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Begin part 3 of 3
THE PLAYS:
New Post-Split Play:
Play Date: 08/09/2008
ARO (Aeropostale--$34.40; +2.00; optionable): Teen apparel stores
http://biz.yahoo.com/p/a/aro.html
EARNINGS: 8-21-08
STATUS: Cup. Another one of the leading retailers, ARO is coming off the bottom of a solid 12 week base formed after the April breakout and run higher from a longer 10 month base. Interestingly, during the July selling and worries about the economy and consumer, it sold all the way down to 28 intraday, completely testing the breakout from that prior base, then it shot back up to close within the confines of its pattern. It continued forming up and Friday was breaking nicely higher though volume slipped back below average as it did. With the great performance in the leading retailers last week we are looking for ARO to show us the breakout this week and move to an all-time high of its own.
Volume: 2.816M Avg Volume: 2.866M
BUY POINT: $34.77 Volume=4M Target=$41.95 Stop=$32.34
POSITION: ARO JG - Oct. $35c (48 delta) &/or Stock
http://www.investmenthouse.com/ci/aro.html
Play Date: 08/09/2008
ESRX (Express Scripts--$72.65; +2.48; optionable): Mail order prescriptions
http://biz.yahoo.com/p/e/esrx.html
EARNINGS: Announced 7-30-08
STATUS: Cup w/handle. ESRX was setting up in May for a breakout from a 5 month base but . . . it sold back, falling into the current 9 week, nicely formed pattern. It managed a break from that base (a reverse head and shoulders) then couldn't hold it in the selling into July. The bigger pattern is an 8 month ascending triangle. Okay so it has the credentials with respect to the pattern. It also has the ability to rally like a bat out of hell when it gets going. Great surge higher following its earnings results, then it slipped into a lateral handle, breaking sharply higher Friday. Volume was lower but above average. Looking for that trade to quicken as it continues the move. Very solid and it looks as if ESRX is ready for one of its periodic solid, long runs.
Volume: 2.826M Avg Volume: 2.516M
BUY POINT: $73.12 Volume=3.5M Target=$83.95 Stop=$69.55
POSITION: XTQ KN - Nov. $70c (65 delta) &/or Stock
http://www.investmenthouse.com/cs/esrx.html
New Leader Plays: Any of these could become a pre-announcement play. The theme is they have never announced a split, are in a solid pattern, and have solid sales and earnings growth rates.
Play Date: 08/09/2008
CRM (Salesforce.com--$69.59; +1.97; optionable): Sales force management software, services
http://biz.yahoo.com/p/c/crm.html
EARNINGS: 8-20-08
STATUS: Double bottom w/handle. CRM is always one of our favorite stocks to play because it moves so darn well. After a volatile run higher March to June it fell into the current 7 week base, testing the 200 day SMA in the July selling, rebounding, then forming the second bottom in late July. Started this month well, tested, and then Friday was back at it on the best volume in three weeks. Looking for CRM to continue the move this week and that will be our cue to move in.
Volume: 2.078M Avg Volume: 1.776M
BUY POINT: $70.22 Volume=2.5M Target=$79.95 Stop=$66.77
POSITION: CRM KN - Nov. $70c (47 delta) &/or Stock
http://www.investmenthouse.com/ci/crm.html
Play Date: 08/09/2008
EDU (New Oriental Education & Tech--$74.26; +0.51; optionable): Chinese training services
http://biz.yahoo.com/p/e/edu.html
EARNINGS: Announced 7-17-08
STATUS: Cup w/handle. Something of a ragged cup but a definite pattern as EDU works on a four week handle to its 12 week base. Got a bit wild to start the month, but held the 50 and 200 day SMA that are basically coincident, then jumped higher the last half of the week. EDU is well-positioned to move higher, and when it does it can run like the wind. Low volume of late, and looking for stronger volume as it makes the break through resistance and clears this base. A top stock in terms of earnings growth rate.
Volume: 235.16K Avg Volume: 648.083K
BUY POINT: $76.88 Volume=975K Target=$88.75 Stop=$72.11
POSITION: EDU JO - Oct. $75c (51 delta) &/or Stock
http://www.investmenthouse.com/ci/edu.html
Play Date: 08/09/2008
SXE (Stanley, Inc.--$36.06; +0.40; no options): ITS software
http://biz.yahoo.com/p/s/sxe.html
EARNINGS: Announced 7-31-08
STATUS: Breakout test. SXE shot higher to start August after its earnings announcement, breaking out from an 8 month double bottom with handle base. Classic pattern with a nice low volume handle leading up to the high volume breakout. First serious big base for SXE since coming public in October 2006. Great set up for a breakout and nice, long run higher. Another play on a stock that enjoys some of the strongest earnings and sales growth rates.
Volume: 114.732K Avg Volume: 200.798K
BUY POINT: $36.67 Volume=245K Target=$43.95 Stop=$34.65
POSITION: - Stock (no optoin chain)
http://www.investmenthouse.com/ci/sxe.html
Play Date: 08/09/2008
UTHR (United Therapeutics--$109.71; +0.74; optionable): Drugs
http://biz.yahoo.com/p/u/uthr.html
EARNINGS: Announced 7-31-08
STATUS: Breakout test. Announced earnings to end July and that shot it out of a nicely formed 8 month cup with handle base. Surged on the news, but then the market sold and it lost its momentum, fading back Wednesday and Thursday with the market. It held near support at the 18 day EMA, however, and started to bounce some Friday. Very strong and looking for UTHR to find its footing here at the 18 day (108.35) and resume the breakout move. As it does that is when we move in.
Volume: 960.1K Avg Volume: 559.548K
BUY POINT: $110.88 Volume=800K Target=$124.95 Stop=$108.11
POSITION: FUH KB - Nov. $110c (52 delta) &/or Stock
http://www.investmenthouse.com/ci/uthr.html
PRE-ANNOUNCEMENT PLAYS
We consider many stocks for pre-announcement plays every week. We get information regarding upcoming announcements and other data that leads us to conclude a split announcement is coming. Even then, however, we have to be discriminating. We have to see a strong technical pattern as well, and thus we reject many potential candidates based on a weak technical position.
The key today is to find stocks in strong patterns or that are ready to rebound off support. A split announcement will amplify the move higher in these cases as we enjoy moves from strong leaders in position to run higher. We won't chase a stock in a poor technical position even if we know it is going to split; it simply won't do us any good, i.e. it typically won't make us any money to the upside. We could list all stocks we think are going to split, but again, that won't make us any money unless we are in an office pool as to what stocks will or won't announce a stock split.
Current Pre-Announcement Plays:
This is a list of stocks we are looking to announce splits. We are not in all of the potential splits plays but are letting them set up for the next move. In each report we look at the candidates that are in the best patterns ahead of their potential announcements. This focus on leaders in good patterns allows us to make good money even if companies do not announce the split. The key with splits is the pattern and of course the strong earnings growth that put it in the pattern in the first place.
ACL: Consolidating just over the 10 day EMA, moving laterally after the break higher on earnings announced 7-23-08
BAX: A great end to a great week.
BMI: No announcement on 7-21-08. Another great day on top of Thursday.
CALM: Great week.
FCN: Early August. Took the play off the table out of an abundance of caution as it rebounded Thursday and Friday, but stalled at the 10 day EMA.
IBM: Still working on that next break higher.
MCD: Researching date and enjoying watching it rise as we do.
SNA: Didn't announce with its earnings, but with this kind of pattern it is quite likeable anyway.
TJX: Tentatively set for 8-12-08. What a great week for TJX and what a finish.
TMX: No split announcement yet, but massing for a stronger break higher. Sure wish it could show some volume.
WSO: Researching date
CONTINUING PRE-ANNOUNCEMENT PLAYS:
Play Date: 07/26/2008
IBM (International Business Machines--$128.81; -0.24; optionable)
http://biz.yahoo.com/p/i/ibm.html
EARNINGS: Announced 7-17-08
STATUS: Reverse head and shoulders. Keep waiting for IBM to get into the game with this nice pattern stretching out laterally in a narrow range. At least volume jumped up Friday; we will be positive and view that as a sign of a break to come. It is a nice pattern indeed. To recap: After breaking higher last week on a strong earnings report, IBM is moving laterally just below 130, trading in a flat range. It is forming the consolidation to its 8 week pattern, the handle shakeout at the prior high reached in May as the base started. After this test of the 10 day EMA (127.58) we are looking for a renewed breakout on volume to move into new positions.
Volume: 8.562M Avg Volume: 7.94M
BUY POINT: New: 130.21 (orig. $128.55) Volume=10M Target=$145.95 Stop=$126.44
POSITION: IBM JF - Oct. $130c (49 delta) &/or Stock
http://www.investmenthouse.com/ci/ibm.html
Play Date: 08/07/2008
SNA (Snap-On Inc.--$59.34; +2.38; optionable): Small tools
http://biz.yahoo.com/p/s/sna.html
EARNINGS: Announced 7-24-08
STATUS: Breakout test. Don't get the wrong impression from our description of SNA's business; despite its small tools it is quite a manly stock with a great pattern. Bounced back up off the 10 day EMA test on Friday. Volume was pretty good and likely it was good enough to enter. If it continues we will look to move in. To recap: SNA surged higher Tuesday on strong volume, breaking over the handle high in its 11 week base. Made a new high in the run up to May and June then formed this base to consolidate that move and set up for the next. The selling the past two sessions pushed it back down in the handle, but SNA remains in a good pattern and in good position and just looking for it to follow the surging money flow and continue the move higher.
Volume: 656.272K Avg Volume: 568.072K
BUY POINT: $58.08 Volume=850K Target=$66.95 Stop=$55.97
POSITION: SNA LK - Dec. $55c (63 delta, low OI) &/or Stock
http://www.investmenthouse.com/ci/sna.html
Play Date: 07/29/2008
WSO (Watsco--$50.00; +1.16; optionable): Wholesale electronics
http://biz.yahoo.com/p/w/wso.html
EARNINGS: Announced 7-17-08
STATUS: Test breakout. Really good action as WSO continued the test into the weekend, tapping the 18 day EMA (48.50) Thursday and then bouncing off that level Friday on rising volume. Excellent action and simply waiting for the break higher to signal it is ready for us to buy it. To recap: Raced higher on strong earnings, clearing an 11 week base that formed using the 200 day SMA (40.33) as support. Spent the past week testing, coming back to the 10 day EMA Monday, holding, then breaking higher Tuesday. Tuesday volume was nothing to get all excited about, but really like the pattern and the position for a rapid gain higher. Strong money flow leading the way higher. Ready to move in as WSO continues its move higher.
Volume: 249.058K Avg Volume: 309.423K
BUY POINT: $50.77 Volume=450K Target=$59.95 Stop=$48.22
POSITION: WSO KJ - Nov. $50c (54 delta, 104 OI) &/or Stock
http://www.investmenthouse.com/ci/wso.html
CONTINUING PRE-SPLIT PLAYS:
Play Date: 08/07/2008
TWI (Titan International--$44.52; +1.60; no options): Auto parts. Splits 5:4 on 8-18-08
http://biz.yahoo.com/p/t/twi.html
EARNINGS: Announced 7-30-08
STATUS: Test breakout. Held the 10 day EMA and bounced Friday though volume fell below average. Still an excellent set up to run higher next week as its split date draws closer. Very nice pattern, nice test, and can blow higher like the wind. To recap: TWI gapped higher on the earnings and split news, clearing a 6 week base on the move. Big move and needed a test, making that test the past week. TWI has come back to the 10 day EMA (42.52), closing just over that near support Thursday. Being patient and letting it make the test, and as it breaks higher we will be ready to move in as it makes its move toward another new all-time high.
Volume: 542.606K Avg Volume: 546.046K
BUY POINT: $44.75 Volume=750K Target=$52.95 Stop=$42.44
POSITION: - Stock
http://www.investmenthouse.com/cs/twi.html
CONTINUING POST-SPLIT PLAYS:
Play Date: 07/24/2008
PKI (Perkinelmer--$29.50; +0.53; optionable): Medical instruments
http://biz.yahoo.com/p/p/pki.html
EARNINGS: Announced 7-24-08
STATUS: Cup w/handle. PKI was cheating higher at the end of the week, moving up all week but finally getting some volume Thursday and Friday with trade moving up to average as PKI tapped at the July highs. Looking very ready to make the break out of its 11 month base. Just needs to show us the break on continued improving volume.
Volume: 1.223M Avg Volume: 1.172M
BUY POINT: $29.36 Volume=1.8M Target=$33.95 Stop=$28.11
POSITION: PKI LG - Dec. $30c (53 delta, low OI) &/or Stock
http://www.investmenthouse.com/cs/pki.html
Play Date: 08/06/2008
QLGC (Qlogic--$18.82; -0.08; optionable): Storage networking solutions and infrastructure
http://biz.yahoo.com/p/q/qlgc.html
EARNINGS: Announced 7-21-08
STATUS: Flying plateau. Couldn't capitalize on the Wednesday break higher, fading back to tap the 10 day EMA (18.66) on the Friday low and bouncing modestly. Now it has tested, and we will see if that delivers the next break higher that we can buy into. To recap: QLGC is in a long, long base, the most recent part of it a 1.5 year effort that saw an ugly earnings announcement in July 2007 that crushed it. Since then it has recovered, and this July the earnings were well-received and QLGC broke sharply higher out of a 20 week flat base. Strong surge up to 19, then a two week lateral move, holding the gains as it waited for the 10 day EMA (18.56) to catch up with it. Strong volume Wednesday as QLGC broke higher out of the plateau. Looking to move in as it continues this break higher.
Volume: 5.089M Avg Volume: 4.151M
BUY POINT: $19.52 Volume=5M Target=$23.45 Stop=$18.45
POSITION: QLC JW - Oct. $17.50c (78 delta) &/or Stock
http://www.investmenthouse.com/ci/qlgc.html
CONTINUING LEADER PLAYS:
Play Date: 08/07/2008
ACN (Accenture--$41.74; +0.07; optionable): Management consulting services
http://biz.yahoo.com/p/a/acn.html
EARNINGS: Announced 6-26-08
STATUS: Ascending base. Took a pause Friday even as the rest of the market surged, but that doesn't change our view of this pattern and the potential for a breakout and run. Very solid. To recap: Surging volume Thursday as ACN makes a higher low over near support at the 18 day EMA (40.84), ready to make the breakout from its 9 week base. Solid action using the 50 day EMA (39.94) as support in the higher lows with a top at 42. Part of a larger 14 month cup with handle base, a great foundation for a breakout and strong run higher, making a new high along the way.
Volume: 2.659M Avg Volume: 3.223M
BUY POINT: $42.11 Volume=4M Target=$48.45 Stop=$40.69
POSITION: ACN KH - Nov. $40c (57 delta) &/or Stock
http://www.investmenthouse.com/ci/acn.html
CONTINUING DOWNSIDE PLAYS:
Play Date: 08/07/2008
FCX (Freeport McMoran--$85.52; -1.74; optionable): Copper
http://biz.yahoo.com/p/f/fcx.html
EARNINGS: Announced 7-22-08
STATUS: Put. FCX gapped lower Friday, not giving us the opportunity to get in. After falling over 5 clicks on the low it rebounded to close down quite modestly all things considered. Commodities, oil and gold got a bit oversold Friday, and as noted in the market summary, they may reverse course a bit to test the gut punch from last week. If that is the case FCX may make another test up toward the 10 day EMA at 94. If it does and volume remains low we have an even better entry point. To recap: Double topped in May and June then rode the 18 day EMA (94.68) lower before falling off the table hard to start August. Bottomed just over 75 and bounced on good volume, but on Thursday as it tried to move through near resistance at the 10 day EMA (90.29) it turned and slipped back down, running out of volume. It is a bit oversold overall, but this 15 point rebound up to near resistance and the close well off the intraday high suggests FCX is going to head back down again. A move to the target lands a 47%ish gain.
Volume: 13.398M Avg Volume: 10.698M
BUY POINT: New: Will let it bounce back up this week, see if it makes the 10 day EMA at 94 or fails earlier. Either way we have a good entry point (orig. $86.77) Volume=16M Target=$78.76 Stop=$89.22
POSITION: FCX UR - Sept. $90p (-58 delta)
http://www.investmenthouse.com/ci/fcx.html
Play Date: 08/07/2008
OSG (Overseas Shipholding--$68.51; +0.18; optionable): Shipping
http://biz.yahoo.com/p/o/osg.html
EARNINGS: Announced 7-29-08
STATUS: Head and shoulders. Gapped lower Friday, then retrenched a bit itself, racing back up to the 200 day SMA but then failing and sliding back to close flat. That is fine; it likely will go ahead and fall this week and give us the move we want. To recap: Set up a 12 week head and shoulders then collapsed hard to start August, tumbling on strong volume. Bounced Tuesday and Wednesday on lower trade, then rolled back over Thursday on another strong volume surge, falling back through the 200 day SMA it broke on the Wednesday bounce higher (71.85). It came back up for air, but it now nose down, tail up, heading for the ocean floor with money flow dragging it down toward Davey Jones' locker. A move to the bottom lands a 43%ish gain.
Volume: 923.531K Avg Volume: 782.877K
BUY POINT: $67.78 Volume=1M Target=$62.65 Stop=$70.11
POSITION: OSG UN - Sept. $70p (-48 delta)
http://www.investmenthouse.com/ci/osg.html
Good Investing!
Jon L. Johnson and the Stock Split Report Staff.
All of the foregoing is commentary for informational purposes only. All statements and expressions are the opinion of Online Investment Services, LP or its paid consultants and are not meant to be a solicitation or recommendation to buy, sell, or hold securities. We are not licensed or registered in the securities industry. The information presented herein and on our related web site has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. The security portfolio of Partners of Online Investment Services, LP or its paid consultants may, in some instances, include securities mentioned herein and on our web site. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future developments may differ materially due to many factors.
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