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us stock market, trend trading stock
Begin Part 2 of 2
As far as stations, I prefer Bloomberg if you can get it during market hours. Not because it has better commentary, but because it gives more information on the screen at one time. It has the screen divided, and since I use it for maximum information, that works best. It also puts up news flashes in red; you cannot miss them even with the volume off! CNBC is not bad, but most of its reporters appear to be journalism majors and their comments are often inane. Ron Insana knows his stuff and is worth listening to when he gets in a critical mood.
In short, use them for information and to get a feel for what the crowd is being told. Use it as a tool for information that is part of your overall plan. It should not replace your own ideas or game plan.
TEAM TRADES
Sometimes I get accused of being downright boring with some of my trades, but there is a theme at work here in the market. The economy continues to show signs of recovering. As it does, financials are doing better and so are transports. This weekend we looked at many and dropped a trade on the Daily, IXX, a packaging company. As many of you know, back when everyone was still all bent out of shape about the 'white hot' economy (excuse me while I go throw up), we reported that containerboard orders were way down, and that was a sure sign the economy was really starting to slide: no orders meant that not as many new goods were being boxed up for shipment and that inventories were piling up. Now it seems things have finally started to reverse.
IXX: A strong move Friday as it tried to breakout of its trading range to a new high. Volume has been surging this month, and that second big spike caught our attention. We were ready to jump on when it cleared the trading range. It rallied higher on the momentum from Friday, but we waited for the initial surge to die down with the market starting off hot and heavy as well. It ran to 21.40 (buy point at 21.25), and then backed down over the next hour to the buy point and held. It started to bounce. Volume looked decent, so we issued an alert and entered a straight stock trade (no options). We were set. The stock then turned with the market and dropped. Crap. Down to 21.05 over the next 2.5 hours. Then it hit bottom and started higher. It ran up to 21.25 to 21.30 and found resistance; makes sense as that was the breakout point. Then it jumped up from there and was off to the races. It ran a half dollar in the last half hour, and we were looking for more positions, but in issuing some other alerts we were not in time before the final bell. A very good move, and we bet it continues to move well though it might take a pause to rest before continuing on.
THE PLAYS:
Good movers: ACTN broke out, gapping up on a strong earnings report with huge volume. The stock had pulled back to the 50 day MVA and the last 2 days of last week was pulling back on low volume ahead of this move. VARI hit a new closing high, breaking resistance at the January high (35.21; the stock closed at 35.40). Volume was high on this continued bounce from the 50 day MVA.
Puts: NBIX hit our new aggressive buy point (44) and dropped nicely; still above the January low (41.14). Target 37.50.
Stop Advisories hit today: SKIL (24.57), EGOV (3.95), MFLO (14.04), EDS (62.77 on buys at 67.50).
Removed to a watchlist. Some of these still look good but are taking some time and we want to make room for new plays:
CAKE: Still looks pretty good in the continuing hold at the 50 day MVA. Volume was lower and the stock showed a hammer doji. Buy point is 35.15 (aggressive).
RMG: Still testing the breakout from its cup with handle; found support on low volume Monday at the 10 day MVA. Needs to move over 28.90.
ANN: Weak breakout move but headed higher on rising volume Monday after building 2 days of support at the 36.70 range. Closed just under the January high at 37.95.
CTAS: Tightening up in the ascending wedge handle (doji on low volume). Buy point is 50.75.
Puts:
AA: Monday held the move back over the 50 day MVA. Volume low.
SAGI: Were not looking for this move back over the 50 day MVA, but that is what the stock did on a small rise in volume. Has the 10 day and 18 day MVAs ahead, potential resistance. Will be ready to close positions taken on the aggressive buy point (33) if it continues to show improvement.
Best Plays:
1) USAI: Warming up for a breakout move.
2) ACDO: A shooting star doji at support in the pullback.
3) CASY: Bounced on higher volume.
4) ULTE: Still in good position for upside.
5) ECL: Lower volume pullback to support and tight doji.
6) IRM: Making the move off support.
7) NDC: Moved up to resistance on lower volume and thus may be ready for the kiss of death.
8) STK: Headed for breakout!
9) JEC: Still weak.
New:
USAI (Usa Networks--$27.64; +1.94; optionable): Media
http://biz.yahoo.com/p/u/usai.html
STATUS: Earnings are out before the bell Tuesday. USAI is moving up in the handle to a 21-week cup, popping off the 18 day MVA Monday on strong volume of 5.7 million (avg. 3.08 million) on the tails of a breakout from ROOM (Hotel Reservations Network, which reported higher fourth-quarter earnings resulting from a rise in hotel bookings despite slackened travel after the September attacks). The stock is showing strong money flow and high relative strength (both ahead of price), so we look for a breakout on this solid move. Target: 33
BUY POINT: Breakout: 27.95 on continued strong volume (4.5 million is minimum desired for breakout). Stop: 25.99 (7%)
POSITION: Stock and/or April $25 calls to buy (QTH DE).
http://www.investmenthouse.com/ct/usai.html
ACDO (Accredo Health--$48.50; +0.26; optionable): Health Services
http://biz.yahoo.com/p/a/acdo.html
STATUS: Testing the breakout from its June through December flat base. The stock on Monday showed a shooting star doji at the bottom of its pullback to the 18 day MVA (off the January high at 52.25 after the breakout), so we will be watching for confirmation of a move back up from this support. Volume has been falling off decently in the pullback, and was up to average levels (621,400) Monday with the doji. Excellent money flow and buying in this stock. Target: 60
BUY POINT: Aggressive: 50.15 on volume in the range of 700,000. Stop: 46.64 (7%)
POSITION: Stock and/or March $45 (0 open interests, good delta) calls to buy. DZU CI
http://www.investmenthouse.com/ct/acdo.html
Put:
CELG (Celgene--$26.26; -0.90; optionable): Biotech
http://biz.yahoo.com/p/c/celg.html
STATUS: Has been in a down trend since November, and seven days ago broke support of the 200 day MVA (27.67), resistance now that has since kept the stock down. Volume is falling back pretty quickly the last 2 days (down Monday to 358,500; avg. 1.47 million) but instead of holding just under the 200 day MVA like it did Friday, CELG started to fall today. On a move below 25.83 (January closing low) on increasing volume, look for a drop to the range of the September low (20.50). Earnings are out Wednesday before the opening bell, so will be listening for that news.
BUY POINT: 25.35 on stronger volume.
POSITION: April $35 puts to buy (LQH PG).
http://www.investmenthouse.com/ct/celg.html
Covered Call:
INVN (Invision Tech--$37.33; +0.33; optionable): Scientific & Technical Instruments
http://biz.yahoo.com/p/i/invn.html
STATUS: Started to pull back from its recent 10 day MVA, but held up with a tight doji on low volume Monday. Buy point was 36.95 and the low down to 36.15 before the bounce back up; we are looking for a move down to the 18 day MVA for a covered call sale play. The resistance at the January high (39.40) can still hold INVN back; the last bounce up was weak so leads us to watch for the move back to the 18 day MVA (now at 32.90). Volume was down to a low 1.08 million (avg. 2.8 million).
POSITION: March $35 calls to sell (FQQ CG). Looking to buy them back upon a hold at and move back up from support.
http://www.investmenthouse.com/ct/invn.html
TROW (T.Rowe Price--$36.77; +0.42; optionable): Financial
http://biz.yahoo.com/p/t/trow.html
STATUS: Financials are holding up well. Holding steady with a small gain at the 18 day MVA, tapped on the low of 36.09. TROW is in the handle to a 22-week cup with handle, and we are looking for a move up from this support level for its third bounce from the 18 day since early December. At that point TROW bounced from the 50 day MVA and broke its 200 day MVA. January high at top of the last leg up is 37.65. Target: 45; money flow and relative strength are nicely ahead of price.
BUY POINT: Hit the aggressive buy point at 36.65, so holding those positions. Breakout: 37.75 on volume of 876,000 or higher. Stop: 35.11 (7%)
POSITION: Stock and/or April $35 calls to buy (RQW DG).
http://www.investmenthouse.com/ct/trow.html
CASY (Casey's General Stores--$14.63; +0.14; no options): Grocer
http://biz.yahoo.com/p/c/casy.html
STATUS: Like the food sectors recently. We are looking for a 50 day MVA bounce from CASY, after it tested the double bottom breakout of December. Volume was up Monday to 220,900 (avg. 158,000), a nice boost from Friday's low volume, and to accompany it was price, moving up to close at the 18 day MVA on the nose. Looking for a continued bounce! Strong money flow. Target is 18.
BUY POINT: Aggressive: 14.70 (over the 18 day MVA at 14.53) on volume of 160,000 or higher. Stop: 13.67 (7%)
POSITION: Stock.
http://www.investmenthouse.com/ct/casy.html
ULTE (Ultimate Electronics--$30.80; -0.07; no options): Retail
http://biz.yahoo.com/p/u/ulte.html
STATUS: We are calling this a 7-month cup with handle (resembles a reverse head and shoulders). ULTE continues to hold above the 18 day MVA, support for the last 2 days after a nice pop back over the moving average three days ago. Volume has been very low and below average for those days, however (Monday 24,400; avg. 107,000), and that is just fine as long as ULTE holds the 18 day (30.21). We are looking for that action ahead of a breakout over the January highs. Money flow and relative strength are out ahead of price, a bullish sign. Target: 39.
BUY POINT: Breakout: 32.44 on volume of 164,000 or higher. Stop: 30.17 (7%)
POSITION: Stock.
http://www.investmenthouse.com/ct/ulte.html
DLTR (Dollar Tree Stores--$33.23; +0.45; optionable): Retail
http://biz.yahoo.com/p/d/dltr.html
STATUS: Broke out of a 25-week cup with handle and moved higher Monday (to 33.96) but pulled off the high. The stock may pull back now to the range of the buy point (31.97, just above the December high in the handle), and we definitely want to see a hold there, and on a subsequent move back up perhaps get a better entry point for the test. Volume was down but still well above average (was quite high on the breakout); 2.85 million; avg. 1.18 million). The breakout was in conjunction with a strong earnings report out Thursday. Target: 38. High relative strength, buying looking good.
BUY POINT: On a pullback to 32 range for our preferred entry. Remains a buy on the breakout up to 33.60 (5% above buy point). Stop: 30.50 (7%)
POSITION: Stock and/or March $30 calls to buy (DQI CF).
http://www.investmenthouse.com/ct/dltr.html
ECL (Ecolab--$41.78; -0.15; optionable): Consumer Non-durables
http://biz.yahoo.com/p/e/ecl.html
STATUS: In a year-long flat or saucer type base (excepting the September lows) with a closing high at 44.69. Recently ECL topped at the handle high of its most recent base, a 20-week cup with handle, the base of the handle at the 200 day MVA on the pullback. Friday ECL popped over the handle high at 41.36 but Monday pulled back on lower volume (400,500; avg. 411,000), showing a tight doji. That can mean a move back up if the stock can hold above the buy point (41.46); the low tested that support at 41.40. We will look for that move. Strong money flow and relative strength. Target: 50
BUY POINT: Hit the aggressive buy pint (41.95), so look for a move over 42 from here. on again rising volume. Stop: 39.15 (7%).
POSITION: Stock and/or April $35 calls to buy (ECL DG; 0 open interests).
http://www.investmenthouse.com/ct/ecl.html
STT (State Street--$54.26; -0.45; optionable): Regional Banks
http://biz.yahoo.com/p/s/stt.html
STATUS: Like the financials. A 33-week reverse head and shoulders pattern inside a bigger 14-month base that has formed a handle, pulling back to the 18 day MVA (54.32).
The stock threw a nice spike Friday, but volume was back down and below average Monday (1.02 million; avg. 1.13 million). STT closed a few cents below the 18 day MVA, but at least volume was low, and the low at 54.16 tapped near support at some November highs (December, too), so we will give it a chance to get back over the MVA. Will look for a hold above 54, then, for a good move back up in the handle. Target: 68
BUY POINT: Aggressive: 55 on strong and rising volume. Stop: 51.15 (7%). 56.80 on volume of 1.7 million or higher. Stop: 52.82 (7%)
POSITION: Stock and/or May $50 calls to buy (STT EJ).
http://www.investmenthouse.com/ct/stt.html
Trades on less than 100,000 average daily volume:
GRTS (Gart Sports--$21.90; -1.09; no options): Specialty Retail
http://biz.yahoo.com/p/g/grts.html
STATUS: Was making what looked like a breakout move from a 7-month cup with handle base (the handle was short over three days, but the quickly falling and low volume looked good), but Monday GRTS retraced the move though it hit our aggressive buy point at 23.09. It closed above the 10 day MVA (21.77) but may test the 18 day MVA at 21.51. Volume was lower at 50,000 (avg. 56,000). From here we will look for further consolidation at the 18 day MVA ahead of a breakout. GRST moved off the 50 day MVA over a week ago on strong institutional buying, and has strong money flow and solid buying. 22.99 has become the upper resistance now (hit three times this month). Target: 28.
BUY POINT: Over 23.50 on above average volume. Stop: 21.95 (7%)
POSITION: Stock.
http://www.investmenthouse.com/ct/grts.html
IRM (Iron Mountain--$31.73; +0.23; optionable): Diversified Services
http://biz.yahoo.com/p/i/irm.html
STATUS: In early January IRM broke out of a little cup formed as a test of its 5-month flat base breakout (early December). Currently the stock is testing that breakout, and we were looking for a move off the 18 day MVA and a hammer doji, as of Friday. That is what the stock did Monday as volume rose to 415,100 (avg. 201,300). Looking for a continued move up; the January high is 32.52. Strong money flow and buying, and relative strength is turning up. Target: 38
BUY POINT: Riding positions taken at the aggressive buy point of 31.75, on continued rising volume.
POSITION: Stock and/or March or April $30 calls to buy (IRM CF for 0 open interests, or DF for 68 open interests).
http://www.investmenthouse.com/ct/irm.html
SY (Sybase--$18.40; +0.40; optionable): Software
http://biz.yahoo.com/p/s/sy.html
STATUS: SY is attempting to move into the upper right side of a year-long cup and had moved up for the last three days from its 50 day MVA (16). Strong earnings portended a break of resistance (at 18) in the stock's more recent 8-month v-bottomed base, and SY made that move though volume was down Monday to 885,800 (avg. 486,000). The stock is likely to pull back to test 18, and on that move we can look at new or add-to entry points for a subsequent move back up. Strong money flow, good buying, and relative strength breaking out. Initial target: 22
BUY POINT: Hit the buy point of 18.10. Remains a buy on the breakout up to 19. Pullback: Aggressive: Over 18.20 on rising volume.
POSITION: Stock and/or March $15 calls to buy (SY CC).
http://www.investmenthouse.com/ct/sy.html
Small Stock:
BRLI (Bio-Reference Labs--$7.27; -0.18; no options):
http://biz.yahoo.com/p/b/brli.html
STATUS: Gapped up in the manner it did last week, stopping short of the left-side high of its 8-week cup (7.99) but then running back down to close. That candlestick typically indicates a test of support, and last week it used the 10 day (7.06; 18 day at 6.86) to hold and move back up. The volume today was down to 205,300 (average 180,400), so we if it will do the same thing, but we will wait for a breakout to take positions. It might take its time and form a smoother handle. The current pattern formed since November after breaking out from another slightly bigger cup with handle mid-month. Good money flow and buying. Target: 10
BUY POINT: Breakout: 7.95 on minimum breakout volume of 266,000. Stop: 7.39 (7%)
BUY POINT: Stock.
http://www.investmenthouse.com/ct/brli.html
Puts:
VIA (Viacom--$39.66; +0.06; optionable): Media
http://biz.yahoo.com/p/v/via.html
STATUS: Still hanging on after having given up its 50 day MVA (42.25) recently and falling to a recent low of 38.31. It tapped at its 10 day MVA (40.83) Friday, but pulled back and today showed a second consecutive loose doji, with volume dropping back to 442,000 (average 460,000). It is weak and still looking like a drop, but we want to see some stronger selling on the move down. May have potential support at 37.40 near the October highs, so will want to see selling pick up intensity on the move down.
BUY POINT: Aggressive: 39 on continued strong volume. Break of support: 37 on continued strong volume.
POSITION: March $45 puts to buy (VIA OI).
http://www.investmenthouse.com/ct/via.html
NDC (Ndchealth--$32.33; +0.29; optionable): Diversified Services
http://biz.yahoo.com/p/t/ndc.html
STATUS: NDC tapped its down trendline last week and then fell hard, taking out its 200 day MVA (32.74) Friday. After tapping through the buy point the stock bounced a bit today, and it is not unusual for a stock to test support after it has fallen through. Looking for the test to fail (volume was down to 186,700; average 217,000), and on a drop back through 32 targeting 29 (the December closing low is at 28.29).
BUY POINT: Below 32 on above average volume.
POSITION: March or May $35 puts to buy (NDC OG or NDC QG).
http://www.investmenthouse.com/ct/ndc.html
JPM (J.P. Morgan Chase--$34.31; -0.68; optionable): Banking
http://biz.yahoo.com/p/j/jpm.html
STATUS: Made the break lower, hitting the buy point and dropping to an intraday low of 33.45 before pulling back up a bit to close. Volume continued to be very strong at 13.7 million (average 7.99 million). We are targeting 29 on put positions, and with the downward pressure we can look at new or additional positions if the late-day move takes the stock back up a bit toward 35.
BUY POINT: From here or after a quick bounce, a drop through 30 on continued strong volume.
POSITION: March $40 puts to buy (JPM OH).
http://www.investmenthouse.com/ct/jpm.html
CONTINUED PLAYS:
MOVING AVERAGE BOUNCES:
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.
STK (Storage Tech--$23.32; +1.07; optionable): Computer Hardware
http://biz.yahoo.com/p/s/stk.html
STATUS: Solid move today! STK is in an ascending wedge, and today made a strong bid to breakout, running up to close just under the pattern high at 23.50. Volume was solid at 883,400, just under what we are looking for on a breakout move. Looking for the move to push it over the top. Strong money flow and relative strength has broken out ahead of the price. Target: 28
BUY POINT: Breakout: 23.60 on volume of 1.1 million or higher. Stop: 21.95 (7%)
POSITION: Stock and/or March $20 calls to buy (STK CD).
http://www.investmenthouse.com/ct/stk.html
BASING/TRADING RANGES:
FITB (Fifth Third Banc--$62.91; -0.43; optionable): Regional banks
http://biz.yahoo.com/p/f/fitb.html
STATUS: Gapped up a bit but pulled back as we thought it might, tapping its 10 day MVA (62.40) at its low. Could not maintain strength on the breakout from the double bottom with handle, where it hit a high of 63.65 Thursday. If it can hold support, it is still a buy on the breakout up to 66.20. Target: 76. Strong money flow.
BUY POINT: Aggressive: After showing it can hold the 10 day, a move over 63.25 on volume in the range of 2 million (730,500; average 1.4 million). Stop: 58.75 (7%)
POSITION: Stock and/or May $60 calls to buy (FTQ EL).
http://www.investmenthouse.com/ct/fitb.html
MOGN (Mgi Pharm--$15.96; -0.45; optionable): Drugs
http://biz.yahoo.com/p/m/mogn.html
STATUS: In a 2-year base but more recently in a cup with handle that formed after the break back over the 200 day MVA. MOGN dipped back in the handle today, tapping the 18 day MVA at its low of 15.80. Volume decreased on the selling (126,900; average 137,500), so we are looking for it to hold that support, and make another attempt at breakout. Showing excellent money flow and high relative strength. Target: 21
BUY POINT: 17.15 on volume of 201,000 or higher. Stop: 15.95 (7%)
POSITION: Stock and/or April $12.50 calls to buy (QOG DV; low open interests).
http://www.investmenthouse.com/ct/mogn.html
Continued Puts:
JEC (Jacobs Engineering--$63.40; -0.23; optionable): Materials & Construction
http://biz.yahoo.com/p/j/jec.html
STATUS: Continues to hold onto the 10 day MVA (63.11), showing a doji today as volume continued to be low, dropping to 103,800 (average 247,400). JEC has been testing its move down through the 200 day MVA (65.12), and we are looking for a move down to the January low at 58.41, hit when the stock first breached the 200 day.
BUY POINT: Aggressive: 62.40 on above average volume.
POSITION: April $75 puts to buy (JEC PO).
http://www.investmenthouse.com/ct/jec.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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us stock market
trend trading stock
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