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us stock market, stock watch
Begin Part 2 of 2
TEAM TRADES
Today was a mixed day, downside looked good early, and then a rally in tech, and pullback on the Dow late. It had something for everyone, and we took part in many different moves.
NTIQ was on the SSR as a put. It had the typical action of late: a rally, twin tops, a breakdown below the 50 day MVA, then a weak test. We were looking for the fall back down. That did not take long today. The stock did just what we wanted: it started the day higher, ran up to test resistance once again, and then turned lower. It broke below our entry point after about 15 minutes, but we held off issuing an alert to the SSR subscribers until it moves laterally for 10 minutes and then started to fall. That was the move we wanted and the cue to enter the put positions. This is one of our favorite put plays: the break of support, the rally back up to test it, and then the fall from there. This one worked out well today; most of the action was over after the first hour, but the stock was not able to make a strong move higher even as the market rallied later, that is a good sign that when the market weakens again, it will resume its fall.
DSTM: We had entered this smaller priced stock early in the month, watched it run to 8 and then pullback to 7. Still in the black, but not the move we wanted so fast. Also, we had seen some down sessions on above average volume. We decided to put a target in at $8, giving a 20% upside move from the first buy point. We decided that was a good point to take some money off the table; the move was back to 8, it ran over that level and started to pullback, and volume was not huge. In this market we decided to take some money off the table.
DJX: We were looking at add some more DJX puts when it tripped below the December low. It did that about a half hour into the session after an attempted move higher. We entered some more positions when it did that. We knew it could bounce higher, but we liked the fact it has rallied earlier and then pulled back. As it turned out the index rallied, pulled back to test 97, and then rallied sharply after lunch. It capped out with a double top and started to sell. That had us feeling better, and the index dropped close to the entry point before a little bump at the close. Overall we are please, but of course we always like to see our put positions just tank. UP and down, up and down, but right now the trend is still down.
THE PLAYS:
Good movers: VIP hit the buy point in the wedge (29.76) and remains a buy on the breakout up to 31.25; volume was just above average and rising. INVN hit the 10 day MVA on Tuesday and was up on a bounce with higher volume; an aggressive buy over 36.40 (closed at 36.17) on strong volume. We got the 50 day MVA bounce expected from ACTN as it blasted off the support on strong volume (no news; earnings are out January 28). Close to the December high at 37.17, aggressive positions ahead of that with stock and/or April $30 calls to buy (QNC DF).
Previously covered:
NOVL: Holding the 18 day MVA on low volume in the test of the breakout. Buy point is 5.30 for aggressive positions.
LXK: Another hold at the 18 day MVA and a move up, in the handle to the 6-month cup base. Buy points: over 59 (aggressive); breakout 62.03.
INVN: Pulled back to the 10 day MVA Tuesday and bounced today on rising volume. Aggressive positions on a move over 36.40 with volume much stronger (still well below average).
GSLI: Holding the 18 day MVA in the handle, bouncing a little on a slight volume rise (still way below average). Buy point is 10.88 on volume around 162,000.
WW: Hit a suggested stop alert today at 20.58 (7%) but the stock held at an up trendline (connecting November and December lows). From there it bounced on rising volume to cross back over the 50 day MVA. Still has the 18 day MVA ahead, but if it can clear that the new buy point is 22.48 (ascending wedge).
LTD: Up in the handle on strong volume after an upgrade. The company last week reported December sales a percent down from previous year but expects fourth quarter earnings to beat estimates. Buy point 16.73 on continued strong volume.
Best Plays:
1) CA: Strong move off the 50 day MVA.
2) ANN: Solid bounce in the handle.
3) TMPW: Looking for the kiss good-bye.
4) CAKE: Broke resistance on rising volume.
5) MOGN: Still a tight handle and continued decreasing volume within.
6) THOR: Holding support in the handle, on low volume.
7) ANAD: May be ready for the kiss of death.
New:
CA (Computer Associates--$37.98; +3.08; optionable): Software
http://biz.yahoo.com/p/c/ca.html
STATUS: A strong move off the 50 day MVA on a strong earnings announcement. Volume was sky-high as the stock was heavily supported, up to 5.4 million (avg. 2.6 million) on the move. The stock took out the previous January closing high (37.52) but still has 38.40 to beat. A look at the one-year chart shows CA in a more or less flat base at the bottom of its 2-year base, and on a move over that high can just about clear the stock out of it. Looking for that move on a continued move on this strong bounce. Excellent money flow, and buying looks good. Target: 47
BUY POINT: Aggressive: 38.42 on continued strong volume. Stop: 35.34 (7%)
POSITION: Stock and/or March or May $35 calls to buy (CA CG or EG).
http://www.investmenthouse.com/ct/ca.html
ANN (Ann Taylor--$36.35; +1.83; optionable): Apparel
http://biz.yahoo.com/p/a/ann.html
STATUS: Popped up from the 18 day MVA in the handle to a 7.5-month cup base. Volume was up to 588,300, still not at average (655,318) but looks on track to get there. A solid move, and we look for the breakout and a target at 43. The stock shows strong money flow and relative strength breaking out ahead of price, a bullish indicator. No news on the move, which is ANN's first solid bounce from the 18 day MVA since mid-December when it broke back over the 200 day MVA on another bounce. Still cautious about this sector but there are some good patterns in the meantime.
BUY POINT: Breakout: 37.13 on volume of 983,000 or higher. Stop: 33.90 (7%)
POSITION: Stock and/or March $30 calls to buy (ANN CF).
http://www.investmenthouse.com/ct/ann.html
Put:
TMPW (Tmp Worldwide--$41.17; +1.41; optionable): Media
http://biz.yahoo.com/p/t/tmpw.html
STATUS: In a big downtrend since March of 2000. TMPW fell below the 200 day MVA 8 days ago and Friday was back below the 50 day MVA (41.90) on strong volume. After tapping a low at 38.76 the stock bounced back Wednesday on lower volume (1.7 million; avg. 2.5 million). Looking for the stock to turn back down from the 50 day MVA once it hits the resistance (if it does), and on the kiss good-bye look at taking positions for a fall to 35, initially.
BUY POINT: Aggressive: On a move back down from 41.90 on rising volume.
POSITION: March $50 puts to buy (BSQ OJ).
http://www.investmenthouse.com/ct/tmpw.html
SAGI (Sage--$33.46; +0.88; optionable): Semiconductor
http://biz.yahoo.com/p/s/sagi.html
STATUS: Broke the 50 day MVA (34) Tuesday and after hitting 30 bounced back up on strong volume. The stock tapped the broken support on the high and closed just lower, and if we get a rollover in the Nasdaq, are looking for the 50 day to hold SAGI back for another fall. On that move, we are looking at a target at 25 initially, then lower to the 200 day MVA near 20. Volume was strong at 628,900 (avg. 381,000).
BUY POINT: Aggressive: Below 33 on the "kiss good-bye". Below 30: 29.85 on rising volume.
POSITION: April $45 puts to buy (UEJ PI).
http://www.investmenthouse.com/ct/sagi.html
New from the weekend:
Indexes: The DJX hit the buy point at 97 but bounced slightly. An expected move, and may head up to the 50 day MVA before making the move down if it cannot take out the resistance. The OEX tried to move back over 575; it may make it for a move up to the 50 day MVA and turn back down. Hasn't hit the buy point at 568.
SFA (Scientific-Atlanta--$24.55; -0.58; optionable): Telecom Equip
http://biz.yahoo.com/p/s/sfa.html
STATUS: Made the good move Friday off the 50 day MVA but today SFA sold below that support, closing just lower (the moving average is at 24.96). Tapped a low at 24.08, but if we don't get the quick move back over the 50 day we are out. We were looking for SFA to form a handle to the flying 'w' and need to retain support at the 50 day MVA; as it is, the action is too volatile. Does not look promising after today. Volume was just higher at 3.9 million (avg. 2.1 million). Target is the 200 day MVA at 32.50
BUY POINT: 28.31 on continued strong volume. Stop: 26.33 (7%)
POSITION: Stock and/or March $22.50 calls to buy (SFA CX).
http://www.investmenthouse.com/ct/sfa.html
FITB (Fifth Third Banc--$62.46; +0.06; optionable): Regional banks
http://biz.yahoo.com/p/f/fitb.html
STATUS: Maintaining close to Friday's closing price when the stock was up from the 18 day MVA on strong volume. We are looking for a breakout from the double bottom with handle that began developing at the end of August. Volume was up sharply Wednesday to 1.77 million (avg. 1.4 million) with the stock holding its second consecutive doji just above the 10 day MVA (61.88) and other price support at 62. Can re-test those levels, but continue to watch for a breakout. Target: 76. Strong money flow.
BUY POINT: 63.05 on volume of 2.3 million or higher. Stop: 58.64 (7%)
POSITION: Stock and/or May $55 calls to buy (FTQ EK). Please check with your broker for deltas.
http://www.investmenthouse.com/ct/fitb.html
CAKE (Cheesecake Factory--$35.06; +0.28; optionable): Leisure
http://biz.yahoo.com/p/c/cake.html
STATUS: Tapped the 50 day MVA Friday (after a pullback to the support after a 4-month v-bottomed base) and just Wednesday managed to move back over the 18 day MVA (35.05). Volume is still well below average but at least was higher at 278,800 (avg. 516,000). Now that it is over the resistance, we will look for stronger volume and a solid move up to the initial target at 37.75 at the January high. Strong money flow and decent buying.
BUY POINT: Aggressive: 35.15 on continued rising volume. Stop: 32.69 (7%)
POSITION: Stock and/or April $30 calls to buy (CFQ DF).
http://www.investmenthouse.com/ct/cake.html
MOGN (Mgi Pharm--$16.03; +0.17; optionable): Drugs
http://biz.yahoo.com/p/m/mogn.html
STATUS: Holding the handle to the 13-week cup base, showing its third doji right above the rising 10 day MVA (15.86) with volume continuing to decrease in an orderly manner. Still looks good as price holds above the December highs in the handle. Volume fell again, down to 78,400 (avg. 135,000). Big money flow and high relative strength. Target: 20
BUY POINT: 16.90 on volume of 209,000 or higher. Stop: 15.72 (7%)
POSITION: Stock and/or April $12.50 calls to buy (QOG DV).
http://www.investmenthouse.com/ct/mogn.html
NCR (Ncr Corp--$39.98; +0.68; optionable): Information Software
http://biz.yahoo.com/p/n/ncr.html
STATUS: Lost the handle Tuesday on a move below the 200 day MVA. No new positions.
http://www.investmenthouse.com/ct/ncr.html
THOR (Thoratec--$18.63; +0.38; optionable): Health Services
http://biz.yahoo.com/p/t/thor.html
STATUS: Still holding the handle in the 13-week cup base within a larger base. Volume remains well below average (254,900; avg. 540,000). The stock dropped a bit abruptly to the 18 day MVA Tuesday (though volume stayed low) and held for a slight bounce today. Looks good for a move up and breakout. Solid money flow and good buying. Target: 24. Earnings January 29.
BUY POINT: Breakout: 20.13 on volume of 861,000 or higher. Stop: 18.72 (7%)
POSITION: Stock and/or April $15 calls to buy (TQU DC; low open interest).
http://www.investmenthouse.com/ct/thor.html
RMG (Cable-Rainbow--$28.10; -0.38; optionable): Media
http://biz.yahoo.com/p/r/rmg.html
STATUS: Continued the breakout Tuesday with a strong gap up and volume, but closed with a doji, typical topping action. Indeed, Wednesday RMG dropped back to the 10 day MVA (27.03) but gave a bounce back and close over Friday's high (27.80) and the high at the start of the cup with handle from which it broke out (28). Volume was also sharply lower, down to 287,900 (avg. 521,000), suggesting a possible hold at the 28 range. If it can hold there or near the August highs/10 day MVA, we will look for RMG to move out over the breakout high (28.75). Excellent money flow and buying. Target: 32
BUY POINT: Aggressive: 27.55 after a pullback to the 27 range; volume in range of 550,000. Stop: 25.62 (7%)
POSITION: Stock and/or March $25 calls to buy (RMG CE; low open interests).
http://www.investmenthouse.com/ct/rmg.html
Small stocks:
EGOV (National Info Consortium--$4.10; 0.00; no options): Internet Software
http://biz.yahoo.com/p/e/egov.html
STATUS: Rats, rats. Made a very nice move off the 10 day MVA on solid volume but the move was called back from the high of 4.40. Hit the buy point at 4.25 on news that the company won a 5-year contract with the Federal Election Commission, but had to battle sellers. The most we can do here is look for a continued hold at the 10 day MVA (4.05) and look for another move up. Still, we like the shooting star doji at the 10 day MVA on above average volume. Volume strong at 194,200 (avg. 110,000). Great money flow and buying. Target: 6
BUY POINT: Aggressive: Over 4.25 on average or higher volume. Stop: 3.95 (7%)
POSITION: Stock.
http://www.investmenthouse.com/ct/egov.html
DSTM (Datastream--$8.00; +0.57; optionable): Software
http://biz.yahoo.com/p/d/dstm.html
STATUS: Were looking for a bounce from the 18 day MVA after the stock tapped that support Friday. Has moved up from there, and Wednesday popped up to close 5 cents above previous resistance (highs reached on the last bounce). Volume while still above average has decreased the last 2 days. We like the move over 7.95 (hit twice on the previous bounce) and now want to get a move over today's high at 8.19, and on stronger volume (was lower today at 127,100; avg. 102,000). No new news on the MRO Software buy-out offer. Strong money flow and buying, with relative strength breaking out nicely. Target: 10
BUY POINT: Riding positions taken at the aggressive buy point (7.55). New positions taken after a pullback to the 7.40 range.
POSITION: Stock and/or $7.50 calls to buy (DQK EU).
http://www.investmenthouse.com/ct/dstm.html
Puts:
NBIX (Neurocrine Biosciences--$45.09; +2.24; optionable): Health Services
http://biz.yahoo.com/p/n/nbix.html
STATUS: Dropped through the buy point Tuesday, hitting as low as 41.14 before making a run back up. Today in the up market the stock continued to rebound, but volume dropped off to 795,700 (average 641,200). The 50 day is ahead at 47.07, and we will see if the bounce continues to weaken, and watch for NBIX to turn back over and head down to the target of the 200 day MVA (37.17).
BUY POINT: For new or additional positions, after a failed move toward the 50 day, a drop back through 43.50 on increased selling volume.
POSITION: March $50 puts to buy (UOT OJ - no open interest). For February $50 (UOT NJ), it would be for a quick run, exiting as the stock hits the target or appears to have suppot.
http://www.investmenthouse.com/ct/nbix.html
ISIL (Intersil Holding--$28.00; +0.48; optionable): Semiconductor
http://biz.yahoo.com/p/i/isil.html
STATUS: Earnings January 29 after the bell. ISIL broke below the 200 day MVA (now at 32.83) last week, and after a test of that level dropped in a big way Tuesday. Volume was not that severe, but today it picked way up (7.82 million; average 3 million) as it reached down to 26.73 but recovered to close. With the volume on the rebound, we could get a bit more of a test up toward 30 than we want, but we are still looking at a target of 22 on existing positions, and will use this bounce as a possible set up for new or additional positions on a resumption of the move down.
BUY POINT: After a failed test of 29-29.50, a drop through 28 on continued strong volume.
POSITION: March $35 (UFH OG - very low open interest) or April $40 puts to buy (UFH PF).
http://www.investmenthouse.com/ct/isil.html
ANAD (Anadigics--$13.15; +1.18; optionable): Semiconductor
http://biz.yahoo.com/p/a/anad.html
STATUS: Earnings January 30. This stock is in a big head and shoulders pattern dating from last January when it peaked in the first shoulder. Currently the stock is trying to hold on just above the neckline, which is at 11, but it is in a downtrend that started in November, and today ran back up to test that trendline (at 13.50; high today 13.40), as expected. Volume continued to be below average, dropping back to 919,200 (average 1 million). We are looking for a bounce down from here. Target: 8
BUY POINT: Aggressive: A drop back through 13 on increased volume. Head and Shoulders Breakdown: 10.60 (below April closing low of 10.63 at first shoulder) on above average volume.
POSITION: Aggressive: April $17.50 puts to buy (DQA PW). Breakdown: April $12.50 puts to buy (AUZ PV).
http://www.investmenthouse.com/ct/anad.html
MCK (Mckesson--$39.25; +0.31; optionable): Drugs wholesale
http://biz.yahoo.com/p/m/mck.html
STATUS: Not exactly the put play envisioned, but that is what an earnings surprise will do. MCK absolutely blasted up on earnings, gapping over its down trendline (connects the July, September and January closing highs), and its November-December highs at 38. After that huge run up from 37, MCK continued today, though slowing to a smaller gain on continued big volume (down to 2.33 million; average 1.22 million). Could form up as an upside play, but after the big run it needs to settle down and perhaps consolidate its rapid gains.
http://www.investmenthouse.com/ct/mck.html
CONTINUED PLAYS:
MOVING AVERAGE BOUNCES:
IONA (Iona Tech--$22.00; -2.02; optionable): Internet software
http://biz.yahoo.com/i/iona.html
STATUS: Announced earnings before the open, as well as the plan for a new share offering. The news as a whole generated a gap down (share offerings can have that effect), and the stock briefly tested through its 50 day MVA (20.92) before settling with a doji on huge volume (1.7 million; average 387,600). The stock had recently broke out over its 200 day MVA (24.02) and pulled back into a nice handle-type consolidation, but now we will have to see how it responds. If it can hold here and weather the storm, we could look at aggressive positions on a bounce back. The January high at 27.14.
BUY POINT: Aggressive: After showing it can hold here, a move over the 200 day MVA on continued strong volume. Stop: 21.
POSITION: Stock and/or March $20 calls to buy (YWQ CD; low open interests).
http://www.investmenthouse.com/ct/iona.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.
ORI (Old Republic--$28.37; +0.12; optionable): Insurance
http://biz.yahoo.com/o/ori.html
STATUS: Drifting up a bit along the 10 day MVA (28.06), still within a recent consolidation in the 4-month ascending wedge pattern. Volume has cranked up the last couple of sessions, up again today at 443,800 (average 327,400) as the sock edged up slightly. Looking for it to break loose with this volume and run. If we get a pullback first, looking for ORI to hold the 18 day (27.84) and then make the stronger move. Good money flow and relative strength. Target: 34. ORI is in a year-long base with highs at 32.
BUY POINT: 28.58 on volume of 485,000 or higher. Stop: 26.58 (7%)
POSITION: Stock and/or April $25 calls to buy (ORI DE; low open interests).
http://www.investmenthouse.com/ct/ori.html
IOM (Iomega--$9.39; +0.42; no options): Computer Hardware
http://biz.yahoo.com/i/iom.html
STATUS: IOM hit the buy point on the breakout from the ascending wedge pattern Wednesday, but pulled back to close. Today it continued with the breakout move, gapping up and then testing the breakout point (which we often see), and then moving up again for a nice gain. Volume dropped off (213,100; average 203,900) from the huge levels we saw the two preceding sessions, but it was still solid and a good move overall. The initial target is the 200 day MVA at 9.87, so we will see how it handles that.
BUY POINT: Technically a buy up to 9.42 (5%), but that is tight with the resistance ahead at the 200 day.
POSITION: Stock.
http://www.investmenthouse.com/ct/iom.html
BASING/TRADING RANGES:
Small stock:
FORG (Vtel--$3.98; +0.18; no options): Telecom
http://biz.yahoo.com/p/f/forg.html
STATUS: Dipped back Wednesday, dropping out of its extended handle to the 8-week cup it formed off the run from the September lows. Today it continued down and hit 3.30 at the low, but ran back up to close, moving back up on stronger volume of 233,800 (average 229,100). A good recovery at the key support of the 50 day, but we will see if it can continue back into the recent pattern range and manage a breakout. Target on a breakout: 6
BUY POINT: Our original entry point was over 4.60 on 240,000 or higher. Stop: 4.28 (7%). The aggressive can look at a move over 4.30 on increased volume. Stop: 4.05.
POSITION: Stock.
http://www.investmenthouse.com/ct/forg.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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