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- Market takes a breather ahead of weekend after a strong surge.
- Economic data continues to erode as sentiment hits decade low.
- Waiting for a follow through session if it will come.
- 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

XTO (XTO Energy--$25.03; +0.07; optionable): Independent oil and gas. Splits 4:3 on 3-19-03.
Company Profile
STATUS: Testing the 50 day MVA (24.75). XTO has dropped all the way to the 50 day, undercutting it on the Friday low but then rallying back on rising, above average volume. This is exactly the type of signal we look for on a pre-split play. We will look to pick it up on the bounce higher to catch a run into and maybe through the near term split.
Volume: 1.106M Avg Volume: 817.136K
BUY POINT: $25.55 Volume=1.2M Target=$28.75 Stop=$24.33
POSITION: XTO EX - May $22.50c (91 delta) &/or Stock.

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Sweeping Up Hoover’s.

As the sun sets in the Western sky, we tearfully bid a sad farewell to Hoover’s (Nasdaq: HOOV)IPO.

The company, incorporated in 1990 as The Reference Press, Inc., launched Hoover’s Online in 1995. On Monday, March 3, 2003, its shareholders approved a merger with Dun & Bradstreet (NYSE: DNB). On Dec. 5, 2002, Dun & Bradstreet announced an offer to buy Hoover’s for $117 million, or $7 a share.

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