PPG MK or PPG NL)
http://www.investmenthouse.com/ct/ppg.html
For a review of frequently asked questions, please use the link below:
http://www.investmenthouse.com/1questions.htm
Investment House subscribers are offered a special from eSignal for those interested in a realtime service. Contact:
Ray Fitzgerald
Account Executive
800-322-0940
Office hours 6:30-3:30 PST
rfitzgerald@esignal.com
Good Investing!
Jon L. Johnson and the Technical Traders 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 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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