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Begin Part 2 of 2
TEAM TRADES
LE: The retail news in the morning has many retail stocks looking down for the open. We were watching with interest because the news was really not all that bad and LE had some good news on its own. It has also been building a very solid pattern for over 3 months. The stock started low. We were monitoring a lot of retail stocks based on the news. Most started lower, but they started working their way back up. LE was no exception; about an hour into the session it turned positive. It hit our buy point right at that time (53.48). It ran to 54 but then fell back, and that is where we were able to pick it up as it started higher. It was already up $1 from Tuesday's close and was bouncing down a bit so we did not take our full position for the stock. It rallied to 54.50, pulled back to 53.55 and held. That was important, and it acted as a springboard to more gains. It spent the rest of the afternoon trading between 54.50 and 55, and volume was huge. Now we did not finish taking out our full position today; we could have as the stock looked strong and had solid volume. We will wait and see if it pulls back a bit to test the breakout tomorrow and if it is successful will look at adding to the position.
THE PLAYS:
Good Movers: Breakout from HDWR! PLCM continued to fall for the put play and volume is rising.
Best Plays:
1) QLGC: Getting ready.
2) AVY: Heading lower.
3) PZB: Surging volume can break it out.
4) PFG: Still tight in the handle.
5) WWW: Looks good in the handle.
6) SLAB: Ditto.
7) NATI: Formed another handle.
8) CEY: Ready to drop.
9) HET: At support on low volume.
10) SWK: Lower volume in the test.
NEW PLAYS:
QLGC (Qlogic--$48.96; -1.05; optionable): Semiconductor
http://biz.yahoo.com/p/q/qlgc.html
STATUS: Some of the techs are setting up for a good move if the Nasdaq heads up again. This is one we are looking at. QLGC, after posting the March high at 51.36, has pulled back on decreasing volume, and Wednesday showed a tight doji above support, the 50 day MVA (simple). The intraday low of 48.40 tapped that support with volume falling below average to 7.5 million (avg. 20.6 million). Looking for a strong bounce back up in a rally; QLGC is off the December and November tops at the 56 level (a double top that resulted in the fall to 35 last month), initial target on the play.
BUY POINT: Aggressive: 50.50 on strong, rising volume (21 million or higher). Stop Advisory (7%): 46.97
POSITION: Stock and/or July $40 calls to buy (QLC GH).
http://www.investmenthouse.com/ct/qlgc.html
Puts:
AVY (Avery Dennison--$58.90; -2.33; optionable): Paper
http://biz.yahoo.com/p/a/avy.html
STATUS: Broke the 50 day MVA on huge volume, no specific news (1.05 million; avg. 333,000). The stock can drop to the 200 day MVA at 53.65 (currently), which is the level at which AVY found support on its last correction below the 50 day MVA (59.56). May try a test of the 50 day, or the 50 day MVA simple at 59.25.
BUY POINT: 58 on continued strong volume.
POSITION: July $65 puts to buy (AVY SM).
http://www.investmenthouse.com/ct/avy.html
MU (Micron Tech--$34.10; -1.59; optionable): Semiconductor
http://biz.yahoo.com/p/m/mu.html
STATUS: MU formed a double top at the February and March highs, and Wednesday broke support of its 50 day MVA (34.52) and the up trendline (connects Sept/Oct/Jan lows). Volume was strong at 13.2 million (avg. 7.3 million), and the stock is still above the 200 day MVA (33.03). If it breaks that support, will look at entering with some put positions for a drop to 27.50.
BUY POINT: 32.50 on continued strong volume. Upon a break of the 200 day MU may try for a test of the broken support before heading lower.
POSITION: July $45 puts to buy (MU SI).
http://www.investmenthouse.com/ct/mu.html
Watchlist stocks that look good today: Still like ESST, ROH, SXT, RTN, LOGI, MAS:
PZB ($23.21; +0.27: Still in the lateral pattern and the last 2 days shown 2 massive volume spikes, Tuesday with the stock moving up in the pattern (just above the 18 day MVA at 23). May these 2 days of pounding volume will break it out! Buy point is 23.95 for stock.
FDX ($57.78; -0.31): Holding the 18 day MVA in a low volume pullback in the test of its ascending wedge breakout. Buy point for the breakout was 56.10, and the stock remains above that, which is positive. A hold for positions taken there; new buy point in the test is 59 for positions with stock and/or July $50 calls to buy (FDX GJ). Target 71.
From Tuesday:
PFG ($25.02; +0.02; optionable): Remains in the handle to the 6-week double bottom pattern. Support is at the short term MVAs (tapped the 10 day on the intraday low at 24.80), and Wednesday the stock showed a tight doji just above other recent price support at 25. Looking for breakout. Volume remained low at 965,100 (avg. 2 million). Target: 31. Aggressive buy point is 25.61 on volume of 3 million or higher, stock and/or July $22.50 calls (PFG GX).
http://www.investmenthouse.com/ct/pfg.html
WWW ($17.08; -0.36): Continues the handle consolidation in the 6.5-month cup base, while volume slips lower, down Wednesday to 64,600 (avg. 145,000). Pulled back to the 10 day MVA from where it bounced intraday, closing higher and holding above 17, other support for the last week. Looking for a breakout; still showing strong money flow, and buying is looking better. Breakout is 18.10 on volume of 230,000 or higher. Stock and/or June $15 calls to buy (WWW FC). Target: 22
http://www.investmenthouse.com/ct/www.html
SLAB ($33.51; -1.56): Pulling back to the 10 day MVA as it continues the handle consolidation to its 10-week cup with handle pattern. Volume still below average, holding Wednesday at 401,600 (avg. 700,000). Still like the pattern, and look for a breakout over the March high (37.19). Aggressive buy point over 35 on strong volume, breakout 37.29 on 1 million or higher. Stock and/or July $30 calls to buy (QFJ GF). Excellent money flow and buying. Target: 45
http://www.investmenthouse.com/ct/slab.html
From Monday:
HDWR (Headwaters--$14.50; +1.53; optionable): Metals & Mining
http://biz.yahoo.com/p/h/hdwr.html
STATUS: Broke out from the 4-month ascending wedge! Volume was huge at 2 million (avg. 204,000) and the stock is beyond the 5% limit for buying on a breakout. A strong move, however, and aggressive players can look at getting in here and riding a pullback. The stock may try an early pullback to test the 14.30 range for a better entry point, in that case. We prefer to look for the pullback before adding to positions. Target: 16.50
BUY POINT: After a pullback to test the buy point at 13.60, or higher.
POSITION: Stock and/or May $12.50 calls to buy (HQK EV).
http://www.investmenthouse.com/ct/hdwr.html
MYG (Maytag--$44.51; -0.79; optionable): Appliances
http://biz.yahoo.com/p/m/myg.html
STATUS: Pulled back slightly on lower volume (1.32 million; avg. 496,000) after the big breakout Tuesday. Will hold current positions for the pullback and will expect the stock to hold above the buy point at 41.05, at the level of the 10 day MVA. MYG broke out on huge volume from its flying plateau pattern yesterday on earnings news. Huge money flow and buying. Target: 48
BUY POINT: From here: 45.50 on rising volume. Pullback: After a test of the 41 range, on rising volume.
POSITION: Stock and/or July $35 calls to buy (MYG GG).
http://www.investmenthouse.com/ct/myg.html
SLVN (Sylvan Learning--$25.69; -0.26; optionable): Education & Training
http://biz.yahoo.com/p/s/slvn.html
STATUS: Continues to pull back in the handle to its 7-month cup with handle base. The stock closed at its 10 day MVA Wednesday, recent support in the handle except for Tuesday's lower test of the 18 day MVA. Volume was lower again, down to 123,500 (avg. 448,400), in keeping with the low volume in the handle for the last several days. Looking for a breakout over the March highs at 27. Target is 32.
BUY POINT: 27.05 on volume of 674,000 or higher. Stop Advisory (7%): 25.16
POSITION: Stock and/or May $22.50 calls to buy (NQV EX).
http://www.investmenthouse.com/ct/slvn.html
New from the weekend:
Breakouts:
FCS (Fairchild Semiconductor--$26.50; -0.50; optionable): Integrated Circuits
http://biz.yahoo.com/p/f/fcs.html
STATUS: This pattern failed. FCS looked ready for a breakout Friday, but by Wednesday fell back to the 50 day MVA. Dropping for now.
http://www.investmenthouse.com/ct/fcs.html
EXPE (Expedia--$61.92; -1.53; optionable): Internet Software
http://biz.yahoo.com/p/e/expe.html
STATUS: Hasn't given much of a move after Friday's strong bounce after testing the flying 'w' breakout. Instead, the stock is pulling back from resistance at 65.37 with volume falling lower (down Wednesday to 563,700; avg. 714,000). Look for a test of the 10 day MVA at 60 ahead of another move higher. Target is 71.
BUY POINT: A hold for positions taken at 62.60.
POSITION: Stock and/or July $55 calls to buy (UED GK).
http://www.investmenthouse.com/ct/expe.html
NATI (National Instruments--$41.19; +0.24; optionable): Computer Peripherals
http://biz.yahoo.com/p/n/nati.html
STATUS: Broke out of a double bottom with handle on Friday, but did not follow through, instead the stock pulled back again to form another handle to the 8-week base. Volume keeps falling, down Wednesday to 91,400 (avg. 154,000), helping the stock hold for a tap at the 10 day MVA (40.50). Showing a doji here at support, and we are looking for a move up and breakout over Friday's closing high (42.62). Excellent money flow. Target: 50
BUY POINT: 42.72 on continued rising volume. Stop Advisory (7%): 39.73.
POSITION: Stock and/or June $35 calls to buy (SJQ FG).
http://www.investmenthouse.com/ct/nati.html
Basing stocks:
GPC (Genuine Parts--$37.00; -0.26; optionable): Auto Parts Wholesale
http://biz.yahoo.com/p/g/gpc.html
STATUS: GPC is in the handle to a 10-week cup with handle base. It tested the 18 day MVA Tuesday, bouncing from there on rising volume, but did not continue higher Wednesday even as volume shot above average (492,000; avg. 336,300). The stock held at the 10 day MVA, however, for the close, and we continue to look for the breakout. Target is 45. Strong money flow.
BUY POINT: 37.71 on volume of 536,000 or higher. Stop Advisory (7%): 35.07
POSITION: Stock and/or May $30 calls to buy (GPC EF; low open interests).
http://www.investmenthouse.com/ct/gpc.html
FMKT (Freemarkets--$25.76; -0.53; optionable): Internet Software
http://biz.yahoo.com/p/f/fmkt.html
STATUS: FMKT is forming another handle to its 8-week cup base, having moved out of a lower handle but without much force due to below average volume. The stock pulled back the last 2 days, and Wednesday volume was lower again at 904,300 (avg. 1.3 million). Looking for the handle to pullback to the 25 range, then a breakout over the March high at 26.97. Great money flow, strong buying. Target: 31
BUY POINT: A hold for positions taken at 26.22 from the earlier handle. New positions from here for a breakout: 27.07 on volume of 2 million or higher. Stop Advisory (7%): 25.18
POSITION: Stock and/or July $22.50 or $25 calls to buy ((FAQ GX or GE). Check for deltas.
http://www.investmenthouse.com/ct/fmkt.html
Moving average bounces:
BDK (Black & Decker--$48.26; -0.64; optionable): Small Tools
http://biz.yahoo.com/p/b/bkd.html
STATUS: Made a nice move up Tuesday after testing the breakout from its year-long cup base (February), but didn't cap it off Wednesday. The stock pulled back on sharply decreased volume (599,200; avg. 769,000) for the small loss. At least the price/volume action is healthy, and BDK can hold at 48 or the 10 day MVA (47.35) if volume continues to decrease. A hold for positions taken at the aggressive buy point of 47.50. Money flow and buying are good, and our target is at 57.
BUY POINT: For a move over the March high (49.95) 50 on volume in the range of 885,000 or higher. Stop Advisory (7%): 46.50
POSITION: Stock and/or May $45 calls to buy (BDK EI).
http://www.investmenthouse.com/ct/bdk.html
ADSK (Autodesk--$44.80; -0.61; optionable): Technical Software
http://biz.yahoo.com/p/a/adsk.html
STATUS: Made the bounce from the 10 day MVA that was expected (Monday) but as volume remains weak ADSK is trying to form a pennant pattern. Showing a doji Wednesday as it closed just cents above the 10 day, volume fell back again, down to 595,700 (avg. 799,227). The pattern is holding above the 18 day MVA at 43.89. Looking for a move up when the consolidation works through lower volume and tightens up better. Good money flow, strong buying. Target: 51
BUY POINT: A hold for positions taken at 45. Buy point for breakout: 47.47 on volume of 1.1 million or better. Stop Advisory (7%): 64.08
POSITION: Stock and/or July $40 calls to buy (ADQ GH).
http://www.investmenthouse.com/ct/adsk.html
SYY (Sysco--$29.19; -0.54; optionable): Food Wholesale
http://biz.yahoo.com/p/s/syy.html
STATUS: Lost support at the 18 day MVA (29.48) on stronger volume selling. The stock was in an ascending wedge pattern and this takes it out of it, though it tapped on the low (29) the up trendline connecting the December and January lows. No new positions until it gets back over the 18 day, if it will. The ascending wedge is a handle to a 10-month cup. Volume was 2.2 million (avg. 1.86 million).
BUY POINT: (Current buy point) Breakout: 30.45 on 2.8 million or higher. Stop Advisory (7%): 28.32
POSITION: Stock and/or May $25 calls to buy (SYY EE).
http://www.investmenthouse.com/ct/syy.html
Breakout
URS (Urs Corp--$32.28; -1.16; no options): Technical Services
http://biz.yahoo.com/p/u/urs.html
STATUS: It was a short breakout of 2 days; URS popped off the 18 day MVA Friday after testing the ascending wedge breakout. Closed at the 10 day MVA on lower volume (98,600; avg. 107,000). The stock can hold here, which is preferable since it is still above the earlier March closing high reached on the wedge breakout, or at the 18 day MVA at 31.34. We will look at adding to positions on a bounce back up from here on stronger volume. Strong money flow and buying. Target: 38.50
BUY POINT: A hold for positions taken at 32.55. New buy point for a bounce: 32.75 on volume of 110,000 or higher. Stop Advisory (7%): 30.46
POSITION: Stock.
http://www.investmenthouse.com/ct/urs.html
Puts:
Removed CACI after it reversed back over the 50 day MVA on Monday.
PLCM (Polycom--$24.41; -1.41; optionable): Telecom
http://biz.yahoo.com/p/p/plcm.html
STATUS: PLCM hit the buy point Tuesday, although on rather light volume, and today continued to drop. The fall started after tapping up toward its down trendline from early December (with its 50 day MVA, at 29.25), and we are looking for the fall to continue back to the target of 21.50. Volume was up but not that strong today (2.6 million; average 3.08 million), so we could get a relief bounce, and will watch for strong volume that could push it higher, but will expect that move to fail. A bit tight from here for new positions.
http://www.investmenthouse.com/ct/plcm.html
NVDA (Nvidia--$53.60; -0.99; optionable): Semiconductor
http://biz.yahoo.com/p/n/nvda.html
STATUS: NVDA dropped again from the 50 day MVA (58.32), gapping down and continuing to drop through the put buy point on Tuesday. It gapped down again today, but held on for a loose doji, showing lower volume on the action (8.6 million; average 9.5 million). Looking for a continued drop back toward our target of 50, with the recent lows (200 day MVA at 49.13).
BUY POINT: Aggressive: On a failed bounce above 55, a drop back below 54.50 on increased volume.
POSITION: June $75 puts to buy (RVU RO).
http://www.investmenthouse.com/ct/nvda.html
CONTINUED PLAYS:
Covered Calls: Still looking at COHU, which dipped back today but held on for a doji. ITT pushed back up but on lower volume.
CEY (Certegy--$40.92; -0.34; optionable): Software
http://biz.yahoo.com/p/c/cey.html
STATUS: Continues to drift upward since its big breakout move from a flat base. Volume has been down on much of the drift, and that action points to a drop. Today CEY pulled back slightly, with volume blasting up to 676,500 (average 209,000). Watching for the drop, and we are looking for support in the 38 range to hold it (18 day MVA at 38.58). On a hold and move back up, that will be the cue to buy back the calls.
SELL POINT: 40.50 on continued strong volume.
POSITION: April $35 calls to sell (CEY DG).
http://www.investmenthouse.com/ct/cey.html
MOVING AVERAGE BOUNCE PLAYS: None this weekend.
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.
TUES (Tuesday Morning--$19.91; -1.50; no options): Retail
http://biz.yahoo.com/p/t/tues.html
STATUS: Wild day for TUES as it fell hard, tapping all the way down to 17.89 (50 day MVA at 18.41), and then rebounding back to close just below the 18 day (20.03) and above the prior handle highs (19.54) and its late-December high. TUES had been testing the breakout it made from the cup with handle a week ago, but after today's action (volume way up to 468,800; average 153,000), we will have to see where it settles to consider new positions. We could be in for another test of the 50 day.
http://www.investmenthouse.com/ct/tues.html
HET (Harrah's--$41.62; -0.48; optionable): Resorts, Casinos
http://biz.yahoo.com/p/h/het.html
STATUS: Has formed a short consolidation on the test of the breakout from the 6-week cup with handle, still holding near the support at the 10 day MVA (41.72) after tapping the 18 day at its low of 41.24. Volume has settled down in the consolidation (down to 589,800 today; average 871,000). Looking for the strong volume to break things higher from here. March high at 43.98 was posted on the breakout. Strong money flow. Target: 49
BUY POINT: For new positions (aggressive): 42.75 on above average volume. Stop Advisory (7%): 39.76
POSITION: Stock and/or May $37.50 calls to buy (HET EU).
http://www.investmenthouse.com/ct/het.html
SWK (Stanley Works--$49.79; -0.54; optionable): Tools
http://biz.yahoo.com/p/s/swk.html
STATUS: After the late February breakout from the 7-week cup with handle, SWK is testing the move but holding at the 18 day MVA (48.85). It bounced Wednesday from that level with volume back over the average (but not up to what we were looking for), but could not sustain, today dipping back for a doji over the 10 day MVA (49.66) with much lighter volume (319,200; average 441,000). We are looking for the 18 day to hold (the former cup with handle buy point was at 47.30), but it could need a bit more time to consolidate its gains and make another run toward the target of 60. Continued strong buying.
BUY POINT: Over 50.70 on volume of 575,000 or higher. Stop Advisory (7%): 47.24
POSITION: Stock and/or July $45 calls to buy (SWK GI).
http://www.investmenthouse.com/ct/swk.html
BASING/TRADING RANGES:
IPCR (Ipc Holdings--$30.24; -0.24; optionable): Insurance
http://biz.yahoo.com/p/i/ipcr.html
STATUS: Dropped out of the pattern Monday, but held the 50 day MVA (29.59). Volume was below average on the drop, and IPCR is holding support for now. It took a weak bounce, but stopped short at the 18 day MVA (30.54). IPCR had been holding in a lateral pattern (flat base) as it tested its breakout from a 6-week saucer. We will see what it does from here, with the recent pattern high at 31.90.
BUY POINT: Aggressive: Over 30.75 on above average volume (231,000; today 90,600). Stop: 29.25.
POSITION: Stock and/or June $25 calls to buy (QHE FE - no open interest).
http://www.investmenthouse.com/ct/ipcr.html
SFD (Smithfield Foods--$24.58; -0.26; optionable): Food
http://biz.yahoo.com/p/s/sfd.html
STATUS: Fell out of the handle Monday, but is holding the 50 day MVA (24.13). SFD is now battling its short-term MVA's (24.77), which had been support in the handle to the 12-week cup with handle base (cup highs near 27). Volume has not been severe on the selling back or rebound, today coming in at 299,100 (average 527,200) as its tested back near the 50 day intraday. We will see if the stock can battle back into the handle range and recover.
BUY POINT: The breakout is way out at 26.09. The aggressive can look at a move over 25.25 on above average volume.
POSITION: Stock and/or July $22.50 calls to buy (SFD GX).
http://www.investmenthouse.com/ct/sfd.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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