stock watch, stock recommendation

Part 2 of 2

THE PLAYS:

Good movers: CCMP hit our buy point (59.80) for the put play, with volume strong on the move below the previous February low. So did VRTS (37.50). GRTS closed at 25.05 after popping up on stronger (above average volume), our new suggested buy point from Tuesday's report was 25. The stock was testing the ascending wedge breakout and is trying to make another run of it. LLTC was selling down on strong volume (buy point is 38.50 for the put play; descending wedge). EAT hit the buy point at 32.25 on a good move off the 18 day MVA, and BVN hit the buy point of 24.90, moving up from the doji on strong volume.

Targets hit Thursday: LNOP (10.50)

Short updates on new stocks from the Wednesday report:
BRKS ($47.89; -1.21): Pulled back on a bare decrease in volume, tapping at 47.50 support on the low (just above the 10 day MVA). Not a bad move in the ascending wedge and we continue to look for upside; up trendline holding the pattern lows is at 45.72.. Hit buy point (49.51).
PLAB ($33.70; -0.87): Another pullback, but volume dropped back significantly and well below average. The stock showed a shooting star doji just above the low that stopped short of the lower 10 day MVA (33.50). Not a bad move. New buy point is 35.35.
SOX ($564.95; -4.38): Tried, but couldn't hold the high at 579.87 and pulled back slightly with a tombstone doji.. Will look for the late Jan/early Feb highs at 563 range for initial support, but in a deeper pullback watch 551 (just above 200 day MVA). Were looking for a pop up to 600 after Wednesday's strong move.
CLS ($39.00; +0.09): Slight gain on lower volume. Looking for a move below 37.50 for the put play as the stock couldn't muster a move over the 10 day MVA (39.88).

Continued Plays that look good today: CEY, SLGN, ITG, HOLX, RTN, KROL (see last night's report for details), WTW (2-12)

Update:

BRCD (Brocade--$32.64; -2.56; optionable): Telecom Equip
http://biz.yahoo.com/p/b/brcd.html
STATUS: Back on February 6 we were looking for BRCD to give us the kiss of death on a move up to broken support at the 200 day MVA. The stock looked ready for that action but instead of turning back down moved back over it and the 50 day MVA by Wednesday. However, the stock moved back down on heavier selling, just breaking the 200 day (32.98) with volume strong (25 million; avg. 14.6 million). The company reported in line earnings but were cautious with outlook. If BRCD doesn't move back over the broken support quickly, we will look for the kiss of death at this point, too, and on a move down from that consider aggressive positions for a move to the target at 25.
BUY POINT: Aggressive: 31.95 on continued strong volume.
POSITION: April $50 (UBF PJ) or July $55 (UBZ SK) puts to buy.

http://www.investmenthouse.com/ct/brcd.html

New upside:

ITT (Itt Industries--$54.00; +0.35; optionable): Manufacturing
http://biz.yahoo.com/p/i/itt.html
STATUS: Testing the recent good breakout from a flat base/ranging pattern, launched after the stock plunged to a test of the 200 day MVA in January that set off the recovery. The company had reported a loss in earnings to explain the tumble but gave a stronger forecast. After running to the February high at 55.23, ITT gave a nice pullback on decreasing volume (which was very strong on the breakout run) save one nice spike Monday, when price didn't move much at all. That can be a bullish sign, and with the rise off the 10 day MVA Thursday (53.38) on a big surge of volume (626,900; avg. 326,300), we are looking for a new breakout. Money flow is high and ahead of price. Target: 64
BUY POINT: Aggressive: 54.10 on continued strong volume. Stop: 50.31 (7%)
POSITION: Stock and/or July $45 calls to buy (ITT GI; low open interests).

http://www.investmenthouse.com/ct/itt.html

OSIS (Osi Systems--$23.09; -0.89; optionable): Semiconductor
http://biz.yahoo.com/p/o/osis.html
STATUS: Has been in a nice uptrend since breaking out of a 9-month flat base last fall, mid-September. The run has taken OSIS to the February high (27.75), reached on a recent breakout from a 6-week cup with handle base in late January. OSIS is t,esting that move now in a pullback to the 18 day MVA on overall decreasing volume, which spiked up Monday and Tuesday, bouncing price up from the support. OSIS wasn't ready for a strong move up at that point, however, and on sharply decreasing volume the last 2 days is holding the 18 day (tapped on Thursday's low at 23.09). Will look for another day or two of consolidation but expect a strong move back up after this test of the breakout. Buying is strong. Target: 32
BUY POINT: Aggressive: 25 on volume in the range of 380,000 or better (Thursday's volume down to 281,500; avg. 815,400).
POSITION: Stock and/or July $20 calls to buy (UOJ GD).

http://www.investmenthouse.com/ct/osis.html

New Puts:

LNCR (Lincare Holdings--$25.48; +0.20; optionable): Specialized Health Services
http://biz.yahoo.com/p/l/lncr.html
STATUS: LNCR formed a double top in late December/early January, but held support on at 26 (December lows and early February lows) for a move back over the 50 day and 200 day MVAs. That move was short-lived however, and three days ago LNCR sold off heavily Tuesday in part on a downgrade. It bounced back from 24 but volume has been weak, down Thursday to 1.27 million (avg. 942,000) with the stock showing a doji after Wednesday's bounce. Can head back down from here, or from 26 if it makes it up that high. However, we will look for a move below 24, which marks the stock's long-term up trendline (connecting the November 2000, October 2001, and February lows). On that move, our target is 18.
BUY POINT: 24, on rising volume.
POSITION: May $35 puts to buy (LQN QG).

http://www.investmenthouse.com/ct/lncr.html

OEX (Standard & Poors--$567.13; -0.66; optionable):
STATUS: The OEX hit our initial upside target at 566 on Monday then edged up to Thursday's high at 571.40 (just under the 50 day MVA). We were, on Tuesday, looking for a move down from the 18 day MVA (565.66) but the index was over that resistance next day, where it stalled out before hitting the 50 day MVA. The candlestick chart shows a doji on the higher volume (1.25 million; avg. 1.3 million), indicating churning, so we are looking for a move down from here. On a break of the 18 day, will again look for a move down to the target at 549.38, a price hit four times since October. The index may test back up to the broken support before making the real move.
BUY POINT: Aggressive: 565 on continued rising volume.
POSITION: April $570 puts to buy (XEK PL).

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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