The MTG Stalk Sheet
May 8, 2008

The MTG Stalk Sheet presents you with the best individual stocks that Morpheus Trading Group is stalking for potential trade entry each day, all in a concise and easy to understand format. Please be sure to read the MTG Stalk Sheet User Guide in order to understand the terminology below and to receive the maximum benefit from your subscription. Enjoy!


"FULL-SERVE" STALK LIST

There are no new setups for today. Broad market indices sold off into the close yesterday on a pick up in volume, logging a bearish distribution day. Though we can't call this rally dead just yet, one or two more days of heavy volume selling and negative breadth would greatly increase the odds of an intermediate term top being put into place. We plan to step aside today and see how leading stocks react to yesterday's selling, though we still like BMRN long, as it ignored the market yesterday and maintained its tight range. If any new pullback or breakout setups develop intraday, we will promptly send an email alert.







BMRN - BioMarin Pharmaceutical

  • Industry - Biotech
  • Side - Long
  • Shares - 225
  • Stalking since - May 7
  • Timeframe - 5 - 20 days
  • Trigger - 38.20
  • Target - breakout to new highs
  • Stop - 36.65
  • Notes -
      • BMRN has formed a double bottom pattern (the top chart outlines the pattern, looks like a W). What makes this formation significant is when the second low undercuts the first low, and quickly reverses. This second low washes out all the remaining weak longs.
      • Note the two biggest volume spikes within the pattern. Circled in yellow on the bottom chart is the strong volume reversal bar of 4/17 that undercuts the 3/17 low. The second spike in volume is the gap up above the 50-day MA from strong earnings on 4/30 (circled in purple).
      • The official buy point of a double bottom pattern is the mid-point of the formation (37.28). We are getting a second valid entry point (just a touch higher) from the tight range of consolidation below 38 over the past few days.
      • The buy entry is over the highs of the tight range.
      • We are using a "darvas stop", which is placed a point or two below the entry to guard against a false breakout. We are risking about 1/3 of our max loss, which allows us to re-enter if the breakout fails with little damage done to our capital. A more conservative approach would be to place the stop just beneath the 50-day MA.
      • Trade expectations - We are looking for a big volume breakout above 38, followed by a breakout to new highs over the next few weeks.
    "SELF-SERVE" STALK LIST - UPDATED EVERY MONDAY (Click here to view the "Self-Serve" Stalk List section of the user guide.)

      LONG WATCHLIST AND TRIGGER PRICES - (changes to trigger prices are highlighted in red)

      Pullback entries - (2-5 day pullback in a strong uptrend or pullbacks to the 20 & 50-day MA's)

    • BRCM - 27.35
    • IMCL - 46.01
    • BMRN - pullback to 35.50-36.00 (50-day MA)
    • OTEX - 35.50-36.50 pullback to breakout pivot
    • STLD - pullback to 34.00 (50-day MA)
    • SLB - 100.65 (triggered 5/5)
    • CF - 136.01 (triggered 5/5)
    • MOS - 125.60 (triggered 5/5)
    • TITN - 20.05 (triggered 5/6)
    • LNN - pullback to 96-97 (50-day MA) (triggered 5/6)
    • GFA - pullback buy zone 42.50-43.50 (triggered 5/7)

      Breakout entries (from cup and handles, bull flags, flat bases,and downtrends)

    • GDI - 49.51
    • BKE - 50.65
    • BMRN - 38.20
    • NUAN - 21.58 (earnings coming up)
    • CE - 46.01
    • FLS - 124.51
    • ILMN - 80.06 (triggered 5/5)
    • CELG - 65.01 (triggered 5/5)
    • EAC - 46.55 (triggered 5/5)
    • CRM - 70.10 (triggered 5/6)
    • SID - 45.23 or 45.96 (triggered 5/7)
    • AKS - 69.76 (false breakout on 5/7)
    • WDC - 30.15 (triggered 5/7)
    • WLL - 80.51 (false breakout 5/7)

      SHORT WATCHLIST AND TRIGGER PRICES

    • TIN - 11.16
    • TSO - 24.74 (triggered 5/6)
    • RJET - 17.17 (triggered 5/6)
    • SCHL - 29.87 & 27.84 (29.87 entry triggered 5/5)
    • UCBI - 13.65 (triggered 5/5)


    Daily Stalk Summary

    Below is an overview of all "full-serve" open positions, as well as a performance report on all "full-serve" positions that were closed only since the previous day's newsletter. Net P/L figures are based on the $100,000 Stalk Sheet model account size. Changes to open positions since the previous report are listed in red text below:

      Open positions (coming into today):

        UTHR long (100 shares from May 2) -
        bought 90.36, stop 89.64, target 99.50, unrealized points = + 0.35, unrealized P/L = + $34

        ISRG short (40 shares from May 2) -
        sold short 289.60, stop 299.30, target 252.00, unrealized points = + 0.81, unrealized P/L = + $32

      Closed positions (since last report):

        GFA long (150 shares from May 6) -
        bought 43.60, sold 40.94, points = (2.66), net P/L = ($402)

        ILMN long (200 shares from May 5) -
        bought 80.13, sold 77.85, points = (2.28), net P/L = ($460)

      Current equity exposure ($200,000 max. buying power):

        $20,623


      Notes:

      • ILMN and GFA both triggered the protective sell stops.


      Market Conditions / Gameplan:

    • We are scanning for quality pullback and breakout entries in leading stocks.


      Market Leaders:

        Monitoring the price action of leading stocks is the best way to gauge the health of the market (when the market is trending higher). Keep a watchlist of these symbols up at all times and review the price action every night after the close. This list of leaders is updated every Monday.

          Leaders - AKS ANR APA BUCY CF CLF CLR CMP CSX DVN EOG FDG FSLR HAL HP JRCC LNN MOS MTL POT RRC SID SQM STLD SWN USO UNP X XEC

          Leading/strong stocks at/near the 50-day MA (a key institutional support level) - STLD, PCU, CRZO, ECA, SYT, XTO, MUR, ADM, MON, FCN

          Leading/strong stocks breaking the 50-day (last week) - PBT, XTO, OI, SIAL, DE, MDR, CVA, DNR, FXE, AG


        Notes on leaders:

      • Leadership may be in pullback mode.

      Open Position Detail:

      • UTHR - We are trailing a tight stop beneath the two day low in case UTHR fails to hold on to the recent breakout. We would rather limit our losses here and move on.
      • ISRG - A move below the 5/6 reversal bar should trigger a sell-off. No change in stop.


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      Edited by Deron Wagner,
      MTG Founder and Head Trader

      DISCLAIMER: There is a risk for substantial losses trading securities and commodities. This material is for information purposes only and should not be construed as an offer or solicitation of an offer to buy or sell any securities. The Company and/or its affiliates, officers, directors and employees may or may not buy, sell or have a position in the securities discussed in The MTG Stalk Sheet and may profit in the event the shares of the companies discussed in The MTG Stalk Sheet rise or fall in value. Morpheus Trading, LLC (hereinafter "The Company") is not a licensed broker, broker-dealer, market maker, investment banker, investment advisor, analyst or underwriter. This discussion contains forward-looking statements that involve risks and uncertainties. A stock's actual results could differ materially from descriptions given. The companies discussed in this report have not approved any statements made by The Company. Please consult a broker or financial planner before purchasing or selling any securities discussed in The MTG Stalk Sheet. The Company has not been compensated by any of the companies listed herein, or by their affiliates, agents, officers or employees for the preparation and distribution of any materials in The MTG Stalk Sheet. Past performance never guarantees future results.

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