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Begin Part 2 of 2
TEAM TRADES
WOR: Back to basics as in basic materials, i.e., iron and steel. WOR was in a 3-month ascending wedge, riding above the 50 day MVA. It had been showing some strong accumulation volume spikes during February, and Friday's strong move to the top of the wedge had us on alert for today's move. It did not take the stock long to hit the buy point at 15.40, trading up to that point and then gapping over it about 20 minutes into the session. It ran to 15.50, and then bounced back down to 15.40. It would not trade below that level, and that bolstered our confidence in the breakout. Given the price, we were looking at stock positions though we did consider some low open interest options. The stock bounced up from 15.40, and the spread was anywhere from 12 cents down to 3 cents. The ask was 15.49 when we were putting in the order with a spread of about 8 cents. We just plunked the limit in at 15.48 for some reason (more like a typo) and left it. It did not take long to be confirmed. The stock then just banged around in its range for another 3 hours then tightened up right under 15.50 for an hour. It was either going to break higher or break down, but the volume was not bad. It broke higher and we thought about buying some more positions but decided to see how it finished out the session. It did fine, closing at 15.80 on strong volume.
THE PLAYS:
Good Movers: Many good moves in today's rally. GDW, MAS, COHU, WOR, HET, LOGI, PH, SWK, FDX
Targets hit Monday: MNC (28.50), CYMI (44)
Stop Advisories: C (46), IDTI (29), LLTC (41.50), ADVS (52), MRCY (35.60), LEH (60.75), CACI (37)
Best Plays:
1) TUES: Aggressive but a strong move today.
2) CTX: Breaking out and still a buy.
3) GDW: Ditto.
4) MAS: Moving up in the test of the breakout!
5) PZB: Still holding a tight consolidation.
6) WOR: Still a buy on its breakout!
7) SWK: Solid move!
8) WSTC: A blast of volume on the move up!
NEW PLAYS:
CHD (Church & Dwight--$30.96; -0.28; no options): Cleaning Products
http://biz.yahoo.com/p/c/chd.html
STATUS: Pulling back toward support (18 day MVA, 30.51) on volume that has been low and below average for over a week (Monday at 103,000; avg. 134,000). The stock showed a loose doji above the 10 day MVA (30.91) after tapping near the 18 day on the low of 30.70. CHD broke out of a 17-week flat base/saucer mid-January, then sold back to the 50 day MVA (currently at 29; just under 28 at the test). Looking for a run from the 18 day MVA on strong volume. Excellent money flow, good buying. Target: 38
BUY POINT: Aggressive: 31.50 on volume of 180,000 or higher. Stop advisory (7%): 29.30
POSITION: Stock.
http://www.investmenthouse.com/ct/chd.html
TUES (Tuesday Morning--$21.02; +1.60; no options): Discount retail
http://biz.yahoo.com/p/t/tues.html
STATUS: Had our eye on this one over the weekend with its good buying, relative strength, and price/volume action, but it jumped the gun on us today with a strong volume move (683,000; average is 140,600). It broke out of a cup with handle pattern, just clearing the pre-correction high of 20.80. An 8% move on the session, so from here it would be aggressive; we would prefer a test of near 20 and then pick it up from there. It might do that after another rally try tomorrow. What we are looking at doing is picking up some positions from here or on any weakness in the morning, and then letting it run and test. If it is successful, we will buy more as it moves up off the test.
BUY POINT: 21.10 for a partial position (not our total buy), and then wait for a test of 20 and a bounce from there to pick up the remaining positions. Target: 25.50 is our initial target.
POSITION: Stock.
http://www.investmenthouse.com/ct/tues.html
CTX (Centex--$61.32; +2.68; optionable): Materials & Construction
http://biz.yahoo.com/p/c/ctx.html
STATUS: Breaking out of a 2-month rolling pattern the stock moved into after cresting at the top of a breakout run (reverse head and shoulders pattern) in late December. Monday the stock, on a strong surge of volume (2 million; avg. 941,000), broke out of the rolling pattern. It remains a buy on the move up to 63. Excellent money flow, high relative strength. Target: Initial is 68 as the amplitude of the rolls up and down is $8.
BUY POINT: Buy point was 60.12, so a buy up to 5% over that (63). Stop advisory (7%) from buys at 61.45: 57.15. Look for continued strong volume on the move.
POSITION: Stock and/or July $60 calls to buy (CTX GL).
http://www.investmenthouse.com/ct/ctx.html
New from the weekend:
GDW (Golden West Financial--$65.75; +1.43; optionable): Savings & Loan
http://biz.yahoo.com/p/g/gdw.html
STATUS: Broke out of the ascending wedge with volume rising, not explosively but that can develop on a continued breakout (995,900; avg. 786,000). It was close to the million minimum required for the breakout. The stock made it past resistance on the move, so looking for a continued breakout. The ascending wedge was at the end of a 7.5-month cup base. High relative strength, decent money flow. Target: 70
BUY POINT: A hold for positions taken at 65.10. Remains a buy on the breakout up to 68.36 on continued rising volume.
POSITION: May $60 calls to buy (GDW EL).
http://www.investmenthouse.com/ct/gdw.html
MAS (Masco--$28.97; +0.82; optionable): Manufacturing
http://biz.yahoo.com/p/m/mas.html
STATUS: Moved up after the test of the breakout, hitting our aggressive buy point at 28.70. The stock has the February high at 28.98 to clear, but looks like it is starting a move here that can get the job done. Volume was up to 3 million (avg. 2 million) on the move. Excellent money flow and high relative strength. Target: 34
BUY POINT: A hold for current positions. New buy point over 28.98 on continued rising volume.
POSITION: Stock and/or July $25 calls to buy (MAS GE).
http://www.investmenthouse.com/ct/mas.html
PZB (Pittston Brinks--$23.16; +0.11; no options): Security Services
http://biz.yahoo.com/p/p/pzb.html
STATUS: Made a small move up from the 10 day MVA where it opened Monday (at 23.08; the stock tapped the 18 day MVA on the low, 22.85), in the month-long lateral pattern, an extended handle to a 9-month cup/saucer base. Highs are near 25. We look for a continued hold at the short term moving averages in the pattern, and volume can continue to decrease until PZB breaks out. The stock threw a good volume spike on Thursday, which can presage that move. Strong money flow. Target: 29
BUY POINT: 23.95 on rising volume (250,000 or higher). Stop advisory (7%): 22.27
POSITION: Stock.
http://www.investmenthouse.com/ct/pzb.html
LTD (The Limited--$18.66; -0.29; optionable): Retail
http://biz.yahoo.com/p/l/ltd.html
STATUS: Pulled back in the ascending wedge after Friday's decent little bounce from the 18 day MVA (support at 17.96). Volume continues the low levels in the month-long pattern (it was stronger at the start of the wedge when LTD sold back to the 50 day MVA), down Monday to 1.46 million (avg. 2 million). Can pull back to either the 10 day MVA (18.27) or the 18 day MVA at 18, but we look for a bounce back up and breakout. Strong money flow and high relative strength. Target: 23.
BUY POINT: 19.08 on volume of 3 million or better. Stop advisory (7%): 17.74
POSITION: Stock and/or May $17.50 calls to buy (LTD EW).
http://www.investmenthouse.com/ct/ltd.html
COHU (Cohu Inc--$27.95; +3.28; optionable): Semiconductor
http://biz.yahoo.com/p/c/cohu.html
STATUS: Explosive. Blasted off Monday after Friday's bounce from the 10 day MVA (test of the breakout from a 7.5-month base). Volume was strong that day, and Monday the levels remained high (366,500; avg. 98,227) as the chips rallied. Heading up from here. Strong money flow and high relative strength. Target: 30
BUY POINT: A hold for positions taken at 24.80, for the ride.
POSITION: Stock and/or May $25 calls to buy (QCH EE; low open interests).
http://www.investmenthouse.com/ct/cohu.html
WOR (Worthington Industries--$15.80; +0.70; optionable): Steel, Iron
http://biz.yahoo.com/p/w/wor.html
STATUS: Hit the buy point of 15.30 for a breakout from the 3-month shallow base. Volume was sharply higher on the move in a classic breakout surge, pushing the stock above the resistance. Remains a buy here! It could pull back slightly in the morning before heading back up, but gave a strong move. Excellent money flow and high relative strength. Target: 18.
BUY POINT: A hold for positions taken on the breakout. Remains a buy on the breakout to 16.07. For continued buys: From here on continued strong volume.
POSITION: Stock and/or June $12.50 calls to buy (WOR FV).
http://www.investmenthouse.com/ct/wor.html
SXT (Sensient Technologies--$21.70; -0.23; optionable): Food
http://biz.yahoo.com/p/s/sxt.html
STATUS: In a year-long double bottom with handle base. The stock broke out Friday over the high in the handle to a shorter 8-week cup base within that larger base, but pulled back Monday as volume fell back below average levels to 141,100 (avg. 211,000).
From here it can move down to a test of the February high (21.50) or the 10 day MVA at 21. Looks like some more consolidation (perhaps another handle) can possibly form here. Money flow and buying are excellent. Target: 26
BUY POINT: 22.15 after a pullback to test the 21 range or higher.
POSITION: Stock and/or July $20 calls to buy (SXT GD).
http://www.investmenthouse.com/ct/sxt.html
HET (Harrah's--$43.98; +1.79; optionable): Resorts, Casinos
http://biz.yahoo.com/p/h/het.html
STATUS: Nice. Extended the Friday move beyond our 5% limit for buying on breakouts (that was 43.16), gapping up on the open with volume remaining above average but down to 1.4 million (avg. 811,400). Need to see volume ramp higher to extend the breakout, otherwise we can get a pullback if it doesn't; that can be a good point to add to positions. High relative strength and strong buying. Target: 49.
BUY POINT: A hold for positions taken at 42.30.
POSITION: Stock and/or May $40 calls to buy (HET EH).
http://www.investmenthouse.com/ct/het.html
CARS (Capital Automotive--$21.80; +0.07; no options)
http://biz.yahoo.com/p/c/cars.html
STATUS: CARS hit the buy point for a breakout from the 5-week ascending wedge pattern, reaching 21.90 on the high but pulling back to the buy point to close. The stock was still showing good volume, though it did not reach the minimum required for the breakout and was slightly lower at 212,500 (avg. 159,000). Can still head up from here on rising volume. Excellent money flow. Target: 26
BUY POINT: For positions taken at 21.80: Remains a buy on the breakout up to 22.89. New buy point: 22 on volume of 215,000 or higher. Stop advisory (7%): 20.46.
POSITION: Stock.
http://www.investmenthouse.com/ct/cars.html
Trades on less than 100,000 average daily volume:
LOGI (Logitech Intl--$45.90; +1.94; no options): Peripherals
http://biz.yahoo.com/p/l/logi.html
STATUS: Started a good bounce from the 18 day MVA on Friday and continued Monday with volume higher at 94,000 (avg. 46,000). LOGI has shown a recent pattern of bouncing from the 18 day MVA 2-3 times after correcting back to major support (the 50 day MVA, currently at 40 and from where the stock moved up 4 days ago). We anticipate similar action here, and will look for a pullback after this run for adding to positions. Outstanding money flow and buying. Target: 51
BUY POINT: A hold for positions taken at 44.25 on the bounce.
POSITION: Stock.
http://www.investmenthouse.com/ct/logi.html
CONTINUED PLAYS:
Covered Call:
BMS (Bemis--$58.07; +1.29; optionable): Packaging
http://biz.yahoo.com/p/b/bms.html
STATUS: Look like it is going up with the market at least for now. Volume was stronger (321,000; avg. 217,136) on the gain. However, the stock has not hit the call sell point (55.95) since we wrote the play last week so we can afford to wait. It will have to come down at some point, having avoided testing back to support since mid-February, so will keep looking for that move to begin.
CALL SELL POINT: 55.95 on continued strong volume.
POSITION: April $55 calls to sell (BMS DK)
http://www.investmenthouse.com/ct/bms.html
TEST OF BREAKOUT: Some of these stocks are moving back on low volume to test the breakout. 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. This second move is where some of the biggest gains are made.
PH (Parker Hannifin--$53.85; +3.65; optionable): Manufacturing:
http://biz.yahoo.com/p/p/ph.html
STATUS: Taking off. Gapped up and broke out from the test of the breakout (PH broke out of an ascending wedge late February) on big volume of 1.7 million (avg. 604,000). Super move, and PH can continue up from here. Taking new positions here is aggressive; riding the move from here is preferable, looking for a pullback to add to or take new positions. Super money flow and buying. Target: 59.
BUY POINT: A hold of positions taken at 50.55.
POSITION: Stock and/or May $50 calls to buy (PH EJ).
http://www.investmenthouse.com/ct/ph.html
SWK (Stanley Works--$51.98; +1.84; optionable): Tools
http://biz.yahoo.com/p/s/swk.html
STATUS: Got the move today! SWK made a nice breakout from the 7-week cup with handle last week, and after a short test back, SWK continued the strength, running on big volume (way up to 1.08 million; average 427,000) after holding 50. Strong money flow and excellent buying. Target: 57
BUY POINT: Holding positions on a move (buy point was 51.10) at the target. Aggressive from here on continued strong volume, as we are less than a 10% move from the target.
POSITION: Stock and/or July $45 calls to buy (SWK GI).
http://www.investmenthouse.com/ct/swk.html
VLY (Valley National--$35.05; +0.15; optionable): Regional Banks
http://biz.yahoo.com/p/v/vly.html
STATUS: Made the good run off the 50 day and 18 day MVAs but could be ready to test back a bit, closing at the buy point. After a low volume push up Friday, VLY showed a doji Monday as volume was sharply up to 106,300 (average 74,100). We will see if it holds the prior high at 34.30 and the short-term MVA's (10 & 18 day at 34.40 and 34.11) for a continued run up the 18 day MVA. Strong money flow. Target: 41
BUY POINT: New buy point: On a hold of the 34.30 range, a bounce on continued strong volume.
POSITION: Stock and/or June $30 calls to buy (VLY FF; 50 open interests).
http://www.investmenthouse.com/ct/vly.html
ROH (Rohm & Haas--$40.68; +1.43; optionable): Chemicals
http://biz.yahoo.com/p/r/roh.html
STATUS: Continued up! ROH gapped up and continued to climb today, taking off where Friday's bounce from the 10 day MVA (38.80) left off. Not a strong continuation move, however, as volume dipped way back to 677,800 (average 920,700). That below average volume does not bode well for a continued move, so with short-term positions we need to be watchful of a pullback to test toward the recent highs near 39. Still targeting 47 if it can muster more strength, but for new positions we will look for a move up after a rest.
BUY POINT: New buy point: After a test back that holds 39.50-40, a run back over 40.50 on above average volume. Stop advisory (7%): 37.76
POSITION: Stock and/or July $35 calls to buy (ROH GG).
http://www.investmenthouse.com/ct/roh.html
FDX (Fedex Corp--$61.22; +2.77; optionable): Delivery Services
http://biz.yahoo.com/p/f/fdx.html
STATUS: Great move! FDX made a small move from its 6.5-week ascending wedge pattern recently, but after touching back toward its 10 day MVA (57.45), it started back up Friday, finally with some volume behind it, and today took off. Volume was stronger at 2.23 million (average 1.69 million), and we are targeting 67 with current positions. An aggressive buy from here up to 61.86, as with a bit more of a run it could need to test back to the short-term MVA's.
BUY POINT: Aggressive: A buy up to 61.86 on continued strong volume. Stop advisory (7%): 56.93-57.53.
POSITION: Stock and/or July $55 calls to buy (FDX GK).
http://www.investmenthouse.com/ct/fdx.html
BASING/TRADING RANGES:
RTN (Raytheon--$38.68; -0.47; optionable): Aerospace/Defense
http://biz.yahoo.com/p/r/rtn.html
STATUS: Could not continue the breakout move from the pennant. RTN made it to 40 Friday but pulled back with a tight doji, and pulled back off of that candlestick today on slightly higher volume (3.09 million; average 2.24 million). It tapped its 18 day MVA (27.44) at its low, bouncing back up to close. We will look for a continued hold and more consolidation in the pattern above the short term MVA's, looking for another attempt to breakout. Excellent money flow. Target: 45
BUY POINT: Breakout: 40.10 on volume of 3 million or higher. Could need to settle a bit first. Stop advisory (7%): 37.29
POSITION: Stock and/or May $35 calls to buy (RTN EG).
http://www.investmenthouse.com/ct/rtn.html
WSTC (West Corp--$29.00; +0.60; optionable): Business Services
http://biz.yahoo.com/p/w/wstc.html
STATUS: Made the breakout! WSTC got a lot of volume behind it today (422,800; average 126,500) as it moved out of its 8-month cup with handle pattern. The strength we were looking for, as WSTC had be attempting a move but volume had not been there. It is just under the left side high at 29.18, and we will look at new or additional positions on a move over that level. The all-time high is at 31.38. Money flow and buying are strong. Target: 34
BUY POINT: For new positions, over 29.18 and a buy up to 29.82 on this move, with continued strong volume. Stop advisory (7%): 27.23
POSITION: Stock and/or July $25 calls to buy (HUD GE).
http://www.investmenthouse.com/ct/wstc.html
IBC (Interstate Bakeries--$24.96; -0.19; optionable): Food
http://biz.yahoo.com/p/i/ibc.html
STATUS: Continued back, tapping the 50 day MVA at its low of 24.70, but pulling back up to close on lighter volume (24.96; average 128,600). IBC has been tightening up in the rolling pattern (moving between 26 and, roughly, 23), and we were looking for it to hold the 18 day MVA (25.10). Although it dipped back through that support, there is strong support at the 50 day (also at the levels of a February consolidation), and it looks like it wants to hold. We will see if it can make the bounce, and look for it to challenge and tae out the highs at 26. Strong money flow. Target: 31.25.
BUY POINT: Aggressive: Over 25.25 on above average volume. Breakout: 26.35 on volume of 180,000 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
UOPX (University of Phoenix Online--$40.06; +2.03; optionable): Internet Software
http://biz.yahoo.com/p/j/jci.html
STATUS: Gapped up to break out of the 9-week cup with handle, and reached up intraday to 42.10, but pulled back to close with a 'tomstone' doji. Volume was extremely high at 1.17 million (average 123,700), with no apparent earthshaking news. The gap up to the tombstone typically spells a test back, and we will see if UOPX can hold the recent highs at 38.50, setting up another move. We will carefully look for that support to hold with current positions. 10 & 18 day MVA's at 36.80 and 35.84. Target on a resumption of the move: 46
BUY POINT: After a move back on lower volume holds above 38.50, a move back over 39 on continued strong volume. Stop advisory: 36.36 (7%)
POSITION: Stock and/or June $35 calls to buy (UBY FG).
http://www.investmenthouse.com/ct/uopx.html
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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