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Begin Part 2 of 2

TEAM TRADES

Again there was action both directions today, including some index puts. We also closed on some targets hit with alerts sent on JPM puts and TMCS upside action.

FILE is a software stock we are covering on the SSR, watching for its move to break out of its cup with handle, a move that coincided with support at the 50 day MVA. We liked that it held the 50 day MVA on its handle, and today it was blasting higher on strong volume. Given the market, we were going to wait and let the move take shape and check the volume closely. The stock was up strong in the first half hour, but we were not ready to buy it yet. We wanted to see how the first surge panned out for the stock and the market. as the market pulled back FILE did the same, but it held nicely at 20.80 after hitting right at the breakout point on the first surge (21.53). It held on and moved laterally for two hours. We were watching some big volume build, and when the stock made the move over the breakout point near 1:30ET, volume was running in excess of 200% of the daily average. The decision to buy was easy at that point, and we stepped in at the ask. The stock continued up, ran to 22 and then did what stocks often do, fell back to test the breakout. It undercut and went down to 21.15; a bit of concern given that some stocks have been running up on strong volume and then reversing. It managed to catch itself, however, and then rallied up to close near 22 on some super volume. Nice breakout, now we see if it holds for a quick 15% to 20%.

THE PLAYS:

Good movers: USAI broke out of the cup with handle, a nice chart to see on a day like today although it pulled off the high of 30.11. Volume was huge.

Heads up on some stocks that are selling back (continued plays):
TROW: Broke the 18 day MVA on strong volume, not what we wanted; looks headed for the 50 day or 200 day MVAs the latter is lower at 34).
ULTE: Below the 18 day MVA on sharply higher volume (still below average) in the cup with handle. Still okay.
STT: Tanked below the 50 day MVA on strong volume with the financial woes. Was in a pullback after completing a reverse head and shoulders pattern.
GRTS: Broke the 18 day MVA but on low volume. Could get a move back over pretty quickly, but has shown rocky action since trying the breakout Friday and failing. Stop advisory hit (21.95).
BRLI: Continued Monday's reversal and broke the 18 day MVA. Volume keeps falling, however, which is one positive. The stock found support at the 50 day MVA simple and can use it for a bounce back up. Cup with handle.
FITB: Sold through the 18 day MVA on heavy volume. Bounced from the 50 day MVA and the up trendline supporting the December and January lows. Was trying to break out of a double bottom with handle.

Continued plays that look solid: See Monday report for more details.
ACDO: Holding the 18 day MVA in its test of the breakout with another doji and lower volume.
INVN: May not fall back all the way to the 18 day MVA as per the covered call sale play target. Tapped the 10 day MVA on the low and bounced back up on rising volume. If it heads up from here, will look at closing out positions taken at the 36.95 buy point. Nice hammer doji (suggests upside).
ECL: Another tight doji and small pullback on decreasing volume in the test of the breakout.
IRM: Continued the bounce from the 18 day MVA though volume fell back rather abruptly. Look for a hold at the moving average on a pullback.

Indexes: The DJX and OEX hit our buy points for the put plays after moving up and testing resistance. Still room to get in on the DJX; OEX is tighter for the initial target but tonight have included later options (previous were from February, getting close for those).

DJX (1/100 Dj Indu--$96.18; -2.48; optionable):
STATUS: Hit our 97 buy point for the January 22 put play, falling through the January low (96.81). Volume was around 1.1 million (avg. 1.2 million) on the move but the break below support on lower volume is not a good sign despite that. Looking for a drop to the 92.50 initially, with possible down to 91. There is a lateral consolidation in early November at 95 where the index may try to find some support.
BUY POINT: 95.98 on preferably rising volume.
POSITION: April $98 puts to buy (DJV PT).

OEX (Standard & Poors--$557.28; -17.63; optionable):
STATUS: Hit the January 22 report buy point of 568 Monday, falling hard from the 18 day MVA on strong volume of 1.77 million (avg. 1.25 million). From here we look for the index to make the 50% retracement, down to our target at 545-540, for adding to current positions or for new buy points.
BUY POINT: 556.95 on continued strong volume.
POSITION: March $560 puts to buy (OEB OL). Just a few weeks left for February options, listed on the previously written play.

SOX (Phili Semi--$532.72; -13.10; optionable):
STATUS: After making our target as put forth on the January 17 report (500) the index bounced and actually crossed back over the 50 day MVA (535.95). It held that perch 2 days and was back below it Tuesday on rising volume. We are looking for a drop back to the original target at 500. Once there we can assess the possibility of a bounce or continued downside with respect to any current positions.
BUY POINT: 531.75 on continued rising volume.
POSITION: March $550 puts to buy (SJX OJ). Just a few weeks left for February options, listed on the previously written play.

New upside:

TRI (Triad Hospitals--$32.34; -0.44; optionable): Health Services
http://biz.yahoo.com/p/t/tri.html
STATUS: Forming a handle to a 16-week cup base, a pattern formed after the stock broke out of a 4-month double bottom that was part of a larger base. TRI tested back to the 50 day MVA after that breakout, but moved to a new high after the test before commencing the current pattern. After topping Friday at 33.65, TRI pulled back the next 2 days, actually trying to sell but holding tough on Monday. Tuesday volume was back down and low at 311,400 (avg. 491,363). The stock tapped support (10 day MVA) on the low of 32.04 and we are looking for that to support this handle, in which we expect another day or two of consolidation ahead of a breakout. Money flow looks good. Target: 41
BUY POINT: Breakout: 33.75 on volume of 737,000 or higher. Stop: 31.39 (7%)
POSITION: Stock and/or May $30 calls to buy (TRI EF).

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

New Puts:

INTC (Intel--$32.68; -1.24; optionable): Semiconductor
http://biz.yahoo.com/i/intc.html
STATUS: Broke through its 18 day MVA on a sharp rise in volume to 44.7 million (avg. 47.3 million). INTC has formed a head and shoulders pattern since early December (first shoulder) that peaked this month at the 35.79 closing high. The stock on today's move headed back down the right side of the right shoulder, and looks ready to break the 50 day MVA here to initiate a breakdown out of the pattern (50 day MVA is at 32.42). Neckline is at the December closing low of 31.45 for the breakdown but we will look at aggressive positions on a strong break of the 50 day MVA. 200 day MVA is at 28.96, but the stock may hit 28 before it stops. On a strong break of support we would not necessarily look for a test of the 50 day first, but the stock might do so. In that case we can look at entry points on that test and a move back down.
BUY POINT: Aggressive: 32 (on break of the 50 day) on above average volume. POSITION: March $37.50 or $35 puts to buy (INQ OU or OG). Deltas unavailable.

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

MMM( Minnesota Mining & Mfg--$108.65; -1.89; optionable): Conglomerates
http://biz.yahoo.com/m/mmm.html
STATUS: Got a good put play out of this stock from the January 15 report. It fell down to 100, and we just might get that move again. The stock bounced from the earlier target (100) and ran up to the 200 day MVA (now at 111.86), but has not been able to cross back over. Today it opened at the 18 day MVA and fell on rising volume (1.87 million; avg. 1.86 million). Looking for a quick drop to an initial target at 105, but will watch for weakness there for a continued fall to 100.
BUY POINT: Aggressive: 108 on above average and rising volume.
POSITION: March $120 puts to buy (MMM OD).

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

Continued Puts:
QCOM: Fell over 2 points; volume strong though slightly down; target is 41.50.
AA: Hit our buy point of 34.90, breaking the 18 day MVA on rising volume. Target is 28.
JPM: Another put that fell over 2 points today, and with the super volume looks headed lower; target is 29 (closed at 32).
JEC: Stronger volume couldn't break it over the 18 day MVA. Target is 58.41.
TNL: Hit 23 on the low and bounced, back up to potential support at 24. Our target is 21.
TMPW: Broke the 50 day MVA on strong volume. Hit the 41.90 buy point yesterday so are riding this one down, preferably to the 35 target.
SAGI: Another break of its 50 day MVA, with volume rising. Looking for a move down to 29.85 (buy point was 33).

Previously covered and looking good:

IOM (Iomega--$9.08; 0.08; no options): Computer Hardware
http://biz.yahoo.com/i/iom.html
STATUS: Testing the breakout from the ascending wedge. Holding support at the 18 day MVA which IOM tested on the intraday low of 8.80, the stock looks ready to make a move up, judging from the bounce from support on rising volume (139,800; avg. 203,000). Has resistance ahead at the 200 day MVA (9.71) and the January high at 9.80, but price/volume action has looked good the last few days and the stock is holding nicely above the wedge's highs. Getting ready for an assault on the resistance. High money flow. Target: 11
BUY POINT: Aggressive: 9.15 on volume of 205,000 or better. Stop: 8.51 (7%)
POSITION: Stock.

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

For a review of frequently asked questions, please use the link below:

http://www.investmenthouse.com/1questions.htm

Good Investing!
Jon L. Johnson and the Technical Traders 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 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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