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The good, bad and beautiful

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One of my favorite western movies is "The Good, the Bad and the Ugly." Three stocks I've profiled in past commentary perhaps present "good, bad and beautiful" in early morning trading.

OSI Systems (NASDAQ:OSIS) $15.81 -4.23% perhaps represents "the good" as the stock gives bearish traders a needed break after a little rally last week right into overhead supply. My first trader's target of $14.09 now looks achievable as today's trade at $16.00 gets the point and figure chart of OSIS back on a sell signal and has the stock looking vulnerable once again to the $14.09 level which we've identified as potential market maker support and a near-term bearish trader's target.

OSI Systems Chart - Daily Interval

Last week's action tested a bear's resolve, but guidance given in the market monitor was for "nervous bears" to look for a pullback to cover positions, but we remained bearish the stock. Broader- market negativity has undoubtedly helped, but the stock continues to look vulnerable near-term to original near-term target of $14.09.

"The bad" is recent bullish profile for 1/2 bullish position in NVIDIA (NASDAQ:NVDA) $16.96 -6.45% as today's trade at $17.50 puts the point and figure chart of NVDA back on a sell signal and defensive. With retracement overlaid, I suggested that bulls in the underlying stock either stop out as previously profiled at $17.50 or look to write at the money calls in the August $17.50. Bullish call option traders should look to sell their calls on rallies to the $20.00 level should that happen as that level now look to be market maker resistance.

NVIDIA Chart - Daily Interval

With the NASDAQ-100 Bullish % ($BPNDX) having reversed into "bull alert" and then "bull confirmed" status, NVDA gave bulls an opportunity to look long a semiconductor stock on a break higher at $21. Things were looking good for about 2 trading session until earnings from Apple Computer (AAPL) and a downgrade on NVDA sent the stock lower. With lack of any type of bullish internal confirmation from the S&P 100 Bullish % ($BPOEX) or S&P 500 Bullish % ($BPSPX) in recent sessions, previously outlined stop at $17.50 should be honored.

"The beautiful" is perhaps found in past bearish profile of Verizon (NYSE:VZ) $28.40 -12.6% from the $42 level as the stock trades lower in sympathy with weaker than expected earnings from Bellsouth (NYSE:BLS) $22.90 -17.05% and has shares of Verizon (VZ) falling to its point and figure chart's bearish vertical count of $29.

Verizon Chart - $1 box

While originally profiled before we had a bearish vertical count to work from, the eventual triple-bottom sell signal at $38 and resulting column of O gave hint of lower prices and a bearish vertical count of $29 eventually was formed. Bears holding puts in Verizon (VZ) can lock in full position gains here, or take 1/2 of the position off the table. Look for any rally back near $35 as another put opportunity.

Jeff Bailey
Senior Market Technician
Option Investor

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