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Begin Part 2 of 3

THE PLAYS:

Good movers: ITN, ELBO, QFAB, RAH
Targets: JILL (35)
Stop Advisories: All puts in the rally today. ARW (27, put), GCI (75.50, put), POSS (15, put), BZH (84.50, put), CTX (55.50, put).

THE PLAYS: Excitement this week on splits by ATK, APPB and YUM! BBY made the downside move we were looking for, and the put plays that were reversed on Wednesday's rally have been making their anticipated retreat.

BONUS PLAYS: AGN gapped up but looks like it could drop back and give us the put play. WFMI gapped up on the news it was going to the S&P madcap 400, and we will see if it can be stingy with the gain and set up more.

Upside:

SERO (Serologicals--$20.90; +0.15; optionable): Biotech
http://biz.yahoo.com/p/s/sero.html
STATUS: In a four month cup with handle. After breaking from one handle at the end of April, SERO has not pulled into a second handle. It looks good, pulling laterally over the 10 day MVA (20.61) on low volume (153k on today's doji; avg. 219k). A good-looking pattern, with volume up on up weeks ahead of volume up on down weeks 14-6. Excellent money flow, good buying and relative strength. Target: 25.50
BUY POINT: 21.38 on volume of 330k. Stop: 19.88 (7%).
POSITION: Stock and/or August $20 calls to buy (QEO HD - 40 OI).

GPK (Graphic Packaging--$8.90; -0.11; optionable): Packaging & containers
http://biz.yahoo.com/p/g/gpk.html
STATUS: GPK has made a nice move, trending up steadily along its short-term MVA's in March and April, and breaking from a cup dating back to September 2001 (highs 7) last month. Volume has been very solid on the move up the last six weeks, and for the last nine sessions GPK has pulled into a tight lateral consolidation over the 10 day MVA (8.83). The stock showed its sixth consecutive doji today, as volume was down but still strong at 137,600 (avg. 74k). Looking for another breakout, targeting 11.75.
BUY POINT: 9.22 on continued strong volume (min. 100k). Stop: 8.56 (7%)
POSITION: Stock only.

GRMN (Garmin--$23.00; +0.04; optionable): Scientific & Technical Instruments
http://biz.yahoo.com/p/g/grmn.html
STATUS: GRMN is in a year-long cup with handle, looking strong on accumulation with up volume weeks on rising price leading down volume weeks 15-9. The handle pulled back to the 50 day MVA (22.31) toward the end of April, but GRMN moved back over the short-term MVA's (22.85) and it is in a very tight, low volume consolidation over that support now, showing six consecutive dojis. Looks poised for a move. Very strong buying. Target: 28
BUY POINT: 23.40 on volume of 240k (avg. 160k; today 93k). Stop: 22.25
POSITION: Stock and/or July $20 calls to buy (GQR GD).

Downside:

UVN (Univision--$40.27; +0.37; optionable): TV broadcasting
http://biz.yahoo.com/p/u/uvn.html
STATUS: UVN is showing a descending wedge pattern, making lower highs as it holds support in at the 40 level. Friday UVN dropped hard back through its 50 day MVA (41.36), holding the 40 level again with a loose doji Monday and tight doji today. Volume was up on the doji today (1.8m; avg. 997k), so we could see a test up toward the 50 day, but we are looking for a failed move and a strong drop through the recent lows. Target: 36 (200 day MVA)
BUY POINT: From here or after a test up toward the 50 day, a drop through 39.55 on continued strong volume. Stop: 42.60
POSITION: June $45 puts to buy (UVN RI - 46 OI, next month out is September).

Quick updates prior bonus plays: A lot of stops on the tech put plays (BRCD, CYMI, LRCX, NVLS, MSIM, ARW)

PCAR - Moved up on low volume and we are holding for a drop back
DISH - A lot of volume on the gap up, but a doji under resistance and we are looking for it to retreat again
ROIA - Not a good follow-up, dropping back on higher volume
NAFC - Still set up to move to the upside
CCRD - Tested back up, setting up a renewed fall
ABT - Relief bounce on good volume, but bias still down on our put play
CPRT - Still set up for the drop
LIN - Quick pullback off the breakout, and now trying to hang on
AVY - Another great move!
XTO - Showing strength as it tries to move up out of the consolidation again
MTB - Nice bounce and breakout!
TDY - Continued strength
MFC - Got the drop, and it was strong so protecting positions from a further fall
IRIC - Big bounce!
LEXR - Testing the 50 day
RF - Weak move up and we could still get the drop
MCY - Looking good on the breakout test
PZB - Moving up again
CAT - Gapped up but faces the 50 day off of a doji - does not indicate it will break through
CF - Bouncing from the 50 day but not on strong volume

PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: Announcement from ESI Monday! Nothing from BER today, with CAKE, KSS (still a put) and MHK for Thursday.

PRE-ANNOUNCEMENT BEST PLAYS:
1) CAKE - Looking for a bounce going into the forecast
2) BMS - Still struggling under resistance
3) KSS - Flipped on retail sales
4) EASI - Looks primed for a breakout
5) MHK - Trying to move going into the forecast

CAKE (Cheesecake Factory--$41.80; +0.12; optionable): Restaurant. Forecast to announce a split on 5-16-02 in conjunction with its annual shareholder meeting.
http://biz.yahoo.com/p/c/cake.html
BACKGROUND: Last announced a 3:2 split on 5-24-01 with its annual shareholder meeting. The stock price was $34.50. The annual shareholder meeting is scheduled for 5-16-02 at 10:00 PT at which time no additional shares will be authorized. The company has sufficient shares for a 2:1 split. CAKE typically announces close to a shareholder meeting.
STATUS: We have followed CAKE as it announced prior splits in 2000 and 2001, both which were in this range. CAKE broke out of its December-March range in April, making a nice move over 38 and then making a steady trend upward. It is trying to bounce from its 18 day MVA (41.08), but not making much headway at the moment, showing a doji today as volume remained below the average (416k; avg. 534k). Looking for another bounce and continued trend up, and with the shareholder meeting we can pick our entry point on a move. Target: 49.50
BUY POINT: Over 42.25 on above average volume. Stop: 39.29 (7%)
POSITION: Stock and/or July $40 calls to buy (CFQ GH).

BMS (Bemis--$54.27; +0.91; optionable): Packaging and containers. 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 company has sufficient shares for a 2:1 split.
STATUS: Put. BMS is making the test of the 50 day MVA (54.26) we were looking for after the crash through that former support last Friday. Off of Monday's doji, BMS rose back to close at the 50 day today, moving on increased volume of 318k (avg. 281k). Still looking for this move to fail, producing the 'kiss goodbye' and drop back. We recently got stopped out of some put plays on this one, and it set up as one that could set up to go either direction (we were looking for it to form a handle to a double bottom), but it made another higher low and fell back with rising volume. Targeting 49.50 (200 day MVA at 48.88).
BUY POINT: A drop through 53 on continued strong volume. Stop: 55.25
POSITION: July $60 puts to buy (BMS SL - 20 IO).

KSS (Kohl's Corp--$73.00; +3.25; 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: Retail sales blasted KSS up on a trend reversal gap, stopping us out of the put play. Not a weak-kneed move like we saw last week, KSS gapped to open over the 50 day MVA (71.28) and its short-term down trendline and then continued up, with volume spiking way up to 3.67m (avg. 1.76m). We see changes in character in both directions that can turn a good play into one where you are racing to get out. With KSS approaching the forecast, we can look to make lemonade. We will see what Wednesday brings, and with a test back that holds we can catch upside positions on a strong move up going into the forecast.
BUY POINT: From here (momentum): A continued move over 73.40 on continued strong volume. Stop: 70.50. Test: On a successful hold of the 72 range on a lower volume pullback, a move back over 73 on continued strong volume. Stop: 70.50.
POSITION: Stock and/or July $70 calls to buy (KSS GN).

EASI (Engineered Support--$51.22; +0.26; optionable): Aerospace/Defense. Forecast to announce a split the week of 5-27-02 with earnings. At this time, the company cannot confirm this date.
http://biz.yahoo.com/p/e/easi.html
BACKGROUND: EASI last announced a 5:4 split on 2-1-2001 with a board meeting at a price of $28.50. Before that it announced on 6-12-98 at a price of $26.50. The company has sufficient shares for a 3:2 split.
STATUS: Still patient. EASI is trying to break from a cup with handle, and it is tightening into a small ascending wedge. The last two sessions it has tested support at the 18 day MVA (50.09) at its low, pulling back up today to close with a loose doji as volume increased to 230,800 (avg. 187k). Still looking for a breakout. With some strength on a move, targeting 62. The left side high in the pattern is at 58 from October 2001.
BUY POINT: 52.23 on volume of 290k. Stop: 48.57 (7%).
POSITION: Stock and/or August $50 calls to buy (UFE HJ).

MHK (Mohawk Industries--$66.15; +1.96; optionable): Textile manufacturing. Forecast to announce a split at the shareholder meeting to be held 5-16-02.
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: Cup with handle. MHK failed on a breakout attempt last week, pulling back into the base of the handle. It held on there, and bounced today in the rally on increased volume, although it remained below the average (574,400; avg. 605k). Not the best handle pattern at this point, and we need to see some volume to take positions, but we have time all the way up to the shareholder meeting (time still not supplied).
BUY POINT: Aggressive: 67.05 with volume of 900k. Stop: 62.60. The high was established on the breakout attempt at 68.45.
POSITION: Stock and/or August $60 calls to buy (MHK HL - 78 OI).

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) COCO - Breakout test
2) APPB - Nice consolidation
3) LLL - Ascending wedge
4) RYL - Aggressive bounce
5) FULT - Bounce up in the pattern

COCO (Corinthian Colleges--$57.13; +1.34; optionable): Splits 2:1 effective 5-28-02.
http://biz.yahoo.com/p/c/coco.html
STATUS: Bounced up off of Monday's doji, hitting our aggressive buy point intraday. After a solid April move, COCO made a nice, light volume pullback to test the 18 day MVA and its former highs (April and August 2001, the left-side high of a cup), finally showing the 'hammer' doji Monday. Looking for a continuation of the move. Target going into the split: 66.
PLAY: Over 58, with August $55 calls to buy (UCS HK).

APPB (Applebee's--$40.70; +0.66; optionable): Restaurants. Split 3:2 effective June 12.
http://biz.yahoo.com/p/a/appb.html
STATUS: Made a solid breakout last month from its December-April range, and has held up, showing a pennant pattern over the 10 day MVA (39.92). Today APPB started the bounce we were looking for, not quite hitting our buy point. Still looking for an options play up to a target 46.
PLAY: Over 41 with volume of 500k, and August $35 calls to buy (AQB HG). Stop: 38.70

LLL (L-3 Communications--$131.85; +0.36; optionable): Splits 2:1 effective 5-21-02.
http://biz.yahoo.com/p/l/lll.html
STATUS: The test of the breakout has developed into a small ascending wedge. Today LLL moved up a bit on sharply higher volume (862,500; avg. 760k), but could only manage another doji. Still looking for a test of the 10 and perhaps 18 day MVA (129.47 and 127.52) to set up the bounce and breakout. Target 145.
PLAY: Looking for a test back that holds the 128-130 range, and then a move over 133.50. July $130 calls to buy (LLL GF). Stop: 126.

RYL (Ryland Group--$115.60; +4.02; optionable): Residential construction. Splits 2:1 effective 5-31-02.
http://biz.yahoo.com/p/r/ryl.html
Nice bounce today. RYL has given us numerous plays on its fine, steady trend up, and now it has set up again. We have had some caution with homebuilders lately, but RYL continues to show strength, and we can look again at a pre-split play with options on a continued run. Target: 123
PLAY: Aggressive: Over 117.74, with July $110 calls to buy (RYL GB).

FULT (Fulton Financial--$25.17; +0.53; no options): Regional bank. Splits 5:4 effective 5-21-02.
http://biz.yahoo.com/p/f/fult.html
STATUS: After the attempted move that took out our buy point, FULT has drifted back into its recent flat base range, testing the 50 day MVA (24.56). Today FULT bounced up from the 50 day, and we can look at a move over 25.57 for a move to the target of 29.50.
PLAY: Aggressive: 25.57, with stock. Stop: 24.20.

CONTINUING CANDIDATES BEST PLAYS: INVN still set up for a possible put.
1) THC - Ready to bounce from the 50 day
2) GNSS - Yes, GNSS
3) INVN - Not a convincing bounce back

THC (Tenet Health Care--$71.53; +1.01; optionable):
http://biz.yahoo.com/p/t/thc.html
BACKGROUND: Last announced a stock split in September 1991 in the $45 range. No additional shares will be authorized at the annual shareholder meeting, but the company has sufficient shares for a 2:1 split.
STATUS: A great run that took THC up from 58 to 75.45 over the course of two months, and it finally took a rest. A nice pullback to be sure, as THC has dropped back to visit its 50 day MVA (69.36) on below average volume selling. We look for low volume selling on such a test, and a good stock will periodically test the 50 day. Today THC tapped that support at its intraday low, pulling back up to close with a gain on sharply higher volume of 2.62m (avg. 1.94m). Looking for a continued bounce. Target: 86
BUY POINT: Over 72.40 (short-term MVA's) on continued strong volume. Stop: 68
POSITION: Stock and/or August $70 calls to buy (THC HN).

GNSS (Genesis Microchip--$27.62; +4.12; optionable): Semiconductor.
http://biz.yahoo.com/p/g/gnss.html
STATUS: Not really a continuing candidate at this level, but one that we have kept our eyes on after our put plays ran their course. This is one of the techs that is working on the bottom of its base, and which can give us plays on the way back up - we just have to realize that there is a lot of overhead supply that can push it back down after a run and be prepared for that type of action. Today GNSS made a strong move, running back over its 50 day MVA (27.22), as volume ran high at 5.9m (avg. 4m). Having broken support with a strong move, we can look at a play on a continued strong move. Targeting 34 on a move.
BUY POINT: Over 28.10 on continued strong volume. Stop: 26.90
POSITION: Stock and/or September $25 calls to buy (QFE IE).

INVN (Invision Technologies--$20.38; +2.58; optionable): Scientific & Technical instruments.
http://biz.yahoo.com/p/i/invn.html
BACKGROUND: Based upon our research it does not appear that INVN has ever split its stock. The company has sufficient shares for a 3:2 split.
STATUS: INVN has made a drop out of its consolidation under the 200 day MVA (23.34), falling with a lot of volume Monday on a put play. In the rally today it bounced back up on a gap, but could only manage a doji right at the lows of the recent consolidation (and under the 10 day MVA, at 21.18). With the doji under resistance, looking for a fall back for new or additional positions on a put play. Target: 15
BUY POINT: Below 19.30 on continued strong volume (down slightly to 2.74m today; avg. 1.9m). Stop: 23
POSITION: July $25 puts to buy (FQQ SE).

POST-SPLITS BEST PLAYS:
1) JEC - Nice pullback to support could yield a continued options play
2) MCHP - Has come back to break out of a large pattern

JEC (Jacobs Engineering--$41.00; 0.00; optionable): Heavy construction. Split 2:1 April 2.
http://biz.yahoo.com/p/j/jec.html
STATUS: The gap up last week, while nice for existing positions, did not give us a chance to grab some new options positions. However, JEC has pulled back to fill the gap, selling back on nice, low volume and holding the 10 day MVA (40.90), which is with prior highs. Today JEC showed a tight 'star' doji over support, with volume way up to 494k (avg. 193k), and that pattern indicates a bounce. We are targeting 45, and on a bounce we can pick up a nice bounce play with options.
PLAY: 41.55 on continued strong volume, with July $37.50 calls to buy (JEC GU).

MCHP (Microchip--$32.37; +2.36; optionable): Semiconductor. Split 3:2 effective 5-9-02.
http://biz.yahoo.com/p/m/mchp.html
STATUS: We had a put play on MCHP last week, but the reversal ended that, although the drop back produced a better exit point. With AMAT MCHP took off, gapping up with excellent volume Tuesday, and it broke over recent highs at 32, and the move was actually a breakout of a cup with handle dating back to September 1990 (high 32.91). Most techs are in ugly patterns, and although we can play them as they build their bases, we need to be cognizant of what is happening - they can be pushed down by all of that overhead supply. MCHP, however, is one that is in a good pattern and is closing on an all-time high, so a different story - however, we still need to watch carefully given the erratic behavior of the techs as they try to turn the tide. We could see a gap up tomorrow, and we will wait to see if it comes back to hold 32; if so we can look at positions on a move back up from there with a Nasdaq that does not drop hard.
PLAY: After a gap up, looking for a pullback that will hold 32-32.50. In a continued decent tech market we can take positions with stock and/or July $30 calls to buy (MEF GF) on a move back up with volume of 5 million (today 4.67m; avg. 2.47m).

End Part 2 of 3

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