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Begin Part 2 of 2
THE PLAYS:
Good Movers: RJR blasted up on strong volume today, extending the breakout from its 3.5-month flat base. SLGN also continued its breakout, but the stock has been rising on falling volume the last 2 days and can pull back soon if that doesn't change.
Best Plays:
1) SWK: Moving up on good news.
2) WSTC: Pressure building up with the volume spike today.
3) FDX: Broke out, but needs stronger volume to back it up.
4) UTX: Looks ready to break out!
5) ROK: Broke out and still a buy; volume needs to push higher.
6) ATVI: Moving up on higher volume in the ascending wedge.
7) VRTS: Setting up for the fall.
8) RTN: Nice wedge.
NEW PLAYS:
SWK (Stanley Works--$47.17; +1.47; optionable): Tools
http://biz.yahoo.com/p/s/swk.html
STATUS: Announced after the bell a 5-year deal with Home Depot, and with that the stock was up over a half-point after hours. In regular trading SWK shot up from the 10 day MVA (45.84) in the handle of a 7-week cup with handle, moving to a new all-time closing high Monday. Volume was lower at 431,300 and we would like to see it higher on such a move, but it remained strong at average levels. The cup with handle is part of a larger, 7-month base that resembles an ascending wedge, but SWK did move out over the August high (45.48) at the start of this smaller pattern (December's high at the start of the cup is 46.60). Looking for a breakout over the earlier February high at 47.50. Strong money flow and high relative strength. Target: 57
BUY POINT: 47.30 on volume of 647,000 or higher. Stop advisory (7%): 44
POSITION: Stock and/or July $45 calls to buy (SWI GI)
http://www.investmenthouse.com/ct/swk.html
CMX (Caremark--$17.50; +0.35; optionable): Health Services
http://biz.yahoo.com/p/c/cmx.html
STATUS: A 7-month cup with handle, the stock currently pulling back in the handle on steadily decreasing volume (by Monday 1 million; avg. 1.6 million). Overall the price/volume action looks good in the handle (below average, calm, falling), and we look for the stock to continue to hold the 18 day MVA (17.08) for a strong move up to breakout. High relative strength.
Target: 23
BUY POINT: Breakout: 18.10 on volume of 2.4 million or higher. Stop advisory (7%):
16.83
POSITION: Stock and/or June $15 calls to buy (CMX FC).
http://www.investmenthouse.com/ct/cmx.html
New plays from the weekend:
Indexes Update: The OEX was up $9.74, making the bounce we expected. Volume was lower but it can still move up to the 50 day MVA (569), our initial target.
CBSH (Commerce Banc--$41.25; +0.33; no options): Regional Banks
http://biz.yahoo.com/p/c/cbsh.html
STATUS: We like the smaller banks in the current market. CBSH made a move up in the test of its breakout (from a 9-week ascending wedge inside a bigger 23-week cup/saucer base). The initial bounce up after the test was on Friday, but the small gain off the 18 day MVA (40.62) was on a sharp drop in volume. That improved nicely Monday, with volume rising to 97,700 on the move up (avg. 132,000) and CBSH breaking through some resistance at 41. Looking for a continued move up! The stock hit our aggressive buy point at 41.15. Target is 49.
BUY POINT: Holding aggressive positions taken at 41.15. New buy points can be taken from here, on average or higher volume, over 41.80 (February high is 42.10).
POSITION: Stock
http://www.investmenthouse.com/ct/cbsh.html
VLY (Valley National--$34.20; +0.24; optionable): Regional Banks
http://biz.yahoo.com/p/v/vly.html
STATUS: We are looking for a continued run off the 50 day MVA (just above 33 now), the level from which VLY bounced four days ago from the base of the handle to its 14-month cup with handle base. Friday's nice move on super volume was from the higher 18 day MVA. However, volume was sharply lower Monday (112,000; avg. 71,200) and while VLY made the gain, it closed just below the previous February closing high in the handle (34.30), pulling off a high of 34.45. We look for a continued bounce up and move over the high for a breakout. Target: 41
BUY POINT: Holding positions taken at 34.40.
POSITION: Stock and/or June $30 calls to buy (VLY FF; 50 open interests).
http://www.investmenthouse.com/ct/vly.html
WSTC (West Corp--$27.01; -0.02; optionable): Business Services
http://biz.yahoo.com/p/w/wstc.html
STATUS: Continues to hold above the 18 day MVA (26.83) and showing a tight doji Monday in the handle of its 8-month cup. Volume shot above average after holding well below average the previous three days (up Monday to 159,800; avg. 120,200), so we want to see that blast the stock up from here. The stock is holding just above the December and January highs, important support in this pattern. The handle is a test of WSTC's recent breakout from an ascending wedge, a move that helped move the stock up toward completion of the cup. Strong money flow. Target: 34
BUY POINT: Breakout: 28.20 on volume of 181,000 or higher. Stop advisory (7%): 26.23
POSITION: Stock and/or July $22.50 calls to buy (HUD GX; 1 open interest).
http://www.investmenthouse.com/ct/wstc.html
IBC (Interstate Bakeries--$25.86; -0.11; optionable): Food
http://biz.yahoo.com/p/i/ibc.html
STATUS: After Friday's nice move up in the flat rolling pattern (the stock has been moving between 25.95 and 23 since mid-September), IBC did not break out, instead pulling back from the strong move as volume fell back to 149,900 (avg. 128,000). The low tapped support at 25.50. If the stock cannot surge back up from here for the breakout, it can consolidate further in the pattern until it can. As noted, 25.50 can support it on that move, or, the 18 day MVA in the 25 range. Money flow remains strong and moving higher. The stock hit our weekend buy point of 26.05 but we will look for stronger volume and a move over the intraday high at 26.27 for a new buy point. Target: 31.25
BUY POINT: New buy point: 26.35 on volume of 173,000 or higher. Stop advisory (7%): 24.51
POSITION: Stock and/or July $22.50 calls to buy (IBC GX; low open interests).
http://www.investmenthouse.com/ct/ibc.html
FDX (Fedex Corp--$56.40; +1.26; optionable): Delivery Services
http://biz.yahoo.com/p/f/fdx.html
STATUS: Broke out of the ascending wedge pattern (hit the buy point of 56.10) and volume was rising at 1.15 million (avg. 1.67 million) but certainly needs to improve to support the breakout (still well below average). We will look for that to happen as the breakout advances. The 6.5-week ascending wedge formed after FDX had bounced for the third time from its 18 day MVA off a breakout from a short base, off of its 200 day MVA. Money flow and relative strength look good. Target: 67
BUY POINT: Holding current positions.
POSITION: Stock and/or July $50 calls to buy (FDX GJ).
http://www.investmenthouse.com/ct/fdx.html
UTX (United Tech--$70.05; +0.35; optionable): Conglomerates
http://biz.yahoo.com/p/u/utx.html
STATUS: Remains in the small ascending wedge the stock formed after it moved over the 200 day MVA at the end of January (the stock is in a bigger, 9.5 month base). The pattern is supported by the 18 day MVA (68.25) on the lows in the pattern, and that support is squeezing the pattern into resistance at the 70 range. Made the buy point of 70.15 on the move up to the intraday high of 70.50 then was back down, still holding above the 18 day MVA (68.44) and looking good. The stronger volume looks ready to break it out (4.1 million; avg. 2.2 million). Target: 84
BUY POINT: A buy on the breakout up to 73.66. New buy point over 70.50 on continued strong volume.
POSITION: Stock and/or May $65 calls to buy (UTX EM).
http://www.investmenthouse.com/ct/utx.html
ROH (Rohm & Haas--$39.09; +0.45; optionable): Chemicals
http://biz.yahoo.com/p/r/roh.html
STATUS: Friday ROH popped out of the short, tight consolidation that formed at the end of its year-long flat base/trading range pattern, then continued higher Monday, moving over the early highs in that base (38.70). Volume wasn't what we like, down just under average to 943,100 (avg. 890,000), but that may have been because of the lower volume on the market. Continue to look for a breakout with volume surging again. Strong money flow, high relative strength. Target: 47
BUY POINT: 39.14 on volume of 1.2 million). Remains a buy on the breakout up to 41.10. Stop advisory (7%): 36.40
POSITION: Stock and/or July $35 calls to buy (ROH GG).
http://www.investmenthouse.com/ct/roh.html
ROK (Rockwell--$19.74; +0.74; optionable): Conglomerates
http://biz.yahoo.com/p/r/rok.html
STATUS: Broke out of the ascending wedge/pennant pattern the stock formed as a test of the breakout from its 9.5-month cup with handle base. Made the buy point of 19.44 on the pop higher, and though volume was lower it was just a slight drop, so we will look for it to ramp back up to support a strong breakout. Excellent money flow and high relative strength. Target: 23.50.
BUY POINT: Remains a buy on the breakout up to 20.41.
POSITION: Stock and/or July $17.50 calls to buy (ROK GW; 48 open interests).
http://www.investmenthouse.com/ct/rok.html
AZR (Aztar--$19.52; +0.12; optionable): Resorts & Casinos
http://biz.yahoo.com/p/a/azr.html
STATUS: Remains in the ascending wedge, supported on the lows by the 50 day MVA (18.33). The stock looked ready Friday to break out, bouncing off the 50 day MVA on strong, above average volume), but the move was held back as volume slid below average Monday to 91,100 (avg. 118,400). Still looks good in the pattern, so look for the breakout. Target: 24. The ascending wedge formed after a breakout from a 17-month flat base.
BUY POINT: Breakout: 19.97 on volume of 160,000 or higher. Stop advisory (7%): 18.57
POSITION: Stock and/or May $17.50 calls to buy (AZR EW).
http://www.investmenthouse.com/ct/azr.html
Back on:
ATVI (Activision--$27.13; +0.42): Software
http://biz.yahoo.com/p/a/atvi.html
STATUS: Continued the move up from the 50 day (25.58) in its ascending wedge, but volume was not there as ATVI hit the aggressive buy point (up to 1.24 million; average 2.07 million). The ascending wedge began forming back in early November, and as it tightens up we continue to anticipate a breakout. The up trendline supporting the pattern is at 25. Could get a test back toward support, but ATVI appears ready for now to hold the 50 day MVA. Like the strong money flow and high relative strength. Target: 34
BUY POINT: Holding positions taken at 26.30. Breakout: 28.64 on volume of 2.8 million or higher. Stop: 26.64 (7%)
POSITION: Stock and/or May $25 calls to buy (AQV EE)
http://www.investmenthouse.com/ct/atvi.html
A bounce play for aggressive players:
ENZN (Enzon--$43.85; -0.14; optionable): Biotech
http://biz.yahoo.com/p/e/enzn.html
STATUS: ENZN has been beaten down for almost 4 months as it bounces up and down in its downtrending channel. After showing a 'hammer' doji Friday on strong volume after having tested near its September low (at 42.77) intraday, we were looking for a bounce. The move did not materialize today, with ENZN tapping down again to 41.86 at its low Monday before recovering for another hammer doji. Volume continued to be strong at 1.66 million (average 1.2 million), so we could still see a bounce, but it is an aggressive play now that the stock did not move with the market bounce today. On a solid move up we will watch the 18 day, currently at 47.81 (10 day at 46.28).
BUY POINT: Aggressive: 44.70 on continued strong volume. Stop advisory (7%): 41.57
POSITION: Stock and/or May $40 calls to buy (QYZ EH).
http://www.investmenthouse.com/ct/enzn.html
New Puts:
VRTS (Veritas--$36.18; +1.86; optionable): Software
http://biz.yahoo.com/p/v/vrts.html
STATUS: VRTS continued back up, which is what we were looking for it to do in a market bounce to set up the next downward leg in the downtrend. Monday's move was on the same weak volume we saw Friday (10.4 million; average 12 million), and it closed right at its 10 day MVA (36.04). We could still see VRTS challenge the down trendline (connects the January and February closing highs) at the 37.50 range. On the failure to move back over the resistance, looking at put buys for a move back down to 30 for an initial target.
BUY POINT: Aggressive: 37 on the "kiss good-bye"; after a test of the down trendline at 37.50 on above average volume.
POSITION: May $50 puts to buy (VIV QJ).
http://www.investmenthouse.com/ct/vrts.html
ADVS (Advent--$47.23; +2.33; optionable): Software
http://biz.yahoo.com/p/a/advs.html
STATUS: Relief bounce. ADVS broke its 50 day MVA (50.55) last week, falling out of a 2.5 month rolling pattern above that support. It continued down on strong volume to finish last week before taking the bounce with the market. Volume was weak on the move up (478,400; average 495,000), so we do not expect the move up to last. It is facing resistance at 48 to 50 from recent lows in its range (10 day MVA at 48.77; 50 day MVA at 50.25), so we will look for the failure of the move and a drop back for the put play. ADVS can fall to the 37 to 38 range (November lows), but we will take 39.
BUY POINT: After a failure at 48 to 50, a drop back through 47 on increased volume.
POSITION: May $55 puts to buy (UIV QK).
http://www.investmenthouse.com/ct/advs.html
BOBJ (Business Objects--$36.10; -0.07; optionable): Software
http://biz.yahoo.com/p/b/bobj.html
STATUS: After breaking the 50 day MVA (36.85) after forming a kind of head and shoulders (the left shoulder is not so clear-cut), BOBJ started down and hit the put buy point Monday. However, it hit a low of 35.12 and managed a move back up to close with a doji, as volume dipped back to 785,500 (average 625,200). Still weak, although we could see a test of the 50 day from here before more of a drop. Still looking at 32 for an initial target; the 200 day MVA at 30 below that.
BUY POINT: After a test of the 50 day, a drop back through 36 on continued strong volume.
POSITION: July $45 puts to buy (BBQ SI).
http://www.investmenthouse.com/ct/bobj.html
CONTINUED PLAYS:
Continued Puts:
CACI (Caci Intl--$34.81; +0.09; optionable): Technical Services
http://biz.yahoo.com/p/c/caci.html
STATUS: Continues at the neckline at the completed right shoulder of the head and shoulders pattern, showing a doji Monday. Volume continues to fall very low (down again to 96,200 Monday; average 528,500). Previous buy point was 33.99, but the pattern has not broken down yet, so can look at some new entry points from here. Target is 30.
BUY POINT: Holding current positions taken at 33.99. From here, 33.50 on rising volume (600,000 or higher).
POSITION: June $45 puts to buy (KFQ RI).
http://www.investmenthouse.com/ct/caci.html
MOVING AVERAGE BOUNCE PLAYS:
None this weekend.
TEST OF BREAKOUT:
RTN (Raytheon--$37.86; -0.06; optionable): Aerospace/Defense
http://biz.yahoo.com/p/r/rtn.html
STATUS: Holding the pennant pattern that formed as a test of the breakout (RTN made a nice run off the 50 day MVA at the end of January). RTN moved up off the 10 day MVA (37.86) Monday, with volume decent although down at 2.75 million (average 2.15 million). Looking for a continued hold of support, and a breakout over the February high. Target: 45. Money flow remains strong.
BUY POINT: Breakout: 39 on volume of 2.8 million or higher. Stop advisory (7%): 36.27
POSITION: Stock and/or May $35 calls to buy (RTN EG).
http://www.investmenthouse.com/ct/rtn.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.
URS (Urs Corp--$29.65; +0.30; no options): Diversified Services
http://biz.yahoo.com/p/u/urs.html
STATUS: Continues in the 5-week ascending wedge pattern, which has tightened into a lateral movement above the 18 day MVA (29.30). URS popped up a bit off of Friday's doji, but volume was not there (38,400; average 93,000). Still waiting for a move, but we see some weakening in the pattern. The ascending wedge formed as a test of the breakout from a cup with handle, a favorite combination of patterns that can lead to good breakouts. Money flow and relative strength remain high. Target: 35
BUY POINT: Breakout: 30.30 on volume of 124,000 or higher. Stop: 28.28 (7%)
POSITION: Stock.
http://www.investmenthouse.com/ct/urs.html
BASING/TRADING RANGES:
None this weekend.
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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