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us stock market, trend trading stock
Begin part 3 of 3
THE PLAYS
New Plays: Again looking for an upside bounce and looking at some very strong stocks that still held up in the selling Friday. They will be leaders in any rebound. After a rebound we can look at some downside as well.
Upside:
Play Date: 07/28/2007
BCSI (Blue Coat Systems--$49.53; -1.12; optionable): Business security software
http://biz.yahoo.com/p/b/bcsi.html
EARNINGS: 8/19/2007
STATUS: Test 50 day EMA. Nice winner for us on its last run as it broke out in late May from a nice 9 week cup with handle base. Solid run through mid-July and then another break higher as the market broke out. As we all saw last week, that market breakout failed, and BCSI came back with the market, testing its 50 day EMA (47.89) on the Thursday low before rebounding. Friday it faded some, but on low volume so it was just drifting with the market trend that day. Bigger picture: nice base, nice breakout and run up the 10 day EMA (52.20), and then a typical deeper test to the 50 day EMA, using the overall market selling to make the pullback. Looking for BCSI to be a leader in the next rebound as it breaks higher. Looking to move in after it clears the 10 day EMA, but if the market sells lower, it tests the 50 day again, and then the market reverses, we will pick it up before then on the rebound.
Volume: 434.649K Avg Volume: 454.981K
BUY POINT: $52.32 Volume=600K Target=$62.95 Stop=$49.89
POSITION: IYU JJ - Oct. $50c (55 delta) &/or Stock
http://www.investmenthouse.com/cd/bcsi.html
Play Date: 07/28/2007
CELG (Celgene--$61.13; +0.93; optionable): Biotechnology
http://biz.yahoo.com/p/c/celg.html
EARNINGS: Announced 7-26-07
STATUS: Reverse head and shoulders. Another stock that was a nice winner for us in 2006 and then again in early 2007, CELG had become extended and needed a rest. Over the past 10 weeks as the market advanced CELG faded, forming its current cup base with a reverse head and shoulders pattern formed at the bottom. You often see that pattern form at the bottom of a cup; back when the bear market was ending we saw TSCO doing the same thing as everyone said the market was heading back down. We jumped on TSCO and caught a great gain on an early bull market leader. But I digress. After selling down to the 200 day SMA two weeks back, CELG bounced, then got a nice break higher Thursday on a strong earnings report. It continued higher Friday, gapping again, but after peaking at 62.35 it faded to post a smaller gain. As the market faded late, no wonder. We are looking for a bit more fade to start the week, say down to support near 60ish. Then on a bounce back up to continue the breakout we move in and look for CELG to provide the drug for some of those sell off blues from last week.
Volume: 6.852M Avg Volume: 4.257M
BUY POINT: $60.88 Volume=5.5M Target=$69.95 Stop=$58.78
POSITION: LQH JL - Oct. $60c (53 delta) &/or Stock
http://www.investmenthouse.com/cd/celg.html
Play Date: 07/28/2007
FTK (Flotek Industries--$28.60; -0.75; no options): Pumps
http://biz.yahoo.com/p/f/ftk.html
EARNINGS: 8-2-07
STATUS: Test 50 day EMA. It doesn't get much more basic than this: pumps. I have two Flotek pumps that I use to irrigate with. Had an issue with one; good customer service for a good product. FTK is trading post split, but it is doing a nice job of it. It rallied well April through June and then peaked out on this run with the market. Unlike the market, it is making a very nice orderly test of the 50 day EMA (27.77), touching down at that level twice over the past two weeks, making the second test to end last week. Nice, low, slow volume on the test shows no real selling, just a routine test of the 50 day EMA after a nice run up the 10 day EMA. Given that no one is dumping it, we are looking to move in as it rebounds through the 10 and 18 day EMA (29.93) on a rebound in volume.
Volume: 268.6K Avg Volume: 402.594K
BUY POINT: $30.05 Volume=604K Target=$35.97 Stop=$27.95
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cd/ftk.html
Play Date: 07/28/2007
LAYN (Layne Christensen--$43.40; -0.12; no options): Heavy construction
http://biz.yahoo.com/p/l/layn.html
EARNINGS: 8/31/2007
STATUS: You can call it a cup with handle or you can call it a reverse head and shoulders. Either way it is a solid pattern, formed after LAYN posted a new all-time high in early June as it ended its prior nice run. Now LAYN has set up once more, forming the current 8 week base, using the 50 day EMA on the low as its support. Textbook action. Excellent 4 to 1 accumulation in the base (4 up price weeks on rising volume to 1 down price weeks on rising volume) shows almost all buyers in the base, and that sets the foundation for yet another breakout and run higher. You have to like how it handled the selling, just using it to form a classic handle. LAYN ain't heavy, it's a buy on the breakout.
Volume: 251.57K Avg Volume: 210.247K
BUY POINT: $45.31 Volume=315K Target=$51.95 Stop=$42.34
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cd/layn.html
Play Date: 07/28/2007
TPX (Tempur-pedic Intl.--$31.39; -0.04; optionable): High density foam mattresses
http://biz.yahoo.com/p/t/tpx.html
EARNINGS: Announced 7/19/07
STATUS: Test breakout. You know, you wouldn't think that a mattress maker would emerge as a market leader, but I have learned over years of scratching my head in amazement as candle makers and grease recovery companies soared that you have to listen to the market. It was a lesson in letting the market show you what was hot, not your own tastes and preferences about what businesses should and should not make a lot of money. Back in 2002 and 2003 a huge winner for us was SCSS, an air mattress maker. Fortunately we realized the value of that one as I fancy sleeping a bit. Well TPX is the new mattress rage and I have to admit that memory foam is nice. Have one at our place in Telluride. So do a lot of others (though maybe not in Telluride). TPX gapped higher two Fridays back on strong earnings, clearing a 13 week cup with handle base on big volume. In the ensuing market selling TPX tested, but it used the selling to its advantage and tested near support at the 10 day EMA while the market burned. See the benefits of being refreshed and relaxed after a good nights sleep? We are looking to pick up TPX off of this test and ride it higher (not sure if you can sleep it higher or snooze it on up).
Volume: 2.16M Avg Volume: 1.394M
BUY POINT: $32.48 Volume=2.1M Target=$38.95 Stop=$30.39
POSITION: TPX LF - Dec. $30c (66 delta) &/or Stock
http://www.investmenthouse.com/cd/tpx.html
Current plays ready to move:
CPO
NVDA
PFWD
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, EDU, GME, GOOG, MA, PCLN, NVDA, VLO
AAPL: Nothing seems to affect it as it continues its trend higher.
AKAM: Earnings affected this one and it could not get off the mat Friday.
EDU: Getting an education in selling last week but bounced off some support at 45.
GME: Still in the nice test. Lower last week but look at it versus just about everything else. Looking to buy more when it bounces.
MA: Making a test of the 50 day EMA. Looking for it to give us a buy off this support.
NVDA: Still ready to rock and roll for us this week with the current play.
VLOooooooooo: Glad we sold out of it as it thus far has found no way to crack this selling run. Get it?
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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us stock market
trend trading stock
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