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stock watch, stock recommendation
Begin Part 2 of 2
THE PLAYS:
Good movers: CA tanked today, a good move for the put play.
Targets hit Wednesday: CA (21), LMT (55.50, for buys at 46.30)
Trailing Stop Advisories: BRCD (28), CTX (53.01)
Best Plays:
1) CYMI: Ready to move off the 18 day MVA.
2) RTN: Still good in the pennant.
3) BRKS: Has held up its pattern well.
4) URS: Still in the ascending wedge.
5) KROL: Ditto.
NEW PLAY:
CYMI (Cymer Inc--$37.94; 0.00; optionable): Chip Equipment
http://biz.yahoo.com/p/c/cymi.html
STATUS: After making a new high this month at 41.37 (after testing the breakout from a 5-month cup with handle pattern), the stock has pulled back to the 18 day MVA on lower volume, actually a bit stronger at 1.25 million (avg. 816,000). However, it is much lower relative to the volume reached with the new high. CYMI has been making a gradual fall back to the support over the last four days, but six days ago volume spiked up to huge levels with CYMI barely moving; that can be a bullish signal. Looking for a bounce back up for a run to a target at 44.
BUY POINT: Aggressive (over the 10 day MVA, 38.29): 38.55 on volume in the range of 940,000. Stop advisory (7%): 35.85
POSITION: Stock and/or May $30 calls to buy (CQG EF).
http://www.investmenthouse.com/ct/cymi.html
KLAC (Kla-Tencor--$59.77; +1.30; optionable): Semiconductor equipment.
http://biz.yahoo.com/p/k/klac.html
STATUS: Has pulled back to test the breakout from its double bottom with handle (dating back to early December) and its bigger reverse head and shoulders dating back to last summer. The breakout hit 62.29, and KLAC held 60 briefly before gapping back down to the 18 day MVA (57.53). However, it has held strong there and today it moved back up off that level on very strong volume (14.85 million; average 8.83 million). Looking for a continued run that takes out its high. Target 70.
BUY POINT: Over 61 on continued strong volume. Stop: 56.82 (7%).
POSITION: June $55 puts to buy (KCQ FK).
http://www.investmenthouse.com/ct/klac.html
Moved off the report to make room over the weekend but still looking good (with a quick update on EAT): ATVI, ITG, CEY, TROW (the latter after selling below the 18 day MVA on Tuesday, bounced back over that level on stronger volume Wednesday; holding positions taken at 39 last week). STJ is trying to make another bounce from the 50 day MVA, crossing back over the 18 day MVA on strong volume Wednesday (holding positions taken at 78.66).
EAT ($32.05; +0.85): Bounced again from the 50 day MVA on strong, above average volume (1.2 million). Now above the 18 day MVA, the stock can head for the January high at 33.76. Hit the buy point of 32.25 before dropping to the 50 day MVA. New buys from here (aggressive) at 32.25 on continued strong volume. Stock and/or July $25 calls (EAT GE; low open interests).
From the Tuesday update report:
ESRX ($53.05; +0.80): Made a move up in the handle, but volume was back to average (just below) levels. The high tapped near resistance at the handle high. Still like the play.
CC ($24.32; +2.21): Bounced back up for the gain Wednesday. Tapped near the 50 day MVA on the high, but pulled back down. Weak.
CACI ($35.12; +0.92): Did not make much of a drop in the right shoulder after Tuesday's move down, but stopped its bounce back at the up trendline that has supported recent closing lows. Volume was lower, so will continue look for a move down from here.
FRX ($80.35; +2.10): Another bounce after the stock gapped back up and opened above its 50 day MVA in a positive move. Volume was lower but still high above average. Good recovery.
New from the weekend:
Upside:
ATH (Anthem--$54.00; -0.37; optionable): Insurance
http://biz.yahoo.com/p/a/ath.html
STATUS: We were looking for ATH to hold the 10 day MVA for a move up after testing its recent bounce off the 18 day MVA. However, the stock sold below the 18 day MVA (54.68) on Tuesday. It held with a doji today on lower volume, but that is below the January high (54.50). No new positions until we see a move over 56. Target: 62
BUY POINT: Aggressive: 56.75 on volume in the range of one million. Stop advisory (7%): 52.78
POSITION: Stock and/or June $50 calls to buy (ATH FJ; low open interests).
LMT (Lockheed Martin--$55.70; +1.90; optionable): Defense
http://biz.yahoo.com/p/l/lmt.html
STATUS: After Friday's solid move off the 10 day MVA it pulled back sooner than we expected, to the 10 day MVA again, showing a tight doji just above that support Tuesday on a drop in volume. Today it employed that support once again, bouncing on higher volume (2.88 million; avg. 2.1 million), on news of a contract with the Naval Sea Systems Command. Just like on Friday, we look for continued upside from here. LMT broke higher Friday after testing the breakout from an earlier 10-week cup with handle.
Another new closing high on this move. Target: 63
BUY POINT: Holding positions taken at 55.20, and looking for stronger volume on the move up from here.
POSITION: Stock and/or June $50 calls to buy (FMT FJ).
http://www.investmenthouse.com/ct/lmt.html
FULT (Fulton Financial--$22.92; +0.09; no options): Regional banks
http://biz.yahoo.com/p/f/fult.html
STATUS: Broke out of the 6.5-month cup with handle base (part of a 14-month base) on Friday, but as volume fell back the stock did too, but is holding recent support at the 18 day MVA (22.72) in the wedging-type handle. Volume was quite low Wednesday at 26,900 (avg. 85,100) as FULT made a small bounce from the support. We will watch for another try at a breakout, but of course will have to see volume ramp up. Money flow remains strong. Target: 28
BUY POINT: Remains at 23.25 on volume in the range of 100,000 and rising. Stop advisory (7%): 21.62
POSITION: Stock.
http://www.investmenthouse.com/ct/fult.html
Covered Call:
RJR (RJ Reynolds--$63.75; +1.34; optionable): Tobacco
http://biz.yahoo.com/p/r/rjr.html
STATUS: A strong move up Wednesday as the stock headed north on good volume (524,800; avg. 452,000) and is showing upside strength. The stock hit our buy point Tuesday for the covered call play at 62.40, but if it continues higher, we have a stop advisory at 64.50 though we can close positions ahead of that if the stock races away. Another approach, since the options are May, is to wait to see if RJR can pull back down to or near the buy point. There is time for that. Volume broke above average to 524,800 (avg. 452,000). The stock was up on news that an EU lawsuit alleging the company had participated in sponsoring tobacco smuggling had been thrown out by a New York judge.
http://www.investmenthouse.com/ct/rjr.html
New Puts from the weekend: Most all are moving back up toward resistance levels; some not quite there yet.
NVDA ($56.35; +2.80; optionable): Semiconductor
http://biz.yahoo.com/p/n/nvda.html
STATUS: Still watching for a move up to resistance for taking downside positions; we were looking at a test of 60 but NVDA may not make it up that high, instead it may hit resistance at the 56.75-57.50 range. The stock gapped down on Tuesday, found feet today at 52.60, then bounced back up on lighter volume (15.3 million; avg. 9.2 million), testing near that resistance on the intraday high of 56.95. The 10 day MVA is at 59.03. On a failure to move over those levels, we will look for a move down toward the initial target at 50.
BUY POINT: Test of 60: 59 on rising volume. From here: 56 on rising volume.
POSITION: June $70 puts to buy (RVU RN). Please check with your broker for deltas.
http://www.investmenthouse.com/ct/nvda.html
EMLX (Emulex--$38.03; +2.75; optionable): Computer Peripherals
http://biz.yahoo.com/p/e/emlx.html
STATUS: Made the move for the put play, hitting 35 on Tuesday's close. Wednesday EMLX bounced back up, and the move was on stronger and high volume at 16.3 million (avg. 8.9 million) as the Nasdaq performed a reversal move as well. The stock may run out of steam by the time it hits the 50 day MVA (39.93), and if it does, we can look at taking positions on the kiss of death, a move back down from the resistance. For that move, can continue to look for a drop to the 200 day MVA just above 30, but our initial target will be 35 again.
BUY POINT: For now, holding positions taken at 39. New positions for the kiss of death: 39 again, on strong and rising volume.
POSITION: July $50 puts to buy (UMQ PJ). Please check with your broker for deltas.
http://www.investmenthouse.com/ct/emlx.html
LEH (Lehman Bros--$57.31; +1.88; optionable): Brokerage
http://biz.yahoo.com/p/l/leh.html
STATUS: Made a good move for the put play on Tuesday, then found its feet at 55 and bounced back up Wednesday. Volume was still strong though lower at 4.1 million (avg. 2.1 million). We will look for a move up to the range of the 10 day MVA (59.37 today), then a move back down to our target at 50.50.
BUY POINT: Holding positions taken at 57.90.
POSITION: July $65 to $60 puts to buy (LEH SM or SL). Check for deltas.
http://www.investmenthouse.com/ct/leh.html
CA (Computer Assoc--$20.91; -4.40; optionable): Software
http://biz.yahoo.com/p/c/ca.html
STATUS: What a plunge, hammered on news that the government is now looking into the company's accounting practices. It fell below our target at the September lows (22), hitting 19.47 on the low and bouncing lightly, but not back up to its high at 221.0. A good place to lock in profits. The stock will try to rebound back to the 25 range. We will look at it again when and if it gets back up to resistance there.
http://www.investmenthouse.com/ct/ca.html
C (Citigroup--$43.52; +1.30; optionable): Banks
http://biz.yahoo.com/p/c/c.html
STATUS: Fell to the 42 range after gapping below our buy point of 43.85 on Tuesday, as worries continued about bad debt exposure and other concerns. C held that level and bounced back up today with volume remaining high and slightly lower at 22 million (avg. 12.5 million). It can try a move up to the 10 day MVA (44.58) or 44, near the Friday closing price before the stock gapped down Tuesday (that price was hit 4 times since September, so may pose solid resistance for a weakened stock). From there we will look for a move back down. Target is 38.
BUY POINT: Holding current positions. New: Aggressive: 43 on rising volume.
POSITION: June $55 puts to buy (C RK)
http://www.investmenthouse.com/ct/c.html
CONTINUED PLAYS:
Continued Puts:
SMTC (Semtech--$31.36; +1.92; optionable): Semiconductor
http://biz.yahoo.com/p/s/smtc.html
STATUS: Gave a nice drop Tuesday but bounced back up today, though volume was weaker at 1.64 million (avg. 1.3 million). Closed just under the 10 day MVA (31.81), and the 32 range looks pretty stiff, so we may get another move back down from here. Target remains 27 after the stock has hit our initial target at 30.
BUY POINT: Holding positions taken at 31.75.
POSITION: June $45 puts to buy (QTU RI)
http://www.investmenthouse.com/ct/smtc.html
CLS (Celestica--$35.74; -0.28; optionable): Hardware: Peripherals
http://biz.yahoo.com/p/c/cls.html
STATUS: Made the 37.50 buy point on Tuesday as the stock dropped and Wednesday it continued the move but bounced off the low of 34.10 with volume rising. CLS can continue up to the 10 day MVA (38.31) or the 18 day MVA (39.47) before heading back down in the breakdown from the descending wedge pattern. Volume was up to 3 million (avg. 2.2 million) with the stock showing a hammer doji, a signal for the potential move back up to resistance. If it moves back down, we can look at adding to positions. Target: 30
BUY POINT: Holding positions taken at 37.50.
POSITION: June $55 puts to buy (CLS RK).
http://www.investmenthouse.com/ct/cls.html
LLTC (Linear Tech--$38.69; -0.28; optionable): Semiconductor
http://biz.yahoo.com/p/l/lltc.html
STATUS: Dropped to a low of 36.84 on an attempt to break down in the 7-week descending wedge pattern, but the stock on higher volume made it back up close near the buy point of 38.50, which it hit intraday (volume broke above average to 6.5 million; avg. 5.3 million). Showing a hammer doji, LLTC can continue higher but we are not looking for it to head over resistance at 40 or the 50 day MVA at 40.49. Target on the breakdown is 31.
BUY POINT: Holding positions taken at 38.50. New aggressive positions below 38 on continued strong volume.
POSITION: March or August $45 puts to buy (LLQ OI or TI).
http://www.investmenthouse.com/ct/lltc.html
MOVING AVERAGE BOUNCE PLAYS:
OSIS (Osi Pharmaceuticals--$22.15; -0.07; optionable): Semiconductor Equip
http://biz.yahoo.com/p/o/osis.html
STATUS: Testing the recent 6-week cup with handle (high reached at 27.75). Was holding the 18 day MVA (22.41) until Tuesday when it edged below the support, and Wednesday showed another doji and higher volume on another drop (673,100; avg. 815,000), not a great move on the pullback. It has moved below the December high and a later January high, but may be able to grab support at the 21.60 range. The action, however, alerts us to a possible drop to test the 50 day MVA again (at 20.23). Target: 27.50
BUY POINT: Aggressive: Over 24 on volume of 362,000 or higher. Stop advisory (7%): 22.55
POSITION: Stock and/or July $20 calls to buy (UOJ GD).
http://www.investmenthouse.com/ct/osis.html
TEST OF BREAKOUT:
RTN (Raytheon--$38.00; -0.13; optionable): Aerospace/Defense
http://biz.yahoo.com/p/r/rtn.html
STATUS: Still holding the pennant pattern formed as a test of the breakout off the 50 day MVA (end of January; the stock was in a flat base that pulled back into that support. Wednesday RTN pulled back on lower volume (1.6 million; avg. 2.1 million), showing a hammer doji as the stock holds above the 10 day MVA (37.71), support for the pattern since it started developing earlier this month. We continue to look for a breakout, and RTN continues to show strong money flow. Target: 45
BUY POINT: Has hit the aggressive buy point at 37.75 (riding those positions). For breakout: 39 on continued strong volume (minimum for breakout met at 3 million). Stop advisory (7%): 36.27
POSITION: Stock and/or May or August $35 calls to buy (RTN EG or HG).
http://www.investmenthouse.com/ct/rtn.html
ITT (Itt Industries--$55.99; -0.39; optionable): Manufacturing
http://biz.yahoo.com/p/i/itt.html
STATUS: Pulled back from its 2-day jump off the 10 day MVA, a move made after ITT tested the breakout from the 11-week flat base pattern. Volume was strong on the breakout move, but was down Wednesday (still strong) to 726,700 (avg. 333,300) as ITT pulled back with a doji. Morgan Stanley raised its price target on the stock today. It may take a breather here and head back out. If so, new positions (aggressive) on a move over Tuesday's closing high. Target: 64. Strong money flow.
BUY POINT: Hit the aggressive buy point at 54.10; riding those positions here. Stop advisory (7%): 50.31. New positions over 56.38 on rising volume.
POSITION: Stock and/or July $50 calls to buy (ITT GJ).
http://www.investmenthouse.com/ct/itt.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.
BRKS (Brooks Automation--$47.27; +0.82; optionable): Semiconductor
http://biz.yahoo.com/p/b/brks.html
STATUS: BRKS remains in the ascending wedge it formed at the middle right side of its 9.5-month base (highs near 65). The pattern is supported by the 50 day MVA on the lows, in addition to a short term up trendline connecting Jan/Feb lows. On a rise in volume to 861,900 (avg. 617,200), BRKS held above the 18 day MVA on the gain (the support is at 46.82). Continue to look for a breakout. Strong money flow and high relative strength. Initial target: 60
BUY POINT: Breakout: 49.51 on volume of 933,000 or better. Stop: 46.04 (7%)
POSITION: Stock and/or July $40 calls to buy (BQE GH; low open interests).
http://www.investmenthouse.com/ct/brks.html
SLGN (Silgan Holdings--$29.00; +0.40; no options): Packaging
http://biz.yahoo.com/p/s/slgn.html
STATUS: Broke out of the flying plateau pattern Tuesday with volume strong, but the lower volume Wednesday (292,300; avg. 174,300) didn't enable SLGN to move back over the previous day's breakout high at 29.35 (the stock tapped 29.48 on the high today). It can now test back to the buy point at 28.43 if volume cannot surge back in to take it over these recent 2 highs. Target remains 34.
BUY POINT: Hit the aggressive buy point of 27.75 (holding those positions for now). Will look for a pullback to test the 28.43 range for new buy points.
POSITION: Stock.
http://www.investmenthouse.com/ct/slgn.html
URS (Urs Corp--$29.30; +0.05; no options): Diversified Services
http://biz.yahoo.com/p/u/urs.html
STATUS: Holding the 5-week ascending wedge pattern, which has tightened into a lateral movement above the 18 day MVA (29.22) over the last several days. Volume remains low, down again Wednesday to 87,700 (avg. 90,000). The stock needs to deliver a breakout soon. The ascending wedge formed after a breakout from a cup with handle, a favorite pattern combination. High relative strength and strong money flow. 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
KROL (Kroll--$18.31; -0.29; optionable): Diversified Services
http://biz.yahoo.com/p/k/krol.html
STATUS: Still tight in the ascending wedge that formed after the breakout from an 8-week pennant. Volume keeps falling overall, down again Wednesday to 54,500 (avg. 233,000). A good shakeout here as the pattern holds above the 18 day MVA (18.28). Target on the breakout is 23.
BUY POINT: 19.34 on volume of 335,000 or higher. Stop: 18 (7%)
POSITION: Stock and/or June $15 calls to buy (KRQ FC; low open interests).
http://www.investmenthouse.com/ct/krol.html
BASING/TRADING RANGES:
None tonight.
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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