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Bullish Play Updates Sunday, October 05, 2003

Orbital Sciences - ORB - cls: 9.63 chng: +0.00 - stop: 9.24*new*

Every week or so since the ORB play has been open, ORB has announced a new government contract, and it did so again Thursday. That contract involves an $11 million order for a Minotaur space launch vehicle from the U.S. Air Force.

Instead of responding positively to the news, ORB traded sideways, printing first a small-bodied candle on Thursday and then a doji on Friday. RSI flattens, too, while ORB consolidates. While the DFI, the Amex Defense Index, rose, we note that other defense-related stocks such as BA printed doji, too.

ORB's pattern appears to be a bull-flag pattern building inside the ascending regression channel. We note that ORB often prints doji or small-bodied candles during similar consolidation patterns, and that volume often drops off appropriately during those consolidation periods. As long as volume continues to expand on the breakouts, the pattern continues to be bullish.

The 10-dma and 21-dma's now converge just under $9.50, with the 30-dma again snaking along the lower support line of the rising regression channel. ORB will hit the bottom of that rising trendline near $9.40. We've raised our stop to $9.24, just under the rising 30-dma. MACD lines now converge, with those lines close to another bullish cross. New entries could be sought on a pullback and bounce from above $9.50, but we're beginning to be concerned about the series of lower highs ORB may be printing. Traders who prefer to enter on momentum might now wait for a push above $10.00, confirming that volume expands with the push.

Annotated Chart for ORB:

Picked on Sep 3 at   $9.18
Change since picked: +0.45
Earnings Date:    07/22/03 (confirmed)
Average Daily Volume:  347 thousand

Link to Current Quote ORB

Dendrite Int'l - DRTE - cls: 16.05 chng: +1.06 stop: 14.59*new*

In an almost perfect mirror-image repeat of the action seen in mid-September, our DRTE play built some support and used that as a launching pad for a breakout to new multi-year highs. After the surge to just below $16 in late September, the stock pulled back and found support just above $14.50, as volume withered to almost non-existent. Volume looked much stronger on Friday as the stock vaulted higher by 7%, ending over $16 and looking like it wants to go higher. Traders that entered on the last dip towards support should be eyeing the top of the channel $16.60 as a spot to harvest some near-term gains. We're in no hurry to bid farewell to DRTE, but acknowledge that the stock will likely have a hard time moving above the top of its channel, as each of the prior tests in the past 10 months have been turned back. We're raising our stop to $14.59, just under the last reaction low. Look to exit on strength early next week and then troll for a fresh entry on a pullback into the $15.00-15.25 area.

Picked on September 24th at  $15.55
Change since picked           +0.50
Earnings Date              10/23/03 (unconfirmed)
Average Daily Volume =        180 K

Link to Current Quote DRTE


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