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stock watch, stock recommendation
Begin Part 2 of 2
MARKET ALERT SERVICE: THE LINK IN PART 1 WAS INCORRECT
Subscribers to the current reports can sign up at the following link:
http://www.investmenthouse.com/alertssr.htm
PLAYS TO LOOK AT:
BONUS PLAYS:
PLAB (Phototronics--$34.57; +1.58; optionable): Semiconductor equipment.
http://biz.yahoo.com/p/p/plab.html
STATUS: In the handle to a 10 month cup (which is the right side of a larger double bottom). The handle has formed over the 50 day MVA (31.72), making a slightly higher low when it held support last week at that support, showing something of an ascending wedge. Today PLAB surged on the AMAT momentum, with volume taking off to 1.4 million (average 678,300) as it reached up toward the handle high (35.13). Looking for continued strength and a breakout. Target: 40.
BUY POINT: 35.23 on minimum volume of 1 million. Stop: 32.76.
POSITION: Stock and/or June $30 calls to buy (PQF FF - under 50 open interest, plenty at the $35 strike).
PRIA (Pri Automation--$25.22; +1.07; optionable): Semiconductor Equipment
http://biz.yahoo.com/p/p/pria.html
STATUS: Also in a large base (nearly 2 years) but since late January in another cup with highs near 32. Midway up the right side of the base PRIA formed a good-looking ascending wedge with volume falling back to below average levels for most of the pattern. The stock has marked higher lows at the 50 day MVA (currently at 22.40) and Wednesday volume was up to 235,200 (avg. 382,000) which pushed PRIA back up to resistance just above 25. On a continued sector rally we are looking for a breakout. Since the wedge is in the general area where we would expect a handle, we will look at playing the breakout up to the point where it looks ready to top, then PRIA just may form a better-looking handle. We can then look at adding to current positions. Not a bad scenario. The stock shows great money flow and high relative strength. Target: 32
BUY POINT: 26 on volume in the range of 520,000. Stop: 24.18 (7%)
POSITION: Stock and/or May $20 calls to buy (UXQ ED; low open interests at this point).
SOX (Phili Semi--$569.33; +21.32; optionable):
STATUS: The index took off and gave a nice rally, and we are looking for it to continue for a quick jaunt up to the 600 range at the level of the January high (out at 606). SOX was over the recent "hump" when it moved over the 50 day MVA late January then fell back through, though the second dip hasn't undercut the first (which would have it looking like a good double bottom). That aside, the index may pull back early to test the hump's highs just above 563 before heading back up. This is an aggressive play, but one we feel has a good chance for a quick gain.
BUY POINT: After a pullback to test the 563 range: Over 564 in a continued rally. From here: 570 in a continued rally.
POSITION: March $560 calls to buy (SJX CL)
MARKET FAVORITES: Several of the puts set up well for a fall (or another fall after the recent surge). These include EXTR (hit the buy point today), JNPR (started down) and PSFT, and the updates below. MCHP managed to break back over its 50 day MVA.
SNPS (Synopsys--$51.45; +0.34; optionable): Computer software.
http://biz.yahoo.com/p/s/snps.html
STATUS: SNPS fought steadily back up this week, but volume has weakened and the moves have gotten smaller - signs that a move is coming to an end. Today SNPS showed a doji just under its 200 day MVA (51.63), which intersects with the stock's short-term down trendline. SNPS reached up intraday to 52.69 (50 day at 53.11), but pulled back to close. We expect a failure here with the weak move culminating in the doji at resistance. Recent low is 46, and we will carefully watch that level, with the target 42.50.
BUY POINT: Adjusting the buy point up a bit since it came all the way up to the trendline, so we are looking for a move through 50 on increased volume near the average (883,400 today; average 1.56 million).
POSITION: March $55 puts to buy (YPQ OK).
BRCM (Broadcom--$40.36; +0.54; optionable): Semiconductor.
http://biz.yahoo.com/p/b/brcm.html
STATUS: Since hitting the initial put buy point on its first move through the 200 day MVA (38.83), BRCM rebounded back over that level, but the move has not been impressive. While making it over the 200 day, it has been struggling just over that point with its short term down trendline, which is with its 10 day MVA (40.55). It showed a doji just below that level today, with volume dipping back to 11.8 million (average 14.7 million). Looking weak at resistance, and we can look for another drop back. We fwere looking at 31 as a target on the original drop, but wit the March puts we will look at 35 initially (there is support from recent lows in the 36 range).
BUY POINT: In a weak market, a drop back through the 200 day on increased volume.
POSITION: March $45 puts to buy (RCQ OI).
PRE-ANNOUNCEMENTS: DIAN might test back a bit before continuing its move.
BMS ($52.53; +0.18): Working on a date. Broke out Monday with a gap, testing that move the last two sessions. Holding up over its prior high (52.47) like it should, the stock showed a loose 'shooting star' doji today as volume continued to be strong, up to 307,200 (average 232,800). Looks like it could continue up from here, and on a move over 53 on continued strong volume, stock and/or July $50 calls to buy (BMS GJ).
DRS ($36.10; -1.00): Has fallen hard, and today took out its 50 day MVA (36.42). It did rebound from a low of 35.05, and with the big volume (643,100; average 226,000) we will see if it can recover, but if a bounce back over the 50 day fails, we can look at a put play down to 30. After a failed move back over the 50 day, a drop through 36 on continued strong volume, with March $40 or June $45 puts to buy (DRS OH or DRS OI).
PRE-SPLITS:
BSYS ($64.18; +1.67): Splits 2:1 effective 2-25-02. Made the move we were looking for bouncing up from its 18 day MVA (61.80). Solid move and now that BSYS has cracked over strong resistance in its down trendline and 50 and 18 day MVA's (61-61.50) it has a clear path to the recent high of 66. We will ride the stock to that level, and will like get a rest there, which can set up a final pre-split run over the high. On that move, stock and/or March $60 calls to buy (BQY CL).
WERN ($26.87; -0.13): Splits 4:3 on or about March 15. Has bounced hard back over the 50 day (25.72), and after the nice move Tuesday today WERN slowed to a doji, but held on lower volume (500,000; average 296,500) over the short-term averages (26.70). Looking for the stock to hold here, and make a move over 27.60 with continued strong volume, and stock and/or May $25 calls to buy (QEH EE - no open interest for March).
CONTINUING CANDIDATES: Still waiting for GOSHA, EDS might be setting up for another drop, HB recovered a bit, and LLL continues to look strong after its recent breakout. APPB started back up on strong volume, but we will see how earnings plays out.
DHR ($65.67; +1.98): Received an upgrade and broke out today with a gap up, but could only manage a loose doji in the range of its June highs. Volume was up at 1.65 million (average 1.06 million), and while it is a buy on the run up to 67.95, we could see a quick test back. If it holds 64 on a test, we will look at new or additional positions with a run back up on continued strong volume, with stock and/or June $60 calls to buy (DHR FL).
BBBY ($35.22; +1.38): Broke out today, moving out of the handle of its shallow double bottom (the handle and right side of the pattern shaped up like an ascending wedge as well). Volume was not the breakout volume we were looking for, however, coming in at 2.6 million (average 3.18 million). One of those mid-session breakout where volume was just not shaping up, but we will see if volume kicks in now, and if so we can still buy it on a move over the high of 35.70. Looking for volume of 5 million, and stock and/or ay $32.50 calls to buy (BHQ EZ).
TGIC ($41.99; +0.50): Made a pretty small breakout move from its cup with handle, but now appears to be consolidating over the 10 day MVA (40.97), holding up well. It has moved laterally the last few sessions, with volume dipping back, today down to 18,300 (average 43,800). Looking for TGIC to hold this pattern over support, and make a move over the high of 42.39 on volume of 50,000, with stock.
YUM ($55.52; +1.85): After retreating with earnings, YUM bounced back today, gapping back over its short-term MVA's (10 & 18 day at 54.56 and 54.13) with volume up and strong at 1.08 million (average 724,000). A good rebound, and on a move over the high of 56.20 on continued strong volume, stock and/or July $55 calls to buy (YUM GK).
POST-SPLITS: CHBS still set up for a possible drop, and XRAY tried a bounce, but it was not particularly strong.
VAR ($40.00; +0.61): Made the move back up today that we were looking for, but it could not hold on. VAR reached up over our buy point (40.03) and hit 40.75, but it pulled back to close, holding some of the gain, as volume climbed again to 1.23 million (average 312,000). Has set up very well, with a nice breakout and test, but the candlestick today indicates a possible pullback, so we will see if VAR will hold up over 39. Still a buy up to 41.93, with stock and/or May $35 calls to buy (VAR EG).
Good Investing!
Jon L. Johnson and the Stock Split Report 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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