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stock watch, stock split
Begin part 2 of 3
SUBSCRIBERS QUESTION
Q: You mention quite often in your reports that you watch the leaders and how they perform during rallies. How do you filter out the leaders to watch them? Is there a special screen that you use?
A: Looking for leaders depends upon what stage of a rally you are in, but the plan of action is still similar. During the downtrend we would keep an eye on stocks that were in 'building patterns.' That is our name for stocks that are coming off their downtrend and are working laterally, attempting to build the first base off of that trend. Those are not necessarily easy to find other than watching the various sectors and observing which stocks are building. Now before we do that, we also look at what sotcks are growing their earnings and sales at 20% plus clips per quarter. That helps narrow the search. We watch for those that form up and start moving ahead of the the pack. Those that form up those bases and breakout first and have strong earnings and sales growth are typically the leaders in any rally.
After the rally starts we continue to watch those that breakout first and how they perform. EBAY, GRMN, SOHU, SINA, NTES, YHOO, ERES, HITK, OVIT were early leaders and have continued to perform through the rally. There are many others on the reports. Those are stocks that we got into early and have ridden up the rally. We know what these stocks are, so we can keep tabs on them because we are in many of them and it is easy to find them by looking for stocks that are within 10% of their 52-week highs.
Indeed, that is how we narrow the search during the start of rallies or when the market looks as if it is trying to put together a run. We search for stocks that are within 10% to 15% of their 52-week highs. That shows they are leading the market, and as the big gains of the leaders during this rally have shown, it is the leaders that can make you some impressive money as they barely hiccuped during the early part of the year when most of the market was struggling to hang on. From that group we look at those that are growing those sales and earnings at 20%+ per quarter, year over year. Those are the stocks that will typically give the best runs.
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THE PLAYS
In each report we prepare full write-ups for those that look ready to move. If the move has been made already we discuss the play in the summary table. The purpose is to focus on the next good movers.
Good movers Friday: BCR; EBAY; MME; SOHU; UNH
NEW PLAYS:
Upside:
Play Date: 05/17/2003
CY (Cypress Semiconductor--$9.8; 0; optionable): Semiconductors
http://biz.yahoo.com/p/c/cy.html
STATUS: Testing the breakout. CY exploded out of a 4.5 month cup with handle base in April Rallied to 11, and is now testing that breakout. It has pulled back to hold just over the 18 day MVA (9.60) on mostly lower volume. In the Friday selling CY showed a very tight doji on below average volume, holding over the 18 day. After a pullback on a nice run this can indicate a move back up. CY is holding the breakout and support at the 18 day. Excellent money flow. Looking for a bounce back up from here on some sharply higher volume.
Volume: 1.547M Avg Volume: 2.244M
BUY POINT: $10.06 Volume=2.3M Target=$12.12 Stop=$9.36
POSITION: CY IB - Sept. $10c (56 delta) &/or Stock
http://www.investmenthouse.com/cs/cy.html
Play Date: 05/17/2003
DVA (Davita--$24.22; +0.17; optionable): Health services
http://biz.yahoo.com/p/d/dva.html
STATUS: Cup w/handle. With the market potentially turning somewhat defensive, we are looking at medical and health services. They have not been laggards by any means, and DVA is forming a nice pattern as the market may get a bit choppy. It is in a 6-month base showing solid 6 to 4 accumulation, working through the 2-week handle where it shakes out the last sellers. Price/volume action in the handle is very solid, and Friday volume shot higher on the start of a move up toward a breakout. Strong pattern, and looking for the breakout.
Volume: 641K Avg Volume: 381.71K
BUY POINT: $24.65 Volume=573K Target=$29.55 Stop=$23.45
POSITION: DVA JE - Oct. $25c (46 delta) &/or Stock
http://www.investmenthouse.com/cs/dva.html
Play Date: 05/17/2003
QLGC (Qlogic--$46.21; -0.27; optionable): PC Data storage components
http://biz.yahoo.com/p/q/qlgc.html
STATUS: Testing the breakout. QLGC broke out of a 5-month reverse head and shoulders pattern in late April, and rallied up to 47.50 Tuesday. It has since eased back to the 10 day MVA, tapping that support level on the Friday low (45.91) on lower, below average volume. It showed a doji at that level, i.e., the open and close prices were almost identical. That shows buyers and sellers evenly matched after the sellers were ahead on the pullback. Dojis can signal a change of momentum/direction, especially when they occur over support. Looking for a bounce higher on much stronger volume to enter positions.
Volume: 3.846M Avg Volume: 7.395M
BUY POINT: $46.78 Volume=8M Target=$54 Stop=$44.65
POSITION: QLC JI - Oct. $45c (60 delta) &/or Stock
http://www.investmenthouse.com/cs/qlgc.html
Play Date: 05/17/2003
RNR (Renaissance Holdings--$45.9; +0.93; optionable): P & C Insurance
http://biz.yahoo.com/p/r/rnr.html
STATUS: Testing the breakout. RNR broke out of a 6-month cup with handle base in April, rallied, and is now testing that move. It came back to the 18 day MVA (44.91) on lower, below average volume, then jumped off that level Friday. Volume was up Thursday and Friday, but still below average. Excellent 8 to 4 accumulation during the base, and this is a good test, holding the 18 day and the breakout. Money flow is huge, and all the stock needs is more volume on the rebound to be a good buy.
Volume: 293.7K Avg Volume: 469.567K
BUY POINT: $46.25 Volume=500K Target=$53.25 Stop=$44.88
POSITION: RNR JI - Oct. $45c (60 delta) &/or Stock
http://www.investmenthouse.com/cs/rnr.html
Play Date: 05/17/2003
UVN (Univision Communications--$29.54; -0.22; optionable): Broadcast TV
http://biz.yahoo.com/p/u/uvn.html
STATUS: Cup w/handle. Media stocks are forming up quite well, and UVN is currently in a 3-week handle to its 5.5 month base. Accumulation is solid at 7 up weeks on rising volume to 4 down weeks on rising volume. Volume is backing off as it slides back to test the 18 day MVA (29.33), showing a doji at that level Friday. Money flow is way out in front, rising even as the stock moves laterally and lower as it shakes out the last sellers. A very nice base setting up for a nice breakout.
Volume: 1.032M Avg Volume: 1.605M
BUY POINT: $30.65 Volume=2.4M Target=$35.55 Stop=$28.84
POSITION: UVN IF - Sept. $30c (54 delta) &/or Stock
http://www.investmenthouse.com/cs/uvn.html
Downside:
Play Date: 05/17/2003
TLB (Talbots--$26.51; -0.89; optionable): Apparel stores
http://biz.yahoo.com/p/t/tlb.html
STATUS: Put. Retail is suffering with the concerns about deflation and the consumer. TLB was in a cup w/handle pattern as several retailers are, but at the end of last week it started to fall, and Friday it broke the 50 day MVA (27.20) on rising, above average volume, closing near the session low. It might try to give a test of the 50 day, and that would be our preferred entry point as failed recovery attempts are great downside entry points just as breakout tests are great upside entry points. Still, if it continues down from here we will look at entering some positions in case it does not make a test.
Volume: 357K Avg Volume: 332.771K
BUY POINT: $26.38 Volume=375K Target=$23 Stop=$27.45
POSITION: TLB TF - Aug. $30p (-76 delta)
http://www.investmenthouse.com/cs/tlb.html
CONTINUING LEADER PLAYS
Upside:
Play Date: 04/22/2003
CNQR (Concur Technologies--$6.05; -0.07; no options): Technical and system software
http://biz.yahoo.com/p/c/cnqr.html
STATUS: Triangle. CNQR continues to move laterally, rising up the 18 day MVA (5.95) on the lows as it presses up against 6.25 on the highs. It is building pressure from below, and that typically leads to a breakout. Excellent money flow and solid accumulation.
Volume: 177.6K Avg Volume: 216.295K
BUY POINT: $6.28 (orig. $6.12) Volume=250K Target=$7.58 Stop=$5.84
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/cnqr.html
Play Date: 05/13/2003
KOSP (KOS Pharmaceuticals--$23.09; -0.35; optionable): Drug manufacturers
http://biz.yahoo.com/p/k/kosp.html
STATUS: Testing the breakout. KOSP continues the test of the breakout. Last week KOSP tested the 10 day MVA (22.60) and started back up. Volume was rising, but not outstanding, and the intraday action was not the best as it finished off the highs Thursday and Friday. Still in a solid pattern with accumulation at 5 to 2 supporting the base and solid money flow. Need to see a strong move higher on even better volume.
Volume: 396.105K Avg Volume: 258.426K
BUY POINT: New: $23.65 (orig. $22.94) Volume=400K Target=$27.48 Stop=$21.33
POSITION: KQW HX - Aug. $22.50c (56 delta) &/or Stock
http://www.investmenthouse.com/cs/kosp.html
Play Date: 04/28/2003
MER (Merrill Lynch--$42.37; -0.55; optionable): Investment brokerage
http://biz.yahoo.com/p/m/mer.html
STATUS: Cup w/handle. Solid surge Thursday on volume, rising off the 10 day MVA (42.09). Friday it reversed the move, but held over the 10 day on the same volume. Still in the handle to its 4-month base showing positive 4 to 3 accumulation and excellent money flow as financials continue to receive more money. Still looking for a strong break over near resistance at 43 to break it away.
Volume: 6.898M Avg Volume: 6.272M
BUY POINT: New: 43.12; (orig. $41.55) Volume=7.5M Target=$47.45 Stop=$41.39
POSITION: MER GH - July $40c (58 delta) &/or Stock
http://www.investmenthouse.com/cs/mer.html
Play Date: 05/10/2003
POWI (Power Integrations--$24.65; -0.29; optionable): Semiconductor integrated circuits
http://biz.yahoo.com/p/p/powi.html
STATUS: Flat. Strong move up Monday, POWI eased back the rest of the week, testing the 10 day MVA on the Friday low (24.15) and then rebounding on some rising, above average volume. It looks as if POWI is making the test of the breakout, and it is holding. Looking for another move up over 25 on strong volume for new positions.
Volume: 735.197K Avg Volume: 668.376K
BUY POINT: New: $25.28 (orig. $24.85) Volume=970K Target=$29.75 Stop=$23.45
POSITION: QPW JE - Oct. $25c (53 delta) &/or Stock
http://www.investmenthouse.com/cs/powi.html
Play Date: 05/10/2003
PRAA (Portfolio Recovery--$26.05; +0.63; no options): Accounts receivables collections
http://biz.yahoo.com/p/p/praa.html
STATUS: Testing the breakout. PRAA is holding the breakout from its short base, hanging at the 18 day MVA (25.69) and starting to move higher Friday on above average volume. This was a new issue in November, and this was its first attempt at a base. We like to pick up new issues after their first base, and a strong move up from here on solid volume is a good entry point.
Volume: 209.229K Avg Volume: 131.13K
BUY POINT: $26.45 Volume=185K Target=$31.75 Stop=$25.25
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/praa.html
Play Date: 05/07/2003
PWN (Cash America--$11.3; -0.18; no options): Pawn shops
http://biz.yahoo.com/p/p/pwn.html
STATUS: Testing the breakout. PWN is on its second test of the short term MVA after the April breakout, falling back to the 10 day MVA (11.26) late in the week. Friday volume jumped above average as it tested the 10 day and held. Money flow is strong, accumulation is solid. Looking for a solid volume move back up from this test.
Volume: 106.6K Avg Volume: 83.995K
BUY POINT: $11.42 Volume=117K Target=$13.75 Stop=$10.62
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/pwn.html
Play Date: 05/12/2003
SFNT (Safenet--$27.43; -0.38; optionable): Security software
http://biz.yahoo.com/p/s/sfnt.html
STATUS: Cup w/handle. SFNT continues in the handle of its 4-month base, moving laterally last week on lower and lower below average volume. Solid 7 to 2 accumulation in the base. Waiting patiently for the breakout.
Volume: 136.001K Avg Volume: 275.152K
BUY POINT: $28.5 Volume=394K Target=$32.75 Stop=$26.5
POSITION: UUI IE - Sept. $25c (69 delta) or UUI IF - Sept. $30c (46 delta) &/or Stock
http://www.investmenthouse.com/cs/sfnt.html
PRE-ANNOUNCEMENT PLAYS
We are putting those pre-announcement stocks that are ready to make moves on the report. As the other pre-announcement candidates reach new buy points we will put them on as well. We want to keep the report focused on those stocks ready to make moves.
All current pre-announcements:
AVP
BBBY
BCR: Beautiful break higher on excellent volume.
CECO
EBAY: Another volume move higher as EBAY hit 100 on the high and backed off to close. Stocks like to run to $100, but then it can be a barrier. The action is good, however, and we are willing to let EBAY work for us.
MME: Beautiful volume move higher off the 10 day MVA test.
RARE: Struggled at the 50 day MVA, unable to break over that level Friday.
This week watch for new pre-announcement plays. Several we are looking at have run with the market and we are going to let them pullback some to set up the next move and then put them on the report when they do set up.
Continued Pre-Announcements:
Play Date: 03/29/2003
AVP (Avon Products--$57.92; +0.62; optionable): Makeup, etc. No announcement with shareholder meeting on 5-1. Researching the next date, most likely in July with earnings.
BACKGROUND: Last announced a 2 for 1 split on 7-22-98 in conjunction with earnings. The stock price was $43. The annual shareholder meeting is scheduled for 5-1-03 at 10:00 ET at which time no additional shares will be authorized. The company has sufficient shares for a 2 for 1 split.
http://biz.yahoo.com/p/a/avp.html
STATUS: Testing the breakout from cup w/handle. AVP is still working laterally, holding the 18 day MVA (57.45) in its 6-week lateral move that is consolidating the breakout from its prior 3.5 month double bottom. A very good new base showing 3 to 1 accumulation, what we look for now is AVP to make the breakout from this new base.
Volume: 844.8K Avg Volume: 1.441M
BUY POINT: New: $58.72 (orig. $57.58) Volume=1.7M Target=$65.88 Stop=$56.74
POSITION: AVP GK - July $55c (69 delta) &/or Stock
http://www.investmenthouse.com/cs/avp.html
Play Date: 04/26/2003
BBBY (Bed, Bath & Beyond--$39.99; -0.51; optionable): Home furnishings. Forecast to announce a split in July and we are working on pinpointing a date.
http://biz.yahoo.com/p/b/bbby.html
BACKGROUND: BBBY last announced a 2:1 split in July 2000 at a price of $36.
STATUS: Testing the breakout. BBBY is still testing back to the short term MVA on below average volume, falling back to the 18 day MVA on the Friday low (39.69) and rebounding slightly to close. Volume has been below average on this test as money flow remains solid. Looking for this test to hold and a volume rebound. Still close enough to the breakout for new buys if we get the volume on the move.
Volume: 2.157M Avg Volume: 3.449M
BUY POINT: New: 40.88 (orig. $39.12) Volume=4M Target=$46.55 Stop=$39.33
POSITION: BHQ HU - Aug. $37.50c (57 delta) &/or Stock
http://www.investmenthouse.com/cs/bbby.html
Play Date: 02/15/2003
CECO (Career Education--$60.53; -0.58; optionable): Education and training. No split announcement with earnings on 4-22. Likes to announce with earnings, so next most likely date is in July, but we hear work it may be sooner.
BACKGROUND: Last announced a 2 for 1 split on 4-31-01 in conjunction with earnings. The stock price was $61. The annual shareholder meeting was on 5-11-02 at which time authorized shares were increased. The company has sufficient shares for a 2 for 1 split.
http://biz.yahoo.com/p/c/ceco.html
STATUS: Testing the breakout. CECO is still making the test of the strong April breakout, holding the 10 day MVA on the Friday close on lower, below average volume. CECO showed a doji at that level again Friday, continuing a the nice pullback and test of the breakout. Looking for a hold here and a stronger volume rally back up.
Volume: 473.264K Avg Volume: 737.38K
BUY POINT: New: 61.25 (orig. 52; 48.25)
Volume=1.4M Target=$65 (letting it run as orig. was 58.55) Stop=$59.04
POSITION: CUY GL - July $60c (62 delta, low OI) and/or Stock
http://www.investmenthouse.com/cs/ceco.html
Play Date: 05/13/2003
HAR (Harman Intl.--$70.5; +0.34; optionable): Consumer electronics. Forecast to announce a split in early August. A bit early on the report, but is testing a strong move.
BACKGROUND: Last announced a 2:1 split in August 2000 at a price of $65. This is the first time HAR has been back at that level.
http://biz.yahoo.com/p/h/har.html
STATUS: Testing the breakout. Friday HAR started up off the test of its breakout, rallying off the 10 day MVA (69.14) as volume increased to above average. It was good enough to start positions Friday, and HAR is still a buy on a further volume move higher. Solid 6 to 3 accumulation in the base and outstanding money flow.
Volume: 449.2K Avg Volume: 432.258K
BUY POINT: New: 70.94 Volume=619K Target=$80.25 Stop=$68.12
POSITION: HAR JN - Oct. $70c (57 delta) &/or Stock
http://www.investmenthouse.com/cs/har.html
PRE-SPLIT PLAYS:
Play Date: 05/08/2003
CEDC (Central European District--$32.7; +0.01; no options): Basic Materials. Splits 3:2 on 6-2-03
http://biz.yahoo.com/p/c/cedc.html
STATUS: Test breakout. Solid move up off the 10 day MVA (31.12) on above average volume Thursday, CEDC held steady Friday on lower, average volume. CEDC held up very well in the Friday selling, and we are looking for a continued move higher this week on the back of its solid accumulation during its 3-month base and outstanding money flow that is rising ahead of the price.
Volume: 143.911K Avg Volume: 131.237K
BUY POINT: New: $32.92 (orig. $31.78) Volume=186K Target=$36.55 Stop=$30.65
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/cedc.html
Play Date: 05/08/2003
FLIR (Flir Systems--$52.58; +0.04; optionable): Scientific and technical instruments. Splits 2:1 on 5-30-02
http://biz.yahoo.com/p/f/flir.html
STATUS: Testing the breakout. FLIR is still trying to make the move up off 18 day MVA (51.29) where it fell to after the big breakout. Volume started to rise Thursday and Friday is it started to do the same. Friday it could not make much of a move in the selling market, but with the increased volume we are looking for the move higher this week.
Volume: 334.94K Avg Volume: 273.935K
BUY POINT: New: $52.88 (new $51.70) Volume=401K Target=$58.75 Stop=$51.25
POSITION: FFQ GJ - July $50c (57 delta) &/or Stock
http://www.investmenthouse.com/cs/flir.html
End part 2 of 3
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stock watch
stock split
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