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Begin part 3 of 3
THE PLAYS:
New Pre-Announcement Plays:
Play Date: 10/23/2008
CELG (Celgene--$58.05; +4.76; optionable): Biotechnology
http://biz.yahoo.com/p/c/celg.html
EARNINGS: Announced 10-23-08 before the open
STATUS: Trend reversal. Strong volume and price move Thursday as CELG enjoyed a ride higher on strong earnings, pushing through the 18 day EMA (57.80) on the close. Has not closed over the 18 day EMA for some time and with the volume we are looking for CELG to make a bounce here for us. The 200 day SMA is at 62.76 and that will cause some resistance; when it hits that we will look at banking some of the option gain at least then see what new staying power it has after the initial earnings move.
Volume: 11.27M Avg Volume: 5.432M
BUY POINT: $58.32 Volume=7M Target=$66.95 Stop=$55.88
POSITION: LQH AK - Jan. $55c (65 delta) &/or Stock
http://www.investmenthouse.com/ci/celg.html
New buy point on current position:
Play Date: 10/23/2008
AFAM (Almost Family, Inc.--$39.54; -0.39; optionable): Home health care
http://biz.yahoo.com/p/a/afam.html
EARNINGS: No confirmed date
STATUS: Cup w/handle. Nice handle forming the past two sessions on lower, below average volume as AFAM puts the finishing touches on a new 8 week base. This base formed after AFAM moved to a new high in late August. Nice run from May to August and this leader needed a base to rest and set up again. Volatile base but the selling this fall was volatile and still AFAM formed up a new solid base. Nice break higher last week and on through Tuesday, now testing. On the next break higher with rising volume AFAM is a new buy.
Volume: 218.725K Avg Volume: 324.147K
BUY POINT: $40.65 Volume=475K Target=$48.85 Stop=$37.98
POSITION: KQA BH - Feb. $40c (49 delta, wide sprd low OI) &/or Stock
http://www.investmenthouse.com/ci/afam.html
New Post-Split Play:
Play Date: 10/23/2008
NEOG (Neogen--$28.83; -0.63; no options): Diagnostic substances
http://biz.yahoo.com/p/n/neog.html
EARNINGS: 9-24-08
STATUS: Test breakout. NEOG broke higher from an 11 month base in mid-September on earnings. In the market selling it back hard but reversed quickly and rallied back. It broke higher gain early this week only to test back Wednesday and Thursday on lower, average volume. Tapped the 18 day EMA on the Thursday low and rebounded to recover most of the loss on the session. The rebound held it over the highs in the prior base, just the action it should show. Strong money flow is out ahead of the stock and looking for NEOG to move back up and as it does that is when it is a buy.
Volume: 79.107K Avg Volume: 80K
BUY POINT: $29.78 Volume=175K Target=$34.95 Stop=$27.78
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/neog.html
Trend Reversal/Leader Plays:
Play Date: 10/23/2008
DO (Diamond Offshore--$73.73; +9.34; optionable): Offshore drilling
http://biz.yahoo.com/p/d/do.html
EARNINGS: Announced 10-23-08 before the open
STATUS: Double bottom. Strong volume Thursday as DO reported some solid earnings and gapped higher, running up to the 10 day EMA (74.77) on the close. It is threatening to reverse the downtrend that steepened in October, stifling DO at the 10 day EMA when it tried to bounce. Looking for a break over the 10 day EMA on some more solid trade to show us the buyers are still in the game and ready to send it higher.
Volume: 5.882M Avg Volume: 2.353M
BUY POINT: $74.88 Volume=3.2M Target=$88.75 Stop=$71.68
POSITION: DO LO - Dec. $75c (55 delta, 62 OI) &/or Stock
http://www.investmenthouse.com/cs/do.html
Play Date: 10/23/2008
RTN (Raytheon Co.--$46.84; +2.69; optionable): Aerospace/defense
http://biz.yahoo.com/p/r/rtn.html
EARNINGS: Announced 10-23-08 before the open
STATUS: Trend reversal. Volume is jumping on certain days with RTN, doing so Thursday on its earnings. It has moved laterally the past two weeks after selling off in September and early October but not the gut-punch dive lower as with many stocks. Very good action and looking for RTN to make the break higher off of this earnings momentum.
Volume: 6.589M Avg Volume: 3.288M
BUY POINT: $47.55 Volume=4M Target=$53.65 Stop=$44.22
POSITION: RTN AI - Jan. $45c (61 delta) &/or Stock
http://www.investmenthouse.com/ci/rtn.html
Index Play:
Play Date: 10/23/2008
DIG (Oil & Gas Ultra ETF--$30.00; +3.00; optionable)
STATUS: Rolling. DIG is rolling up and down in a range from 25 to 37-38 on the closes at the top of the range. Reached lower and reversed Thursday on very strong volume. Looking to step in and play DIG on the roll to the top of the range. If it continues higher from there say on up to 40, great. We will be digging it even more in that case and will let some of the positions move higher for us.
Volume: 30.432M Avg Volume: 6.529M
BUY POINT: $30.32 Volume=15M Target=$36.00 Stop=$28.24
POSITION: DPB LD - Dec. $30c (51 delta, 101 OI) &/or Stock
http://www.investmenthouse.com/ci/dig.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.
AMED: Researching date
CELG: Forecast January 2009. Good earnings report
USNA: Nothing announced with earnings, but like this pattern it is showing.
CONTINUING POST-SPLIT PLAYS:
Play Date: 10/21/2008
ALXN (Alexion Pharmaceuticals--$39.60; -0.06; optionable): Drugs
http://biz.yahoo.com/p/a/alxn.html
EARNINGS: 10-23-08 before the open
STATUS: Double bottom w/handle. Big volume on the earnings announcement as ALXN sold off then reversed to hold the 10 and 18 day EMA. Still in the pattern, still looks good; have to like how a stock holds up well after earnings, and ALXN is in position to make the breakout. To recap: 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: 2.864M Avg Volume: 1.706M
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
CONTINUING LEADER PLAY:
Play Date: 10/18/2008
ALK (Alaska Air--$22.63; -0.87; optionable): Regional airline
http://biz.yahoo.com/p/a/alk.html
EARNINGS: 10-23-08 before the open
STATUS: Reverse head and shoulders. Tested lower Thursday, tapping at the 50 day EMA on the low (20.95) and then rebounding nicely. Still solidly in a solid pattern and just waiting for the break higher. 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: 1.142M Avg Volume: 1.096M
BUY POINT: New: Needs to clear 24 on continued solid volume (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
Play Date: 10/22/2008
NUE (Nucor--$33.88; -0.48; optionable): Steel and iron
http://biz.yahoo.com/p/n/nue.html
EARNINGS: Announced 10-16-08
STATUS: Double bottom w/handle. Nice tight doji Thursday on an increase in already above average volume. Very nice set up to move higher. To recap: Held up very well for a down day in commodities. Nice to have earnings already out of the way. Eased back to the 10 day EMA on the close, working on a handle to a short 5 week base. Solid volume on the bounce up last week off the second leg of the double bottom. We can look to play this as a straight upside play buying some stock and some options or we can look at selling some puts on it, taking in the premium and see if it gets put to us. It has a good dividend yield at 5.9% at this level. Not bad as it looks to have some upside ahead of it if the market bottoms at the prior lows. We get some appreciation and some dividend as well though it will have to be the next go round as they have already paid out the latest dividend.
Volume: 13.828M Avg Volume: 9.253M
BUY POINT: $35.84 Volume=14M Target=$42.75 Stop=$33.33
POSITION: NLV AG - Jan. $35c (51 delta) &/or Stock or NLV WG - Nov. $35p to sell
http://www.investmenthouse.com/ci/nue.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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