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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:

Reading the Plays: Please note that when we reference the 10, 18, and 50 day moving averages (MVA), those are exponential moving averages (EMA). The 200 day moving average is always simple (SMA). We will note when we reference a particular MVA differently, e.g., a simple 50 day MVA. Please click on the Yahoo and chart links for company and charting information. A "prior high" refers to the high at the start of a base.
For conserving space on listings of stop losses, the symbol (7%) indicates that the stop is 7% below the buy point.

Good movers: CCK broke out on big volume (subscriber's choice 2-28), RGFC extended its breakout from the cup with handle. PRIA hit our earlier buy point at 26 for the ascending wedge pattern, and remains a buy on the move up to 27.30. Follow-through on today's volume can keep it moving. FMX finally broke out over the January high but volume hasn't been great lately. We covered the stock in the cup with handle, but it fell out of the pattern for a test of the 50 day MVA, from where it has moved up the last week. STEC hit our target for the 18 day MVA bounce play on a big breakout. It looks ready to head higher from here! We have also been noting the progress of IXX, and that stock broke out as well, though volume decreased on the move.

Targets hit Monday: UNTD (7), STEC (7)
Stop Advisory: QQQ (36 on buys at 33.90), QSFT (21.50), FRX (76.81)

Stocks/Indexes from the weekend report:
HNT: Fell through the 18 day MVA which was holding the stock in the handle to its year-long base. Rising (below average) volume with the stock closing just under the now-resistance level off a bounce from 23.20 (closed at 23.70).
SIMG: Broke out of the ascending wedge, and while volume was still strong at above average levels, it tapered off slightly.
IMAX: Broke out Friday in the handle, and continued the move Monday, but fell back into a tombstone doji on decreasing volume. That suggests a move back down, but the stock can try to hold at the 3.75 range (closed at 3.89).
ASYT: Broke out of the ascending wedge!
PETM: Friday's move lost its punch on Monday; the stock pulled back on lower volume, showing a small loss and a tight doji. May just be a breather.

Continued plays:
Covered call:
HRB: Still resisting moving higher on volume that remains above average, but is tenaciously holding 50 (where the calls were sold). The pattern is tightening and we do not like that. We are ready to buy them back if it does not drop tomorrow toward 48.50 where we want to buy them back on a drop in price.
BLL: Rallied again, moving over the February high after giving us a brief window to buy back the calls. Volume low but still rising.

Other continued plays: Still like JH (2-27).
ACE: Forming an ascending wedge as it tests the breakout, showing a doji Monday at support on low volume. Still holding positions taken at 42.85 (2-26). Breakout is over 44.76 from the new pattern.
GAP: Looks good as it tests the breakout from the ascending wedge (26.26 buy point). New buy point from here is over 28.
LYTS: Still testing the breakout from the ascending wedge. It got a strong dose of volume Monday (no specific news) and on that can break out over the February closing high (20.18). New buy points above that for positions with stock.
ODP: Holding positions taken on the buy point at 19.50 (hit 2-28) in the test of the breakout, and Monday ODP moved up on rising volume. Looking for the breakout over February's high at 19.75.

Best Plays:
1) PENN: Covered call on existing positions.
2) PPD: Bouncing from the 18 day MVA.
3) DGX: Running up to a breakout.

New Covered Call:

PENN (Penn National Gaming--$36.35; -0.78; optionable): Leisure
http://biz.yahoo.com/p/p/penn.html
STATUS: PENN gave us the nice run off the 50 day MVA and started to sell back Monday. Volume was high at 1.08 million (avg. 375,363). The strong volume suggests a continued fall so we are looking for support on that move at the 18 day MVA (33.59) or at the 33 level (the strong volume can send the stock below the moving average if it accelerates). We can look at selling covered calls for the move down to support, and upon a hold at support and move back up, buy them back. If it keeps falling on strong volume, we can sell the stock as well and then buy the calls back at a later date after the fall is done.
SELL POINT: 36.20 on continued strong volume.
POSITION: July $35 calls to sell (selling for $5.20; a 3-point move would put them at about $3.65 at support).

http://www.investmenthouse.com/cd/penn.html

New plays:

HRLY (Herley Ind--$19.89; +0.93; optionable): Scientific & Technical Instruments
http://biz.yahoo.com/p/h/hrly.html
STATUS: Breaking out of a 20 week cup with handle (buy point 19.08). Volume was strong and rising at 198,300 (avg. 111,000), and on a continued breakout the stock remains a buy up to 20.03. If the stock pulls back in the morning, it can give a better entry point. Money flow and buying are strong, and relative strength is high breaking out as well. Target: 23
BUY POINT: Pullback: 19.70 on volume in the range of 115,000 or higher. Stop advisory (7%): 18.32
POSITION: Stock and/or May $17.50 calls to buy (FZQ EW).

http://www.investmenthouse.com/cd/hrly.html

PPD (Pre-Paid Legal--$26.06; +1.60; optionable): Diversified Services
http://biz.yahoo.com/p/p/ppd.html
STATUS: This one is making the bounce from the 18 day MVA (24.65) and volume is looking good on the move (513,200; avg. 249,000). Looking for a run up from here; PPD's last run from the 18 day MVA chalked up 6 points, and that isn't counting the extra 2.5 points (below the 18 day) at the start of that previous run, since PPD began at the lower 200 day MVA at the time. Strong money flow and buying. Target: 33; may take a bounce or two to get there, but not a bad move at all.
BUY POINT: Aggressive: 26.20 on continued rising volume. Stop advisory (7%): 24.37
POSITION: Stock and/or May $22.50 calls to buy (PPD EX).

http://www.investmenthouse.com/cd/ppd.html

SSRI (Silver Standard Resource--$2.84; +0.07; no options): Silver
http://biz.yahoo.com/p/s/ssri.html
STATUS: In a tightening ascending wedge and recently holding support at the 18 day MVA (2.72). Volume Monday shot up to 259,600 (avg. 238,000) with the stock moving off of its 10 day MVA in the tail of the pattern. Looking for a breakout over the highs at 2.88. The stock shows strong money flow, high relative strength. Target: 4
BUY POINT: 2.98 on volume of 321,000 or higher. Stop advisory (7%): 2.77
POSITION: Stock.

http://www.investmenthouse.com/cd/ssri.html

PORTFOLIOS: Each report, we look at these to see which is in a buy position. We don't cover them all each time, just the ones that look ready to pick up a few shares.

THE LEADERS: DGX, FRX, LLL, MIK, BMET, APPB, IGT.

DGX (Quest Diagnostics--$73.26; +1.95; optionable): Health Services
http://biz.yahoo.com/p/d/dgx.html
STATUS: Moving up in the handle to its 8-month cup with handle base (highs near 76). Volume was strong at 702,100 (avg. 524,000) as the stock moved back over the 18 day MVA (71.55) after testing the 50 day MVA late last week at 70. DGX has been making successive bounces from the 50 day MVA since early November; no change here except we had market confirmation today, and that makes it a big difference. Looking for a continued move up into a breakout here. Outstanding money flow. Target: 90
BUY POINT: Breakout: 74.95 on minimum breakout volume of 786,000. Stop advisory (7%): 69.70
POSITION: Stock and/or May $65 calls to buy (DGX EM).

http://www.investmenthouse.com/cd/dgx.html

IGT ($70.09; +2.49): Moved up from a 4-day lateral move, a nice gain though volume is still well below average. Heading for the December highs near 72.
BMET ($31.08; +0.36): Back over the 50 day MVA, a positive sign for the stock, which spent 2 days below that level the previous 2 sessions.
LLL ($116.25; +4.97): Bought back the calls today. Leaders are hard to suppress, apparently, especially in a solidly rallying market and the war escalating again. LLL surged on strong volume after holding the 110 level. The March $105 calls expire in about 2 weeks.

UP & COMERS PORTFOLIOS: BBBY, SRCL

MEMBER PORTFOLIO: CSCO, SEBL, EMLX, BRCM, HDI, BRCD, BUD, AMGN, WMT, ORCL, HB, NOC

HDI ($54.73; +2.24): Back over the 50 day MVA on strong volume after holding the 200 day MVA. Has resistance at 55, tapped on the high. Can be launching a run here.

NOC ($103.50; -4.25): NOC is getting beaten up over the TRW buy-out issue. The stock fell below the 50 day MVA (105.28). Remains in an uptrend as long as it is above the 200 day MVA, but we don't like to hold stocks that do not make quick moves back over 50 day MVAs. Has potential support at 2 up trendlines at 100 and 102.50, the latter tapped on the intraday low before the stock bounced back up a little. Volume was strong.

ORCL ($13.67; -2.32): Pounded on news that earnings for quarter ending February fell a cent below estimates. Might get a reflex bounce up toward 14.50 to exit.

AMGN ($59.88; +1.35): Making a run on its 200 day MVA (60.52).

SEBL ($32.53; +2.10): Good move to get back over the 50 day MVA after floundering below that level for over a week. Can continue higher from here, but needs to form a better pattern.

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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