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Begin Part 2 of 2

THE PLAYS:

Good movers: We had a target of 46 on PPG, but it tanked to 42.62 on the low today after the bomb that earnings were down 34% great exit point for those in the play. It bounced up to close at 45.55 and volume was huge. The high met resistance at Wednesday's closing price of 46.59 so it may not make it back over that price if the rebound continues. Another one of our puts plays, QCOM, was up to close at its 10 day MVA today, but volume continued to fall. If it does not move higher, aggressive positions at 47 can be taken on a move down from here (the stock can move up to the 18 day MVA at 56 before moving back down if it does). VRTS was a half-point off our target to sell on the bounce play from last night. Volume was lower so may be the end of this bounce with the resistance; plus, it was down after hours a la MSFT. Started ABGX at 26.25 and it hit 24 on the low today before bouncing strong volume and may hold above 25. MMM hit the sell point (100) on its intraday low.

Notes on some stocks that are selling back:
ACXM hit our original buy point at 18.80 earlier this month in the cup with handle but couldn't hit our new one at 19.60 (test) and began selling back Thursday. It broke the 18 day MVA and may test the 50 day MVA at 16. Original stop loss was 17.48 (stock closed at 17.32).
SKIL sold back on heavy volume to support at the 18 and 200 day MVAs (converged) and bounced slightly. Want a hold here in the handle to the cup base, but volume was strong on the move down.

Previously covered and looking good: MONE, up on rising volume and ready to move over previous high of 15.17. Stock and/or May $15 calls. Also, EGOV at support in test of breakout on steadily decreasing volume and looks good (no options).

Continued plays that look good:
ORI was up in the ascending wedge on strong volume; could get a breakout (see the last update for details; buy point is 28.58).
IONA still looks good, back over the 200 day MVA after a bounce from the 18 day. Volume slightly higher and we are looking for a bounce from the support; software selling off after hours but the internets may escape pressure.
PRSE: Up on rising volume in the handle (6-month cup) on a move off support. Looks good, but keep in mind that software was selling after hours; this one down a nickel at the time of this writing.
LXK: Halted the selling and held above 57.50, but below the 18 day MVA in the handle.

Index Puts:

SOX (Phili Semi--$539.55; +7.76; optionable):
STATUS: The SOX closed just above its 50 day MVA (538.96) and may give us another upside test of the 50 day simple (542.06) or the 545 level from prices near that level since November. Maybe; the selling after hours may prove otherwise. On a move back down from either resistance level we can look at taking aggressive positions, with less aggressive entry points on a move back below the 50 day MVA. Indeed, it may move down first, then try to test the 50 day MVA before really tanking. That is where we get really interested in stepping in with some puts.
Target: Possible support from prior lows at 508. After that we look at 500, but if the selling really gets nasty, 475.
BUY POINT: Aggressive from the 50 day MVA simple: 541 on rising volume (preferably). Aggressive: from 545: 544 on rising volume, after at move up to 545 range. Below the 50 day MVA, preferably after the gap down and attempted test: 538 on preferably rising volume.
POSITION: February $550 puts to buy (SKX NJ).

DJX I1/100 Dj Indu--$98.50; +1.38; optionable):
STATUS: The index rallied but closed beneath its 50 day MVA (98.98) with volume decreasing to 1.36 million (avg. 1.2 million). We are looking for the index to fall from that resistance. It will be pressured by IBM and MSFT, so there is a chance that put options will be held early as market makers try to price in the unopened stocks that are delayed on the open. May be able to buy them at the open, but if not we will wait for them to open and give a bit of a bounce. Target: 95
BUY POINT: After a gap lower, let it rally and when that rally stalls, then jump in.
POSITION: February $100 puts to buy (DJV NV).

OEX (Standard & Poors--$581.63; +6.64; optionable):
STATUS: Closed just under its 50 day MVA (582.93) on lower volume of 1.35 million (avg. 1.25 million). We expect the index to rise up to test the resistance again, but fall, looking at aggressive positions on a move down from there, less aggressive on a break below the 575 range, near Wednesday's closing price and today's intraday low. Look for rising volume for the selling. Target: 565
BUY POINT: Aggressive from 50 day MVA: 582 on 1.3 million+ volume. Below support: 574 on rising volume.
POSITION: Aggressive: February $590 puts to buy (OEB NR). Below support: February $590 or $580 puts to buy (OEB NR or NP).

Continued Plays:
WW continues to look super in the ascending wedge, which is very tight despite three recent volume spikes. See buy point from the Wednesday report.
FORG is still holding the 18 day MVA as volume dropped back again (very low and below average); continue to look for a breakout from the ascending wedge.
AUDC, while testing our patience, was back over the 18 day MVA as volume continues its good shakeout in what is now a handle to a 5-month cup base. Aggressive buys over the 200 day MVA at 5.39.
SHLM likes to throw volume spikes in its lateral pullbacks, and did so Thursday in a sharp surge in volume numbers. Check out the buy point from last night's report to be ready for this one to pop out of the pattern.
VIP was up on rising volume in another move off the 10 day MVA (similar move to Friday's strong pop from the support level). Looking for it to move over 29.55, the recent breakout high in the ascending wedge.
VAST and RECN holding their patterns.

MROI (Mro Software--$25.13; +1.98; optionable): Applications
http://biz.yahoo.com/p/m/mroi.html
STATUS: We said last night that earnings could be key for a breakout, and there is no doubt good news helped today's strong move. MROI was up in the ascending wedge and closed right at the breakout (pivot) point after hitting the aggressive buy point at 24.50. All signs point to a continued breakout judging from the strong volume (up to 725,700; avg. 236,000). Earnings came in with a narrower loss in the first quarter, and the company raised guidance for the year. This is a strong combination of patterns, an ascending wedge followed by a cup with handle breakout. Target: 30.
BUY POINT: Breakout: 25.50 on volume of 312,000 or higher. Stop: 23.72 (7%)
POSITION: Stock and/or March $20 calls to buy (UPJ CW).

http://www.investmenthouse.com/ct/mroi.html

INVN (Invision--$34.56; +5.76; optionable): Scientific & Technical Instruments
http://biz.yahoo.com/p/i/invn.html
STATUS: Exploded over the 18 day MVA Thursday after moving below that support on Wednesday. The company announced a $9 million order for its explosive detection systems by Aeroports de Paris, and expect revenues during the first, second and third quarters of this year. Volume was strong at 3.5 million (avg. 2.7 million) and we are looking for a follow-through on the move. INVN hit our initial target at 35, but if it can blast over that tomorrow, can get a good start on the move up to our next target at the 45-47 highs (achieved on the December breakout). Good money flow and strong buying.
BUY POINT: Aggressive: Over 35 on continued strong volume. Stop: 32.55 (7%)
POSITION: Stock and/or April $30 calls to buy (FQQ DF).

http://www.investmenthouse.com/ct/invn.html

Back On:

IOM (Iomega--$8.78; +0.33; no options): Computer Hardware
http://biz.yahoo.com/i/iom.html
STATUS: Covered formerly in the ascending wedge pattern which IOM lost Friday on some selling, but it has formed another, larger one as it continues to post higher closing lows. It has held the 18 day MVA and moved up nicely from that support Thursday, with volume rising to 141,700 (avg. 206,000). In this volatile market we would like to see more volume on the move, but at least it was higher, and we will see if IOM can give us a breakout from here. Earnings were out after the bell with the company reporting a fourth-quarter net profit but with revenues down sharply from a year earlier. Was trading slightly higher after hours despite that. Good money flow, decent buying. Initial target: 10. Shorter term at the 200 day MVA, 10. 20% move, normal target on breakout, is at 11.
BUY POINT: 9.11 on volume of 278,000 or higher. Stop: 8.47 (7%)
POSITION: Stock.

http://www.investmenthouse.com/ct/iom.html

MFLO (Moldflow--$15.64; +0.26; no options): Software
http://biz.yahoo.com/m/mflo.html
STATUS: Testing the recent huge breakout from the ascending wedge, and has held above the buy point and the 18 day MVA (15.30) for the last 2 days. Today volume shot up from miniscule levels on Wednesday, breaking above average to 122,700 (avg. 70,000). We are looking for a move up on that action; the stock closed just under the 10 day MVA at 15.72 so will look for a move over that level for possible entry points. The pullback on the test was rather steep but volume fell back decently. Huge money flow. Initial target: Breakout high at 19. Over that, 22.
BUY POINT: Aggressive: 15.80 on continued strong volume. Stop: 14.69 (7%)
POSITION: Stock.

http://www.investmenthouse.com/ct/mflo.html

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Jon L. Johnson and the Technical Traders Team

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