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Begin part 2 of 2
New: Good day for the chip equipment stocks, and we have picked a couple of the best patterns tonight:
BRKS (Brooks Automation--$49.10; +2.10; optionable): Semiconductor
http://biz.yahoo.com/p/b/brks.html
STATUS: Working on a 22-month base but more recently BRKS formed a v-bottomed cup of 9.5 months length. It has developed in the middle right side an ascending wedge that is supported at the dips (higher lows) by the 50 day MVA (just below 45). It was early January when BRKS broke back over its 200 day MVA, immediately moving into this consolidation, which is actually in position for a handle to an even shorter, 6.5-month base. Not our favorite spot for wedges, but we like the pattern, the sector's performance today, and BRKS' strong move up to resistance in the pattern in today's action (volume 1.14 million; avg. 622,000). Looking for a breakout here to kick off a run to our initial target at 60 and then 64. Money flow and relative strength are high and breaking out ahead of price.
BUY POINT: 49.51 on volume of 933,000 or better. Stop: 46.04 (7%)
POSITION: Stock and/or April (aggressive) $45 or July $40 calls to buy (BQE DI or GH).
http://www.investmenthouse.com/ct/brks.html
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).
http://www.investmenthouse.com/ct/plab.html
And looking at the index for a quick upside play:
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).
Put:
CLS (Celestica--$38.91; +0.04; optionable): Hardware: Peripherals
http://biz.yahoo.com/p/c/cls.html
STATUS: In a descending wedge pattern that started early December, and has lower support at the 38.60-38.80 range. Volume was higher the last 2 days (up Wednesday to 2.27 million; avg. 2.2 million) with the stock today showing a hammer doji after a sell-off previous session. It can test back up to 40, at the 10 day MVA (40.86) but we will look for a move back down and breakdown on a fall below the support. Target: 30
BUY POINT: 37.50 on volume of 3 million or higher.
POSITION: March $45 (aggressive, CLS OI) or June $55 puts to buy (CLS RK)
http://www.investmenthouse.com/ct/cls.html
From Monday:
TROW (T.Rowe Price--$39.29; +0.92; optionable): Financial Services
http://biz.yahoo.com/p/t/trow.html
STATUS: Hit the buy point of 39 from the little ascending wedge pattern TROW had formed at the upper right side of its 28-week base. Volume, however, was not there as it fell back for the third day, down to 362,500 (avg. 586,181). That will have to roll in to support this move, or else the stock may just pull back to test the buy point or the 10 day MVA (38). We will look for a continued breakout on rising volume, with TROW remaining a buy on the move (as long as we get the volume) up to 41. Strong money flow and high relative strength. Target is 47.
BUY POINT: Riding breakout positions taken at 39. A buy up to 41 on this move, but needs volume.
POSITION: Stock and/or July $35 calls to buy (RQW GG; low open interest).
http://www.investmenthouse.com/ct/trow.html
New from Monday:
EAT (Brinker Intl--$32.00; +0.63; optionable): Leisure: Restaurants
http://biz.yahoo.com/p/e/eat.html
STATUS: Took it 2 days, but EAT finally started moving up from the 50 day MVA, from where we were expecting a bounce. It gave that move Monday on super volume, but the move deflated next day. However, we got stronger volume Wednesday (1.06 million; avg. 793,000), and with the hold just above the 18 day MVA (31.97), will look for the stock to continue up from here. Money flow rising and ahead of price. Target: 38
BUY POINT: Aggressive: 32.25 on continued strong volume. Stop: 30 (7%)
POSITION: Stock and/or July $25 calls to buy (EAT GE; very low open interests).
http://www.investmenthouse.com/ct/eat.html
New (from the weekend):
COTT (Cott Corp--$17.79; +0.14; no options): Soft Drinks
http://biz.yahoo.com/p/c/cott.html
STATUS: Has been trying to break out over the early January breakout high of 18.07, from which COTT pulled back to the 18 day MVA three days ago. Volume remains low though was up to 136,700 (still well below the average of 311,000). At least it was up on the small gain, and we look for a big push to take the stock over that high. Target is 22, and the stock shows strong money flow, high relative strength, and solid buying.
BUY POINT: Hit the aggressive buy point (17.55) Tuesday. Are riding those positions from here. New entry points over 18.07 on average or higher volume.
POSITION: Stock.
http://www.investmenthouse.com/ct/cott.html
CEY (Certegy--$35.46; +0.50; optionable): Business Software
http://biz.yahoo.com/p/c/cey.html
STATUS: Made a nice move in the flat base CEY formed since late December (high in the pattern is 35.65, though the stock has hit 35.60 which may pose stronger resistance). Volume was higher after surging up Tuesday (today up to 300,100; avg. 169,000) and CEY responded with a move off of its 18 day MVA (34.90). We are looking for that breakout here! Excellent money flow. Target is 43.
BUY POINT: 35.70 on continued strong volume. Stop: 33.20 (7%)
POSITION: Stock and/or July $30 calls to buy (CEY GF).
http://www.investmenthouse.com/cd/cey.html
BVN (Compania De Minas Buena--$24.41; -0.13; no options): Gold
http://biz.yahoo.com/p/b/bvn.html
STATUS: BVN is still testing the strong breakout and uptrend of last month (reached a February high at 25.88 on the run). We were looking last weekend for a follow-through to Friday's strong bounce from the 10 day MVA, but BVN just wasn't done with its pullback. Volume finally dropped back below average Tuesday, remaining so though higher Wednesday at 158,100 (average levels). We like the slight pullback into a tight doji, off a tap of the lower 10 day MVA (24.10). Looks good, and BVN may be ready to try another move up, if gold hasn't lost its luster just yet. Money flow is out ahead of price, which is bullish, and buying is strong. Target: 30
BUY POINT: Aggressive: 24.90 on continued strong volume. Stop: 23.11 (7%)
POSITION: Stock.
http://www.investmenthouse.com/ct/bvn.html
SLGN (Silgan Holdings--$27.95; +0.15; no options): Packaging
http://biz.yahoo.com/p/s/slgn.html
STATUS: Tightening up in the test of its recent strong earnings breakout, showing 2 consecutive dojis through today, and Wednesday saw volume surging well above average to 339,900 (avg. 180,000). For the last few days prices have been moving in a little ascending wedge pattern, so we are looking for a breakout over resistance (28-ish). Big money flow and buying! Target is 34.
BUY POINT: Hit the aggressive buy point of 27.75 (holding those positions for now). Breakout: 28.43 on continued strong volume (min. breakout volume met at 243,000).
POSITION: Stock.
http://www.investmenthouse.com/ct/slgn.html
ATVI (Activision--$26.53; +0.57; optionable): Software
http://biz.yahoo.com/p/a/atvi.html
STATUS: ATVI is in the 3.5-month ascending wedge that is part of its 8-month base, and holding up above support at the 26 level (above its short term moving averages). The stock has inched up the last three days since we began coverage, but an interesting development occurred today with a strong surge of volume up to average levels (2.3 million; avg. 2.1 million). The stock didn't make a lot of headway on that, but if we get a good move up tomorrow that will be a good sign for this pattern. The stock was holding steady after hours. It pulled off the high of 27.05 to show the loose doji, which could mean a pullback to 28 or so if this action doesn't move things up. Target: 34. Money flow is ahead of price and we like that. Buying is strong.
BUY POINT: Hit the aggressive buy point of 26.30. Breakout: 28.64 on volume of 2.8 million or higher. Stop: 26.64 (7%)
POSITION: Stock and/or May $22.50 calls to buy (AQV EX, low open interests); next month out is August.
http://www.investmenthouse.com/ct/atvi.html
URS (Urs Corp--$29.49; +0.04; no options): Diversified Services
http://biz.yahoo.com/p/u/urs.html
STATUS: Still looks nice in the ascending wedge as it hugs the 18 day MVA for the last 4 days (at 29.16). Volume is building though still below average, up Wednesday to 76,800 (avg. 86,000). Looking for that breakout, and things are looking fine still. Good money flow, high relative strength. Target: 36.
BUY POINT: Breakout: 30.30 on volume of 143,000 or higher. Stop: 28.28 (7%)
POSITION: Stock.
http://www.investmenthouse.com/ct/urs.html
ITG (Investment Tech--$43.50; +0.34; optionable): Brokerage
http://biz.yahoo.com/p/i/itg.html
STATUS: Another ascending wedge that continues to look very good, holding support tightly at the 10 day MVA the last several days as the pattern tightens. Volume is shaking out nicely, too, falling steadily and today at very low levels (55,900; avg. 302,300). Looking for a breakout here, from the 12-week double bottom with handle (ascending wedge is the handle, not the best handle but the pattern is well-formed). Money flow remains strong. Target: 50
BUY POINT: Breakout: 44.50 on volume of 461,000 or higher. Stop: 41.39 (7%)
POSITION: Stock and/or July $40 calls to buy (ITZ GH; very low open interests).
http://www.investmenthouse.com/ct/itg.html
HOLX (Hologic--$12.69; -0.26; optionable): Health Services
http://biz.yahoo.com/p/h/holx.html
STATUS: The tail of the pennant pattern is drooping below the 18 day MVA support (13.14), which is not the price action we'd like to see. Volume continues to shake out very nicely, down today to 58,500 (avg. 214,400), but we would have preferred the hold at support. HOLX did bounce up after tapping the 50 day MVA (11.96), which held it above the buy point in the former pennant (the breakout from which HOLX is now testing), so the stock could still make a good move up. We want it back over the 18 day MVA pretty fast, though. We won't take any positions from here that are below our current buy point of 14.20 due to this action. Target is 18. Still outstanding money flow and buying.
BUY POINT: Aggressive: 14.20 on volume of 225,000 or higher. Stop: 13.21 (7%)
POSITION: Stock and/or June $12.50 calls to buy (QHX FV; 65 open interests; delta 0.65 but should improve as the stock moves up).
http://www.investmenthouse.com/ct/holx.html
New Puts from weekend:
UTSI (Utstarcom--$23.42; -1.03; optionable): Telecom: Wireless
http://biz.yahoo.com/p/u/utsi.html
STATUS: Still holding above the 200 day MVA (22.81); we were looking for a move back down from that level (kiss of death) but the stock headed back over the resistance Monday. Volume remains well below average and falling today (1.2 million; avg. 1.9 million) as UTSI backed off from the 18 day MVA (25.49) and tapped the 200 day on the low. Will continue to look for another break below the support; just a waiting game for now.
BUY POINT: Aggressive for the kiss good-bye: 21.25 on strong, above average volume.
POSITION: May $30 puts to buy (UON QF).
http://www.investmenthouse.com/ct/utsi.html
TLB (Talbots--$35.40; +0.72; optionable): Apparel
http://biz.yahoo.com/p/t/tlb.html
STATUS: Continues to hold above the 50 day and short term moving averages after diving back below on Tuesday (the dive was shallow, as the stock quickly recovered today). Volume was rising (298,900; avg. 454,000), and with retail improving, TLB is not looking ready for the move down at this point. No new positions.
http://www.investmenthouse.com/ct/tlb.html
VRTS (Veritas--$37.42; -0.58; optionable): Software
http://biz.yahoo.com/p/v/vrts.html
STATUS: Steadily falling volume has not enabled VRTS to move back over the 10 day MVA (39.26), but it is trying to hold up with only small moves down. It fell back from that resistance again Wednesday after doing the same Monday, but is holding at some support just above 37 for now. However, it is still vulnerable if the market turns, so will continue to monitor; lower support is at the February low of 35.57. Our initial target is lower at 30. Volume was 8.8 million (avg. 12 million).
BUY POINT: Riding positions taken at previous buy points. Stop Advisory: 42.50. New positions: Aggressive: Below 38 on rising volume.
POSITION: May $55 puts to buy (VIV QK).
http://www.investmenthouse.com/ct/vrts.html
MIMS (Mim Corp--$16.67; +0.92; optionable): Health Services
http://biz.yahoo.com/p/m/mims.html
STATUS: MIMS hit our buy point at 15 on Monday but has moved back up and over the 50 day MVA (16.64) in today's action, with volume rising to 942,300 (avg. 756,000). The 18 day MVA is ahead at 17.05, so we will see if MIMS can take that out. If not and we get another drop back through the 50 day, can continue to look for the move down after a "kiss good-bye". Looking more bullish with this move, however. Target for the put play is 12.
BUY POINT: Riding positions taken at 15 on continued rising volume. On a resumption of selling in the market we will look for a move down from a test of the 50 day MVA (move below 16.50). New Stop Advisory: 17.15
POSITION: April $22.50 puts to buy (OQX PX).
http://www.investmenthouse.com/ct/mims.html
CONTINUED PLAYS:
Continued Puts:
NVLS (Novellus--$43.74; +2.72; optionable): Semiconductor
http://biz.yahoo.com/p/n/nvls.html
STATUS: Strong move on the AMAT effect. We were looking for NVLS to hit the 50 day MVA (40.50) then fall back, but instead the stock broke above that resistance (which includes the 18 day MVA, 40.77), and with the AMAT news today blasted up again to close just over the 200 day (43.54). Volume spiked up to 11 million (average 6.47 million), so clearly the put play did not materialize and is not in the cards..
http://www.investmenthouse.com/ct/nvls.html
BRCD (Brocade--$35.20; +1.77; optionable): Telecom
http://biz.yahoo.com/p/b/brcd.html
STATUS: BRCD has plowed back over the 200 day and 50 day MVA (32.99 and 34.23), today taking out the latter level on a volume surge going into earnings. After the announcement it was back down in post-session trading in the 33.50 range, so we will see if it will hold the 200 day or if it will break that support. On a breach we will look at a positions for a move down to a target of 26.
BUY POINT: A drop through 32.50 on continued strong volume.
POSITION: April $45 (UBF PI) puts to buy.
http://www.investmenthouse.com/ct/brcd.html
TEST OF BREAKOUT:
FAST (Fastenal--$72.40; +1.06; optionable): Retail
http://biz.yahoo.com/p/f/fast.html
STATUS: FAST made a break out of the short reverse head and shoulders last week in a good move, and has continued up this week after a hesitation move that found the stock testing its short-term MVA's (10 & 18 day currently at 70.10 and 69). Today it reached up toward its all-time highs; the stock turned back at 73.31 in 2000 and 73 in May (the left-side high of the reverse head and shoulders). Volume has been decent on the move, today up to 263,500 (average 234,100), but FAST might need a break to build strength for a move to a new high. Target: 83
BUY POINT: No new positions; riding what we have for now.
http://www.investmenthouse.com/ct/fast.html
RTN (Raytheon--$37.46; +0.06; optionable): Aerospace/Defense
http://biz.yahoo.com/p/r/rtn.html
STATUS: Got the pullback we were looking for off of Monday's doji, and RTN is acting like it wants to hold the 10 day MVA (37.18) again, showing a doji today. The stock has formed a pennant on the test of the breakout from a 15-week flat base "pullback" into the 50 day MVA, which turned into a break from a cup without a handle. Such patterns can be prone to failure, but can be strong with the formation of a handle-type consolidation. The pennant here is shaping up nicely, so we will see if it can hold support at the 10 day, ultimately looking for a new breakout over the February high (39.25). RTN shows strong money flow, high relative strength, and good buying. Target is 45.
BUY POINT: New buy point from here: over 38.90 on strong volume. Still riding aggressive positions taken with a continued hold of support.
POSITION: Stock and/or May or August $35 calls to buy (RTN EG or HG).
http://www.investmenthouse.com/ct/rtn.html
USAI (Usa Networks--$30.28; -0.68; optionable): Media
http://biz.yahoo.com/p/u/usai.html
STATUS: A good move over the past week, running up from a test of its breakout from its 21-week cup with handle pattern. It took out the breakout high with good volume, and today reached up to 31.49 before reversing, selling back to close on lower volume (4.46 million; average 3.63 million). After the run from 28, not too surprising that it would rest here, so now we will look for it to hold the 30 range (10 day MVA, support in the last consolidation, at 29.27) to set up another move. For new or additional positions we will need to see it hold support and continue the strength on a move up. Target is 35 now.
BUY POINT: After showing it can hold the 30 range, a move back over 31 on continued strong volume. Stop: 28.92.
POSITION: Stock and/or July $27.50 calls to buy (QTH GY).
http://www.investmenthouse.com/ct/usai.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.
KROL (Kroll--$18.60; -0.10; optionable): Diversified Services
http://biz.yahoo.com/p/k/krol.html
STATUS: Has formed an ascending wedge since mid-January as a test of the breakout from a larger, 8-week pennant type pattern. The 'double pattern' developed after KROL's September through mid-November strong uptrend. KROL is riding support of its 18 day MVA (18.21), moving on low volume as it sets up for the possible breakout. Today it traded in a narrow range, closing with a doji as volume popped up a bit (146,300; average 247,100). KROL has outstanding money flow and strong buying. Target is 23.
BUY POINT: 19.34 on volume of 335,000 or higher. Stop: 18 (7%)
POSITION: Stock and/or June $17.50 calls to buy (KRQ FW; low open interests).
http://www.investmenthouse.com/ct/krol.html
GOSHA trades on less than 100,000 average daily volume:
GOSHA (OshKosh B'gosh--$41.82; +0.84; no options): Kid's clothes
http://biz.yahoo.com/p/g/gosha.html
STATUS: The lengthening consolidation has been tightening up from the bottom with the 50 day MVA (40.02), today tapping near that level at its low before moving up toward its recent highs in the 42 range. GOSHA formed an ascending wedge from early December, but the last few weeks is has moved laterally along its short-term MVA's (18 day at 41.41). We are being patient, and are looking for the pressure from the support at the 50 day to finally push the stock to a breakout. Money flow remains high. Target is 52.
BUY POINT: 43.10 on minimum breakout volume of 60,000. Stop: 40.08 (7%)
POSITION: Stock.
http://www.investmenthouse.com/ct/gosha.html
BASING/TRADING RANGES:
DLTR (Dollar Tree Stores--$31.19; -0.90; optionable): Retail
http://biz.yahoo.com/p/d/dltr.html
STATUS: Stronger selling today. DLTR has been consolidating in a handle to its 25-week cup, with solid low-volume action as it holds its 18 day MVA (31.41). Today it dipped back on much higher volume (1.51 million; average 1.16 million), closing below the 18 day but still at the level of prior handle lows (31.05). There is substantial support from prior highs at 30 (and the 50 day MVA, at 29.77), but we will see if DLTR can make a quick recovery back up into the handle and make the breakout. A bit of a shakeout is not necessarily a bad thing, as it can get rid of some of the last weak holders. Higher, above average volume is another thing, however. Target: 41
BUY POINT: Breakout: 34.06 on volume of 1.8 million or better. Stop: 31.68 (7%). Aggressive: A move back over 33 on continued strong volume. Stop: 30.78 (7%).
POSITION: Stock and/or May $30 calls to buy (DQO EF).
http://www.investmenthouse.com/ct/dltr.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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