stock split, stock recommendation

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SUBSCRIBER QUESTIONS

Q: How do you determine the exact buy pivot point of any stock breaking out of cup w/handle?

A: The buy point is based on the theory of the pattern. The idea behind a base is that it weeds out those that do not want to hold the stock for the long term. As the stock works through the base more and more shorter term holders get out. As the stock makes its way back up to the old high, that forms the cup. Those that bought at that level and want to get out 'even' are excited; they may soon get their chance. Some are so eager they sell a bit early. Some more sell, and that starts the formation of the handle just below the prior high. Those wanting to get out even see the stock starting to fade from the old high where they bought. Instead of risking the stock falling on them further, they sell and get out as close as the can to 'even.' If volume is light in the handle that means there are not that many sellers. More are willing to hold even as the stock pulls back than sell. This is the final 'shakeout' of sellers. When there are no more sellers of a stock at a price, as soon as some buying demand comes in the price rises. The last overhead resistance is cleared when the stock beats that high in the handle; slightly above that level is the buy point because all of the overhead had been cleared, and if the base shows good accumulation weeks versus distribution weeks it has a very good chance of posting some very nice gains.

THE PLAYS:

BONUS PLAYS: WHI continued with a massive move today!! BLI is still set to move, and, and BAC could still make the drop. TECD started down but made a bit of a recovery with the market.

CMPC (Compucom--$3.94; +0.03; no options): Computers Wholesale
http://biz.yahoo.com/p/c/cmpc.html
STATUS: Testing the breakout of a cup with handle, and the 50 day MVA (3.70). On its move up in the right side of the cup (which dates back to August), CMPC has shown that strong institutional support as it makes solid bounces from its 50 day on very strong volume. Today CMPC started another bounce, moving up on sharply higher volume. Looking for more of a move to take out the recent high at 4.20. Relative strength is already breaking out. Target: 5
BUY POINT: 4.10 on continued strong volume (206k today; avg. 151k). Stop: 3.65
POSITION: Stock only (no option chain)

ZQK (Quiksilver--$26.25; +1.00; optionable): Textile - apparel
http://biz.yahoo.com/p/z/zqk.html
STATUS: Has made a great move from 22 recently, breaking out of an extended handle to a year-old cup. After Friday's move reached over handle highs at 26 and hit 27.30, ZQK has drawn back on decreasing volume. The pullback has held support at the 10 day MVA (24.93, in the upper reaches of the prior handle), and today ZQK bounced back up as volume continued to be above the average (306,200; avg. 269k). A nice test after a very strong move up, and we are looking for the move to continue. Good buying and relative strength. Target: 32
BUY POINT: Over 27 on increased volume. Stop: 25.20 (7%)
POSITION: Stock and/or November $25c to buy (ZQK KE - 37 OI, 65 delta).

MAR (Marriott--$38.77; -0.97; optionable): Lodging
http://biz.yahoo.com/p/m/mar.html
STATUS: After fighting back from the September crash, MAR fell back in May and has caught some support at January-February levels, bouncing back and forth over its 200 day MVA (39.31) for the past few weeks. It looked like MAR was going to fall off of the right shoulder to the head and shoulders in mid-May, but it has held on, but today the selling volume picked up sharply as MAR again dived through the 200 day. We are looking for continued selling through the recent lows for a breakdown and put down to a target of 34.
BUY POINT: Below 38.50 on continued strong volume (1.5m today; avg. 871k). Stop: 41
POSITION: October $45p to buy (MAR VI - 8 OI, .63 delta).

PRE-ANNOUNCEMENTS: BRL hit the put buy point on light volume, and we are still looking for a breakdown. LSTR could be ready to make another move up. SLM bounced a bit, but we are looking for it to fail and continue down. Higher volume selling on PDCO and ABC has us protecting positions.

HSIC ($47.34; -1.16): Has formed a head and shoulders, and today dropped back to close below key support. The early May and mid-May tops form the left shoulder and head, and a weak bounce from the 50 day MVA (47.67) Friday and Monday form the right shoulder. After the bounce failed to reach the prior high, volume picked up on the selling, above average today (295k; avg. 297k). We will see if HSIC tries a climb back over the 50 day, but we will be ready for a failure and look at October $55p to buy (HQE VK - 10 OI, -.68 delta) on a drop though 46.85 on increased volume. Target: 43. Stop: 49.25.

PRE-SPLITS: THC still looks strong, while STJ dropped back and hit the target! Still looking for HCBK to move.

CONTINUING CANDIDATES: WEN continues to blast upward! KLAC rebounded, but we are not panicking on put positions, and will look at more on a failure at the down trendline.

CYN ($51.98; -0.17): Made the drop back, but volume continued to be light and CYN recovered from a low of 51.35 to close with a doji. We could see a little bounce here, but CYN is weak and we will look for resistance at the 10 day MVA (52.72) to push it back down. Still a buy on the put on a drop back from resistance through 51.75, looking for volume of 200k. August $55p to buy.

AZO ($49.10; +1.06): Has held up on the breakout and formed an ascending wedge. It hit up to 84.50 Monday, but pulled back to close and has pulled slightly back the last two sessions on below average volume (919k today; avg. 1.04m). It is holding the 10 day MVA (81.42), today with a second consecutive doji. Looking for another strong upward move to add to positions or take new ones. On a move over 83.50 with volume of 1.4m, stock and/or September $80c to buy (AZO IP). We will see if we get a run to 100. Stop: 78.

POST SPLITS: SONC continues its solid push upward.

FBC ($20.70; -0.13): Took a very nice bounce from the 50 day MVA (19) last week, pulling back last week and showing four consecutive dojis as volume has steadily dropped (down to 50,400 today; avg. 84.7k). Looking for a hold at support and continued move. On a move over 21.35, positions with stock.

ZRAN ($20.00; +0.65): Started the drop today but after hitting 18.63 it bounced up with the market. Volume was quite low on the bounce, however (728k; avg. 1.09m), and with the weak bounce we continue to look for the put play, perhaps after a further test up toward the 10 day MVA (20.84). In tech weakness, on a drop back through 19.25 on increased volume, September 23.375p to buy (HZL UV).

COCO ($28.45; -0.27): A fine 50 day MVA bounce last week, but stalled after hitting up to 29.49, has pulled back a bit toward the support of the short-term MVA's (18 day at 27.87). Today COCO reached up to 29 for the second consecutive day, pulling back to close with a doji. Looking for a hold of 28 and continued move. On a move over 29.10, stock and/or August $27.50c to buy (UCS HY).

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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