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us stock market, stock watch
Begin Part 2 of 3
TEAM TRADES
CNMD: Medical appliance maker that enjoyed a strong breakout in March and was moving laterally for over two weeks above the 18 day MVA. We noted the doji last night right over the 18 day MVA and the continued positive price/volume action in the lateral consolidation. We liked what we were seeing as this was an example of how a solid stock was holding up well while the rest of the market tanked. That is the strong action we like to see. Today when the market started up CNMD was ready to spring. At 1:30 it shot up on some huge volume spikes, hitting our buy point of 26.05. This is one we were waiting for and we shot out the alert quickly and then turned around and put in a limit order at the ask of 26.09. That was good enough and the stock continued its strong move up to 27 where it ran into intraday resistance in the last hour. Good volume, solid pattern, a good leader.
THE PLAYS:
BONUS PLAYS: MTB made the move, and RI is still set up. EMR and ARW rallied with the market, testing the drops but short of resistance.
UAG (United Auto Group--$24.92; +1.42; optionable): Auto dealerships
http://biz.yahoo.com/p/u/uag.html
STATUS: After making a high of 27.70 in January, UAG has formed a cup with handle, the cup having a bit of a spike in the center like a double bottom. The handle formed after an early-April surge took UAG back up to 25.60 before it gradually pulled back to consolidate over the support of its 50 day MVA (23.12). Today UAG tapped that support and then blasted up on sharply higher volume of 316,500 (avg. 250k). We are looking at the earnings announcement in the morning, so we will see how the reaction is, and look for a breakout. 30.50.
BUY POINT: 25.70 on volume of 375k. Stop: 23.90.
POSITION: Stock and/or August 22.50 or 25 calls to buy (UAG HX - delta 72, OI 7; UAG HE - delta currently 57, 27 OI).
XTO (Xto Energy--$20.40; +0.15; optionable): Independent Oil & Gas
http://biz.yahoo.com/p/x/xto.html
STATUS: XTO made a good January-February run as it broke from a double bottom pattern, and now it has reached the all-time highs (21.73, also the left side of a larger base dating back to May 2001). XTO hit up to 20.88 and has formed an ascending wedge testing its 50 day MVA (currently 19.33) in early April but holding the short-term MVA's (18 day 20.08) after trying to reach over the prior high recently. We have seen some huge volume spikes as XTO consolidates over support, and we are watching for a breakout move. Money flow remains strong and relative strength has broken out. Target: 25.
BUY POINT: 20.98 on volume of 700k (avg. 517k; today 444k). Stop: 19.51 (7%)
POSITION: Stock and/or August $17.50 calls to buy (XTO HW).
ODSY (Odyssey Healthcare--$34.02; +1.02; no options): Long-term care facilities. Earnings May 6 after the close.
http://biz.yahoo.com/p/o/odsy.html
STATUS: New issue since November. ODSY broke from a seven-week cup with handle in early April, and has looked good as it tested the move and continued higher. ODSY pulled back Friday and Monday to test prior highs and the 18 day MVA (32.59), taking a bit of a bounce from the 18 day today as volume was higher but remained below average at 129,500 (avg. 167,500). Looking for a strong bounce and a continued move up along the 18 day. Excellent money flow and buying. Target: 42.
BUY POINT: Bounce: Over 35 on volume of 200k. Stop: 32.64 (7%).
POSITION: Stock only (no options yet).
Quick updates prior bonus plays:
RTEC - Strong bounce, so watching put positions carefully
DRTE - Still looks good
MCY - Gapped up and reversed on big volume, so we are prepared for a quick pullback
HLT - Testing the breakout on low volume
PZB - Holding support after the gap up and reversal
ASCA - Holding on after the breakout reversal, but we are watching support carefully
SMTC - Bounced but still looks weak on the put play
FDS - Good looking put play
CAT - Testing the 50 day on light volume, so looking for a renewed drop
CKP - Holding the 50 day but not showing much to the upside yet
JILL - A bit erratic; it could move up again, but protecting from a downward move through the 50 day
CF - Nice consolidation over the 10 day after the big move
CDIS - Pulled back to the 18 day; if it holds could set up an ascending wedge
FDS - Still dropping on the put play
AVY - Holding over the short-term MVA's and still could move
SYK, SKIL and TIN - Puts that bounced from support so we will watch to gauge if the upward move has strength
ULAB - Low volume push up so wary of a drop
PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: No announcements Monday but RCII blasted off, and BER and ACDO made strong moves up. Looking at MGA and MTG Thursday, SRCL Wednesday.
NEW PRE-ANNOUNCEMENT PLAY:
KSS (Kohl's Corp--$73.70; +0.55; optionable): Department Store. Forecast to announce a split on 5-16-02 after the market closes in conjunction with earnings or on 5-21-02 in conjunction with its annual shareholder meeting.
http://biz.yahoo.com/p/k/kss.html
BACKGROUND: Last announced a 2:1 split on 3-16-00 at a stock price of $76. The company has sufficient shares for a 2:1 split.
STATUS: Earlier this month KSS broke from a shallow saucer, a pattern formed after its pulled up to its prior highs. The stock made a strong breakout from that pattern, but stalled at 76.20 and dipped back to test the move. KSS is holding at the prior pattern highs (72, tested at its low today) and over its 50 day MVA (71.30). KSS made a move up after testing 72 today, running back up as volume spiked back over the average at 2.33m (avg. 1.8m). Looking for a bounce back up and a new high. Relative strength broke out and there is good buying. Target: 89.
BUY POINT: Over 75 on increased volume. Stop: 70.50
POSITION: Stock and/or July $70 calls to buy (KSS GN).
PRE-ANNOUNCEMENT BEST PLAYS:
1) ATK - Nice move!
2) MHK - Nice pattern
3) MTG - Forecast for Thursday and bouncing
4) MGA - Also forecast for Thursday
5) SRCL - Forecast for Wednesday
6) BMS - Still room for new put positions
7) BER - Good move to new high on earnings
ATK (Alliant Techsystems--$107.70; +2.71; optionable): Aerospace/Defense. Forecast to announce a split on 5-9-02 before the open with earnings.
http://biz.yahoo.com/p/a/atk.html
BACKGROUND: Last announced a 3:2 split on 8-8-01 at a stock price of $98.20. The announcement was made a day after the annual shareholder meeting and in conjunction with earnings. The annual shareholder meeting was on 8-7-01 at which time additional shares were authorized. The company has sufficient shares for a 3:2 split.
STATUS: After a test of its March breakout and 50 day MVA (99.48) last week, ATK is poised to continue its run. After a solid initial bounce on the test that neared its high, ATK slowed to rest on its 18 day MVA (104.33). Today it bounced sharply, with volume spiking up to 502k (avg. 314k), hitting 109 at its high (all-time high at 109.28, from early April). Looking for a continued move up over the high. Target: 125.
BUY POINT: Breakout: 109.38 on continued strong volume. Stop: 103.
POSITION: Stock and/or August $100 calls to buy (ATK HT).
MHK (Mohawk Industries--$64.33; -0.67; optionable): Textile manufacturing. Forecast to announce a split at its May 16 shareholder meeting. Earnings were April 15.
http://biz.yahoo.com/p/m/mhk.html
BACKGROUND: Based upon our research it does not appear that MHK has ever split its stock. The company has sufficient shares for a 2 for 1 split.
STATUS: MHK has made a nice run, breaking from a reverse head & shoulders in November and trending nicely up its short-term MVA's, with the occasional test back to the 50 day. MHK hit a high of 68.10 in early March, and off of that has formed a cup with handle. It started a move today, hitting 66.45 but there was no volume (351k; avg. 644k) and it pulled back to close, still holding over its 18 day MVA (63.58). Looking for MHK to hold here, perhaps with a little more handle, and breakout. Good relative strength. Target: 79.
BUY POINT: 67.05 on volume of 965k. 62.36 (7%).
POSITION: Stock and/or August $60 calls to buy (MHK HL - 89 open interest).
SRCL (Stericycle--$67.53; +0.98; optionable): Waste Management. Forecast to announce a split with earnings on May 1 after the close.
http://biz.yahoo.com/p/s/srcl.html
BACKGROUND: Based on our research it does not appear that SRCL has ever split its stock. The annual shareholder meeting is scheduled for 5-15-02 at 11:00 ET, at which time additional shares will be authorized.
STATUS: New high today, but on weak volume. SRCL has been in a nice uptrend since late 2000. After a good run off of its September lows, SRCL dropped back to test the 200 day MVA in January, but showed solid support at that key level, and after hitting a new high on that run at 67.99 in March, the stock showed another pretty serious drop through its 50 day MVA (currently 62.82). It made a nice rebound, and after holding a consolidation over the 50 day last week, SRCL has taken a bounce. However, what started strong has tapered off going into the forecast, and SRCL needs to show us some volume for positions. We will see if the stock pulls back toward 66 tomorrow, but with an announcement we can look at positions on a strong move back up. Target 78. Good money flow, buying and relative strength.
BUY POINT: After holding 65-66 on a pullback, a bounce over 67.50 on volume of 300k (avg. 286; today 189k). Stop: 63.40.
POSITION: Stock and/or August $65 calls to buy (URL HM).
MTG (MGIC Investment--$71.36; +1.55; optionable): Surety & title insurance. Forecast to announce a split on 5-2-02 in conjunction with its annual shareholder meeting.
http://biz.yahoo.com/p/m/mtg.html
BACKGROUND: Based upon our research it does not appear that MTG has ever split its stock. The annual shareholder meeting is scheduled for 5-2-02 at 9:00 ET at which time no additional shares will be authorized. The company has sufficient shares for a 2 for 1 split.
STATUS: Nice bounce today. MTG has been trending steadily up along its 50 day MVA (69.09), taking a very strong gapping bounce in early April, but gradually pulling back over the last two weeks. The pullback held at March consolidation levels and the 50 day, today producing a bounce on sharply higher volume (547k; avg. 504k). We can look at adding positions on a continued move going toward the shareholder meeting, looking for a good move to gather more momentum with an announcement. The bounces are typically about $8-$10, so we can look at a bounce play up to an initial target of $80.
BUY POINT: Over 72 on increased volume. Stop: 68.
POSITION: Stock and/or June $70 calls to buy (MTG FN).
MGA (Magna--$73.89; +1.09; optionable): Auto Parts. Forecast to announce a split 5-2-02 with earnings or on 5-9-02 in conjunction with its annual shareholder meeting.
http://biz.yahoo.com/p/m/mga.html
STATUS: Broke out from a large ascending wedge in early March, but has not been able to put together much of a move. It formed a lateral consolidation, managing a recent move up to 77.25, but over the last two weeks has pulled back into the consolidation range. It has held support at its 50 day MVA (72), but a weak bounce today (volume 182,700; avg. 266k) could only produce a loose doji under its short-term MVA's (74.25). We will see if it continues to consolidate at 72-74 or generate some strength for a move going toward the forecast, or with an announcement. On a strong move, targeting 90.
BUY POINT: Aggressive: Over 75 on volume of 300k. Stop: 71.
POSITION: Stock and/or August $70 calls to buy (MGA HN).
BMS (Bemis--$53.23; +0.56; optionable): We are researching a date.
http://biz.yahoo.com/p/b/bms.html
BACKGROUND: Based upon our research it does not appear that BMS has ever split its stock. The annual shareholder meeting was on 5-3-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: After the strong drop through the put buy point on Monday, BMS was carried back up by the rally today. However, volume was significantly lower (252,600; avg. 269k), and BMS retreated from its intraday high of 54 to close (50 day MVA at 54.26). Weak action, and it points to a continuation of the drop. The move also sets us up nicely for new or additional positions on a drop back. Still targeting 49 (200 day MVA at 48.30).
BUY POINT: For new or additional positions, a drop through 52.60 on above average volume.
POSITION: July $55 puts to buy (BMS SK).
BER (W.R. Berkley--$60.50; +1.00; optionable): Property & Casualty Insurance. Forecast to announce a split at the annual shareholder meeting on 5-14-02 at 2:30 ET.
http://biz.yahoo.com/p/b/ber.html
BACKGROUND: Based upon our research it does not appear that BER has ever split its stock. The annual shareholder meeting was on 5-15-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: Strong move. BER made a nice, January-April trend up along the short-term MVA's. The move took BER to a new high (60.40, from early this month), but off of that mark the stock finally pulled back and dropped back to test its 50 day (57). It settled over that level but with earnings Monday BER gapped up with a lot of volume behind it, hitting a new high but pulling back to close with a 'tombstone' doji. That typically indicates a drop back, but BER pushed back up today on even stronger volume (210,600; avg. 115k), closing just over the Monday high. Targeting 68 with current positions, and we can look at options positions on a continued strong breakout move from here.
BUY POINT: Still a buy up to 62 on this move on continued strong volume. 56.50 - 57.60.
POSITION: July $55 or $60 calls to buy (BER GK or BER GL).
PRE-SPLITS BEST PLAYS: Remember, we try to grab Pre-Splits as they break out of good patterns or as they start a run right before the split. Not looking for home runs, but looking for those $3 to $4 moves running into the split, watching for topping signs and potential resistance. Not huge money, but it can be very steady. We set our initial stops at the 7-8% range below the purchase price (or just below obvious support), and move them up on a move to preserve our profits.
1) FAST - Set up to bounce on the test
2) LLL - Nice move to a new high!
FAST (Fastenal--$83.64; -0.09; optionable): Splits 2:1 effective 5-13-02.
http://biz.yahoo.com/p/f/fast.html
STATUS: Has come back to test the breakout, and is holding the prior pivot point. That is what we want on a test, although this move back was a bit more rapid than we would normally want; however, pre-splits are volatile, and we play to that by heeding our technical analysis signals that point to when a run will begin and when it will end. Today we got a strong signal with a tight 'hammer' doji over the support of the former high and 10 day MVA (82.96), as volume kicked up to a very high level (593k; avg. 255k). Looking for the bounce, and targeting 95.
PLAY: Over 85, with August $80 calls to buy (FQA HP).
LLL (L-3 Communications--$127.78; +5.34; optionable): Splits 2:1 5-21-02.
http://biz.yahoo.com/p/l/lll.html
STATUS: Nice bounce! LLL launched out of its nice, slightly declining consolidation of the last two weeks, taking out the buy point when it moved over the former high of 126. Volume spiked up on the session to 1.18m (avg. 787k). Still a buy on this move up to 130 as we target 145.
PLAY: A buy up to 130, with July $120 calls to buy (LLL GD).
CONTINUING CANDIDATES BEST PLAYS: INVN still set up for a possible put.
1) JCI - Put play
2) PII - Strong
JCI (Johnson Controls--$86.25; +2.00; optionable): Auto parts.
http://biz.yahoo.com/p/j/jci.html
STATUS: Making the weak test we were looking for. JCI double topped at 93, and gave up the 50 day MVA (87.25) mid-April. It tested that level and fell hard Monday, but today we were looking for a relief bounce with the market, and JCI rose back up to tap the 50 day at its intraday high, but pulled back to close, moving on volume that was sharply down at 380k (avg. 445k). We will see if JCI tries again, but we are looking for a drop back and put play down to 80 (200 day MVA at 79.48).
BUY POINT: A drop through 84.50 on above average volume. Stop: 87.50
POSITION: July $90 or $95 puts to buy (JCI SR - 21 open interest, or JCI SS - no open interest - check delta).
PII (Polaris Industries--$75.30; -0.35; optionable): Recreational vehicles
http://biz.yahoo.com/p/p/pii.html
STATUS: PII has made a very strong move from the bottom of its recent flag consolidation (formed a nice early-April breakout from another flag pattern - a pennant type lateral configuration formed after an abrupt breakout upward). After moving from 69.50 over the recent high (73.60), PII hit a new high of 75.75 Monday. Volume was strong on the surge, and today PII rested, pulling back slightly for a doji as volume dropped off significantly to 238,500 (avg. 175k). Looking for PII to hold 74 with a lower volume test, and we can look at new or additional positions on a strong move back up. These flag patterns often occur in groups of three, so after this blast up we could get another consolidation and breakout. Target: 86.
BUY POINT: After holding 74, a but up to 76 on increased volume. Stop: 69-70.70.
POSITION: Stock and/or September $70 calls to buy (PII IN - 54 open interest).
POST-SPLITS BEST PLAYS:
1) JEC - Still solid
2) SONC - Holding on the test of the breakout
3) AMAT - Still a put
JEC (Jacobs Engineering--$39.46; +0.09; optionable): Heavy construction.
http://biz.yahoo.com/p/j/jec.html
STATUS: Still testing last Tuesday's breakout, showing a nice, low-volume pullback that is holding over the prior highs and the 10 day MVA (38.93). Today JEC pushed up slightly from that level, as volume remained relatively light at 187,300 (avg. 190,000). This is the second flag pattern tossed out by JCI on the breakout move, and we can look at new options positions on a strong move up. Still targeting 44, but on a strong move we might adjust that upward.
PLAY: Over 40 with volume of 220k, with July $37.50 calls to buy (JEC GU). Stop: 37.50.
SONC (Sonic--$29.31; -0.24; optionable): Restaurants. Split 3:2 on February 11.
http://biz.yahoo.com/p/s/sonc.html
STATUS: SONC made a powerful breakout from its double bottom with handle last week, but as will often happen on a breakout to a new high, SONC was promptly hit with a downgrade. It has pulled back but held support at its prior pattern highs and the 18 day MVA (28.53). It gapped down to those levels Monday, but rebounded nicely to close, with low volume. Today it rested, holding a doji on increased volume (373,400; avg. 325k) after again testing near the 18 day at its low. Strong stocks usually withstand these valuation downgrades, and we will look for the stock to hold 29, settle down, and make a strong move back up to continue toward the target of 36.
PLAY: Over 30 on increased volume, with stock and/or September $25 calls to buy (ZSQ IE). Stop: 28.
AMAT (Applied Materials--$24.32; +0.38; optionable): Split 2:1 effective 4-17-02.
http://biz.yahoo.com/p/a/amat.html
STATUS: After the big drop Friday, AMAT held on Monday and with some help from the market, today made the relief bounce that we were looking for. The stock tapped back over the 50 day (24.98) at its intraday high, pulling back to close as volume dropped to 25m (avg. 19.4m). We will see what the market brings Wednesday, and if we get some more of a move up we will look for AMAT to make a muted attempt to move higher, but we will still look for the drop back and the put play. If we get a drop in the market, we can catch AMAT on the drop. Targeting 21.80 (200 day MVA at 21.54).
PLAY: From here or after a test of 24.50-25, a drop through 23.80 on continued strong volume, with June 27.50 puts to buy (ANQ RY).
End Part 2 of 3
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us stock market
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