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- Economic woes move to the big boys and the market can’t handle it.
- GDP tacks on a fraction, Michigan sentiment shows the flipside of the Conference Board’s numbers.
- Small business forum to focus on immediate action to help business investment.
- Ten day MVA proves too much for the indexes.
- Subscriber Questions.
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2) Stock Splits

Playing stock splits can be very profitable, but it takes know-how.

Our stock split service focuses on three main types of plays:

1) pre-announcement (where we forecast an upcoming split prior to the company making the announcement); 2) pre-split (these plays are made in the days leading up to the actual split day); and 3) post-split plays (plays made after the actual stock split where the stock is showing continued or renewed strength).

We play pre-split plays as short-term plays. We get in when the technical indicators show us things look right, grab as much as we can, and get out, always being conscious of resistance and support. These stocks are highly volatile at this time, and can turn on you quickly. Don't let good profits disappear. Watch for turns, especially when a stock trades in a wide range and finishes off its high. That is a sign these stocks often give you that they are running out of steam. We usually get out and ask questions later. We can always get back in. We like to play in the money calls, preferably two strike prices in the money as this usually gives us a greater delta (the percent an option will mover versus the stock's movement). We prefer deltas of 75 or better. This means if the stock moves 1 point, the option should move three-fourths of that point. That means up or down.

Remember, wait to see the stock start to move up. Don't just blindly make a play and don't try to guess tops and bottoms. We can look at indicators to give us a clue as to what will happen, but we need the stock to confirm it for us. Here's a pre-split play to watch and our current analysis.

Chart by StockCharts.com

RMCI (Right Management--$24.11; -0.72; optionable): Splits 3:2 on 10-16.
Company Profile
STATUS: Still testing back to the 18 day MVA (24.03). Thursday it looked as if RMCI was ready to move on up off the 18 day MVA after a good pullback, but Friday was not the day for a lot of stocks. It started out well and then came back to close on the 18 day. Volume was very low once again; it appears to be biding its time, setting up for the next rally. We will be ready when it does to catch some of that good upside pop this stock has.
Volume: 68.673K Avg Volume: 152.801K.
BUY POINT: $25.05 (orig. $25.75). Volume=225K Target=$29.75 Stop=$23.65.
POSITION: UHU AD - Jan. $20c (74 delta) and/or Stock.

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A mountainous legal suit claiming that Wall Street banks and their corporate clients rigged hundreds of initial public offerings has hardly begun, but the most important arguments may have already been made.

Friday is the deadline for the final documents in a motion to throw the case out made by defendants like Goldman Sachs Group Inc. (GS.N) and Credit Suisse Group First Boston (DIR.N) and once hot IPOs like EToys.

(This IPO story is continued on our website in the IPO Forum.)