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Long Play Updates

JDS Uniphase - JDSU - close: 2.51 change: +0.05 stop: 2.24

Thus far shares of JDSU are cooperating. We suggested that traders look for a dip into the $2.40-2.35 range as the next entry point to go long. JDSU delivered just such a dip on Friday with an intraday low of $2.37. Bulls did buy the dip and the stock closed back above what might be considered round-number resistance at the $2.50 level. This past week saw JDSU breakout past significant resistance in the $2.30 level and its simple 50-dma. We suspect that shares will be able to trade toward the 200-dma near $2.87 although the 100-dma that just crossed under the 200-dma might be a problem for us. Our target is the $2.85-2.90 range. We do consider this an aggressive, higher-risk play due to JDSU's volatility. Please note that we do not want to hold over the August 30th earnings report.

Picked on August 16 at $ 2.50
Change since picked: + 0.01
Earnings Date 08/30/06 (confirmed)
Average Daily Volume: 42.3 million


Novellus - NVLS - close: 27.60 change: +0.44 stop: 24.99

Shares of NVLS continue to show great relative strength. The stock added another 1.6% on Friday posting its third big gain in a row on above average volume. This week saw a big rally in the semiconductors (almost +10%) and shares of NVLS managed to out perform its peers on Friday. We remain bullish given the breakout past resistance at $26.00 and its April highs but we would probably not chase NVLS right here. Look for a dip before considering new bullish positions. Our target is the $29.50-30.00 range. Our time frame is four to six weeks. Please note that NVLS has announced its mid-quarter update for August 30th, 2006. FYI: The P&F chart points to a $49 target.

Picked on August 16 at $26.65
Change since picked: + 0.95
Earnings Date 10/18/06 (unconfirmed)
Average Daily Volume: 2.8 million


Teradyne - TER - close: 13.81 change: +0.19 stop: 12.69*new*

TER is another semiconductor stock that managed to out perform the SOX on Friday. The SOX lost 0.05% on Friday after a huge rally this past week. TER added another 1.39% on Friday. More importantly traders bought the dip in TER near 13.40 and its simple 50-dma. This looks like a new entry point to go long the stock. We're going to raise our stop loss to $12.69. Our target is the $14.75-15.00 range, which is under the simple 200-dma.

Picked on August 16 at $13.53
Change since picked: + 0.28
Earnings Date 10/18/06 (unconfirmed)
Average Daily Volume: 2.4 million

Short Play Updates

Brookefield Homes- BHS - close: 24.86 chg: -0.09 stop: 24.55

We may have to consider switching gears with BHS. The homebuilders are still trying to bounce and traders bought the dip in BHS near $23.98 on Friday morning. The stock is starting to look poised for a strong upside breakout. For the moment we're going to keep BHS on the play list as a short candidate with our trigger to short it at $22.99. However, if BHS near $26.00 or breaks out over $26.00 we may consider going long, especially now that the markets believe the Fed may be on hold (to not raise rates) for the rest of the year. Please note that the latest (July) data puts short interest at 20% of BHS' 26.2 million-share float. That is a high degree of short interest and increases the risk of a short-squeeze!

Picked on August xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/20/06 (confirmed)
Average Daily Volume: 497 thousand


Portfol.Recov.Assoc. - PRAA - cls: 41.49 chg: -0.24 stop: 42.05

It has been a week and we're still waiting on PRAA to confirm its bearish breakdown. The market's strength inspired a bounce back toward $42 but PRAA was unable to build on the rally. Shares remain in a bearish pattern (channel) and the P&F chart points to a $32 target. Not only is the pattern on the daily chart bearish but PRAA is flirting with a major breakdown below support on its weekly chart. We are suggesting that traders use a trigger at $39.49 to open short positions. If triggered our target is the $36.00-35.00 range.

Picked on August xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 08/02/06 (confirmed)
Average Daily Volume: 166 thousand


Steel Dynamics - STLD - close: 53.62 chg: +0.72 stop: 54.66*new*

We are starting to worry that STLD may not make it to our target in the $50.00-49.00 range. Several steel stocks have produced much stronger rebounds this past week and the group could see further interest from buyers. STLD is still under performing a number of its peers but the stock is somewhat oversold and the recent bounce is turning the MACD toward a new buy signal soon. We are not suggesting new short positions at this time. More conservative traders might want to think about an early exit to prevent any losses. We're going to lower our stop loss to $54.66, which is just above last week's high. The P&F chart still looks very bearish with the triple-bottom breakdown sell signal and the $42 target.

Picked on August 09 at $53.95
Change since picked: - 0.33
Earnings Date 10/19/06 (unconfirmed)
Average Daily Volume: 1.6 million

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