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Begin Part 2 of 2
THE PLAYS:
Reading the Plays: Please note that when we reference the 10, 18, and 50 day moving averages (MVA), those are exponential moving averages (EMA). The 200 day moving average is always simple (SMA). We will note when we reference a particular MVA differently, e.g., a simple 50 day MVA. Please click on the Yahoo and chart links for company and charting information. A "prior high" refers to the high at the start of a base.
For conserving space on listings of stop losses, the symbol (7%) indicates that the stop is 7% below the buy point.
Stocks/Indexes from the Monday report:
MEDQ: Held the handle with a slight bounce from 18 day MVA on rising volume.
SEBL: Moved lower on decreasing volume to the 10 day MVA in the pullback consolidation.
LRCX: Testing the 200 and 18 day MVAs in the cup with handle.
LOW: Holding at 42 but fighting the selling. Put play from yesterday's report, and still alive; looking for a move down to 36.
BRCM: Bounced from the 10 day MVA with volume rising very nicely without hitting the 18 day MVA, support we thought it might test before moving up in the cup with handle base on base pattern. Can continue higher from here after hitting aggressive buy point over 50.
Continued Plays:
AJG: We said to watch it once it hit the 18 day MVA and it is trying to move over that resistance for the second time in three days. Volume was lower on the move up so may drop for another put play opportunity, target 30.
EXTR: Holding at the 50 day MVA and may be ready to make a bounce from the support. Volume has been below average and dropping; could get a bounce and run up to the 200 day MVA at 20 (aggressive entry point over 16).
ITWO: A tight doji at the 18 day MVA on low volume; testing the breakout from its pennant. We are looking for a trade up to the 200 day MVA at 11.55 range (stock closed at 8.09. Aggressive buy point over 8.70.
KSS: Tested the 50 day MVA and strong volume brought it back up from below that support - another example of some institutional support at a critical level (WMT). Good buy point on a further move up.
NMHC: Continuing to head up from a bounce from the 18 day MVA.
RHAT: Holding above the December high and the 10 day MVA in a pullback on low volume. May end up testing the 10 day MVA again, but is looking ready for a bounce.
TYC: Gapped below our buy point for the put play today, after the stock closed back over the 200 day MVA Monday.
WMT: Noted last night as at key support, the stock bounced from the 50 day MVA on strong volume, illustrating good institutional support at this level. It closed back above the 18 day MVA which is another good sign. Looks like it is on another leg up, but we will watch resistance at the December highs (58 range). Stock closed at 56.87 Tuesday.
YHOO: Holding at the 18 day MVA on low volume, and after crossing over the 200 day MVA in December may be getting ready for another bounce from the 18 day MVA.
SUBSCRIBER CHOICE:
GSPN (Globespanvirata--$17.15; +1.55; optionable): Semiconductor
http://biz.yahoo.com/p/g/gspn.html
STATUS: Many requests for this stock, and it is now at a position for possible entry points after a pullback though we will have to see how it reacts to the INTC news. GSPN is deep in a 22.5-month base, off the lows and recently broke out in a strong move over its 200 day MVA (now just above 14). The breakout was on a heave off the 50 day MVA (just under the 200 day MVA and getting ready to intersect a bullish development), and the stock pulled back to the 18 day MVA (15.58) from where it make a solid bounce Tuesday. Volume was strong at 4.48 million (avg. 3.2 million) on the move, and we are looking for it to head higher. This is actually an incipient breakout move from a cup with handle base of 22 weeks. We plot a buy point just over 18.39, a January high from 4 days ago. GSPN shows excellent money flow and buying. Target: 22
BUY POINT: Breakout: 18.52 on volume of 4.8 million or higher. Stop: 17.22 (7%)
POSITION: Stock and/or April $12.50 or $15 calls to buy (AYF DV or DC).
http://www.investmenthouse.com/cd/gspn.html
Best Plays:
1) TMCS: An internet stock that is tightening up in a pennant.
2) PDG: A solid move up in the cup base.
3) CAKE: Ready for a move off support.
4) NVDA: Blasting up off of the 50 day MVA
New:
TMCS (Ticketmaster--$18.98; -0.07; optionable): Internet Software
http://biz.yahoo.com/p/t/tmcs.html
STATUS: We don't think EBAY's after hours action (down despite beating the street on earnings news) will necessarily effect other internets, especially those that are in good patterns. TMCS is just off the lows in a 3-year base and recently broke out of a shallow v-bottomed base that is part of the larger one. Volume was huge on the breakout, but has dropped back sharply on the pullback as it tests the breakout. Showing a tight doji, TMCS may be ready to make a move back up, though there is a chance it can test the 18 day MVA (17.79), just below the intraday low of 18.25. We are looking for a strong move back up and over the high (20.85) on a strong resurgence in volume (lower but stronger Tuesday at 696,700; avg. 443,136). Strong money flow and buying. Target: 24. Earnings out January 28.
BUY POINT: Aggressive: 19.25 on continued strong volume. Stop: 17.90 (7%)
POSITION: Stock and/or April $17.50 calls to buy (QMF DW).
http://www.investmenthouse.com/cd/tmcs.html
PDG (Placer Dome--$12.16; +0.35; optionable): Gold mining
http://biz.yahoo.com/p/p/pdg.html
STATUS: In a huge base (off lows near 8) but more recently in a 16-week cup base within which PDG recently broke over some key resistance (at the 12 range). After pulling back to the 18 day MVA Monday it bounced from that support, a move followed today with another gain and nice surge in volume (1.8 million; avg. 1.2 million). Now is ready to break out over the January high at 12.19; the current pattern can be called a 13-week cup with handle at the bottom of the slightly larger cup. Solid money flow and buying. Target: 15. Likely to pull back in the 13 range and form another handle before breaking out of the cup.
BUY POINT: 12.25 on continued strong volume. Stop: 11.39 (7%)
POSITION: Stock and/or March $10 calls to buy (PDG CB).
http://www.investmenthouse.com/cd/pdg.html
CAKE (Cheesecake Factory--$34.95; -0.07; optionable): Leisure
http://biz.yahoo.com/p/c/cake.html
STATUS: CAKE broke out of a v-bottomed cup with handle base in early December and has bounced twice from the 18 day MVA after the breakout. In its most recent pullback from the January high of 37.75, price/volume has looked very good with volume falling back with stock price. Showing a doji Tuesday CAKE actually closed just below the 18 day but held support at the up trendline connecting October and December lows. With the strong volume (604,200; avg. 540,000) today, we are looking for the stock to bounce back up from here. Strong money flow and decent buying. Target: 41
BUY POINT: Aggressive: 35.65 (over the 10 day MVA at 35.58) on continued rising volume. Stop: 33.15 (7%)
POSITION: Stock and/or April $30 calls to buy (CFQ DF).
http://www.investmenthouse.com/cd/cake.html
PORTFOLIOS: Each report, we look at these to see which is in a buy position. We don't cover them all each time, just the ones that look ready to pick up a few shares.
THE LEADERS: ACS, NVDA, DGX, FRX, LLL, KRON, MIK, BMET, APPB, LOW, MYL, IGT
NVDA (Nvidia--$65.34; +5.58; optionable): Semiconductor
http://biz.yahoo.com/p/n/nvda.html
STATUS: NVDA hit the 50 day MVA Monday and bounced on strong volume Tuesday as institutions rolled in to support the stock. This is where we noted that the calls for the covered call sale play should be bought back. With this strong move (NVDA closed back over the 18 day MVA which is at 65.24), we are looking for a run up to an initial target at the January high range (72.66). First potential resistance if the move loses some steam is at the 70 level (December highs), but is still a 5-point move from here. Money flow and relative strength turned up sharply, as did volume (15.3 million; avg. 9.15 million).
BUY POINT: Aggressive: 65.55 on continued rising volume. Stop: 60.87 (7%)
POSITION: Stock and/or March $55 calls to buy (RVU CK).
http://www.investmenthouse.com/cd/nvda.html
APPB: Back over the 50 day MVA; were looking at it for a put play but looks ready for a possible hold here.
LLL: LLL rebounding well from 50 day MVA post an acquisition announcement.
FRX: Beat the street buy three cents but did not move out of the handle even with huge volume. Like to see it continue to hold the 18 day MVA here.
IGT: Closed the covered call play as the stock moved back over the 18 day MVA on rising volume.
ACS: Unreal. Rallying on strong volume in what could be the start of the climax run. Looking to sell some more calls once the stock looks ready to top out, but just enjoying the run. We would look for a deeper correction afterward.
CACI: Out of this one; a deep drop through the 50 day MVA on heavy volume.
BMET: Continued to hold over the 50 day MVA. Still at step one.
MIK: Back over the 50 day MVA on rising volume as retailers looked brighter today. Not sure how much strength is behind the moves, however.
MYL: Another low-volume lateral consolidation above the 50 day MVA. A kind of larger ascending wedge pattern.
KRON: A covered call sale play. Tapped our initial target on the low of 53.50 (53 target) Tuesday with volume lower but still above average. Can re-test that low for a possible better and lower price to close out the play if the support holds. Lower target is 51, at some December tops.
UP & COMERS PORTFOLIOS: BBBY, KKD, SRCL, EBAY, KG.
EBAY: Was down after hours despite beating the street with revenues. Sales will be higher this quarter as well. In regular trading the stock held the 50 day MVA. We wrote a put play on the stock over the weekend. Will see if it holds.
KKD: Broke the 50 day MVA on strong selling; if it moves below 38 look for a drop to the 200 day MVA (33). Can look at buying puts on the move, but watch for potential support again at 36 (October and November prices). If we don't get a move back over the 50 day right off (not likely from the strength of this selling), we are out of the doughnut business.
BBBY: Held the 50 day MVA with a tight doji and evidence of institutional buying as volume shot up above average in a sharp spike. Not sure how strong a move off the 50 day MVA will be; we are still skeptical at this point about seeing strong moves in retail. Look for a move over the 18 day MVA for some confirmation (at 33.23).
SRCL: Yikes, another break of support on strong volume. On a move below 55 (tested 55.45 on the low and bounced slightly), can look at buying puts on this one for a move down to about 50 or the 200 day MVA (29.37), May $70 puts to buy. That is if the stock does not move quickly back over the 50 day.
MEMBER PORTFOLIO: BRCM, CHKP, AMAT, JNJ, MSFT, AOL, BUD, PXLW.
MSFT: Was back down close to (but above) the 18 day MVA in after hours trading. In regular trading was making a solid move off of that support with volume breaking above average.
CHKP: Earnings were out this morning, and the news killed the stock (profits fell in the fourth quarter as expected and the company warned of no improvement in the first quarter). Below the 50 day MVA on huge volume. If we don't get a move back over it right away, selling.
AMAT: Fell to a test of the 50 day MVA intraday but got some support and the stock was back over the 200 day and short term MVAs to close regular trading, but after hours was back down and below the low (42.81) on INTC's plans to cut its capital spending budget 25 percent in 2002. We think INTC is being reserved about the future as in previous quarters, but how the market will perceive the news is the question. AMAT will not fare well at all.
BUD: Looked good on Monday's move, but pulled back on lower volume. Messed up the pennant pattern, so we will look for more consolidation above the 18 day MVA in the test of breakout.
Good Investing!
Jon L. Johnson and The Daily Staff
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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