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us stock market, trade stock
Begin part 3 of 3
THE PLAYS: Looking at upside this weekend given the selloff and the look that the second leg of the selling is just about over. After the bounce starts we will start putting downside back on the report.
Upside: Still looking at plays to ride the rebound from this second leg of selling. These are in addition to those on the Thursday report.
Play Date: 01/19/2008
AMZN (Amazon.com--$79.76; -0.36; optionable): Internet sales
http://biz.yahoo.com/p/a/amzn.html
EARNINGS: 1-30-08
STATUS: Test 200 day SMA. Yes it is retail, but AMZN was also one of the better performers in 2007, starting with its big gap higher in April on earnings. It peaked in October and has moved in a trading range from 77 to 97 since. It has just come back to the bottom of the range, tapping just over the still rising 200 day SMA (77.55) on the intraday lows last week, showing a series of dojis on the candlestick chart last week. That tells us it is bottoming on this pullback, perfect timing for an upside play with the market rebound as it rides back up in its range. One of the best set ups we see for an upside move in the market rebound from the second leg lower.
Volume: 13.364M Avg Volume: 9.429M
BUY POINT: $81.15 Volume=14M Target=$92.90 Stop=$77.45
POSITION: ZQN DP - Apr. $80c (58 delta) &/or Stock
http://www.investmenthouse.com/ci/amzn.html
Play Date: 01/19/2008
BAX (Baxter Intl.--$63.16; +0.37; optionable): Diversified medical products company
http://biz.yahoo.com/p/b/bax.html
EARNINGS: 1-24-08
STATUS: Test breakout. We like BAX for several reasons. One, it is showing great technical strength, having broken out from a long 8 month base two weeks back, holding the gain in the market selling, working laterally as it waited for the 10 day EMA (62.63) to rise to meet it. Second, it is in a good sector for a defensive market. Third, it has already made the breakout; if it starts to run higher again on continued solid volume that tells us the breakout buyers are not alone in wanting the stock. Thus we are going to watch and see if it can make the next break higher in its breakout move and continue what it already started. If it does then we can move in.
Volume: 5.388M Avg Volume: 3.418M
BUY POINT: $64.31 Volume=5.1M Target=$72.65 Stop=$62.11
POSITION: BAX EZ - May $62.50C (58 delta) &/or Stock
http://www.investmenthouse.com/ci/bax.html
Play Date: 01/19/2008
HUM (Humana--$84.35; +0.08; optionable): Health care plans
http://biz.yahoo.com/p/h/hum.html
EARNINGS: 2-4-08
STATUS: Test breakout. HUM showed no weakness in the recent market selling. It broke sharply higher to start 2008, moving out of a 9 week ascending base that formed using the 50 day EMA as support. It rallied nicely on that initial surge and last week faded on lower volume to the 10 day EMA (84), showing a high volume doji at that level Friday. Excellent strength, and this is just the kind of play you want to look at in this market, i.e. the first test of a breakout by a leader in a great defensive sector.
Volume: 2.881M Avg Volume: 1.705M
BUY POINT: $85.11 Volume=2.6M Target=$95.95 Stop=$84.21
POSITION: HUM EQ - May $85c (48 delta) &/or Stock
http://www.investmenthouse.com/ci/hum.html
Play Date: 01/19/2008
TEVA (Teva Pharmaceutical--$48.12; +0.28; optionable): Drugs, generic
http://biz.yahoo.com/p/t/teva.html
Earnings: Late January
STATUS: Breakout test. In late December TEVA gapped higher out of a 15 week flat base and rallied to 50 early in 2008. In the market selling the past two weeks it gapped lower but then held the 18 day EMA (47.34). It gapped lower because a unit CEO left the company. It has held at support during the market selling, and then started higher Friday on more volume. Sure a lot of it was expiration trade, but we really like TEVA in this market as it is in a good sector, made its breakout already, and has held up during the ugly market selling.
Volume: 11.98M Avg Volume: 5.548M
BUY POINT: $48.64 Volume=6.5M Target=$54.95 Stop=$47.22
POSITION: TVQ CW - Mar. $47.50c (59 delta) &/or Stock
http://www.investmenthouse.com/cd/teva.html
Play Date: 01/19/2008
VSEA (Varian Semiconductor--$34.20; +2.64; optionable): Chip equipment
http://biz.yahoo.com/p/v/vsea.html
EARNINGS: 1-24-08
STATUS: Yes a chip stock. Quietly last week, chips started to show strength as the rest of the market sharply sold off. VSEA, a former chip leader before peaking to start September 2007, showed some solid action with two strong upside sessions on jumping volume. That indicates it was more than just a bounce back up to resistance in a continuing downtrend. Indeed, we are looking for it to continue higher off this strong volume turn, move through the 50 day EMA at 37.50, and test a band of resistance at 40. Not a huge move but a nice gain in a rebounding market.
Volume: 1.768M Avg Volume: 1.506M
BUY POINT: $34.55 Volume=2M Target=$39.45 Stop=$33.08
POSITION: UES CG - Mar. $35c (48 delta) &/or Stock
http://www.investmenthouse.com/ci/vsea.html
Continuing plays ready to move:
Play Date: 01/17/2008
CMED (China Medical Technologies--$47.03; -0.29; optionable): Chinese medical instruments
http://biz.yahoo.com/p/c/cmed.html
EARNINGS: Third week February
STATUS: Breakout test. Still testing, holding at the late October high in the market selling last week. Now we look for it to hold and rebound on rising trade as it starts the second leg of the breakout, a great entry point for this type of market. To recap: CMED made us some money on its breakout, and we sold out this week, waiting on a test to give us another entry point. It fell to the late October peak (the start of the last base) on Thursday. Just waiting for it to hold the line near this level and rebound from here with a market recovery. A leader in the market and withstood the selling well. Ready to move in when it turns and bounces with the market.
Volume: 428.476K Avg Volume: 643.23K
BUY POINT: $48.22 Volume=700K Target=$57.88 Stop=$44.84
POSITION: QCY CI - Mar. $45c (64 delta) &/or Stock
http://www.investmenthouse.com/ct/cmed.html
Play Date: 01/17/2008
DIA (Diamonds Trust (DJ30 EFT)--$120.57; -1.05; optionable):
http://biz.yahoo.com/p/d/dia.html
STATUS: Fell further on Friday so we adjusted the buy point to accommodate the additional downside. Still looking for a sharp rebound after this second leg spends its last bullet. To recap: This second leg down is approaching its climax, and when it bounces it is going to have a fairly sustained rebound similar to late November, early December. When we see the turn after some more selling we will move in. The buy point is flexible; if DIA sells more first we can move in a bit lower when it reverses.
Volume: 35.592M Avg Volume: 16.203M
BUY POINT: $121.83 Volume=18M Target=$127.95 Stop=$119.91
POSITION: DAW CQ - Mar. $121c (59 delta)
http://www.investmenthouse.com/ct/dia.html
Play Date: 01/17/2008
FWLT (Foster Wheeler--$129.94; +1.36; optionable): Heavy construction, engineering
http://biz.yahoo.com/p/f/fwlt.html
EARNINGS: Early February
STATUS: Test 200 day SMA. Held up very well Friday, holding the line on the selling at the 130 support. Just waiting for the market bounce to move into this stock that can sprint back up. To recap: FWLT sold off in a straight line and Wednesday it held some support in the 130 range. Broke it slightly Thursday, but breaks of support after sharp declines tend to lead to rebounds. Given the market is on the cusp of a rebound, FWLT is positioned perfectly for a bounce.
Volume: 2.789M Avg Volume: 1.852M
BUY POINT: $131.48 Volume=2.2M Target=$147.00 Stop=$127.55
POSITION: UFB EU - May $135c (54 delta) &/or Stock
http://www.investmenthouse.com/ct/fwlt.html
Play Date: 01/17/2008
MOS (Mosaic Company--$80.02; -0.98; optionable): Agricultural chemicals
http://biz.yahoo.com/p/m/mos.html
EARNINGS: Early April
STATUS: Test 50 day EMA. A nice hold at the 50 day SMA on the Friday close, keeping in the mid-December lateral range of support. Ready to bounce with the market and it can move fast when it moves. To recap: One of the ag leaders in the rally, MOS surged higher last week on solid earnings. Then the market took it down this wee, down to the 50 day SMA on the Thursday close. It is one of the few stocks that is actually holding the 50 day MA, and when the worm turns on this sell off, MOS is going to pop.
Volume: 10.352M Avg Volume: 4.526M
BUY POINT: $82.89 Volume=6M Target=$99.00 Stop=$79.21
POSITION: MOS CP - Mar. $80c (51 delta) &/or Stock
http://www.investmenthouse.com/ct/mos.html
Play Date: 01/17/2008
SPY (S&P Depository Receipts--$132.06; -1.37; optionable):
http://biz.yahoo.com/p/s/spy.html
STATUS: Tried to move higher Friday but failed, closing modestly lower. Still ready to make the rebound after this second leg of selling in the market downtrend. To recap: Similar to DIA, SPY is diving on its second down leg of the selloff. This second leg is now the same drop and duration of leg one, and another good scare and it is ready to reverse. If SPY sells substantially lower and then the market reverses, move the buy point down and move in.
Volume: 348.46M Avg Volume: 223.201M
BUY POINT: $133.45 (orig. $134.91) Volume=250M Target=$141.94 Stop=$133.88
POSITION: SFB CD - Mar. $134c (55 delta)
http://www.investmenthouse.com/ct/spy.html
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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