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Begin Part 2 of 2

Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.

2-28-02
Initial Claims, 2/23 (8:30): 378K actual versus 385K expected and 361K prior (revised from 383K).
GDP, preliminary Q4 (8:30): 1.4% actual versus 0.9% expected and 0.2% prior.
Chain Deflator, Q4 (8:30): -0.3% actual versus -0.3% expected and -0.3% prior.
Chicago PMI, February (10:00): 53.1 actual versus 47.0 expected and 45.1 prior.
Help-Wanted Index, January (10:00): 47 actual versus 46 expected and 46 prior.

3-01-02
Truck Sales, February: 7.1M versus 7.1M prior.
Auto Sales, February: 5.3M versus 5.3M prior.
Personal Spending, January (8:30): 0.4% versus -0.2% prior.
Personal Income, January (8:30): 0.1% versus 0.4% prior.
Mich Sentiment-Rev., February (9:45): 91.0 versus 90.9 prior.
ISM Index, February (10:00): 51.0 versus 49.9 prior.
Construction Spending, January (10:00): 0.1% versus 0.2% prior.

SUBSCRIBER QUESTIONS

Q: Where do you get your information on the Put/Call Ratio (CBOE)?

A: The CBOE website contains a summary of daily activity. It can be found at www.cboe.com under the 'Market Data' heading.

Q: [There has been an increased] noise level very recently about US troops moving into Iraq and Turkey. I would really like to hear your take on market reactions if/when there is an escalation on the part of US. It seems imminent that this is the situation. I'd like to be better prepared to know how to prepare and respond for such an event!

A: The rumors have been flying, and have struck two times when the indexes were having decent rallies. Short sellers have good timing. Anyway, if we do send troops into Iraq there will be uncertainty. Uncertainty about a new campaign while another is still ongoing, uncertainty about reprisal attempts, uncertainty about the outcome. The stock market hates uncertainty and they would most likely suffer selling as investors take money off the table and reallocate into some gold and cash. Gold stocks may perform a bit better at first and defense stocks as well. In the 1990 invasion of Kuwait gold spiked higher but then pulled back rather quickly. How fast a recovery comes depends upon the campaign's success. As we saw in 1991 and in 2001, if the success is apparent, the stock market starts to price that in.

TEAM TRADES

BRCM: One of the many techs that rolled over Wednesday and continued today. We were looking at a buy point at 31.90. After testing 33.25 twice early in the session on the early rally it started to roll over with the index. Now an earlier put play hit the target at 32. The stock then hit our next buy point at 31.90, running down fast to 31.50. It bounced after the big drop as most stocks and indexes do, back up to 32 (32 was a point of some support, and that is why the other put play had that as a target). It failed to move over that level and we entered downside positions at 31.98. The May 40 puts were trading 10 by 10.20. We slid a limit order in at 10.20 and that was good enough. The stock then started its descent, hitting 31 and bouncing back up, then heading to the next level, down to 30. Another bounce and then it sold again. It did not make it down to 30 again, holding at 30.50. The options ended the session at 10.80 by 11.

THE PLAYS:

Good movers: Super breakout from CEY (flat base)! AZR extended its breakout from the ascending wedge after a little rest Wednesday, and ABC kept moving on its wedge breakout. SWK continued to run on its cup with handle breakout but pulled back into a doji on decreased volume Thursday. Puts: IDTI, MANU, ITMN (2-04 report)

Targets hit Thursday: EMLX (31, put); BRCM (32, put)
Stop Advisories: EGOV (3.85), CASY (13.67)

Continued Plays:

ROH (Rohm & Haas--$38.41; -0.42; optionable): Chemicals
http://biz.yahoo.com/p/r/roh.html
STATUS: Pulling back these last 3 sessions after breaking out of the year-long flat base/trading range pattern. In the test of the breakout, the stock is holding above the 10 day MVA (tapped on the low of 38.29) and the buy point at 38.36. Volume shot up to a strong 1.3 million (avg. 1 million) but the stock held support on the slight loss. We don't like pullbacks on rising volume, but ROH may turn this into an upside move after holding up today. Target: 47.
BUY POINT: Holding current positions taken on the breakout. New buy point: 39.50 on continued rising volume. Stop advisory (7%): 36.74
POSITION: Stock and/or July $35 calls to buy (ROH GG).

http://www.investmenthouse.com/ct/roh.html

Previously covered stocks that look ready for a play:

PH (Parker Hannifin--$49.82; -0.30; optionable): Manufacturing
http://biz.yahoo.com/p/p/ph.html
STATUS: After breaking out of the ascending wedge, PH is now testing the move on a lower volume pullback to support at the 10 day MVA (49.59). It showed a tight doji above that support, with volume slipping down to 646,500 (avg. 604,000), holding above the buy point of 49.50. Looking for another move up on rising volume. Strong money flow and high relative strength. Target: 58
BUY POINT: Aggressive: 50.25 on volume of 876,000 or higher. Stop advisory (7%): 46.73
POSITION: Stock and/or May $45 calls to buy (PH EI; just under 100 open interests).

http://www.investmenthouse.com/ct/ph.html

New:

UOPX (University of Phoenix Online--$36.68; +0.13; optionable): Internet Software
http://biz.yahoo.com/p/u/uopx.html
STATUS: Forming a handle to a 9-week cup base that is inside a larger, 7.5-month cup base. Prior to developing the recent shorter pattern, UOPX broke out of a double bottom with handle, then pulled off the December high (39) to begin the cup. On volume that has decreased the last three days, UOPX started the handle, dropping abruptly Wednesday off of the February high at 38.50, but showing a tight doji off a tap of support near 36 (just above the 10 day MVA). Volume was lower at 54,900 (avg. 135,000). Looking for a hold at support for perhaps another day or two as the handle progresses, then breakout. High relative strength. Target: 46
BUY POINT: Breakout: 38.60 on volume of 203,000 or higher. Stop advisory (7%): 35.90
POSITION: Stock and/or June $30 calls to buy (UBY FF).

http://www.investmenthouse.com/ct/uopx.html

New Puts:

EXBD (Corporate Exec Board--$31.51; +0.72; optionable): Diversified Services
http://biz.yahoo.com/p/e/exbd.html
STATUS: In a head and shoulders pattern below the 50 day MVA, but it is the 18 day MVA that is giving the stock the most trouble the last week (at 31.85). The stock moved up to that resistance Thursday on a sharp decrease in volume (544,300; avg. 479,000) but could not break the resistance. Volume was very strong the previous session when EXBD posted a loss, but held at the neckline level near 30. On a break below that support, we look for fall to 26.
BUY POINT: Breakdown: 30 on strong and rising volume.
POSITION: June $35 puts to buy (EBU RG).

http://www.investmenthouse.com/ct/exbd.html

PNRA (Panera Bread--$51.64; -1.59; optionable): Specialty Eateries
http://biz.yahoo.com/p/p/pnra.html
STATUS: Broke below its 50 day MVA (now at 54.47) eight days ago and has moved more or less laterally below that resistance without attempting a move back over until Thursday, when on a strong leap in volume (660,200; avg. 339,000) PNRA made the move over the 50 day but couldn't hold on. It sold back down, still holding at the recent support (just above 51). We are going to watch for a breakdown from this recent action for a fall to 43 (200 day MVA).
BUY POINT: Aggressive: Below 51 on continued strong volume. Below support: 49 on continued strong volume.
POSITION: May $60 puts to buy (UPA QL).

http://www.investmenthouse.com/ct/pnra.html

For a review of frequently asked questions, please use the link below:

http://www.investmenthouse.com/1questions.htm

Good Investing!
Jon L. Johnson and the Technical Traders 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 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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