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top stock pick, stock recommendation
Begin Part 2 of 2
Best Plays:
1) SYK: Trying to break out of a rolling range.
2) ITMN: Looking for a test of the break of support.
3) FAST: Tightening up nicely.
4) ENER: May give another intraday bounce.
5) MONE: Holding tight at the 18 day MVA on low volume.
6) ACDO: Made its move off the 18 day MVA!
7) GOSHA: Still tight in the ascending wedge.
8) TRI: Below support in the pullback, but a shooting star doji on very low volume.
New:
SYK (Stryker--$58.85; +1.44; optionable): Health Services
http://biz.yahoo.com/p/s/syk.html
STATUS: This medical instruments stock has been rolling between (roughly) 52 on the lows and the current resistance at 59. Since the December lows (52 level), those of January were higher buy about a point, and Monday SYK held support above its 10 day MVA (57.17). Volume was strong on the bounce (the stock pulled back Friday on lower volume) at 1.1 million (avg. 486,000). Volume was higher Thursday when the stock stretched to a high above previous resistance in the pattern, but after the lower volume pullback may be ready to make a breakout here. The rolling pattern spans about three months in a 6-month flat base (excepting the September slice lower). Money flow and relative strength are ahead of price. Target: 72
BUY POINT: 59.95 on continued rising volume. Stop: 55.75 (7%)
POSITION: Stock and/or March $55 calls to buy (SYK CK).
http://www.investmenthouse.com/ct/syk.html
New Put:
ITMN (Intermune--$38.45; -4.42; optionable): Drug Manufacturers
http://biz.yahoo.com/p/t/itmn.html
STATUS: Broke the 200 day MVA (40.25) on a breakdown from a head and shoulders pattern of 4 weeks. Volume was strong on the break of support (1.2 million; avg. 870,000). After this break, we are looking for the stock to test the 200 day MVA before it heads lower, to our initial target at the 32.50 range. On a move back down from the now resistance level in the 'kiss good-bye', we will look at some aggressive positions with puts.
BUY POINT: Aggressive: 39.50 (just below the January low) on a move back down from the 40 level.
POSITION: April $50 puts to buy (IQY PJ).
http://www.investmenthouse.com/ct/itmn.html
New from the weekend:
FAST (Fastenal--$67.33; -0.12; optionable): Retail
http://biz.yahoo.com/p/f/fast.html
STATUS: In a 21-month base with a very recent 1-month reverse head and shoulders. Two weeks ago FAST bounced from the 50 day MVA and after testing resistance at the 68.50-68.70 range near three times in January, again tapped that level Friday and Monday. It is holding support at the 10 day MVA in a tightening pattern (three consecutive lateral dojis) in the right shoulder. Volume was up somewhat sharply to 227,500 (avg. 227,000). Continue to look for a breakout; target is 83.
BUY POINT: 68.80 on volume of 308,000 or higher. Stop: 63.98 (7%)
POSITION: May $65 calls to buy (FQA EM).
http://www.investmenthouse.com/ct/fast.html
ENER (Energy Conversn--$22.91; -0.36; optionable): Diversified Services
http://biz.yahoo.com/p/e/ener.html
STATUS: Eked out another gain after Friday's strong breakout over major resistance, the 200 day MVA (22.47), but after hitting the high at 24.53 Monday, the stock sold back, tapping that (now) support on the low of 22.51. Volume was even higher than that of Friday, which was huge (387,000; avg. 72,000). We will look for ENER to hold the 200 day here and then bounce back; that is the move we are awaiting for taking upside positions. Initial target is 28. Strong money flow. In a 16-month base but this is a key move over key resistance.
BUY POINT: Aggressive after a test of the 200 day MVA: 23 on rising volume. Stop: 21.39 (7%)
POSITION: Stock and/or March $20 calls to buy (EQI CD).
http://www.investmenthouse.com/ct/ener.html
SCS (Steelcase--$15.30; -0.28; optionable): Consumer Durables
http://biz.yahoo.com/p/s/scs.html
STATUS: Fell below the 18 day MVA from the flying plateau pattern (which had formed at the top of the 6-month base's right side). That support had held the stock over the last several days. The low tapped 15 and the stock was able to bounce back nicely. May be shaking out the sellers, but we want it back over tomorrow the 18 day (and that is at 15.41). We will trash the play if the pattern gets completely trashed. Target: 19 (initial). Money flow and buying are excellent.
BUY POINT: 16 on volume of 183,000 or higher. Stop: 14.88 (7%)
POSITION: Stock and/or April $12.50 calls to buy (SCS DV; low open interests).
http://www.investmenthouse.com/ct/scs.html
Some small stocks:
PCLE (Pinnacle Systems--$8.50; -0.55; optionable): Consumer Durables
http://biz.yahoo.com/p/p/pcle.html
STATUS: In the smaller 9-month cup with handle base (within a larger base), the upper right side of which was completed on a good breakout over the 200 day MVA back in December. We were looking for a bounce from the 10 day MVA, but instead the stock broke that support Monday, in addition to a short term up trendline (connects January and December lows - December lows after the stock gapped over the 200 day MVA early in the month). Volume was even lower at 166,100 (avg. 449,000), which is good for a pullback, but we were not looking for a move this low. It needs to make a higher low here (above 8.25) and move laterally a bit more to rebuild and breakout. Upside target is 13.
BUY POINT: Aggressive: Strong move over 9 (18 day is 8.81) on strong and rising volume. Breakout: 10.05 on volume of 455,000 or higher. Stop: 8.88 (7%)
POSITION: Stock and/or March $7.50 calls to buy (PUC CU).
http://www.investmenthouse.com/ct/pcle.html
DTC (Domtar--$10.41; -0.34; no options): Consumer Non-durables
http://biz.yahoo.com/p/d/dtc.html
STATUS: Broke out of an 8-month reverse head and shoulders pattern Friday (buy point 10.80) in a solid move, but the stock sold back Monday though volume was sharply lower and below average at 38,300 (avg. 64,227). We do not like stocks to pull back below the buy point in tests of breakouts, but DTC may find support at the 10 day MVA (10.23) or in that range. Volume was very, very low, and it looks as if it was resting while the rest of the market sold off. We will look at entering with new positions on a move over the breakout high at 10.75 after this action. The pattern is part of a 2-year base with highs near 15. High money flow and relative strength. Target: 13
BUY POINT: 10.90 on volume of 96,000 or higher. Stop: 10.14 (7%)
POSITION: Stock.
http://www.investmenthouse.com/ct/dtc.html
Looking at again:
MONE (Matrixone--$14.75; -0.40; optionable): Internet Software
http://biz.yahoo.com/p/m/mone.html
STATUS: MONE has been stepping its way higher since early November, using the short term moving averages in earnest since early December when the stock sustained its move over the 50 day MVA. After testing the January breakout over the 200 day MVA, we are looking for an 18 day MVA bounce play. Monday MONE continued to hold that support, with volume slipping down to 484,800. Still looking for the bounce, and the target is 20. Good money flow and buying.
BUY POINT: Aggressive: 15.60 on continued strong volume. Stop: 14.51 (7%)
POSITION: Stock and/or May $12.50 calls to buy (MOU EV).
http://www.investmenthouse.com/ct/dtc.html
Puts:
EMLX (Emulex--$43.60; -2.65; optionable): Computer Hardware: Peripherals
http://biz.yahoo.com/p/e/emlx.html
STATUS: The tombstone doji (Friday) was confirmed and EMLX made the aggressive buy point for the put play moving below the 18 day MVA (43.87) though volume was lower, not higher as we would prefer on a put play. However, EMLX is making the move down from a double top pattern, and after breaking the support we'll keep watching for a drop to our target at the 50 day MVA. Volume was down to 6.6 million (avg. 8.7 million).
BUY POINT: Riding aggressive positions taken at 45, watching for volume to pick up on the move down. 50 day MVA is at 39.44.
POSITION: March $55 or April $60 puts to buy (UMQ OK or PL).
http://www.investmenthouse.com/ct/emlx.html
CCMP (Cabot Microelectronics--$64.01; -1.11; optionable)
http://biz.yahoo.com/p/c/ccmp.html
STATUS: Made the aggressive buy point (64.75) on a move down on slightly higher volume of 692,900 (avg. 1.1 million). The stock was hanging at the 200 day MVA the previous 2 days, and this move was the 'kiss good-bye' move down from that resistance. We will look for volume to increase on the move down; CCMP tapped a low at 62.40 but bounced back and will need the volume push to break it down to 60, our target at the January low.
BUY POINT: Riding aggressive positions.
POSITION: April $80 puts to buy (UKR PP).
http://www.investmenthouse.com/ct/ccmp.html
SMTC (Semtech--$32.52; -0.75; optionable): Semiconductor
http://biz.yahoo.com/p/s/smtc.html
STATUS: Hit both buy points (33 and 32) on a move down to the low of 31.97 for the put play. Volume was lower at 1.1 million (avg. 1.34 million), the sectors holding support on news of upgrades on some semiconductors. Will look for stronger volume to break the stock below today's new low (took out the January low at 32.15). The stock still looks weak.
BUY POINT: Riding current positions on 32 and 33 buy points.
POSITION: March $40 puts to buy (QTU OH).
http://www.investmenthouse.com/ct/smtc.html
CONTINUED PLAYS:
TEST OF BREAKOUT:
EGOV (National Info Consortium--$4.12; +0.12; no options):
http://biz.yahoo.com/p/e/egov.html
STATUS: Tried to make its move today after holding the 10 day MVA the previous 2 sessions in the test of the breakout. Volume was higher at 89,500 (avg. 111,272) with EGOV moving up nearly all day and selling back late. Still, it held a gain and thus good price/volume action. Will look for another try. Money flow out ahead of price. Target: 6.
BUY POINT: Holding positions taken at 4.30; new buy points at 4.40, over the intraday high of 4.32, on continued rising and above average volume.
POSITION: Stock.
http://www.investmenthouse.com/ct/egov.html
AZPN (Aspen Tech--$18.45; -0.74; optionable): Software
http://biz.yahoo.com/p/a/azpn.html
STATUS: Was consolidating in a sideways manner after its strong reversal gap over the 200 day MVA in late January. Friday was holding above the early January highs (18.66 range) but on stronger volume Monday started selling back and was below that support on the closing price (549,500; avg. 465,000). Will now look for it to hold the 18 day MVA (18.14) and from there look for a good bounce. Strong buying! Target: 25. AZPN is off the lows near 9 in a 3.5-year base. Target: 25
BUY POINT: Aggressive on a bounce: 18.60 on continued strong volume. Stop: 17.30 (7%). Previous buy point (aggressive): 20.25, on continued strong volume. Stop: 18.83 (7%)
POSITION: Stock and/or March or May $17.50 calls to buy (ZQP CC or EC; 0 to low open interests, respectively).
http://www.investmenthouse.com/ct/azpn.html
USAI (Usa Networks--$28.81; -0.02; optionable): Media
http://biz.yahoo.com/p/u/usai.html
STATUS: Continues to test the breakout from its 21-week cup with handle pattern, when the stock ran up to 30.11. We like the hold above the buy point of 27.95 and the steadily decreasing volume (down again Monday to 4.03 million (avg. 3.5 million). Should the stock pull back further before making a strong move back up, likely support is at the 10 day MVA at 27.90. Target: 33. The stock shows strong money flow and buying.
BUY POINT: Riding positions taken at 28.50 and over 28.75 (Thursday). From here, positions over the breakout closing high of 29.20 (aggressive) on volume of 4.5 million or higher. Stop: 27.25 (7%)
POSITION: Stock and/or April $25 calls to buy (QTH DE).
http://www.investmenthouse.com/ct/usai.html
ACDO (Accredo Health--$51.25; +3.23; optionable): Health Services
http://biz.yahoo.com/p/a/acdo.html
STATUS: Nice move, as ACDO gapped up to open over the aggressive buy point (50.15), and then reached up to 52.14 (January and all-time high at 52.25) before pulling back to close. Earnings out this morning were strong and the company upped its guidance. The run had strength, as volume spiked way up to 1.14 million (average 540,000). This was a very nice-looking test of the recent breakout from its June-December flat base, showing tight dojis on declining volume on the support of the 18 day MVA (48.12). Still holding tight in the test of the breakout, showing its fifth doji above the 18 day MVA in the pullback. Good money flow and buying. Target is 60.
BUY POINT: From here: Over 52.25 on continued strong volume. Stop: 48.69 (7%)
POSITION: Stock and/or May $45 calls to buy (DZU EI).
http://www.investmenthouse.com/ct/acdo.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.
GOSHA trades on less than 100,000 average daily volume:
GOSHA (OshKosh B'gosh--$40.97; -0.38; no options): Kid's clothes
http://biz.yahoo.com/p/g/gosha.html
STATUS: Earnings are out Thursday at an unspecified time. GOSHA broke out of a cup mid-November and on the test has formed a tight ascending wedge with lows at the 50 day MVA, and is holding up well right now. We picked it up last week as the pattern tightens up in the tail, and today GOSHA closed back below its 18 day MVA (41.15), but right with recent lows. Volume spiked up to 65,600, which is the level we want to see on a breakout of the pattern (average 45,000). Again, we like the prospects for some retail stocks that are not overextended and showing good patterns such as this. Target: 52
BUY POINT: 43.10 on rising volume (minimum breakout volume is 59,000). Stop: 40.08 (7%)
POSITION: Stock.
http://www.investmenthouse.com/ct/gosha.html
CTAS (Cintas--$49.04; -0.85; optionable): Diversified Services
http://biz.yahoo.com/p/c/ctas.html
STATUS: CTAS is in a 6-month cup-type with handle base. The handle had been holding nicely above the 18 day MVA and showing ascending wedge action, but dropped back today on increased volume (1.07 million; average 845,000). At its low it tapped near the 50 day MVA (47.88), recovering to close. The pattern is still solid, so we will see if it can hold up over the 50 day and set up for a breakout move. Not a terrible move today, but wary of a harder selling. Target: 61
BUY POINT: Breakout: 50.74 on volume of 1.2 million or higher. Stop: 47.19 (7%)
POSITION: Stock and/or May $45 calls to buy (NQQ EI).
http://www.investmenthouse.com/ct/ctas.html
BASING/TRADING RANGES:
TRI (Triad Hospitals--$31.38; -0.37; optionable): Health Services
http://biz.yahoo.com/p/t/tri.html
STATUS: In the handle to the 15-week cup, but TRI gapped down and closed just under the recent support of its 18 day MVA (31.49). The pattern was a doji, pulling back from an intraday high of 31.93 (at the 10 day MVA), but volume was extremely low at 130,400 (average 452,000). Although under support, not giving up much here, and we will see if it can make a bounce back up toward breakout. Money flow is ahead of price, a bullish sign. Target: 41
BUY POINT: Aggressive: Over 32 on above average volume. Breakout: 33.75 on volume of 700,000 or higher. Stop: 31.39 (7%)
POSITION: Stock and/or May $25 or $30 calls to buy (TRI EE or EF).
http://www.investmenthouse.com/ct/tri.html
DLTR (Dollar Tree Stores--$31.53; -1.42; optionable): Retail
http://biz.yahoo.com/p/d/dltr.html
STATUS: DLTR was forming a nice new handle after having broken out from its 25-week cup with handle, but today was taken back by the market. The stock closed back below its recent high at 32, but held the 18 day MVA (30.99) as volume was quite low on the selling at 496,000 (average avg. 1.2 million). The low volume on the selling is a positive (taking a rest?), so we will see if DLTR can hold the 18 day and continue to set up in the handle. Shows good buying. On a breakout, target is 41.
BUY POINT: Breakout: 34.06 on volume of 1.8 million or better. Stop: 31.68 (7%). Aggressive: If it can hold the 18 day, a move back over 33 on above average volume. Stop: 30.78.
POSITION: Stock and/or March or May $30 calls to buy (DQO CF or EF).
http://www.investmenthouse.com/ct/dltr.html
Continued Puts:
VIA (Viacom--$36.93; -1.47; optionable): Media
http://biz.yahoo.com/p/v/via.html
STATUS: Continued down through recent consolidation lows Monday, although volume on the selling was sharply down at 405,200 (average 473,000). Last week's low (intraday Wednesday) is at 36.50, and VIA hit a low of 36.65 today before rebounding slightly. Looking for more downside, from here or perhaps after testing back toward 38. The target is 32.50, with a bit of support we are watching from October lows at 34. Needs some more selling volume.
BUY POINT: For new or additional positions: Below 36 on above average volume.
POSITION: May $50 puts to buy (VIA QJ).
http://www.investmenthouse.com/ct/via.html
JPM (J.P. Morgan Chase--$30.56; -1.60; optionable): Banking
http://biz.yahoo.com/p/j/jpm.html
STATUS: Hit the buy point again, falling hard for the second consecutive session after having testing back up to the 10 day MVA (33.55). A great move on the put, and we are targeting 29 (September low). Looking for a continued fall down to that level with current positions, and a little tight for new ones at this point. It is just above last week's low of 30.40. Volume still strong but down at 12.6 million (avg. 8.6 million).
http://www.investmenthouse.com/ct/jpm.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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