OSIP - OSI Pharmaceuticals $72.25 +3.28 (+12.56)

OSI Pharmaceuticals uses gene transcription and other technologies to develop products to treat cancer, cardiovascular and other diseases. The company was given a huge opportunity back in June when the FTC ruled that Pfizer, in order to merge with Warner Lambert (PFE), must grant all commercial and development rights for its anti-cancer agent CP-358,774 to OSIP. Many analysts believe this drug has the potential to be a $1 billion a year product, so it's not surprising that OSIP's stock has been on a tear, gaining just over 500%. Despite the huge gains, we think OSIP could be entering another possible run. The company currently has 50 million shares authorized with 26.5 million shares outstanding, not enough for a 2:1 split, but we like the stock as a momentum play nonetheless. Presently, OSIP shares may be on the verge of a breakout to new highs, as witnessed by its sharp advance this week on increasing volume. We'll look for possible entry point as the stock breaks above its all time high of $73.94 on good volume (700 thousand shares or better). Above this mark, we look for the stock to challenge $75 and then $80. Since there are no obvious resistance levels when a stock trades in new territory, look for increasing volume or positive news releases as a catalyst for further advances. For support, we'll look for a near-term base to come at recent highs near $70 (previously resistance). Further down, the $67 level, also bolstered by recent highs and the 5-dma of $67.06 will present a good base ahead of our stop at $66.00. Use the AMEX Pharmaceutical Index (DRG) to confirm strength or weakness in OSIP and use sharp bounces from support or runs through resistance for possible entries.

Picked on October 19th @ $72.25 Change since picked 0.00

GMST - Gemstar-TV Guide International $69.13 +4.89 (+3.52)

Gemstar could be described as a technology/media company that engages in everything from manufacturing electronics to TV Guide distribution. Gemstar announced plans to become a portal for interactive television moved one step closer today after forming an alliance with Motorola (MOT). This positive announcement comes just ahead of earnings, which are scheduled for mid-November. Consensus estimates are for a profit of $0.11 versus a profit of $0.09 in the same quarter last year. The company has beat earning expectations the last three quarters. We view Gemstar to be at $90.00. The company has previously split its stock two times, the most recent occurring in November 1999. There are currently enough outstanding shares for Gemstar to set a 2:1 split. Looking at Gemstar's chart, we note that support is now measured at the 10-dma of $68.35, the 100-dma of $66.57 and the 5-dma at $66.29. Resistance will likely be met at $72.00 and the 20-dma at $74.36. The average three-month trading volume is 3.5 millions shares. On Thursday, the stock moved higher on lighter volume of 2.5 million shares. Going forward, we'd like to see advances made with average, or better than average, volume. Traders considering a play on GMST should look for good volume coupled with continued strong momentum in the NASDAQ. A bold move through resistance or a bounce off support could trigger an entry point. We will place a protective stop at $63.00 to limit our losses.

Picked on October 19th @ $69.13 Change since picked 0.00