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Begin Part 2 of 2
THE PLAYS:
All prices reflect prices at the close on Wednesday.
Best Plays:
1) BMET: Solid breakout.
2) CYTC: Another strong breakout move.
3) MRCY: And yet another.
4) NVLS: Cleared resistance and ready to build the rest of the base.
5) JPM: At the buy point in the handle.
6) PLT: Stronger volume in a tech rally can break this one out.
The following stocks have performed very well; most of them showing strong moves on good volume. Some are still buys while others are getting pretty far up after great breakouts.
Continued Plays:
Tests of the breakout:
PFGC (Performance Food Group--$56.75; +6.00; no options): Food Wholesale
http://biz.yahoo.com/p/p/pfgc.html
STATUS: After pulling back in an orderly test of the breakout, the stock surged Wednesday, continuing its Tuesday move up on stronger volume (reaching 387,600 today; avg. is 140,000). Good momentum for an aggressive play up from here; on a pullback, look for support at 52.50 or better. Strong money flow and excellent buying. Relative strength broke out to new high levels.
BUY POINT: Aggressive: From here on continued strong volume. Prefer a pullback on some profit taking and catch it moving back up.
POSITION: Stock.
MRCY (Mercury Computer Systems--$50.00; +5.12; optionable (QYR)): Telecom equipmt
http://biz.yahoo.com/p/m/mrcy.html
STATUS: After Friday's strong move up, the stock took a breather Tuesday (on lower volume), surging up Wednesday on above average volume (240,500; avg. 190,000). Took out the recent highs at 47.88 and 47.75, and is an aggressive play from here on the momentum. On a pullback, look for support at the 47.88 level. Money flow continues trending up and relative strength broke out.
BUY POINT: Aggressive: On further upward movement on continued strong and rising volume.
POSITION: Stock. February $45 and $50 options had insufficient open interests (too illiquid for this stock). (QYR BI and QYR BJ).
MAPS (Mapinfo Corp--$51.88; +5.82; no options): Computer software
http://biz.yahoo.com/p/m/maps.html
STATUS: Broke over the earlier December breakout high of 46.69 on the stock's fourth day of a price run from the 50 day MVA (36.51), lunging higher on good volume (302,500; avg. 181,500). A successful test of the breakout, and the aggressive can play this one higher on the momentum, with the safer play being on a move back up after the stock tests the 46.69 range (or better). Strong money flow, high relative strength and good buying.
BUY POINT: Aggressive: From here, but don't let it get much further away. Otherwise, on a bit of a pullback and turn back up.
POSITION: Aggressive: Stock.
MMM (Minnesota Mining & Mfg--$119.19; +4.19; optionable (MMM)): Conglomerates
http://biz.yahoo.com/p/m/mmm.html
STATUS: Finally made its move up from support, launching Wednesday to beat the previous December high of 119 by cents. Volume was stronger yet still below average, but we will look for those numbers to improve in a continued rally. Strong money flow and buying, and high relative strength.
BUY POINT: Up from here on continued rising volume.
POSITION: Stock and/or April $115 calls to buy (MMM DC).
An ascending wedge that broke out:
AVE (Aventis--$81.69; +3.25; optionable (AVE)): Drug
http://biz.yahoo.com/p/a/ave.html
STATUS: A new play from the weekend report, AVE made the breakout move, gapping up and then running up and out of its ascending wedge on strong volume (230,600; average 144,860). A nice move, and still a buy up to 83.94. Strong money flow and high relative strength. There may be a bit of profit taking before it moves on; a good entry point when it starts back up.
BUY POINT: A move up from here on continued strong volume or after a bit of a pullback.
POSITION: Stock and/or April $75 calls to buy (AVE DO).
A breakout from a trading range:
BMET (Biomet Inc--$40.19; +1.31; optionable (BIQ)): Health services
http://biz.yahoo.com/p/b/bmet.html
STATUS: Broke out to a new closing high, moving over the prior closing highs in its recent trading range that the stock had been moving in since early November. Volume was very good on the move, coming in at 2.76 million (average 1.42 million), and the stock closed back over the stock's up trendline (connecting September-November closing lows). The stock's all-time high is just ahead at 41. Looking for more.
BUY POINT: Up from here on continued strong volume.
POSITION: Stock and/or April $35 calls to buy (BIQ DH).
A cup with handle breakout:
CYTC (Cytyc Corporation--$64.63; +1.75; optionable (YQK)): Electronics
(scientific/technical instruments)
http://biz.yahoo.com/p/c/cytc.html
STATUS: Broke out of its handle today, hitting our buy point on decent volume of 859,300 (though slightly less than the 1 million we were looking for; average is 721,000). The handle was to a 5-month cup base, and on the move the stock closed right at our buy point after hitting up to 65.13 at its intraday high. Looks good, and we will watch for a continued move.
BUY POINT: Up from here on increased volume.
POSITION: Stock and/or February $60 calls to buy (YQK BL).
BREAKOUTS:
New Play (from the weekend):
SFNT (Safenet Inc--$44.69; -2.50; no options): Software
http://biz.yahoo.com/p/s/sfnt.html
STATUS: Was trying to break out of its double bottom pattern last week, but pulled back on very low volume (26,000; avg. 102,000). We will see if this pullback results in a decent handle to the pattern, looking for a breakout over the handle high of 48.88. The stock tapped support (short term MVAs and 50 day MVA simple) on its low of 43.06. High money flow and good buying.
BUY POINT: Aggressive: Up from the 10 day MVA (43.67) or better on stronger volume. Safer: 49.01, on volume of 153,000 or better.
POSITION: Stock.
READY TO BREAK TO A NEW HIGH:
New Play (from the weekend):
MEL has been moved to the ascending wedge section.
BOUNCE PLAYS: These plays are fast plays after a pullback to support.
Continued Play:
CB (Chubb Corp--$88.63; +2.13; optionable (CB)): Insurance
http://biz.yahoo.com/p/c/cb.html
STATUS: The stock took a breather Friday and Tuesday, then popped higher on stronger volume (643,100; avg. 865,000). CB is running up from the 50 day MVA (82.32), and we are looking for a move over the earlier December high of 90.25 as the stock ranges up and down off the moving average. CB shows high money flow and relative strength.
BUY POINT: On further upward movement on continued rising volume.
POSITION: Stock and/or April $85 calls to buy (CB DQ).
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.
Wedges:
New Play (from the weekend):
MEL (Mellon Financial Corp--$51.31; +0.75; optionable (MEL)): Banking
http://biz.yahoo.com/p/m/mel.html
STATUS: Moving out of the ascending wedge formation but volume remains below average at 1 million (avg. 2 million). The pattern high is 51.19, so the buy point is plotted at 51.32. We will see if volume can surge to sustain this move and fuel a solid breakout. The stock hit a December high of 51.94 earlier last week. Strong money flow and high relative strength.
BUY POINT: 51.32, on volume of 2.5 million or better.
POSITION: Aggressive: Stock and/or March $50 calls to buy (MEL CJ).
AVE (moved to the top of the report)
Continued Plays:
CGP (Coastal Corp--$88.38; +0.13; optionable CPG)): Energy: Pipelines
http://biz.yahoo.com/p/c/cgp.html
STATUS: Broke out of its ascending wedge pattern Tuesday, but slowed with a perfect doji. The pattern indicates a pullback, especially since it is being replaced on the S&P 500 by JBL. We will see if it can hold over its prior breakout point at 85 for a move back up, but that is never good news even if a stock is leaving because it is being acquired. High relative strength and money flow.
BUY POINT: Pullback A move up after a pullback to the 85 level. Look for reduced volume on the pullback (1.07 million today, about average), with a surge on the move back up.
POSITION: Pullback Stock and/or March $80 calls to buy (CPG CP).
Pennants:
Continued Play: Average volume is lower than 100,000, but the sector has performed well in the recent market and we like the pattern.
MOND (Robert G. Mondavi--$51.38; +0.50; no options): Food and beverage
http://biz.yahoo.com/p/m/mond.html
STATUS: MOND continued up, recovering from its recent drop out of its pennant. Volume was down but remained above the average at 83,100 (average 59,300). The pattern high, from early November, is at 52.50. Still looking for a move over that level. Strong money flow and high relative strength.
BUY POINT: Over 52.50, on continued strong volume.
POSITION: Stock.
BASING/TRADING RANGES:
New Plays (from the weekend):
BRL (Barr Laboratories Inc--$76.44; +2.25; optionable (BRL)): Drug
http://biz.yahoo.com/p/b/brl.html
STATUS: Broke from its cup with handle pattern, but volume was much lower than we were looking for (253,700; average 344,500, and the target was 550,000). Volume tends to be lower on a holiday week, but this was weak for a breakout notwithstanding. On a further move, we will see if it can muster some strength, as the drugs have been looking good. Good relative strength, but buying is weak. Breakout point was 75.94.
BUY POINT: A move up on volume of 550,000.
POSITION: Stock and/or February $70 calls to buy (BRL BN).
AREM (Aremissoft Corporation--$41.88; +1.00; optionable (UKM)): Software
http://biz.yahoo.com/p/a/arem.html
STATUS: In a rolling pattern between 48 and 38. After popping back over its 50 day MVA (40.44) Friday, the stock has pulled back but held over that support, today making a modest move back up on reduced volume (298,900; average 387,200). Look for a stronger move up in a rally, watching for topping signs as the stock approaches 48. Excellent buying.
BUY POINT: A move over 43 on increased volume.
POSITION: Stock. February and April $40 options had insufficient open interests (too illiquid for this stock).
ORCL (Oracle Corporation--$30.69; -0.25; optionable (ORY)): Software
http://biz.yahoo.com/p/o/orcl.html
STATUS: Bouncing up and down in a trading range from 27.50 to 32.50, ORCL pulled back again the last two days, but with today's doji pattern the stock could be finding support this time at its 50 day MVA (30.21). We will see if the stock holds here for a move back up, still looking for a break out of the pattern for positions.
BUY POINT: Breakout: 33.13, on volume in the range of 59 million (26 million today; average 44 million).
POSITION: Stock and/or March $27.50 calls to buy (ORQ CY).
Continued Plays:
JPM (J.P. Morgan & Co--$171.63; +2.63; optionable (JPM)): Banking
http://biz.yahoo.com/p/j/jpm.html
STATUS: Broke out of its double bottom pattern, closing over the "center" (the November high at 168.88). Volume was up on the day at 1.43 million, but not the level we generally look for on a breakout, coming in below the average of 1.82 million). We will watch this one carefully, as it could start to form a handle here; however, we will be ready to take positions on a stronger move up from here.
BUY POINT: A move up on above average volume.
POSITION: Stock and/or March $165 calls to buy (JPM CM).
BMET has been moved to the top of the report.
MER (Merrill Lynch & Co--$66.44; +1.25; optionable (MER)): Brokerage
http://biz.yahoo.com/p/m/mer.html
STATUS: After having pulled back from the upper levels of its ranging pattern (at 73) MER consolidated a bit below its 50 day MVA (64.52). The stock has run back over that resistance with a move this week, continuing up today on increased, though rather low volume (although with the holiday week we are not too concerned about the volume, though encouraged to see it up today at 2.85 million; average is 4.36 million). In continued sector strength we can look for more.
BUY POINT: Momentum Up from here on increased volume.
POSITION: Stock and/or April $62.50 or $65 calls to buy (MER DZ or DM).
BEC (Beckman Coulter Inc--$41.13; +0.75; optionable (BEC)): Electronics (scientific/technical instruments)
http://biz.yahoo.com/p/b/bec.html
STATUS: The stock continued up in the handle to its cup base, breaking from a small pennant it had formed in the larger pattern. The stock has made three consecutive moves up, but volume has steadily declined, which is not the action we look for (135,800 today; average 201,000). However, it is approaching the breakout point in the handle, and we will see if we get a volume surge with a move up. Relative strength has broken out, a bullish sign.
BUY POINT: 42.01, on volume of 279,000 or better.
POSITION: Stock. February $40 options had insufficient open interests (too illiquid for this stock).
CYTC has been moved to the top of the report.
PLT (Plantronics Inc--$48.69; +2.56; optionable (PLT)): Telecom
http://biz.yahoo.com/p/p/plt.html
STATUS: Continued its move back up off of its 50 day MVA (43.87), moving back up in its handle to its double-bottom base. Volume dropped back on the move, down to 243,500 (average is 317,600) as the stock makes its way toward the handle high to 51.50. Looking for a continued move up toward breakout, but on stronger, rising volume. The stock continues to show good money flow and strong buying.
BUY POINT: Aggressive: Up from here on increased volume. Breakout: 51.63, on volume of 475,000 or better.
POSITION: Stock and/or February $45 calls to buy (PLT BI) (use care as there are currently less than 100 open interest).
Good Investing!
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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