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Begin part 2 of 2
THE PLAYS:
Good movers: RJR made the buy point in the cup with handle (60.50) on strong volume. Pulled off the high of 60.69 to close back below the buy point, but remains a buy on breakout up to 63.56. Look for a move back over the high for taking new positions on the move. GRTS continued the breakout but had lower volume on the move.
Target hit alerts: MU (35.95; +28%), ICUI (48; 18.5%), CCMP (60; +$3.10 on the put options)
Stop Advisories: ET (8.49), MONE (13.39), IOM (8.51), GIS (47.62)
Best Plays:
1) PSUN: Even lower volume on another test of the 50 day. Looking for bounce.
2) MMM: Still primed for a drop.
3) VRST: Tight ascending wedge.
4) BRCD: Looking for a breakdown from the double top.
5) DTC: Holding support in a low-volume test.
6) SMTC: Heading lower.
7) GOSHA: Still the tight wedge.
8) DLTR: Getting ready for a move up in the handle.
9) VIA: Ready to fall further.
From Tuesday: Short coverage on some stocks covered last night's update report.
PSUN ($20.64; -1.04): Holding support at the 50 day MVA after falling back to that level on lower volume Wednesday (660,000; avg. 801,000). Still looking for the 50 day MVA, with aggressive buy point at 22.15 on volume in the range of 1 million for stock and/or March $17.50 calls to buy (PVQ CW).
http://www.investmenthouse.com/ct/psun.html
IFF ($32.09; -0.06): Continued the ascending wedge breakout to 33, then sold back with volume falling (643,800; avg. 335,227). Never like to see this, but the lower volume suggests it can hold support here or nearer to the buy point of 32.20 on a test of the breakout. Aggressive positions on a move up from there on stronger volume for positions with stock and/or May $30 calls to buy (IFF EF). New buy point 32.35.
http://www.investmenthouse.com/ct/iff.html
MMM ($109.69; +1.01): Headed up to tap the 18 day MVA as expected on the intraday high of 110.50. Volume was lower at 2 million (just below average levels), so this is the move up to a potential "kiss good-bye". Buy point for the move down remains 110 for the put play, March $120 or April (last night's report incorrectly stated May) $125 puts to buy (MMM OD or PE).
http://www.investmenthouse.com/ct/mmm.html
New:
VRST (Verisity--$18.99; -0.02; optionable): Computer Software
http://biz.yahoo.com/p/v/vrst.html
STATUS: VRST broke out of a 6-month cup with handle base within a larger base (of 7 months), moved up subsequently but was unable to hold the high reached at January's 21.25, instead correcting back to the 50 day MVA and forming the current ascending wedge pattern. For the last three days the stock has tightened up nicely with consecutive dojis, the last 2 hammers, on low volume (184,700; avg. 266,181 Wednesday). Looking for a breakout and ultimate move over the January high. Shows high relative strength that is ahead of price, a bullish sign. Target: 24
BUY POINT: Aggressive: 20.11 on volume of 359,000 or higher. Stop: 18.70 (7%)
POSITION: Stock and/or March $15 calls to buy (UVQ CC; 0 open interests).
http://www.investmenthouse.com/ct/vrst.html
New Puts:
PPG (Ppg Industries--$46.71; +0.34; optionable): Conglomerates
http://biz.yahoo.com/p/p/ppg.html
STATUS: Looking for PPG to wind up again for another selling bout. The stock was on our report earlier in January, and absolutely tanked, hitting 42.62 from the January high (54.27). There is a short term down trendline that sent the stock back down on higher volume Tuesday, and after tapping 46 the stock bounced back up near that resistance Wednesday (actually tapping the 10 day MVA near 47). Volume was strong at 1.09 million (avg. 711,000), but if PPG cannot break the resistance from 47 to 48, we will look for a drop below 46, back to the January low (initial target). That level is the stock's up trendline (connects September and January closing lows).
BUY POINT: After a test of 47 to 48, a move below 45.80 on continued strong volume.
POSITION: May $55 puts to buy (PPG QK).
http://www.investmenthouse.com/ct/ppg.html
BRCD (Brocade --$33.34; -1.59; optionable): Computer Periperals
http://biz.yahoo.com/p/b/brcd.html
STATUS: Broke the 50 day MVA (34.45) and the up trendline that connects October and January lows on strong but slightly lower volume (16.6 million; avg. 15 million). BRCD formed a double top December through early January as it banged around from 32 to 40. Over the last two weeks it has been trying to break downward, with the 50 day MVA providing recent support until today. After hours the stock was down about three-quarters on the "no guidance news" from CSCO. How it opens depends upon what happens with CSCO. If it does, though, we would watch for a move back up to test the 200 day MVA (33.05), considering downside positions on the 'kiss good-bye'. A strong break of the support can take it through the 30 level November consolidation toward 25. Target: 26
BUY POINT: 31.75 on rising volume.
POSITION: March $40 (UBF OH) or April $45 (UBF PI) puts to buy.
http://www.investmenthouse.com/ct/brcd.html
CONTINUED PLAYS
SYK (Stryker--$60.01; -0.85; optionable): Health Services
http://biz.yahoo.com/p/s/syk.html
STATUS: The stock broke out of the rolling range Tuesday on stronger volume, but pulled back on decreasing numbers (1.37 million; avg. 511,000) in a test Wednesday. It closed above the buy point of 59.95, testing 59.53 on the low, so may get a hold there if not at the 58.80 range, where support looks firm as well. SYK can form a handle if it does not quickly resume the breakout after this possible "breather". The rolling pattern spans about three months in a 6-month flat base. Target is 72.
BUY POINT: New: 61 on again rising volume. Stop: 56.73 (7%)
POSITION: Stock and/or March $55 calls to buy (SYK CK).
http://www.investmenthouse.com/ct/syk.html
FAST (Fastenal--$69.81; -0.06; optionable): Retail
http://biz.yahoo.com/p/f/fast.html
STATUS: Broke out of the short reverse head and shoulders pattern Tuesday (buy point was 68.80) with strong volume, but after trying an extension of that move Wednesday, pulled off the high of 71.50 with already strong volume edging higher (467,600; avg. 227,000). We never like the reversal on higher volume right after a breakout. If FAST cannot hold above the breakout day's closing high of 69.87, we are going to be very careful. We won't let it fall below the buy point. Relative strength is still moving out ahead of price. Target: 83
BUY POINT: After a lower volume pullback, over 70 on volume of 500,000 or higher. Stop: 65.10 (7%)
POSITION: March or May $65 calls to buy (FQA CM or EM).
http://www.investmenthouse.com/ct/fast.html
ENER (Energy Conversn--$21.26; -0.03; optionable): Diversified Services
http://biz.yahoo.com/p/e/ener.html
STATUS: Were looking for a hold at the 200 day MVA as ENER tested the strong breakout over that level 4 days ago, but the stock moved below it Tuesday. Volume has been decreasing on the pullback, and with the tight doji shown Wednesday on lower volume (97,700; avg. 72,000), ENER may be ready for a move back up. However, it is below the January highs now (and the lower November highs at 22, now another level of key resistance). We will keep the buy point in the event is makes the move in the next couple of days, but if it doesn't will move on. Initial target is 28.
BUY POINT: Aggressive: 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--$14.82; +0.02; optionable): Consumer Durables
http://biz.yahoo.com/p/s/scs.html
STATUS: Lost the flying plateau and is now sitting well below the former support (18 day MVA at 15.29), showing a doji just above the 50 day MVA. May move up from here with the hammer doji, but that was not the play we wanted. No positions from here.
http://www.investmenthouse.com/ct/scs.html
Small stocks:
PCLE (Pinnacle Systems--$7.60; -0.31; optionable): Consumer Durables
http://biz.yahoo.com/p/p/pcle.html
STATUS: Fell out below the 50 day MVA after we were looking for a bounce from the 10 day MVA in the handle to the 9-month cup with handle. No new positions here.
http://www.investmenthouse.com/ct/pcle.html
DTC (Domtar--$10.44; +0.10; no options): Consumer Non-durables
http://biz.yahoo.com/p/d/dtc.html
STATUS: Held the 10 day MVA as expected, after the stock pulled back a bit far in the test of the breakout (reverse head and shoulders) on Monday, below the buy point of 10.80. DTC used the 18 day MVA for support the last 2 days as volume decreased ever lower (today down to 22,300; avg. 64,000), bouncing back up each day above the 10 day. Continue to look for new positions on a move over the breakout high (10.75). This pattern is part of a 2-year base with highs near 15. Target: 13. Money flow and relative strength still high and ahead of price, and buying is looking good.
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--$13.65; -0.40; optionable): Internet Software
http://biz.yahoo.com/p/m/mone.html
STATUS: Were looking for an 18 day MVA bounce play after MONE had run up to the January high 16.95) off the 200 day MVA bounce. However, the stock broke that support Tuesday and fell further today, tapping the 50 day MVA on the low at 12.78 and triggering some stops. It bounced back over the 200 day MVA (13.46) so is in decent shape, but will have to make the move back over the 18 day MVA again. Now it has some overhead supply from January with which to contend, so we need to see a quick, strong bounce back. Volume down to 407,200 (avg. 747,000). Buying continues to look strong. Target: 20.
BUY POINT: Aggressive: 15.60 on volume of 747,000. Stop: 14.51 (7%)
POSITION: Stock and/or May $10 calls to buy (MOU EB; low open interests).
http://www.investmenthouse.com/ct/dtc.html
TEST OF BREAKOUT:
EGOV (National Info Consortium--$4.17; -0.02; no options):
http://biz.yahoo.com/p/e/egov.html
STATUS: Reached up again to 4.33 but again pulled back to close, with volume on the attempt again weak (down to 100,300; average 112,200). The doji pattern again held over the 10 day MVA (4.07), and we will see if it settles down a bit and makes 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 above average volume.
POSITION: Stock.
http://www.investmenthouse.com/ct/egov.html
AZPN (Aspen Tech--$17.66; -0.83; optionable): Software
http://biz.yahoo.com/p/a/azpn.html
STATUS: AZPN could not hold the 18 day for a bounce, selling down today to close just over the 200 day (17.48). Volume was lower on the selling, however, coming in at 272,300 (average 470,000). With that weak selling, we could still get that strong bounce from here. The stock made a strong reversal gap over the 200 day in late January, and had been holding up nicely until this week. AZPN is off the lows near 9 in a 3.5-year base. Target: 25
BUY POINT: Aggressive on a bounce: 18.60 on above average volume. Stop: 17.30 (7%).
POSITION: Stock and/or May $17.50 calls to buy (ZQP EC; low open interest).
http://www.investmenthouse.com/ct/azpn.html
USAI (Usa Networks--$28.20; -0.45; 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 on an intraday spike. We like the hold above the buy point of 27.95, although we got some added volume on the selling today (4.4 million; average 3.6 million) as the stock continued to hold the 10 day MVA (28.07). We were looking for a possible dip back to this support, but decreasing volume was also on the agenda. We will see if it will hold, as it still looks strong, and make a move back up. Target: 33. The stock shows strong money flow and buying.
BUY POINT: Riding positions on a continued hold of support. 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--$55.02; +0.05; optionable): Health Services
http://biz.yahoo.com/p/a/acdo.html
STATUS: Nice move Tuesday! ACDO came out with strong earnings Monday and upped its guidance, and broke over its January highs with great volume after a tight consolidation over its 18 day MVA (then 47.50, now 49.62). Today it rested a bit, showing a doji on much lower volume (551,300; average 561,200). Beyond our buy window on breakouts (5%) at this point, so we will look for ACDO to continue up with current positions toward the target at 60. If it dips back with a bit of low volume profit taking, we can jump in with new or additional positions. Clearly back in stock split range.
BUY POINT: For new or additional positions, a move up after a low-volume pullback holds the 53 range.
POSITION: Stock and/or May $50 calls to buy (DZU EJ).
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--$41.94; +0.16; no options): Kid's clothes
http://biz.yahoo.com/p/g/gosha.html
STATUS: Earnings are out Thursday before the open. 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 (currently 39.67), and is holding up well right now. After some strong volume the last two sessions, GOSHA held over the 18 day (41.29) as volume fell way back to 10,200 (average 46,600). 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--$49.16; -0.72; 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 is really turning into a flat base with the price/volume action breaking down of late. Today it dropped back through the 18 day MVA (49.35), with volume up to 798,300 (average 838,300). Still a decent pattern, riding above the 50 day MVA (48) soon. Wary of harder selling and watching that level, although CTAS could still show a breakout. 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--$32.15; +0.25; optionable): Health Services
http://biz.yahoo.com/p/t/tri.html
STATUS: In the handle to the 15-week cup. TRI dipped back below the 18 day MVA (31.59) this week, but has moved back over. Volume has been weak on the move back up the last two sessions (325,700 today; average 455,000), and it has pulled way off of its intraday highs to close (today up to 32.84). We will see if it can make its way back up to the breakout (handle high at 33.65). Money flow is ahead of price, a bullish sign. Target: 41
BUY POINT: Breakout: 33.75 on volume of 700,000 or higher. Stop: 31.39 (7%)
POSITION: Stock and/or May $30 calls to buy (TRI EF).
http://www.investmenthouse.com/ct/tri.html
DLTR (Dollar Tree Stores--$32.00; +0.35; 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 fell back Monday. It is holding the 18 day MVA (31.16), right at the late-December high, showing consecutive dojis on low volume (922,500 today; average 1.2 million). Not bad selling on this move, and still looks solid holding support. If it holds support here it will continue to set up 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:
ITMN (Intermune--$39.96; -1.42; optionable): Drug Manufacturers
http://biz.yahoo.com/p/t/itmn.html
STATUS: Made the aggressive buy point Tuesday for the put play then moved back over the 200 day MVA intraday, former support the stock had broken on a strong move Monday. It hit the buy point at 39.50 but did not give the "kiss good-bye" as it moved back over the resistance. Wednesday ITMN was back below the 200 day as volume slipped back somewhat (remaining above average at 1.13 million; avg. 870,000). Will continue to look for the move down after another test of the 200 day (40.42); the low of 39.66 was just cents above the buy point.
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
EMLX (Emulex--$44.31; +1.95; optionable): Computer Hardware: Peripherals
http://biz.yahoo.com/p/e/emlx.html
STATUS: Hit the buy point of 45 for the play on Monday, falling through the 18 day MVA but was back over that level in Wednesday's action. Volume was lower on the move at 9 million (avg. 8.9 million). On the CSCO news (lack of guidance) the stock was down about a point after hours; should it gap down and open below the 18 day MVA, we will look for a move up to test that level (43.77), continuing to ride current positions on a move back down. Our target is the 50 day MVA at 39.74. EMLX formed a double top pattern in January, upon which we base expectations for the drop.
BUY POINT: Riding aggressive positions taken at 45, watching for volume to pick up on the move down.
POSITION: March $55 or April $60 puts to buy (UMQ OK or PL).
http://www.investmenthouse.com/ct/emlx.html
CCMP (Cabot Microelectronics--$62.00; 0.00; optionable)
http://biz.yahoo.com/p/c/ccmp.html
STATUS: Holding below the buy point of 64.75 but showing a hammer doji on low volume after an intraday tap at 59.90. That is just under the January low of 60.57, and was our initial target on the play. We closed out partial positions on that move. The lower volume suggests a hold for now at 60 (612,300; avg. 1.1 million), but CCMP is still below the 200 day MVA, and the intraday high of 63.15 tapped right at the down trendline which has foiled CCMP the last 4 days. The stock was trading down just a bit after hours; if it opens lower near 60 we will consider simply closing out the remaining positions and then later looking for more if it breaks below 59.90 on stronger volume. Target for positions below 59.80: 55
BUY POINT: Riding aggressive positions. New buy point: 59.80 on stronger volume.
POSITION: April $80 puts to buy (UKR PP).
http://www.investmenthouse.com/ct/ccmp.html
SMTC (Semtech--$31.09; -0.78; optionable): Semiconductor
http://biz.yahoo.com/p/s/smtc.html
STATUS: Held briefly above the 32 buy point Tuesday and again today, but on slightly rising volume SMTC moved down again, continuing its move down below the January low (32.15). The intraday low of 30.61 got very close to our intial target at 30; on a move below that the stock can fall to the 28-29 range. Look for rising volume on the way down.
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
VIA (Viacom--$37.63; -0.02; optionable): Media
http://biz.yahoo.com/p/v/via.html
STATUS: Has taken a little bounce back up toward its recent consolidation range (and 10 day MVA, at 38.81). The 10 day has been resistance that has pushed VIA down in this trend, and with the gap up and reversal from the 10 day today, VIA looks ready to head down again with more vigor. We are targeting 32.50 on the play, but for new positions need to see a strong move below the recent lows (36.65). On the way to the target watching possible support from October lows at 34.
BUY POINT: For new or additional positions: Below 36.50 on above average volume.
POSITION: May $45 puts to buy (VIA QI).
http://www.investmenthouse.com/ct/via.html
JPM (J.P. Morgan Chase--$29.44; +0.42; optionable): Banking
http://biz.yahoo.com/p/j/jpm.html
STATUS: JPM has given us a great put play, and is trying to find support here at the target (29). It hit down to 28.90 today after touching 28.30 Tuesday, and with today's doji could make a bounce. Taking profits with the target hit.
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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