Back in the Saddle

Yesterday I purchased two stocks - (EJ) and (STEC).

(EJ) made my High RS/EPS screen a couple of weeks ago so I've had my eye on it. I interpret the chart as a short, ugly cup that formed beginning the week of 6/12 and broke out on just average volume the week of 7/17. The stock advanced 40% and then corrected sharply last week with Monday's sell off, bringing it all the way back to the 50 dma.

What got my attention was the stock's action the rest of last week. While other leaders recovered in mostly below average volume, (EJ) was up on 150% average volume Tuesday and Wednesday and above average Thursday and Friday.

Based on this relative strength I purchased (EJ) about 15 minutes after the open yesterday at $19.30. Since then it has pulled back in average volume yesterday and above average volume today, so I'm in danger of stopping out. Per my rules I have the stop order at 8% below my purchase price and will target a 20% gain on this position.

(STEC) caught my attention with a massive volume move to the upside straight from the open. I missed the move and played it cautiously, holding off on any purchase throughout the day to see if the gains held. They did, and I purchased at $37.61, about 2.5% above the $36.69 pivot. So far the stock is following through to the upside again today. (STEC) is the clear leader of this rally, and should be bought at any reasonable opportunity. I intend to look for a 20% gain on this purchase but will evaluate the chart pattern further to see if this was a 10 wk pullback buy or a second high tight flag pattern. The concern still remains that (STEC) is trading at double it's 200 dma and should be due for a pause or a pullback.