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stock split, stock recommendation
Begin part 2 of 2
Economic Calendar
May 28
Personal Income, Apr (08:30): 0.3% actual versus 0.3% expected and 0.4% prior.
May 28
Personal Spending, Apr (08:30): 0.5% actual versus 0.7% expected and 0.3% prior. (revised from 0.4%)
May 28
Existing Home Sales, Apr (10:00): 5.79M actual versus 5.35M expected and 5.41M prior. (revised from 5.40M)
May 28
Consumer Confidence, May (10:00): 109.8 actual versus 110.0 expected and 108.5 prior. (revised from 108.8)
May 30
Initial Claims, 05/25 (08:30): 411K expected and 416K prior.
May 30
Help-Wanted Index, Apr (10:00): NA expected and 46 prior.
May 31
Productivity-Rev., Q1 (08:30): 8.6% expected and 8.6% prior.
May 31
Michigan Sentiment-Rev., May (09:45): 96.0 expected and 96.0 prior.
May 31
Chicago PMI, May (10:00): 55.0 expected and 54.7 prior.
May 31
Factory Orders, Apr (10:00): 0.7% expected and 0.8% prior.
SUBSCRIBER QUESTIONS
Q: You mention money flow diving in one of your recent reports. What do you find to be the most accurate measure of this? I have seen so many with different values on the same day, I'm getting dizzy trying to come up with the best measure.
A: Money flow has many different heads to it. We look at Bloomberg money flow and TC2000 moneystream when determining money flow levels for our stocks as we have watched them over a long period of time and are comfortable with what they show. There is a caveat on all money flow readings, however: they work well for some stocks in some situations and then in other situations they just play follow the leader, i.e., following the stock up or down and not giving any real forecasting insight. Thus we quite often do not use just the raw data, e.g., that money flow is high. While the raw data does work for some stocks, you have to look at the history of the stock to see how well it has performed in the past.
What we focus on mostly with this type of indicator (as well as stochastics and MACD for example) is whether there is a divergence. A divergence is something that is not in sync with the rest of the chart. For example, if we see a stock that is in the handle of a cup with handle base (that is, moving lower on low volume) but money flow is racing up ahead, that is a positive divergence in that money flow is indicating there is a lot of buying going on and the price will usually follow. On the other hand we may see a stock moving up in price and show a negative divergence, i.e., money flow is moving down or tanking ahead of it. That may indicate that the move is running out of support. Go look at the price/volume action and other indicators to see if they agree or disagree with that proposition and thus confirm what you are seeing.
In sum, money flow is a secondary indicator that will either confirm or potentially call into question your analysis. Again, we really like to see those divergences between money flow and price as those can act as an early warning signal for potential plays.
THE PLAYS: Some new pre-split plays join the cast!
BONUS PLAYS: MKSI hit the buy point on some pretty strong early selling, but pulled back up a bit to close.
ENDP (Endo Pharmaceuticals--$12.70; +0.18; optionable): Drug manufacturer
http://biz.yahoo.com/p/e/endp.html
STATUS: Cup with handle. The pattern dates back to mid-January, and ENDP has pulled back into the handle as it approached its left-side high at 13.31. A solid pattern, with a nice uptrend before formation, and good price/volume action showing overall accumulation. The handle is looking good as well, with volume tapering off to low levels as the the stock pulls back toward the support of its 18 day MVA (12.28). Today ENDP pushed back up slightly, and we are looking for a move over the handle high of 13.05. Excellent relative strength that is also ready to breakout. Target: 15.80
BUY POINT: 13.15 on volume of 315k (avg. 210k; today down to 128k). Stop: 12.23 (7%)
POSITION: Stock and/or October $10c to buy (IUK JB - 60 OI, .78 delta).
SPLS (Staples--$21.56; -0.01; optionable): Specialty retail
http://biz.yahoo.com/p/s/spls.html
STATUS: Cup with handle. SPLS broke out of a range in March, making a test of that move and a run up to 22.45 in early April. It has since corrected into a cup with handle, completing the cup with a strong gapping move last week, since then pulling laterally and slightly down in a handle. The seven weeks is the minimum we want to see, that much time needed to set up a strong breakout. The handle looks good, and today SPLS showed a doji on increased volume, holding the 10 day MVA (21.27) with a doji. Looking for the breakout. Good buying and relative strength. Target: 26.50
BUY POINT: 22.25 on volume of 6.4m (avg. 4.27m; today up to 4.45m). Stop: 20.69 (7%)
POSITION: Stock and/or September $20c to buy (PLQ ID).
SFAM (Speedfam-Ipec--$4.50; -0.03; no options): Semiconductor equipment
http://biz.yahoo.com/p/s/sfam.html
STATUS: Double bottom with handle. SFAM made a great move this moth, running up to form the last leg of the pattern (which dates back to January), taking out the pattern center in the process. The move reversed last week, but after some initial strong selling, SFAM has settled down on light volume, holding over its pattern center and 10 day MVA (both at 4.35). Today SFAM showed its second consecutive doji, with volume continuing below average at 147k (avg. 194k). Looking for a bounce and breakout. Excellent money flow and buying. Target: 6.50
BUY POINT: Bounce: Over 4.70 on above average volume. Stop: 4.37 (7%). Breakout: 5.21 on volume of 290k. Stop: 4.85
POSITION: Stock only (no option chain).
PRE-ANNOUNCEMENTS: PHC and DLX are still holding in there patterns.
HSIC ($49.54; +0.09): Researching a new date. Gapped back a bit but held the support of the 18 day MVA (49.07), pushing back up with a loose 'shooting star' doji on lighter, below average volume (310k; avg. 324k). Still looking for the move, with the buy point at 50.69 on minimum volume of 450k, with stock and/or October $45c to buy (HQE JI).
NYT ($49.69; +0.29): Working on a forecast date. On a breakout test and holding over the former highs and 18 day MVA (49.12). Today NYT reached up to 50.20 on increased but still light volume (274k; avg. 463k). Set up nicely, and looking for the move over 51 on volume of 500k or better, with stock and/or October $45c to buy (NYT JI - 89 OI).
PRE-SPLITS: FOSL is still looking like it could move.
SRCL ($70.09; +2.08): Splits 2:1 effective June 3. Moving in on the split, but SRCL is looking good, today hitting our buy point on the 50 day MVA (67.23) bounce, closing just over the short-term MVA's (69.81). We can take new or additional positions on a continued move, looking for a few points going into the split, and looking on continued strength to carefully hold through the split. Over 70.43, with August $65c to buy (URL HM).
GMRK (Gulfmark Offshore--$42.29; +0.39): Oil & gas equipment. Splits 2:1 effective 6-29-02.
http://biz.yahoo.com/p/g/gmrk.html
STATUS: GMRK broke out of a small cup with handle in April, a pattern that served as a handle to a much larger cup pattern dating back to May. The move took GMRT to a new high (49.25), but it has pulled back over the last month to test prior highs and its 50 day MVA (40.86). Today GMRT showed another in a string of dojis, held down by the short-term MVA's (18 day at 42.91). Holding firm on support, so looking for a strong move on the heels of the split announcement. Target: 52.
PLAY: Over 43, with stock. Stop: 40.60
JNC (John Nuveen--$59.11; +0.03; optionable): Asset Management. Splits 2:1 effective 6-25-02.
http://biz.yahoo.com/p/j/jnc.html
STATUS: On its way to its second split in the past year, and JNC has been on a steady upward trend since the last split in September. It has been using the 50 day MVA (57.88) as steady support, and drew back toward that level the past couple of weeks after riding its last bounce up to a new high of 62.10. Today JNC reached toward the 50 day, but caught itself at 58.20 and pulled back up to close, moving on increased volume. Looking for a move over the 10 day MVA (59.88) to start the next run. Target going toward the split: 69.
PLAY: 60, with stock. Stop: 57
KSWS ($45.99; +0.01): Splits 2:1 effective June 22. Holding the short-term MVA's (45.58) after bouncing from the 50 day (43.86) on the news of the split. After a light volume test back Tuesday, today KSWS showed a doji on lighter volume, looking like it wants to hold here. If so, we are looking for a move over 47, with stock and/or July $40c to buy (SWU GH - 46 OI).
CONTINUING CANDIDATES: DHR is trying to move down on the put.
AZO ($80.65; -0.66): We have been watching the pullback off of AZO's great move last week, and the stock appears to be doing what we want - holding the prior pattern highs at 80 on a low volume test. From here, a move over 82 on above average volume (1m; today down to 856k), with stock and/or September $75c to buy (AZO IO).
AHC ($82.87; -0.30): AHC continues to hold its 10 day MVA (82.63), forming a handle-type consolidation of the test of its recent highs in the little saucer pattern (which was a handle to a larger cup). Volume has been nice and light, and we look for a move over 84.70 on volume of 930k (avg. 620k; today 565k), with stock and/or August $80c to buy (AHC HP).
PII ($67.99; -1.91): Gave us some nice moves, but the last flag pattern could not produce a breakout. Instead, PII steadily pulled back to the lows of its previous flag consolidation (April), which is with the 50 day MVA (69.62). Something of a head and shoulders, although the right shoulder never really developed after the weak one-day bounce from the 50 day last week. Today PII gapped through the 50 day, continuing down on much higher volume (236k; avg. 163k). We could see a test, but this breakdown could produce a strong move down, targeting 60. On a failed move up from here, a drop through 67.65 on continued strong volume, with September $75p to buy (PII UO).
POST SPLITS: ACS still looking interesting in its choppy pattern.
LLL ($62.45; +0.64): Has dropped back to the 50 day MVA (61.30), but held today with a loose doji on higher volume (859k; avg. 757k). LLL tapped its short-term MVA's at its high of 63.34, but pulled back to close. We will look for and aggressive play with a bounce to take out that resistance with increased volume, and October $60c to buy (LLL JL).
MKC ($26.48; +0.20): Made a bit of a move up today on increased volume, although not the strength we are looking for. However, it is still below the buy point, the high in its pennant made on a bounce from the 50 day MVA (25.47) last week. Looking for the move over 26.72 on volume of 360k, with stock and/or September $25c to buy (MKC IE).
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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stock split
stock recommendation
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