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us stock market, trade stock
Begin part 3 of 3
THE PLAYS:
New Pre-Announcement Play:
Play Date: 10/21/2008
AMED (Amedisys--$55.03; +1.17; optionable): Home health care. Could give us an announcement as this is the time it announces.
http://biz.yahoo.com/p/a/amed.html
EARNINGS: 10-28-08 before the open
STATUS: Double bottom. After a steady rise for a few years AMED peaked out in late July and early August, falling hard in August. It caught itself and started forming a new base at the 200 day SMA (49.07) the past 10 weeks. Undercut the 200 day in the October selling but recovered, continuing the work on its base. Rallied up the past week, pausing at some resistance at 55. Still working on its pattern and may take a few more sessions to complete it so we will just be patient and let it show us the breakout if it will. This is one of the few 'hot' sectors in the market in the sense it has stocks forming good bases and starting to move up.
Volume: 790.49K Avg Volume: 1.2M
BUY POINT: $56.35 Volume=1.5M Target=$64.95 Stop=$53.44
POSITION: CQW AK - Jan. $55c (52 delta) &/or Stock
http://www.investmenthouse.com/ci/amed.html
New Post-Split Plays:
Play Date: 10/21/2008
ALXN (Alexion Pharmaceuticals--$41.00; -0.90; optionable): Drugs
http://biz.yahoo.com/p/a/alxn.html
EARNINGS: 10-23-08 before the open
STATUS: Double bottom w/handle. A very interesting pattern here as ALXN holds support at the 200 day SMA (36.31) in its 10 week base. This is an actual base as opposed to just a stock that has sold off and is trying to rebound. ALXN broke higher in late July on earnings, gapping out of a 9 month base. Rallied to 48 on the move and then sold back in the market selling, testing its new 8 year high. It used the selling to form the current base, surging off the 200 day last Friday on very strong, above average volume. Nice test back to the 50 day EMA (40.30) Monday and Tuesday, and it may test a couple of more sessions along this support. All the better as it polishes the base. Just waiting for that next break higher on solid trade.
Volume: 802.359K Avg Volume: 1.709M
BUY POINT: $42.11 Volume=2.2M Target=$48.95 Stop=$40.08
POSITION: XQN AH - Jan. $40c (61 delta) &/or Stock or XQN WH - Nov. $40p (-40 delta, $3 to sell)
http://www.investmenthouse.com/ci/alxn.html
Play Date: 10/21/2008
RS (Reliance Steel--$26.38; -0.47; optionable): Steel and aluminum fabrication
http://biz.yahoo.com/p/r/rs.html
EARNINGS: Announced 10-16-08
STATUS: Trend reversal. No big surge or selloff on earnings, just continued work on its lateral range the past three weeks, showing some good price/volume action, i.e. up on the upside sessions, lower on the downside sessions. The pattern has tightened along the 10 day EMA (26.76) the past week, and volume spiked Tuesday as RS showed a tight doji just below that near resistance level. Looking for that volume spike to take RS higher. We can move in with traditional upside plays with stock and call options or we can sell some puts on it; if it runs higher the puts fall in value and we can repurchase them for less than we paid. With the November options listed if they expire worthless or we buy them after a good surge where their value is near zero our return is in the 20% range (based on the margin requirement for selling the puts). Either way RS looks good.
Volume: 3.624M Avg Volume: 1.855M
BUY POINT: $27.76 Volume=2.5M Target=$34.88 Stop=$25.82
POSITION: RS CE - Mar. $25c (79 delta) &/or Stock or RS WE - Nov. $25p ($1.70 to sell)
http://www.investmenthouse.com/ci/rs.html
Trend reversal/Dividend play:
Play Date: 10/21/2008
T (AT&T--$25.73; -1.26; optionable): Telecom services
http://biz.yahoo.com/p/t/t.html
EARNINGS: 10-22-08 before the open
STATUS: Trend reversal. This is not our usual play, but some folks want to play dividends so we are looking at T, a healthy dividend payer (current yield about 6.5%) that also has earnings potential thanks to its alliance with AAPL and its much better than expected iPhone sales. Indeed, T was moving after hours on the AAPL earnings, but the real story is tomorrow when T announces its results. If T gets a pop we are looking at selling some puts on it as it tests that surge, holds, and starts to rebound. This way we take in the premium for the put sale, using collateral in our account to cover the margin requirements (cash &/or Stock). If T rallies the puts drop in value and we buy them back at a much lower price. If it hangs around we can just let them expire and keep the money. If it comes back a bit we have until 24ish before we would be flat on the play given the option premium we take in on the put sale. Thus we would pick up T at a decent price if it hangs in this general area. We can also just buy the stock outright but as the ex-dividend date has passed on this one (and on most dividend paying stocks) for this quarter we like selling the puts as a way to take in some money now versus waiting for the next dividend payment in February.
Volume: 32.946M Avg Volume: 33.448M
BUY POINT: $26.55 Volume=50M Target=$30.75 Stop=$24.69
POSITION: T LZ - Jan. $26c (61 delta) &/or Stock or T XE - Dec. $25p (sells for $2.60)
http://www.investmenthouse.com/ci/t.html
Downside: Still some stocks that are going to fall even as the market recovers.
Play Date: 10/21/2008
BCR (C.R. Bard--$79.41; -2.21; optionable): Medical instruments
http://biz.yahoo.com/p/b/bcr.html
EARNINGS: 10-22-08 after the close
STATUS: Put. BCR rallied back the past week after an incredibly nasty drop through early last week. It tapped the 10 day EMA (82.09) Tuesday and then slid back down on rising though still below average volume (Monday was low trade after a week of big trade before). Money flow is heading lower even as BCR rebounded, an indication of its weakness. Looking for BCR to turn lower from here and continue the selling. A move to the target lands a 38%ish gain.
Volume: 721.875K Avg Volume: 880.706K
BUY POINT: $78.88 Volume=1M Target=$73.75 Stop=$82.21
POSITION: BCR XP - Dec. $80p (-41 delta)
http://www.investmenthouse.com/ci/bcr.html
Play Date: 10/21/2008
GWR (Genesee & Wyoming--$28.73; -0.16; optionable): Railroads
http://biz.yahoo.com/p/g/gwr.html
EARNINGS: 11-3-08
STATUS: Put. Rails were one of the groups that hung on longer than most, but they cracked big time in late September and early October. After that plunge GWR found some support at the January 2008 low and bounced, but it only made it back to the 10 day EMA (29.08) on mostly lower and lower volume. Showed a doji Tuesday at the 10 day on the lowest volume yet. It is either going to try a modest bounce higher or make another major break lower. Anticipating the latter, so if it rolls over we move in for the ride lower. A move to the target lands a 41%ish gain.
Volume: 276.485K Avg Volume: 510.068K
BUY POINT: $28.38 Volume=635K Target=$24.85 Stop=$29.94
POSITION: GWR XF - Dec. $30p (-49 delta)
http://www.investmenthouse.com/ci/gwr.html
CONTINUING 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.
AAPL: Struck the right chords with investors even with some lower guidance.
AFAM: Researching date.
CELG: Forecast January 2009. Still struggling below the 200 day SMA.
FCN: Tentatively set for November. Trying to hold on at some support at 60.
USNA: Nothing announced with earnings, but like this pattern it is showing.
CONTINUING POST-SPLIT PLAYS:
Play Date: 10/20/2008
HAL (Halliburton--$20.75; -0.05; optionable): Oil and gas service company
http://biz.yahoo.com/p/h/hal.html
EARNINGS: Announced 10-20-08 before the open
STATUS: Double bottom. Held steady Tuesday on lower though still above average volume as HAL forms a short handle to its short double bottom base. May take another day or so to set up but HAL looks good to make the break higher for us. To recap: HAL already has earnings out of the way; have to like that. It gapped higher on the news but filled much of the gap intraday, closing at the 10 day EMA. Might pause a day or two here but we feel it will not take long for HAL to continue the move off of this short double bottom formed after that rather cataclysmic fall from 55 to 15 in just over 3 months. Primed for a relief/recovery bounce and earnings are the catalyst.
Volume: 27.308M Avg Volume: 21.098M
BUY POINT: $21.64 Volume=26M Target=$25.95 Stop=$20.13
POSITION: HAL AD - Jan. $20c (63 delta) &/or Stock
http://www.investmenthouse.com/ci/hal.html
Play Date: 10/04/2008
NDN (99 Cents Only Stores--$10.32; +0.17; optionable): Discount variety stores
http://biz.yahoo.com/p/n/ndn.html
EARNINGS: Early November
STATUS: Double bottom w/handle. Solid bounce off an intraday tap at the 50 day EMA (9.55) Tuesday as NDN continues to set up for the breakout move. Still very solid. To recap: Still working in the handle to its 13 month base, bouncing off the 50 day EMA (9.46) on the Thursday low on rising, almost average volume. Want to see some more volume as it makes the move. Excellent money flow is leading higher and we are looking for NDN to follow the money and show us the breakout.
Volume: 1.267M Avg Volume: 1.637M
BUY POINT: $10.42 Volume=2.3M Target=$14.75 Stop=$9.69
POSITION: NDN AB - Jan. $10c (59 delta) &/or Stock
http://www.investmenthouse.com/cs/ndn.html
Play Date: 10/11/2008
SF (Stifel Financial--$46.17; -0.33; optionable): Investment brokerage
http://biz.yahoo.com/p/s/sf.html
EARNINGS: Second week November
STATUS: Test 200 day SMA. SF keeps looking as if it wants to make the move, but it keeps stalling. Gapped higher Monday, gapped lower Tuesday though both days on low, below average volume. After this pullback, however, it looks as if SF will be set, and on the next move higher on volume it is a buy. To recap: Another strong stock that got shoved back in the selling to the key 200 day SMA (35.14). It held that level Friday and bounced on very strong, above average volume. SF formed a nice 12 month cup with handle base and broke out in September, making us some great money. It has dumped back to test in the market selling in some of the 'out with the bathwater' selling last week. Like the high volume as it tapped the 200 day and bounced. Looking to move in as it continues higher as this stock can fly when it gets its legs. Option spreads on this one are as wide as wide as Aunt Edna's butt. If the don't narrow when trade starts next week we will have to look at stock positions only on this one.
Volume: 272.949K Avg Volume: 382.229K
BUY POINT: New: After this test, on a stronger move back up (orig. $44.44) Volume=550K Target=$54.95 Stop=$42.08
POSITION: SF AH - Jan. $40c (54 delta, wide spread) &/or Stock
http://www.investmenthouse.com/ci/sf.html
CONTINUING LEADER PLAY:
Play Date: 10/13/2008
SPTN (Spartan Stores--$25.81; -0.55; optionable): Wholesale food
http://biz.yahoo.com/p/s/sptn.html
EARNINGS: 10-15-08 after the close
STATUS: Double bottom w/handle. Similar to SF, SPTN is on the verge of making the break higher, showing strong volume as it holds near the breakout point the past week. Just looking for a move higher on volume that can stick through the session. To recap: SPTN came right back from the gap lower to the 200 day SMA, and we are looking at it again. Earnings are Wednesday making this a more aggressive play, but like how SPTN continues to set up a very positive upside base, rallying Monday on the strongest volume since June. If it continues higher we are looking at some positions ahead of earnings given its sector and pattern. Strong money flow continues leading higher.
Volume: 259.868K Avg Volume: 215.351K
BUY POINT: $26.31 Volume=275K Target=$30.45 Stop=$24.47
POSITION: QGH AE - Jan. $25c (62 delta, 50 OI) &/or Stock
http://www.investmenthouse.com/ci/sptn.html
TREND REVERSAL:
Play Date: 10/18/2008
ALK (Alaska Air--$23.75; +0.57; optionable): Regional airline
http://biz.yahoo.com/p/a/alk.html
EARNINGS: 10-23-08 before the open
STATUS: Reverse head and shoulders. Hanging in very well in the market weakness, rising Tuesday on a solid volume jump. It closed off the high and just below last week's closing high (23.87). If ALK can continue the move higher from here we are ready to move in. To recap: ALK has formed a short but deep reverse head and shoulders pattern the past 6 weeks. As oil prices are falling, ALK is setting up to break higher with some very strong above average volume sessions on the upside the past two weeks. This base has formed at the tail end of a larger 8 month base that is part of a larger base . . . suffice it to say airline stocks have suffered as oil rose. Plenty of basing under ALK's belt, and this strong upside volume and surging money flow tell us that ALK is ready to make the break higher. Earnings are Thursday and it looks as if it is going to make the breakout before then.
Volume: 1.575M Avg Volume: 1.076M
BUY POINT: New: on a continued move from the close (orig. $23.11) Volume=1.6M Target=$27.85 Stop=$21.49
POSITION: ALK AX - Jan. $22.50c (49 delta) &/or Stock
http://www.investmenthouse.com/ci/alk.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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