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- Healthcare gets whacked, but the rest of the market drifts toward support on lighter volume.
- Earnings mostly over but WMT, AMAT, DELL to report.
- Market setting up for the next move up.
- 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

ACDO (Accredo Health--$53.68; -1.75; optionable): Health services. Splits 3:2 on 12-3-02.
Company Profile
STATUS: Testing the breakout. ACDO announced the split and some good earnings and jumped over the 200 day MVA (51.01) Wednesday. Friday it started back, testing the 200 day MVA on the low and then rebounding. We think it will try to snug up toward the 200 day a bit more before it starts its next run.
Volume: 852.504K Avg Volume: 752.875K
BUY POINT: After a test down toward 51: 52.55 (aggressive). Then $54.25 Volume=1M Target=$62 Stop=$50.45
POSITION: DZU BK - Feb. $55c (55 delta) and/or Stock.

Click here for more information on our Stock Split Report!

Shares of WellChoice Inc. (WC.N), the New York area provider of Blue Cross and Blue Shield health coverage, rose on Friday in its market debut after investors bid up the price of the insurance provider's initial public stock offering.

Shares in the New York-based company rose as much as 10 percent to $27.50 in midday trade on the New York Stock Exchange. WellChoice raised $417 million in its IPO late Thursday, after selling more shares at a higher price per share than had been expected.

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