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stock watch, stock recommendation
Begin Part 2 of 2
Best Plays:
1) ACTN: Making a strong move off the 50 day MVA.
2) BRKS: At support in a cup with handle.
3) NOVL: Ready to break to a new high.
4) ABGX: New put and heading down.
5) MROI: Still looks good in the ascending wedge.
6) WW: Looks very good today.
7) NEWP: Tight doji at support in the test of the breakout.
8) INVN: Making the bounce!
9) KLIC: A bounce off the 18 day MVA on slightly rising volume, in its test of the breakout.
New: ACTN is a previously covered stock.
ACTN (Action Performance--$33.60; +1.55; optionable):
http://biz.yahoo.com/p/a/actn.html
STATUS: Making a strong move off the 50 day MVA after having pulled back to that support level off the December high of 37.17. ACTN made that high on a nice breakout from a small v-bottomed cup, and on the pullback first tested the 50 day at the end of December. It's now approaching the 34 resistance that pushed it back down after that first bounce back, but this move is much more solid than what ACTN put together over 7 days ago. Look for a continued bounce and potential positions on the move over the 34 range. Initial target on the bounce: 41. Volume was 419,900; average 333,000.
BUY POINT: Aggressive: 34.10 on continued strong volume. Stop: 31.71 (7%)
POSITION: Aggressive: Stock and/or April $30 calls to buy (QNC DF; low open interests).
http://www.investmenthouse.com/ct/actn.html
BRKS (Brooks Automation--$46.76; -0.51; optionable): Semiconductor
http://biz.yahoo.com/p/b/brks.html
STATUS: Pulling back in a handle to a 5.5 cup with handle base that is inside the stock's larger, 20-month base. BRKS tapped the 10 day MVA on the low of 46.61 Monday, with volume falling back to 371,700 (avg. 694,000). We are looking for the stock to hold the support and make its move back up and over the handle high at 50.78 for the breakout. Can look at taking aggressive positions before hitting that price, however. Money flow and buying look good! Target: 60
BUY POINT: Aggressive: 48, on volume in the range of 500,000. Stop: 44.64 (7%). Breakout: 50.85 on volume of 1 million or higher. Stop: 47.29 (7%)
POSITION: Aggressive: Stock and/or March $40 calls to buy (BQE DH). Breakout: Stock and/or March $45 calls to buy (BQE DI)
http://www.investmenthouse.com/cd/brks.html
NOVL (Novell--$5.29; +0.05; optionable): Software
http://biz.yahoo.com/p/n/novl.html
STATUS: In a 23-month base and in early December crossed over its 200 day MVA (now at about 4.50), consolidated back down to the 18 day MVA in a pennant-type pattern from which the stock broke out but not in a strong manner, trying to move higher but having trouble at the range of the buy point of 5.36. Monday the stock tapped support on the low of 4.95 (the 18 day MVA), and gave a nice move up with volume rising though still below average at 2.9 million (avg. 3.3 million). We are looking for a continued move up from here after this test of the breakout. Money flow looks good and buying is outstanding. Target: 7
BUY POINT: Aggressive: Over 5.30 on volume of 3.5 million or higher. Stop: 4.98 (7%)
POSITION: Stock and/or May $5 calls to buy (NKQ EA).
http://www.investmenthouse.com/ct/novl.html
Put:
ABGX (Abgenix--$26.43; -2.33; optionable): Biotech
http://biz.yahoo.com/p/a/abgx.html
STATUS: Broke below support at the January low (27.74) on strong volume of 1.9 million (avg. 1.6 million), no specific news available. On continued selling, the stock can drop to 22.50. Below that is the September low at 19.71. ABGX hovered just under the 30 range for 6 days after falling below the 200 day MVA (currently at 31.46), showing weakness ahead of today's more decisive move.
BUY POINT: 26.25 on continued rising volume.
POSITION: April $40 or $35 puts to buy (AZG PH or PG).
http://www.investmenthouse.com/ct/abgx.html
New from the weekend:
Covered Call:
BORL (Borland--$15.86; -0.43; optionable): Software
http://biz.yahoo.com/p/b/borl.html
STATUS: Dropped to 15.20 on the low Monday (hitting the buy point of 16), with volume falling back to 1.02 million (avg. 842,000). Showing a doji, the stock closed below the 18 day MVA (16.10), the level we were looking for it to break on the move down. That will now serve as resistance, and we will continue to look for weakness. Our target from the weekend report was at 14, near the November tops, so we will see if BORL will make the move back down. 50 day MVA is at 14.93.
BUY POINT: Riding positions taken at 16. If BORL moves back over the 18 day MVA we will close the play.
http://www.investmenthouse.com/ct/borl.html
MROI (Mro Software--$22.62; -0.72; optionable): Applications
http://biz.yahoo.com/p/m/mroi.html
STATUS: Holding the ascending wedge pattern with volume remaining well below average (and lower Monday at 99,800; avg. 231,000). Closed at support of the 18 day MVA (22.53), so we continue to look for a breakout over 25. The wedge formed after MROI broke out of a cup with handle. High money flow and relative strength. Target: 30
BUY POINT: 25.13 on volume of 312,000 or higher. Stop: 23.37 (7%)
POSITION: Stock and/or March $20 calls to buy (UPJ CW).
http://www.investmenthouse.com/ct/mroi.html
LXK (Lexmark--$57.81; -0.71; optionable): Peripherals
http://biz.yahoo.com/p/c/lxk.html
STATUS: In a cup with handle of just over 6 months, part of a 21-month base. After holding the 18 day MVA Friday, LXK closed back below the support (which is at 57.99). Volume was rising and strong at 2.18 million (avg. 1.3 million) on the bounce back up from a low of 56.90, so we will see if LXK can move back over the support. Looking for a breakout over the handle high at 61.90. Target: 74
BUY POINT: Aggressive: 59.75 on continued rising volume. Stop: 55.57 (7%). Breakout: 62.03 on volume of 2 million or higher. Stop: 57.69 (7%)
POSITION: Stock and/or April $55 calls to buy (LXK DK).
http://www.investmenthouse.com/ct/lxk.html
WW (Watson Wyatt--$21.95; +0.26; no options): Diversified Services
http://biz.yahoo.com/p/w/ww.html
STATUS: An 8-week ascending wedge that is inside a 20-week cup with the deep cut in September (highs at the start of the base are near 28 in mid-August). After a low volume pullback Friday, WW got a strong shot of volume (190,200; avg. 72,000) and made a small move up from the 18 day MVA (21.49). A solid move, actually another volume spike after that of last Thursday, and we continue to look for a breakout. Buying and money flow look good. Target: 27
BUY POINT: 22.13 on continued strong volume (min. breakout volume was 97,200). Stop: 20.58 (7%)
POSITION: Stock.
http://www.investmenthouse.com/ct/ww.html
VIP (Vimpel Commun--$28.25; -1.27; optionable): Telecom
http://biz.yahoo.com/p/v/vip.html
STATUS: Broke out of the ascending wedge Friday but pulled back immediately with volume dropping back to 385,300 (avg. 314,000). Not a welcome move, but if VIP can hold up here above 28, level of price support from November, December and this month, it can consolidate in a test and try another move up. The wedge formed at the upper right side of a 17-month cup, and note again that such positioning isn't the best for this pattern. High money flow. Target on a breakout: 35
BUY POINT: Move over the breakout high: 29.55 on continued strong volume. Stop: 27.48 (7%).
POSITION: Stock and/or April $25 calls to buy (VIP DE).
http://www.investmenthouse.com/ct/vip.html
NEWP (Newport--$24.27; -0.10; optionable): Scientific & Technical Instruments
http://biz.yahoo.com/p/n/newp.html
STATUS: NEWP exploded over its 200 day MVA (24.15) on strong volume early this month, and has now, on low and below average volume (794,800; avg. 970,000) pulled back to the support by Friday. Monday NEWP held the support just like we wanted, showing a welcome doji on slightly rising volume (829,600; avg. 971,000). Looking for the 200 day MVA (24.07) to hold the stock for a strong move back up. Target on a move back over the January high of 26.17: 30
BUY POINT: Aggressive: Over 25 on volume of 980,000 or higher. Stop: 23.25 (7%)
POSITION: Stock and/or May $20 calls to buy (NZZ ED).
http://www.investmenthouse.com/ct/newp.html
INVN (Invision--$30.12; +2.37; optionable): Scientific & Technical Instruments
http://biz.yahoo.com/p/i/invn.html
STATUS: Got the move we wanted from INVN Monday, the stock breaking over resistance at the 18 day MVA (28.92) as volume jumped above average to 3.4 million (avg. 2.67 million). We were looking for a continued 50 day MVA bounce, and an initiated buy rating from Emerging Growth Equities helped. The stock is a new issue that more than quadrupled its value inside 3 months before correcting back to the 50 day MVA (24.90). Initial target on a continued move is 35, but this one can fly back toward the December high at 47.09. Good money flow and buying.
BUY POINT: Hit aggressive buy point at 29; riding positions taken there. New buy point from here for continued aggressive positions is over the intraday high of 30.86. Stop: 28.85 (7%)
POSITION: Stock and/or April $25 calls to buy (FQQ DE).
http://www.investmenthouse.com/ct/invn.html
Smaller stocks:
AXCA (Axcan Pharma--$14.38; -0.12; no options): Drug
http://biz.yahoo.com/p/a/axca.html
STATUS: Broke from a flat base in late November and ran to the January high of 14.58, stepping up the 10 day MVA along the way (that support is now at 14.04). After correcting back to 13.33 but not all the way back to the 50 day MVA at the time, the stock blasted up Friday and looked ready to move out to a new high. However, we got a lower volume pullback to a tight doji instead. Can hold at the 18 day MVA (14 range), and we will look for the strong move back over the January high (14.58) after some further consolidation. Money flow and relative strength at excellent levels. Target: 17
BUY POINT: 14.60 on continued strong volume. Stop: 13.58 (7%)
POSITION: Stock.
http://www.investmenthouse.com/ct/axca.html
GSLI (Gsi Lumonics--$10.10; -0.09; optionable): Scientific & Technical Instruments
http://biz.yahoo.com/p/g/gsli.html
STATUS: In a large 17-month base but is now in an 8-month cup with handle base at the bottom of the bigger pattern. Made a move up in the handle Friday but with volume shooting out above average Monday, pulled back slightly. The stock tapped 9.91 on the low, just above support at the 10 day MVA, so that support is looking firm for now. Will continue to look for a move up to breakout. Huge money flow and high relative strength. Target: 14
BUY POINT: Breakout: 10.88 on volume of 140,000 or higher. Stop: 10.12 (7%). Monday's volume up to 127,000 (avg. 91,136).
POSITION: Stock and/or April $7.50 calls to buy (HQJ DU; low open interests)
http://www.investmenthouse.com/ct/gsli.html
FORG (Vtel--$4.34; -0.11; no options): Telecom
http://biz.yahoo.com/p/f/forg.html
STATUS: Made a nice move up Friday on solid volume in the ascending wedge pattern (formed since late October). However, the stock didn't follow through on the move as volume fell back just under average to 186,100 (avg. 250,000). It showed a doji above support, the 10 and 18 day MVAs at 4.26 and 4.16, respectively, so if it was going to falter on a breakout move we don't mind it doing so with a low-volume pullback to support. Under those circumstances we continue to look for a breakout. Excellent money flow and buying. The stock is in a 22-month base and the wedge is just off the lows that are around $1.00. Target: 6.
BUY POINT: Aggressive: Over 4.60 on continued strong volume. Stop: 4.28 (7%)
POSITION: Stock.
http://www.investmenthouse.com/ct/forg.html
SHLM (A.Schulman--$15.90; +0.07; no options): Consumer non-durables
http://biz.yahoo.com/p/s/shlm.html
STATUS: Broke out of the lateral pattern it had formed as a test of the breakout but did not add much to the move Monday. Volume remained high but was lower anyway at 301,300 (avg. 121,000), SHLM showing a doji on the small gain. It can hold here (above Friday's closing price of 15.83 or today's intraday low of 15.69) and with an upsurge in volume continue the breakout (a buy up to 16.30 on the move). If not, can pull back to test the 15.50 range (buy point 15.52). Money flow and relative strength at excellent levels. Target: 19
BUY POINT: 16 on rising volume on a move up from here or after a pullback to test the 15.50 range. Stop: 14.88 (7%).
POSITION: Stock.
http://www.investmenthouse.com/ct/shlm.html
Puts:
KBH (Kb Home--$38.25; +0.56; optionable): M&C: Residential
http://biz.yahoo.com/p/k/kbh.html
STATUS: Hit a lower volume high (41.44) in late December and on its pullback broke the 18 day MVA (38.59) last week. Volume was strong on the drop, but it was able to stop for a moment today, showing a loose doji after testing Friday's low at 37.13. Volume dropped back and was not what we were looking for in an aggressive play (542,000; avg. 569,000), so we will look for the strong selling to resume. Looking for a break of the 50 day MVA (36.27) and a drop to the 200 day (31).
BUY POINT: Below 50 day: 36 on continued rising volume.
POSITION: February $40 puts to buy (KBH NI).
http://www.investmenthouse.com/ct/kbh.html
FLR (Fluor--$35.19; -0.41; optionable): M&C: Heavy Construction
http://biz.yahoo.com/p/f/flr.html
STATUS: Broke out to the downside from a head and shoulders pattern in April-June, tried to rise over 48 but failed and now is in a descending wedge pattern with support at the 34.80-35.00 range. Volume has been below average overall over the last month, but has picked up as it has fallen the last two sessions (up to 511,800 today; average 350,000). We are still looking for a breakdown for a target at the 28 range.
BUY POINT: Aggressive: 34.55 on continued strong volume.
POSITION: February $40 puts to buy (FLR NH).
http://www.investmenthouse.com/ct/flr.html
APC (Anadarko Petro--$49.06; +0.10; optionable): Energy
http://biz.yahoo.com/p/a/apc.html
STATUS: After the big drop Friday where it broke off with a downside gap through support on a downgrade (and on general concerns that upcoming earnings throughout the sector will sag), APC gapped way down Monday. When we get a gap below (or above, on upside plays) the buy point, we have to exercise caution and see if the stock will come back and test the move. APC did surge back today, moving on huge volume (up to 5.48 million; average 2.44 million) from the low of 46.90 to close just up for the day. We will see where the move stalls, and if there is a strong drop, we can still look at a put back toward the September low of 44.
BUY POINT: Aggressive: On a move that stalls at 50, a drop back through 48.75 on continued strong volume.
POSITION: February $55 puts to buy (APC NK - check price, delta, etc. with your broker).
http://www.investmenthouse.com/ct/apc.html
CONTINUED PLAYS:
TEST OF BREAKOUT:
AUDC (Audiocodes--$5.05; -0.26; optionable): Scientific & Technical Instr.
http://biz.yahoo.com/p/a/audc.html
STATUS: Still testing the breakout from the ascending wedge, but it needs to stop here. It gave up the 200 day MVA (5.45) last week and closed below the 18 day (5.12) and just below its former pattern high (5.08) today. The good thing is that volume was not strong on the selling, coming in at 193,400 (average 350,000). If it can hold, we want to see it move back over the 200 day for aggressive positions. Strong money flow, and buying is good. Initial target: 7
BUY POINT: Aggressive: For new or additional positions, a move back over the 200 day on above average volume. Stop: 5.16 (7% below buy point of 5.55)
POSITION: April $5 calls to buy (XRD DA).
http://www.investmenthouse.com/ct/audc.html
KLIC (Kulicke & Soffa--$19.16; -0.55; optionable): Semiconductor
http://biz.yahoo.com/p/k/klic.html
STATUS: Still looking decent although it dipped back off of its doji over the 10 day MVA (19.32). It tapped its former pattern high of 18.97 at its low (also with its 18 day), and holding that support shows some strength. It has been a gradual pullback on rather low volume, and if we get some Nasdaq strength KLIC could make a nice bounce from here. Money flow and relative strength are strong. Initial target: 25
BUY POINT: Aggressive: Over 20.10, hit twice, on volume in the range of 1.3 million or higher. Stop: 18.69 (7%)
POSITION: Stock and/or March $17.50 calls to buy (KQS DW).
http://www.investmenthouse.com/ct/klic.html
LNOP (Lanoptics--$7.30; -0.37; no options): Software
http://biz.yahoo.com/p/l/lnop.html
STATUS: Trying to hold above the former pattern high at 7.50, but gave up that level today. LNOP closed back below its 10 day MVA (7.40), moving down on increased, though still rather light, volume of 38,200 (average 44,400). LNOP broke out of an ascending wedge last week but turned back with a precipitous drop, and not being able to hold here could spell the end of this attempted move. The 200 day MVA is below at 6.87.
BUY POINT: Aggressive: If it can hold here, a move over 7.86 on volume of 60,000. Stop: 7.31 (7%)
POSITION: Stock.
http://www.investmenthouse.com/ct/lnop.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.
KANA, formerly KANAD (Kana Comm--$26.70; 0.00; no options): Internet Software
http://biz.yahoo.com/p/k/kana.html
STATUS: Gave a strong breakout and was showing a nice test, but it fell back today on some news regarding a financing proposal. KANA dumped on increased volume of 592,000 (average 500,000), closing below its 10 day MVA (24.06). The move should have taken out any remaining positions, so we will see if it the stock can hold up over the former pattern high (22.14) and 18 day MVA 22.26). We will see.
http://www.investmenthouse.com/ct/kana.html
BASING/TRADING RANGES:
VAST (Vastera--$16.16; +0.36; 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 base. Still consolidating in the handle and holding above the 18 day MVA (15.83), with volume picking up on the move back up today (423,600; average 319,600). We got an interesting, huge volume spike last Wednesday, and that can mean an upside move is coming. Looking for it to hold and make the move, but if it falls below the 18 day, we will put it on the shelf. Huge money flow and good buying. Target: 22
BUY POINT: Aggressive: Over 17 on continued strong volume. Stop: 15.35 (7%). Breakout: 18.73 on volume of 430,000 or better. Stop: 17.42 (7%)
POSITION: Stock and/or April $15 calls to buy (AQY DC).
http://www.investmenthouse.com/ct/vast.html
RECN (Rscs Connection--$26.45; +0.55; optionable): Business services
http://biz.yahoo.com/p/r/recn.html
STATUS: Still holding the short-term MVA's (10 & 18 day at 26.19 and 25.81), forming its ascending wedge as a handle to a 7-month cup base. While not the preferable handle to a cup, we have been interested by the low-volume shakeout and the volume spike last Thursday as the stock recovered from an intraday low. Today RECN hit back almost as low (25.30), recovering again but on light volume (179,400; average 276,100). We will see if it can move, but if it does not show us something here soon, we will move on. Target: 34
BUY POINT: Aggressive: 27 on above average volume. Breakout: 28.38 on 420,000 or higher. Stop: 26.39 (7%)
POSITION: Stock and/or March $25 calls to buy (QRG CE; no open interests).
http://www.investmenthouse.com/ct/rcen.html
Continued Puts:
PPG (Ppg Industries--$48.41; -1.80; optionable): Conglomerates
http://biz.yahoo.com/p/p/ppg.html
STATUS: Nice move. Continuing the drop, PPG ran through 50 and the buy point just below as volume picked up on the selling (928,600; average 652,200). That is just what we were looking for in a put play, and we are looking to ride it down to the target of 46, although we will watch October consolidation lows at 48.
BUY POINT: Aggressive: If we get a bit of a weak bounce from here, a drop through 48 on continued strong volume for a quick ride to 46.
POSITION: February $55 puts to buy (PPG NK)
http://www.investmenthouse.com/ct/ppg.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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