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TEAM TRADES

PH: As we said, sexy names are not always where the money is: PH is an industrial equipment manufacturer, and that sector is doing well. Friday it broke out of a wedge early in the session, and we were looking at getting on board. The buy point was 49.50, but it gapped past that and was at 49.70 a half hour into the session. Volume was so-so, but we were seeing some good volume buys coming in so we decided to take a partial position and see where the volume came in later. The stock surged up to 50 but then fell right back to 49.80. That gave us the opportunity to get in and we did with a half position of what we had allocated to the trade. Almost immediately the stock shot up to 50.40, but there it flamed out, falling back to 50. It regrouped over a half hour and made another run at 50.40. It fell back to 50 again but held. It then drifted the rest of the afternoon, closing at 50.12. Volume was huge, so it was a good breakout; just not a lot of price movement as it works to definitively clear 50.

THE PLAYS:

Reading the Plays: Please note that when we reference the 10, 18, and 50 day moving averages (MVA), those are exponential moving averages (EMA). The 200 day moving average is always simple (SMA). We will note when we reference a particular MVA differently, e.g., a simple 50 day MVA. Please click on the Yahoo and chart links for company and charting information. A "prior high" refers to the high at the start of a base.
For conserving space on listings of stop losses, the symbol (7%) indicates that the stop is 7% below the buy point.

Good movers: SNS broke out in a super move from the test of the breakout! GAP was higher on its ascending wedge breakout, but volume's been sinking the last two days.

Targets hit Friday: MSFT (58, put); JNPR (put)
Stop Advisories: NOC (107; tanked on acquisition bid)
Trailing Stop Advisories: GDT (45.25)

Stocks/Indexes from the Friday report:
BBX: Held up in the ascending wedge/pennant (more like a wedge) on Friday, bouncing up from the 10 day MVA for a dime gain, even on lower volume. Is ready to move higher, but needs stronger volume or it can pull back to support again before a breakout.
ACE: Still looks good in the test of the breakout, having tested the 18 day MVA intraday to bounce back over the 10 day MVA.
CALP: Tapped 12.18 on the intraday low (a new one for the month), but that is still above the put play buy point of 11.90.
LLL: Tapped down to the 10 day MVA on the low of 108.70 to kick off the covered call sale play, but bounced back up to close. Still looks ready for a deeper pullback.
BUD: Yee-ha! Broke out of the test of the breakout, gapping over our buy point (49). Volume was strong and the stock showed a loose doji on the breakout. A buy up to 51.45 on this move.

Continued plays:

Covered call:
FRED: Stronger volume Friday and the stock was selling back, below the 10 day MVA on the low (31.45) then bounced to close at 32.29. Looks ready for more downside, though the 4-day lateral pattern may offer some obstructive support in that regard. The higher volume is encouraging for a continued move down; if FRED gets below that, a drop to the 18 day MVA at 30.69) might just be a piece of cake. Buy point was 31.88.
BLL: Closed at 85.47 for a drop of almost 2 points. The higher volume selling is a sign the stock is heading down for a test of the 18 day MVA (81.21). Buy point was 77 for the play, and the steady climb since mid-January has put it over its upper channel trendline that is now near 82. That means that if it starts to sell back it may test closer to 79-80 if not lower (not a lot of support between the 18 and 50 day MVAs (the latter at 75).

Other plays:
FRK: Made a nice move up in the pennant (still below buy point, 40.58 on the closing price of 40.27) but volume was lower and still well below average. Pump it up!
MNTG: Tested the 50 day MVA as expected, but on low volume bounced back up to close above the 18 day MVA. Was in an ascending wedge before the failed breakout attempt; if we are lucky we may get a resumption of the pattern, but it may be weakened after Thursday's action.
NYCB: Held the 18 day MVA in the handle after some selling Thursday, posting a small gain. Showing a bullish hammer doji in Friday's action. Volume broke strongly above average so it will be interesting to see what happens here. Will be watching these smaller bank stocks.
PENN: Trying to bounce from the short term MVAs, and got strong volume Friday for a nice $1.30 move off the 10 day MVA. It cleared resistance from January and February, so may be ready to launch a run here. Buy point over 33.65 on continued strong volume. Stock and/or July $30 calls.
RPM: Looks good at the 18 day MVA as we wait for a bounce. Lower volume and a hammer doji at the support (2-20 report).

Best Plays:
1) RGFC: Cup with handle.
2) OEX: Looking for a good bounce ahead.
3) EMLX: Could give us a quick $5

New:

ASL (Ashanti Goldfields--$4.78; +0.03; no options): Gold
http://biz.yahoo.com/p/a/asl.html
STATUS: Gold has been volatile, but some gold stocks are still looking good. ASL is in an ascending wedge with lower support at the 18 day MVA (4.52) and at 4.40, a pattern that formed as a test of the breakout of a shallow 24-week cup/saucer base. That can be a bullish combination of patterns. Thursday ASL bounced from 4.40, moving back over its short term moving averages, but as volume surged Friday the stock held up with a doji and the slight gain. Look for a hold above the 10 day MVA at the 4.60 range, and a breakout over the February high. Volume Friday was 276,100 (avg. 164,000). Money flow is strong and relative strength high. Target: 6.20
BUY POINT: 5.12 on volume of 222,000 or higher. Stop advisory (7%): 4.76
POSITION: Stock.

http://www.investmenthouse.com/cd/asl.html

PDX (Pediatrix Medical--$39.50; +0.59; optionable): Health Services
http://biz.yahoo.com/p/p/pdx.html
STATUS: In a 5-month cup with handle, and trying to move up in the handle as volume remains low in the shakeout. The stock bounced from the 10 day MVA for a three-day gain at the end of the week but with volume dropping back Friday to a low 71,000 (avg. 235,000), may show a few more days of consolidation unless volume surges back. Looking for a breakout over the handle high at 39.93 (February high). Money flow is steady, and relative strength is high. Target: 48
BUY POINT: Breakout: 40.03 on volume of 353,000 or higher. Stop advisory (7%): 37.23
POSITION: Stock and/or May $35 calls to buy (PDX EG).

http://www.investmenthouse.com/cd/pdx.html

Regional banks continue to form up nicely, as some bigger banks remain in the shadow of the Enron mess.

RGFC (R&G Financial--$19.98; +0.53; no options): Regional Banks
http://biz.yahoo.com/p/r/rgfc.html
STATUS: RGFC broke out of a 5.5-month double bottom with handle base (inside a 6.5-month base with highs near 21). On the breakout it completed the right side of the larger cup base, and is now in a handle to that cup. Volume is falling off nicely in the handle, and price is doing a pretty good job of the same (we want the intraday handle lows to angle down a bit). RGFC bounced off the 10 day MVA Friday with volume sliding lower (35,600; avg. 76,000) but we will look for that to pump it up again to help break the stock out of this base. High money flow and relative strength. Target: 25
BUY POINT: Breakout: 20.45 on volume of 114,000 or higher. Stop advisory (7%): 19.02
POSITION: Stock.

http://www.investmenthouse.com/cd/rgfc.html

Indexes: The QQQ is the more aggressive of these two.

QQQ (Nasdaq 100--$33.65; +0.17; optionable):
STATUS: The index showed a star doji after a 5-day fall from resistance at the 18 day MVA (36.13). That suggests a potential move back up, and since we are looking for a market bounce, will consider a quick and aggressive upside move to the 18 day MVA. That is where (at 36.13) the short term down trendline is, and it would be super to get the bounce all the way up to the 50 day MVA at 37.63. We'll assess the chances for that when the index hits the 18 day MVA.
BUY POINT: Aggressive: 33.85 on rising volume (Friday volume was slightly lower at 99.8 million; avg. 72 million).
POSITION: May $26 calls to buy (QAV EZ).

OEX (Standard & Poors--$554.04; +5.45; optionable):
STATUS: Holding support at the 549-550 range (target on recent put play) and at this point we are looking for a quick and aggressive bounce play, for a move up to the 50 day MVA (569.38), maybe even 575. With continued solid price/volume action (up Friday to 1.39 million; avg. 1.3 million) the index can give us a good move. Target: 570 (initial); 575.
BUY POINT: Aggressive: 557 (just above the 10 day MVA) on continued rising volume.
POSITION: April $540 or $550 calls to buy (OEB DH or DJ).

PORTFOLIOS: Each report, we look at these to see which is in a buy position. We don't cover them all each time, just the ones that look ready to pick up a few shares.

THE LEADERS: DGX, FRX, LLL, MIK, BMET, APPB, IGT.

BMET ($31.05; -0.51): After breaching the 18 day MVA Thursday on higher volume selling, BMET continues to flirt with a breakdown, selling on higher volume again Friday down to the 50 day MVA. Want to see it hold here, but not a positive move. Volume was just slightly higher.

UP & COMERS PORTFOLIOS: BBBY, SRCL

BBBY ($32.84; -0.41): Another stock that has been holding up pretty well but flirting with its 50 day MVA. BBBY sold down below that support and despite a bounce from 32, closed just below the moving average. We need to see a fast move back over that level. BBBY is in a 3-month flat base.
SRCL ($64.00; +2.52): And a breather it was; after Thursday's lower volume pullback into a doji, SRCL shot up again Friday, though volume was lower (still above average). The stock cleared the December highs (62.85) so that can now serve as a support on a pullback once we get one.

MEMBER PORTFOLIO: CSCO, SEBL, EMLX, BRCM, HDI, BRCD, BUD, AMGN, WMT, ORCL, HB, NOC

NOC ($109.95; -7.85): Wow. Socked to the 50 day MVA initially after announcement of a buyout offer for TRW. That company's stock soared on the news, and NOC bounced back, but closed below the 18 day MVA (110.32). Took the wind out of the stock's recent cup with handle breakout, but it recovered to hold the handle. This deal may be viewed in a better light this week; it was a shrewd move and shows NOC's management is on the ball.
WMT ($59.95; +0.40): Consolidating above the 18 day MVA after a weak breakout from the ascending wedge. The breakout was from a test of the breakout (earlier this month) but the stock pulled back quickly to the 18 day again, support on its last 2 bounces (and it tried to bounce again Thursday). WMT can give another bounce here and breakout over the new February highs (60.87) but may need to correct back to the 58-59 range first.
EMLX ($35.40; +0.39): May be ready, after showing a doji Friday on lower volume, to try a move back up to the 50 day MVA (40). If it doesn't break over the resistance then, we can look at playing it back down with puts. A potential aggressive upside play to resistance at the 50 day MVA (39.56). We are looking at a buy point of 36.05 with stock or July $30 calls to buy (UMQ DF).

Good Investing!
Jon L. Johnson and The Daily 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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