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stock recommendation, stock option
Begin Part 2 of 2
Best Plays:
1) FITB: Looks ready to move up from a doji.
2) PCSA: Breaking out and still a buy (new play).
3) XOXO: A continuing play that is breaking out.
4) ORCL: Up on stronger volume.
5) LEH: Making its breakout move.
6) MXT: Getting ready for a move up in the handle.
7) MER: Another financial stock moving up.
8) JPM: Ditto.
9) Puts: CAH, BMY
READY TO BREAK TO A NEW HIGH:
Continued Play:
FITB (Fifth Third Bancorp--$56.94; -0.19; optionable (FTQ)): Regional Bank (Midwest)
http://biz.yahoo.com/p/f/fitb.html
STATUS: Finally showing a doji after falling below the 18 day MVA (57.76), the low tapping support of the 50 day MVA (55.15). Volume was slightly up and still below average at 1.9 million (avg.2.3 million). The stock has fallen below the October top (57.88), but we will see what the doji portends. 10 day MVA is at 58.20. Continued good buying.
BUY POINT: Over 58.20 (10 day MVA) on volume in the range of 2.5 million.
POSITION: Stock and/or February $50 calls to buy (FTQ BJ). Better delta (.78).
TESTS OF THE BREAKOUT: Some of these stocks are moving back on low volume to test the breakout. Some of them have already tested and moved to higher ground, but have pulled back from those new highs. We have noted those. On the stocks that are now pulling back to test, we often take profits on option plays when they start to pullback on the breakout move and then get back in when the stock bounces up off of the breakout point.
New Play (from the weekend):
WFC (Wells Fargo & Co New--$48.69; -0.75; optionable (WFC)): Banking
http://biz.yahoo.com/p/w/wfc.html
STATUS: Not performing as well as other financial stocks. WFC broke below the 50 day MVA (49.51) on a gap down, moved up to tap that level on the high but pulled back down. Volume was strong at 7.7 million (avg. 4 million). No new positions until the stock breaks back over the 18 day MVA (51.68).
Continued Plays:
MMM (Minnesota Mining & Mfg--$112.31; -1.13; optionable (MMM)): Conglomerates
http://biz.yahoo.com/p/m/mmm.html
STATUS: Still struggling after the downgrade, remaining below the short term moving averages (18 day MVA is at 114.56). The stock tapped near support on the low of 109 (50 day MVA), then moved up to close near the high of 112.50 on stronger, average volume (2.2 million). We will look at new positions on a move over the 10 day MVA (115.35). Not the best sector right now.
BUY POINT: Over 116 (10 day MVA) on stronger volume.
POSITION: Stock and/or April $115 calls to buy (MMM DC).
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.
Wedges:
New Play:
PCSA (Airgate Pcs Inc--$41.28; +3.53; no options): Telecom services
http://biz.yahoo.com/p/p/pcsa.html
STATUS: Breaking out of an ascending wedge (pattern high of 41) on strong volume (409,400; avg. 184,545). Look for a continued move up from the buy point of 41.13. The telecom sector continues to look good.
BUY POINT: A buy on this breakout up to 43.19, on continued strong volume.
POSITION: Stock.
New Play (from the weekend):
XOXO (Xo Communications--$25.56; +4.50; optionable (QNF)): Domestic Telecom
http://biz.yahoo.com/p/x/xoxo.html
STATUS: Breaking out of the ascending wedge on great volume (16.2 million; avg. 5.7 million). The stock pushed above its down trendline (connecting March, September and November tops), a bullish move. Look for a continued breakout. Money flow shot higher and buying is strong.
BUY POINT: Remains a buy on the breakout up to 26.39 on the strong volume.
POSITION: Stock and/or April $25 calls to buy (QNF DE).
Continued Plays:
ORCL (Oracle Corporation--$32.75; +1.25; optionable (ORQ)): Software
http://biz.yahoo.com/p/o/orcl.html
STATUS: Got the quick move back over the 50 day MVA (30.36) and the stock continued the upward movement Wednesday on above average volume (64.6 million). The closing price is approaching the stock's high in the former ascending wedge pattern (33.25). On the momentum we are looking for a break of that resistance. 200 day MVA is at 36.11. Support at the 32 level on a pullback.
BUY POINT: Aggressive: On further upward movement on continued rising volume.
POSITION: Stock and/or February $27.50 calls to buy (ORQ Y). Better delta (.83) than at $30 strike.
MEL (Mellon Financial Corp--$46.81; +0.62; optionable (MEL)): Banking
http://biz.yahoo.com/p/m/mel.html
STATUS: Sold below the 50 day MVA (47.67) Tuesday and made a small move up from that day's low (46) on stronger volume, still below the moving average. No new positions as MEL has fallen out of the ascending wedge pattern and broken the supporting up trendline.
BASING/TRADING RANGES:
New Play (from the weekend):
LEH (Lehman Bros--$77.31; +4.43; optionable (LES)): Brokerage
http://biz.yahoo.com/p/l/leh.html
STATUS: Made a breakout move on good volume (3.3 million; avg. 2.3 million). Look for a continued move up on the breakout momentum. Still hasn't hit the buy point, but is getting close. High money flow and relative strength that has broken out ahead of price (bullish).
BUY POINT: Aggressive: On a continued move up on stronger volume. Breakout: 81.13, on volume of 3.4 million or better.
POSITION: Aggressive: Stock and/or February $70 calls to buy (LEH BO). Breakout: Stock and/or February or April $75 calls to buy (LES BO or DO).
Continued Plays:
From the Thursday TTR update:
MXT (Metris Companies Inc--$30.00; -0.50; optionable (MXT)): Credit Services
http://biz.yahoo.com/p/m/mxt.html
STATUS: Holding support in the handle of the cup base (the low tested the 200 day MVA at 29.44). Volume is above average and holding at Tuesday's levels as well (752,500; avg. 639,000). Look for a move up from here, or from the moving average on a further test of that support. Handle high is 32.25. Decent buying. Earnings are out January 17.
BUY POINT: Breakout: 32.38, on volume of 959,000. Remains a buy on this breakout up to 34.
POSITION: Stock. February and April options had insufficient open interests (too illiquid for this stock).
Continued Plays:
KEI (Keithley Instruments Inc--$42.19; +1.25; optionable (KEI)): Electronics (scientific and technical instruments)
http://biz.yahoo.com/p/k/kei.html
STATUS: KEI is edging back up after falling from its 50 day MVA (46.22) last week, continuing its move that started at the December low of 29.63. The stock has been making higher lows as it proceeds, a bullish sign, but volume has been weak on the last few moves (down to 286,300 today; average 510,000). We will see if the stock can hold over support at its 18 day MVA (40.72), which it moved back over today, looking for a move over the 50 day on the next strong move. Beyond that resistance, the 200 day MVA is at 51.87. Earnings are out January 18.
BUY POINT: A move over the 50 day on above average volume.
POSITION: Stock. February and April options have insufficient open interests for the stock.
EDS (Electronic Data Systems--$53.69; -1.87; optionable (EDS)): Software (information technology)
http://biz.yahoo.com/p/e/eds.html
STATUS: Is moving in the handle to its cup base, but not looking too good. The stock pulled back today and tapped its 200 day MVA at its low of 52, recovering to close on its 50 day MVA (53.57). The handle resembles an ascending wedge, with the high at 60. Not an encouraging move, but we will see if its holds support for a move back up.
BUY POINT: Aggressive: On a move back over 56 on continued strong volume. The breakout level is 60.
POSITION: Aggressive: Stock and/or February or March $50 calls to buy (EDS BJ).
MER (Merrill Lynch & Co--$72.31; +2.06; optionable (MER)): Brokerage
http://biz.yahoo.com/p/m/mer.html
STATUS: Made a strong move back up Wednesday from the handle to its double-bottom pattern. The stock made a huge move up last week on the rate cut, hitting a high of 75 (representing the high in the handle). Volume was up on today's move at 4.3 million (average 4.6 million). Looks strong, with excellent money flow and relative strength.
BUY POINT: Aggressive: A move up from here on increased volume. Breakout: 75.13, on volume of 6.9 million or better.
POSITION: Aggressive: Stock and/or April $70 calls to buy (MER BN or DN). Breakout: Stock and/or April $70 calls to buy (MER DN).
CYTC (Cytyc Corporation--$54.50; -1.00; optionable (YQK)): Electronics
(scientific/technical instruments)
http://biz.yahoo.com/p/c/cytc.html
STATUS: Took a recent dive, tapping as low as the 200 day MVA (50), but has attempted to recover the last two sessions, tapping just over resistance at the 50 day MVA (56.71). The moves were on sharply lower volume vs. the selling (428,700; average 650,400), which shows weakness that could lead to a move down. We will see if the stock makes another attempt at the 50 day, and on a failure and drop back we will look at a put.
BUY POINT: A move back down after another test of the 50 day, looking for selling on increased volume.
POSITION: February $60 puts to buy (YQK NL).
JPM (J.P. Morgan & Co--$50.94; $2.25; optionable (JPM)): Banking
http://biz.yahoo.com/p/j/jpm.html
STATUS: Made a move up in its handle today after three consecutive sessions where it tapped down to support at its 200 day MVA (47.88). The handle is to a four-month cup base, which is a test of the stock's double-bottom breakout (handle high of 54). Today's move was on increased, solid volume of 10.8 million (average 10 million), and the stock looks good for a continued move up.
BUY POINT: Aggressive: On a move up from here on increased volume. Breakout: 54.13, on volume of 14.9 million or better.
POSITION: Aggressive: Stock and/or February or March $45 calls to buy (JPM BI or CI). Breakout: Stock and/or February or March $50 calls to buy (JPM BJ or CJ).
PUT PLAYS: These plays are on some defensive stocks that look ready to move back down from resistance levels, some of which were tested Friday on moves up on lower volume. They are all setting up beautifully, most of them tapping again at resistance on lower volume.
CAH (Cardinal Health Inc--$93.81; -0.82; optionable (CAH)): Wholesale drugs
http://biz.yahoo.com/p/c/cah.html
STATUS: Still looking good for a put play. After its big drop last week the stock has edged back up to its 50 day MVA (94.26), closing back over that level Tuesday,
But dropping back to close below that level today. The lower-volume move back up to resistance points to a drop back down, and the stock's doji pattern lends credence to that possibility. Recent lows are at 87.
BUY POINT: On a move down from here on increased volume (1 million today; average 1.35 million).
POSITION: February $100 puts to buy (CAH NT).
UNH (Unitedhealth Group Inc--$56.50; +2.19; optionable (UNH)): Health care plans
http://biz.yahoo.com/p/u/unh.html
STATUS: After three consecutive dojis, UNH made a move today back up to its 50 day MVA (122.34), closing under that level after reaching over at its intraday high of 57.19. Volume was up on the move at 1.8 million (average 1.4 million), so we will see if the stock has the strength to hold a move over resistance. If it cannot, we can play it back down.
BUY POINT: On a move down below 56, perhaps after another attempt at the 50 day, looking for continued strong volume on the selling.
POSITION: February $60 puts to buy (UNH NL).
BMY (Bristol-Meyers Squibb Co--$65.94; -0.62; optionable (BMY)): Drug manufacturer
http://biz.yahoo.com/p/b/bmy.html
STATUS: Clawed its way back up to the 50 day MVA (66.28) after a big fall last week. The stock closed back over the 50 day Tuesday, but after gapping up to 67.75 today the stock retreated back below that support/resistance today, with volume up on the selling (5.4 million; average 4.8 million). On a continued drop from here on increased volume, a put play.
BUY POINT: A move down on increased volume on the selling.
POSITION: February $70 puts to buy (BMY NN).
Good Investing!
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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stock recommendation
stock option
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