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trade stock, stock recommendation
Begin part 3 of 3
THE PLAYS
Good movers: ASCA; FRED; HOC; LHCG; MFB; OIH; ROCM; WFR
New Plays:
Upside:
Play Date: 03/24/2007
FCX (Freeport McMoran--$62.30; +0.39; optionable): Copper
http://biz.yahoo.com/p/f/fcx.html
EARNINGS: 4-15-07
STATUS: Cup w/handle. Kind of a ragged and elongated 11 month base, but it has laid the groundwork for a break higher. Nice surge the past two weeks on strong volume as FCX rallied up to the November and December highs. It moved laterally all last week just below that resistance, gapping lower Friday but then rebounding to close positive on some strong trade as it announced an offering of common and convertible preferred stock. That is not going to make much difference to us given how the stock responded nicely to the announcement. Just going to be patient and let FCX continue the lateral handle and then show us the break higher over those prior highs. That is our entry point.
Volume: 46.929M Avg Volume: 9.033M
BUY POINT: $63.48 Volume=14M Target=$72.95 Stop=$60.57
POSITION: FCX HM - Aug. $65c (52 delta) &/or Stock
http://www.investmenthouse.com/cd/fcx.html
Play Date: 03/24/2007
HCSG (Healthcare Services Group--$29.82; +0.58; no options): Housekeeping, laundry, linen, facility maintenance, food services to nursing homes, retirement complexes, rehab centers, hospitals.
http://biz.yahoo.com/p/h/hcsg.html
EARNINGS: Announced 2-13-07
STATUS: Ascending base. Some excellent volume spikes peppered throughout the 12 week base were signaling HCSG was going to show us a strong break higher. It ended the week with the best volume in a month as it rallied past the late February high just over 30 but faded into the close, winding up just below that level. Solid pattern making higher lows up the 90 day MA (27.63). Strong 4 to 1 accumulation in the base (4 up price weeks on rising volume to 1 down price weeks on rising volume) shows the buying under the stocks and is setting up the break higher. Looking to move in as HCSG gives us another break higher this week, this time sticking the move to the close. Excellent fundamentals growth rates to go along with the pattern.
Volume: 326.985K Avg Volume: 188.512K
BUY POINT: $30.15 Volume=275K Target=$35.95 Stop=$28.68
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cd/hcsg.html
Play Date: 03/24/2007
IOC (Interoil Corp.--$26.65; +1.60; optionable): Oil and gas refining
http://biz.yahoo.com/p/i/ioc.html
STATUS: Cup. Nice 20 week consolidation is giving way to some upside. After a strong run to end 2006 it needed a breather, and this was it, a pullback roughly around the 50 day EMA (24.22). It tapped at 22 once, twice, and then three times two weeks back, and that sent it higher last week. Volume finally came in on Friday; well, it was solid Tuesday as well. Excellent money flow is leading higher and with this trade and in this sector we are ready to move in as IOC continues higher.
Volume: 767K Avg Volume: 435.528K
BUY POINT: $26.88 Volume=445K Target=$31.95 Stop=$25.00
POSITION: IOC IE - Sept. $25c (68 delta) &/or Stock
http://www.investmenthouse.com/cd/ioc.html
Play Date: 03/24/2007
MS (Morgan Stanley--$81.10; -0.03; optionable): Investment brokerage
http://biz.yahoo.com/p/m/ms.html
EARNINGS: Announced 3-21-07
STATUS: Double bottom w/handle. MS gapped lower in late February, held the 200 day SMA (73.09) with a couple of taps in March, the last on that Wednesday reversal a couple of weeks back. It then gapped higher Wednesday on earnings, and then got the Fed goose on the behind after that. It hit 82 Wednesday and again Thursday, but it started backing off to end the week, gapping lower Friday but recovering to flat on lower, below average volume. May take another session or two to complete the handle and set up the next move higher. The gap lower and gap back up is what is called an 'island reversal', and in this situation it is a bullish signal due to the gap down and back up. MS has a lot going for it both fundamentally, technically, and from a P/E standpoint as well. After it finishes this handle it is ready to continue the move higher.
Volume: 6.089M Avg Volume: 5.94M
BUY POINT: $82.08 Volume=8.9M Target=$94.95 Stop=$79.38
POSITION: MS GP - July $80c (63 delta) &/or Stock
http://www.investmenthouse.com/cd/ms.html
Downside:
Play Date: 03/24/2007
JNJ (Johnson & Johnson--$60.51; -0.35; optionable): Medicine chest of products
http://biz.yahoo.com/p/j/jnj.html
EARNINGS: 4-22-07
STATUS: Put. JNJ continues to struggle and continues to trend lower after failing to complete a cup base in mid-January. It has careened down the 10 and 18 day EMA (the 10 day at 61.05) as it finds new ways to look weaker. Last week it rebounded to the 10 day and then folded up the tent, collapsing lower Friday on huge volume. Issues regarding stints has induces major weakness. The heavy volume on the downside shows continued distribution. A move to the target nets a pretty solid 50%ish gain.
Volume: 17.678M Avg Volume: 10.502M
BUY POINT: $60.33 Volume=11M Target=$59.05 Stop=$60.71
POSITION: JNJ QL - May $60p (-40 delta)
http://www.investmenthouse.com/cd/jnj.html
CONTINUING PLAYS READY TO MOVE:
AMKR
BRLI
ISE: Nice doji at the 90 day MA has set up the move this week
IVN
MA: Forming a sweet handle and will be ready this week.
PRFT: Sweet handle is forming
RS
SUBSCRIBER PORTFOLIO: These are stocks subscribers suggest by vote that we put in a portfolio to track and move into the stocks if they perform well. If you have any suggestions for additions or deletions, email us. We don't cover them all each report, just when something interesting is developing.
AAPL, AKAM, CELG, DRIV, GME, GOOG, ISE, MA, MRVL, NVDA, WEBX
AAPL: Forming another handle just below 95, and that is setting up another breakout. Again, it needs to blow through 97.50ish on that move, but it is likely to head to 100 if it gets some volume.
AKAM: Stalling some below the 50 day EMA after a nice volume move Wednesday.
DRIV: Trying the old 'flying W' double bottom with the right leg higher than the left. Needs a bit more volume.
MA: Looking super as it forms its handle as a prelude to the next break higher.
NVDA: Strong volume move through the 200 day SMA Wednesday on an upgrade. Tapped at the December/February downtrend Friday and faded. Key to move through 32 after a pause here.
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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