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Begin Part 2 of 2
TEAM TRADES
DIAN: On the Stock Split Report, DIAN was trading in a tightening pennant after giving us a stellar run late in 2001. We were ready to jump on it again today, and it wasted little time getting to the buy point (59.60), hitting it about a half hour into the session. It ran so well, it was at 60 on its first run and we were waiting for it to come back. The pattern however was a very tight lateral range after that initial run. Volume was already at 50% of the daily average so we were excited about it. We jumped in at 59.95 and then of course it dipped to 59.45 for a minute. It bounced right back up and then held that tight consolidation for almost two hours. We started to wonder about the prospects; the market was moving up and now DIAN was stalled. At 11:00CT it jumped to 61.50 in 20 minutes. Then another 2.5 hours of lateral movement where it held almost flat. Volume kept building, and with a half hour to go, as the market sold back, DIAN rallied over 63 on massive volume. What a great move from a pennant: they can be very explosive as DIAN showed today.
THE PLAYS:
Good movers: IFF looked strong today, surging again on strong volume as it moves up after testing the ascending wedge breakout. USAI shot up for another point gain today.
Targets hit Tuesday: DJX (99 on buys at 96.50).
Previously covered and holding up well:
SYK ($59.82; -0.23;): Bounced from the 18 day MVA three days ago in the test of the breakout from its rolling range (was below the buy point of 59.95 even on that move), but Monday was back up and holding above the October and December highs (above 59). Like it. Showing above the support 2 consecutive dojis on rapidly decreasing volume. New buy points over 61 on strong volume, though the move may take a few more days of consolidation.
EGOV ($4.17; +0.12): Still testing the January breakout and has formed an ascending wedge pattern of just over three weeks on low volume. That volume popped higher Tuesday (just under average) and pushed the stock off the 18 day MVA. Still has resistance at the 4.30 range (which happens to be the buy point already hit), but continues to look decent here. For new buy points, 4.43 for positions with stock.
GRTS ($24.25; +0.05): Still testing the ascending wedge breakout (the pattern formed at the upper right side of the stock's 7-month base) and now sporting a 3-day lateral, descending move composed of tight dojis. Got a strong rise in volume Tuesday, so continue to look for a hit at the buy point of 25 for positions with stock.
CCMP ($63.25; -3.43): CCMP started a move down from the 200 day MVA on rising volume. Buy point for our current put play is 59.80, but aggressive players can look at taking positions on a move down from here on continuing rising volume. The 200 day MVA has posed strong resistance since late January, with the stock unable to make any headway above it save one or two weak attempts on intraday highs. April (aggressive) $80 or July $90 puts to buy (UKR PP or UKR SR).
http://www.investmenthouse.com/ct/ccmp.html
Continued Plays that look good today: TROW, COTT, SLGN, ATVI, MIMS, BRCD, FAST, RTN. URS and KROL look super in the ascending wedges. All these stocks are holding steady; buy points are current from last night's report.
New upside:
STJ (Saint Jude Medical--$78.47; +1.61; optionable): Health Services
http://biz.yahoo.com/p/s/stj.html
STATUS: Making a good bounce from the 50 day MVA (75.93) as health services stocks had a good day. Volume was up sharply to 930,100 (avg. 646,000) and the stock broke above the 18 day MVA at 77.55 on the move. The stock ran, on its last move off this support level, 6 points to the January high at 80. We may get a pullback to test the 18 day MVA or the higher 10 day MVA (77.82) early, to give a better entry point on the move up. High money flow and relative strength. Target: 83 on option plays. On stock we will let it run more: 90
BUY POINT: From here: 78.66 on continued rising volume. Stop: 73.05 (7%). POSITION: Stock and/or July $70 calls to buy (STJ GN).
http://www.investmenthouse.com/ct/stj.html
WTW (Weight Watchers--$36.44; -0.21; no options): Personal Services
http://biz.yahoo.com/p/w/wtw.html
STATUS: Newly issued November 16. In a pullback off the February high of 38.75, reached on a strong breakout from a double bottom type pattern that spanned about 5 weeks. Currently the stock is holding the 10 day MVA (36.23) as volume really shakes out to low levels (12,900 Tuesday; avg. 197,000). WTW tried to make its move Monday, but volume kept falling, and followed up today with a doji and the slight pullback. Looking for another strong move back up after this test of the breakout. WTW has strong money flow. Target: 45
BUY POINT: Aggressive: 36.80 on volume of 198,000 or higher. Stop: 34.22 (7%)
POSITION: Stock.
http://www.investmenthouse.com/ct/wtw.html
New Puts:
LLTC (Linear Tech--$40.06; -0.62; optionable): Semiconductor
http://biz.yahoo.com/p/l/lltc.html
STATUS: LLTC is in a 7-week descending wedge pattern with lower support at the 39 range. Closing highs in the pattern are connected by a down trendline that the stock tapped on the intraday high of 40.99 (connects December through this month closing highs). The stock fell back from there, with volume was lower for the second day at 3.77 million (avg. 5.3 million). We are looking for a breakdown as the pattern tightens up. On the AMAT news, the stock may try for a test of the 50 day MVA (40.72) before heading back down in the pattern.
BUY POINT: Breakdown: 38.50 on volume in the range of 7 million. Target: 31
POSITION: March $45 puts to buy (LLQ OI). Next month out is August.
http://www.investmenthouse.com/ct/lltc.html
OEX (Standard & Poors--$562.51; -2.57; optionable):
STATUS: After getting the upside move to our initial target of 566 (to within about 80 cents), the index pulled back on lower volume Tuesday (1.09 million; avg. 1.25 million), tapping on the low support at the 10 day MVA (560.98). The index is just under its 18 day MVA, and above the short term down trendline (connecting January and February closing highs). We are looking at taking aggressive positions on a move down from here, for a move down to 549.38, a price hit four times since October.
BUY POINT: Aggressive: 562 on rising volume.
POSITION: April $570 or $560 puts t0 buy (XEK PL or PN).
Back on:
SMTC (Semtech--$32.28; -0.69; optionable): Semiconductor
http://biz.yahoo.com/p/s/smtc.html
STATUS: Winding up for another fall from all appearances. The stock is current showing a doji just under the down trendline (connects the December and February closing highs) on low volume (SMTC has fallen from that line since early January). The intraday high tapped the 18 day MVA at 33.10 with the stock for now sitting a dime below the 10 day MVA. We are looking for a move down and through the recent lows, for a move down to a new target at 27. Volume was down to 795,500 (avg. 1.3 million). Look for rising volume for the drop. AMAT beat estimates on its earnings which were out after the bell, and the chips were up after hours; SMTC was holding at its closing price, but may move up to test the 18 day MVA (33.22) before moving back down.
BUY POINT: Aggressive: 31.90 on strong and rising volume. Target 27
POSITION: March $37.50 (aggressive) or June $45 puts to buy (QTU OU or RI).
http://www.investmenthouse.com/ct/smtc.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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