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us stock market, stock split
Begin part 2 of 2
SUBSCRIBERS QUESTION
Q: I have a question about stock when they have a reverse stock split. Is this good for a stock? I have one that I have had forever that I got at $7.00 and now is about 3.85 (this was before your great newsletter, I would now never hold a stock till it was 1/2 the price). Would it be better to sell now before the reverse split goes into affect and hold it and see what happens? Thanks
A: Typically it is not a good sign for a stock to announce a reverse stock split. It is usually a defensive move taken to stay listed on an exchange or otherwise generate price stability (at a higher level), something the company has been unable to do on its own. The split itself does not change the fundamentals, and without more it rarely has the desire effect in that most reverse split stocks find themselves below their post-split price within 12 months.
That is not always the case. A general market rally can help. More than that, however, when making the decision on the stock you have to look and see if there is anything else going on that could cause price appreciation after the split is effective. Is there new management, increasing sales, new relationships, etc.? MSTR was one of the early reverse split success stories last year. It reverse split but also announced some changes, some agreements, and some improving financial numbers. Those along with the reverse split helped jumpstart MSTR and made it an early leader in the rally.
As far as hanging onto a stock such as PCLN unitl a reverse split is effective, if it is moving well before the split it is worth letting it run. During the long downtrend reverse splits were a signal for shorts to enter the market. Now with a new budding uptrend, stocks that are working well into a split may continue that action into and after the split.
SEMINARS ON CD
http://www.stockseminarsonline.com
This is Jon Johnson's own site devoted exclusively to seminars designed to teach you what you need to know about the stock market and stock movement and how to take advantage of those moves without incurring the usual high costs of travel and related expenses usually associated with seminars.
THE PLAYS
Good movers Friday: ABTL; BRCM; DCLK; GSPN; NVDA; SIGM
Friday Plays:
GNTA: Nice volume break higher.
LUV: Starting up on much better volume.
UNTD: Nice doji on volume. Looks ready this week.
MME: Still getting squeezed between the 10 day MVA and 48, building pressure.
Best Plays:
1) INSP: Preparing for the next move as the 10 day MVA rises to meet it.
2) UNT: On the verge of a breakout.
3) Continuing: CNQR is starting back up. CTL is bouncing from its pullback. JCOM still looks ready for more.
New Plays:
Upside:
Play Date: 05/31/2003
ED (Consolidated Edison--$42.99; +0.26; optionable): Utilities
http://biz.yahoo.com/p/e/ed.html
STATUS: Cup w/handle. Utilities mean dividends, and ED shot higher in mid-May in anticipation of dividend tax relief as well as on the news of the actual relief. The moved completed the right side of its 5-month base showing solid 8 to 5 accumulation (8 up weeks on rising volume to 5 down weeks on rising volume). After the surge ED spent last week pulling back on lower volume to form the handle. It held well over the 10 day MVA (42.05) on the pullback and started back up Friday on some rising volume. It may have finished the handle or it may have some more testing toward the 10 day to do, but all we have to do is sit back and let it make the breakout. Money flow has shot up with the dividend anticipation. As we said last week, wait until the initial euphoria is over, then step in.
Volume: 1.837M Avg Volume: 900K
BUY POINT: $44.36 Volume=1.4M Target=$47.25 Stop=$42
POSITION: ED KI - Oct. $45c (45 delta) &/or Stock
http://www.investmenthouse.com/cd/ed.html
Play Date: 05/31/2003
INSP (Infospace--$14.60; +0.25; no options): Internet information provider
http://biz.yahoo.com/p/i/insp.html
STATUS: Testing the breakout. INSP has been rising since November, working in a range roughly from 9 to 12. During that time it put together some excellent accumulation at 8 to 3, and then after one last test of the 50 day MVA (12.59) it broke out big time 10 sessions back. It has moved laterally in a second range since then, and just now the 10 day MVA (14.13) is rising to meet it. After breakouts followed by lateral consolidations, when the 10 day MVA rises to meet price that usually touches off the next upleg. That is what we are waiting for here. Excellent money flow and relative strength to go with the strong accumulation.
Volume: 210.186K Avg Volume: 481.693K
BUY POINT: $14.96 Volume=500K Target=$18 Stop=$13.91
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cd/insp.html
Play Date: 05/31/2003
MVSN (Macrovision--$19.15; +1.61; optionable): Software, movie copy protection technologies
http://biz.yahoo.com/p/m/mvsn.html
STATUS: Reverse head and shoulders. MVSN is starting to make a breakout run from its 6.5 month base sporting excellent 7 to 3 accumulation and outstanding money flow. After making a run a the breakout in early May, MVSN pulled back to support at 17 on very low, below average volume. Last week volume started to edge higher, then MVSN exploded higher Friday on sharply higher, above average volume. It looks ready to follow that money flow and accumulation higher, starting a nice breakout from this solid accumulation pattern.
Volume: 1.589M Avg Volume: 828.833K
BUY POINT: $19.59 Volume=1M Target=$23.55 Stop=$18.22
POSITION: MVU JW - Oct. $17.50c (67 delta) &/or Stock
http://www.investmenthouse.com/cd/mvsn.html
Continuing plays that look good:
Play Date: 05/28/2003
UNT (Unit Corp.--$22; +0.39; optionable): Drilling and exploration
http://biz.yahoo.com/p/u/unt.html
STATUS: Cup w/handle. UNT continues to form a lateral handle to its 3-month base showing 4 to 0 accumulation. Friday it was right back up at the breakout point on rising, above average volume. Looks as if it is getting ready to make the move.
Volume: 209.5K Avg Volume: 244.523K
BUY POINT: $22.25 Volume=366K Target=$26.75 Stop=$20.84
POSITION: UNT ID - Sept. $20c (78 delta) &/or Stock
http://www.investmenthouse.com/cd/unt.html
MEMBER PORTFOLIO: AMZN, BRCM, IBM, IGEN, KLAC, MSFT, RCII, TEVA, WMT YHOO
These are the stocks that our subscribers vote to put in a 'portfolio' to track their progress and comment upon when they reach buy points, sell points, or levels to write some covered calls on. They are not intended to be held as a portfolio by subscribers and are not covered in their entirety in every report. When something interesting is developing we take note.
Play Date: 05/31/2003
IBM (International Business Machines--$88.04; +0.68; optionable)
http://biz.yahoo.com/p/i/ibm.html
STATUS: Cup w/handle. Back again with IBM as it has put together another handle with 5 to 2 accumulation. It shook us out when it formed this last handle, but with a volume breakout we will enter again.
Volume: 6.212M Avg Volume: 8.255M
BUY POINT: $88.92 Volume=10M Target=$100 Stop=$84.55
POSITION: IBM JR - Oct. $90c (50 delta) &/or Stock
http://www.investmenthouse.com/cd/ibm.html
CONTINUING/WATCHLIST:
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
ABTL 05/21 Test BO 5.7 +0.23 5.25 6.94 413K 371K 4.88
Current. Nice volume surge off the 10 day MVA as ABTL continues
its move.
ADIC 05/13 DB hdl 10.53 +0.16 9.64 11.65 525K 521K 9.78
Current. Still working up the 10 day but a bit choppy late in
the week though volume dropped off. Still a strong uptrend.
AETH 05/14 Cup hdl 4.81 0 4.45 5.45 319K 244K 4.35
Current. Still moving up the 10 day MVA though getting a bit
volatile late in the week.
AGEN 05/13 Cup hdl 12.27 +0.27 10.95 13.22 670K 417K 10.97
Current. Nice uptrend over the 10 day continues after the breakout.
Solid.
AMZN 05/03 BO 35.89 +0.34 30.3 35.45 10M 12M 32.45
Current. Ran up to 36 and stopped Friday. A good run up the
short term MVA and may try to test the 10 day at 34,
but one of the trio of leading big-name internets:
AMZN, EBAY, YHOO.
AVID 05/22 Flat 33.65 +0.41 29.06 34.78 620K 750K 27.15
Buy Not Issued. What a week, up on strong volume.
AXP 05/24 Test BO 41.66 +0.63 40.75 46.45 5.6M 6M 39.94
Current. Banging its head at 42.25 the last three sessions,
but financial and credit services tend to lead in anticipated
economic recoveries.
BCE 04/05 Cup 22.02 +0.27 19.9 23.75 291K 550K 21.05
Current. Nice surge last week as it uses the 10 day MVA for
support. It has made a few runs off that level and
we can expect a pullback to test that support at some
point this week.
BLTI 02/10 Test BO 14.28 +0.28 7.2 13.45 462K 300K 11.78
Current. Very nice week, starting on strong volume and cruising
up all week.
BRCM 05/03 Cup hdl 24.51 +0.98 19.2 22.94 15M 15M 21.15
Current. Excellent week as BRCM rallied on above average volume.
C 04/18 Rv H&S 41.02 +0.25 41.25 48.55 16M 23M 39.38
Current. Nice breakout early in the week but stalled late in
the week at 41.50. That late week stall was common
among credit service companies, but not major.
CELG 05/14 A Wedge 31.48 +1.08 30.98 37.12 3.5M 1.8M 29.88
Current. Had a tough week on the announcement of that convertible
offering, but held the 10 day MVA Friday with a doji
& that can indicate the selling is over.
CNQR 04/22 Test 18 6.85 +0.08 6.75 8.12 187K 250K 6.22
Current. Up off the 10 day MVA on some rising though below average
volume.
CTL 05/01 Cup hdl 33.67 +0.77 32 38 635K 1.3M 32.45
Current. Started back up after the higher volume selling, but
volume was weak as it made the 10 day MVA bounce.
CTXS 03/29 Cup hdl 21.79 -0.48 14.12 17.25 5.7M 5.3M 19.98
Current. Still moving up the 10 day MVA though lost ground Friday
on volume in an up market. Moved up the trailing stop
to let it ride.
DCLK 04/26 Test BO 10.5 +0.44 9.04 11.35 2M 1.9M 9.48
Current. Great week and surged Friday on a nice shot of above
average volume.
DKS 03/18 DB hdl 28.99 -0.29 23.81 28.42 320K 225K 28.35
Current.
DKS 02/19 DB hdl 28.99 -0.29 22.75 27.35 320K 225K 28.35
Current. Holding the 18 day MVA as DKS sat out last week rally.
DRIV 05/08 Test BO 19.66 +0.3 17.62 20.95 1M 1.4M 17.96
Current. Nice recovery off the 18 day MVA to take it back to
20. This is where it needs to make a strong move but
will probably test back toward 19 first.
EBAY 12/12 Test 18 101.65 +1.5 69.45 92 4.8M 12M 96
Current.
EBAY 10/15 Test 50 101.65 +1.5 62.45 92 4.8M 12M 94.92
Current. Salvaged the week with a bounce off the 10 day MVA
Friday after that strong Tuesday surge to start the week.
ED 05/31 Cup hdl 42.99 +0.26 44.36 47.25 1.8M 1.4M 42
New.
FDRY 04/29 Cup hdl 15.29 +0.19 10.9 13.15 3.8M 4.4M 13.75
Current. Solid week but Friday reversed off its high and closed
fractionally higher on rising, above average volume.
May need to test back toward 14.50 here.
FFIV 05/21 Test 18 17.31 +0.04 15.62 18.55 338K 750K 16
Current.
FFIV 04/23 A Wedge 17.31 +0.04 15.34 18.32 338K 750K 15.23
Current. Good start and then coasted to Friday on lower volume.
FLSH 05/22 Test BO 11.2 +0.06 10.55 12.75 113K 195K 10.15
Current. Good week though Thursday it sold some on sharp volume.
May come back to test the 10 day at 10.50 here for
a routine pullback.
FLSH 05/12 Rv H&S 11.2 +0.06 9.2 10.96 113K 195K 10.15
Current.
GNTA 05/29 Test BO 11.62 +0.36 11.62 14 1.7M 904K 10.74
Current. Excellent volume moved us into this play.
GRMN 11/06 Cup hdl 48.25 +1.3 22.34 37.45 423K 198K 44.44
Current. Up off the 10 day MVA Friday on rising volume, but
no big surge after the nice recovery.
GSPN 05/24 Test BO 8.26 +0.8 7.42 10 7.2M 2.8M 7.15
Current. Super surge Friday on excellent volume. Very nice.
HAS 04/12 Test BO 16.01 +0.01 14.88 17.88 881K 1.2M 15.55
Current.
HAS 03/31 Test BO 16.01 +0.01 14.65 17 881K 1.2M 15.35
Current. Struggling to get over 16 once again.
IBM 05/31 Cup hdl 88.04 +0.68 88.92 100 6.2M 10M 84.55
New.
IBM 01/11 Cup hdl 88.04 +0.68 0 0 6.2M 14M 0
After shakign us out it is now back in a good pattern.
IGEN 01/11 A Wedge 35.12 -0.11 0 0 945K 375K 36
ILXO 04/15 Cup hdl 16.32 -0.03 11.6 15.32 596K 293K 15.3
Current. Nice hammer doji at the 10 day MVA as volume jumped.
Looks ready to rise again.
INSP 05/31 Test BO 14.6 +0.25 14.96 18 210K 500K 13.91
New.
JCOM 05/27 Cup hdl 36.94 +1.14 38.12 45.55 465K 1M 34.94
Current. Started back up Friday though it could use better volume.
JNPR 05/22 Flat 13.8 +0.14 12.9 15.55 16M 17M 12.72
Current.
JNPR 04/15 Flat 13.8 +0.14 10.6 13.42 16M 17M 12.72
Current. Having a hard time clearing 14, hitting that level
all 4 sessions on the high.
KLAC 01/11 Test BO 46.23 +1.93 0 0 17M 0 0
What a week, surging off the 50 day MVA.
LUV 05/27 Test 50 16.07 +0.21 16.45 20.45 2.5M 3.6M 15.35
Buy Not Hit. Trying to get on track and Friday volume was moving
up. Getting ready.
MAT 05/20 Put 21.51 +0.4 21.3 19.45 2.9M 2.5M 21.95
Current. Back up to test the 50 day MVA after looking as if
it was cratering. It fails this week or we will exit.
MDCO 05/10 Test 18 23.3 +0.3 21.25 25.48 314K 825K 21.65
Current. Solid first part of the week that fizzled on low volume
Thursday and Friday.
MME 04/30 BO 47.9 +0.28 45.65 54.45 520K 634K 45.88
Current. Still working laterally over the 10 day MVA and below
48, building pressure from below.
MSFT 01/11 A Wedge 24.61 +0.21 26.62 30 85M 57M 25.55
Failing a test of the break below the 50 day MVA, churning
Friday on high volume below the 18 day MVA. Not good
for the market, but the market has been moving without it.
MVSN 05/31 Rv H&S 19.15 +1.61 19.59 23.55 1.6M 1M 18.22
New.
NTES 04/01 Cup 32.3 -0.25 17 27 1.5M 1M 29
Current. Another great week though the last part was a lateral
move as NTES found resistance at 33.60.
NVDA 05/08 Test BO 26.17 +1.96 22.62 27 18M 11M 23.15
Current. Massive week capped by a big gap higher Friday on an
upgrade. Kind of the reverse as downgrades are the
norm when stocks breakout to the upside.
OVTI 02/24 Cup hdl 35.89 +1.05 19.05 31 1.1M 1.2M 31.05
Current. Excellent week as OVTI continued its move up off the
18 day MVA.
QLGC 05/17 Test BO 50.11 +0.75 46.78 54 7.2M 8M 46.25
QLGC 03/15 Test BO 50.11 +0.75 38.85 45 7.2M 11M 46.25
Current.
QLGC 11/07 Test BO 50.11 +0.75 41.4 50 7.2M 25M 46.25
QLGC 08/17 CCall 50.11 +0.75 36.48 0 7.2M 12M 46.25
Current. Strong week on excellent volume.
RCII 01/11 Test BO 66.29 +0.81 0 0 272K 0 63.75
Getting some volume Friday as RCII edged higher. Looks
ready for the next move.
RGEN 04/07 Test 18 6.42 -0.23 4.84 7.1 161K 132K 5.96
Current. Good week up to Friday when RGEN turned to test the
10 day. Volume fell to nothing, so not so bad.
RMBS 04/09 A Wedge 17.9 +0.41 17.55 21.45 1.6M 6.8M 15.94
Current. Gapped higher and could not go further. Good action
to hold the gains though may test back some after the
gap higher.
SCSS 04/26 Cup hdl 16.05 +0.2 12.22 16 823K 696K 14.75
Current. Still in the strong uptrend over the 10 day MVA SHOWING
STRONG VOLUME fRIDAY.
SHRP 05/23 Cup hdl 22.75 +0.85 22.06 26.55 312K 350K 20.52
Buy Not Issued. Made the price breakout but volume was not quite breakout
quality.
SIGM 05/06 Cup hdl 10.44 +1.16 7.58 9.55 1.1M 125K 9
Exploding higher on huge volume.
SINA 05/22 Cup hdl 16.16 +0.7 14.75 17.75 3.6M 2.5M 13.96
Current. Continues to work up the 10 day MVA on above average
volume all week. Solid trade.
SINA 04/12 Cup hdl 16.16 +0.7 9.35 13.45 3.6M 2.5M 13.96
Current.
SOHU 03/20 Dbl btm 28.04 +0.62 10.55 21.45 3.4M 800K 24.75
Current. Storng move all week, surging on strong volume. Showed
a doji Friday and may need a bit of a test back.
STX 05/24 Test BO 15.15 0 13.95 16.75 2.5M 2.9M 13.55
Current. Gapped lower Friday but managed to rally back to flat.
TEK 05/20 Cup hdl 21.08 +0.17 20.44 24.45 606K 500K 20.22
Current. Nice break higher and follow through the rest of the
week. STrong Friday volume.
TEVA 01/11 A Wedge 50.65 +0.75 0 0 1.7M 5M 0
TLB 05/17 Put 28.94 +1.21 25.95 22.65 292K 375K 27.55
Exited.
TSCO 04/24 Cup hdl 45.3 +0.75 43.75 52 141K 603K 42.85
Current. Forming a new reverse head and shoulders with a breakout
over 46.
TSCO 04/03 Rv H&S 45.3 +0.75 38.6 44.38 141K 577K 42.85
Current.
TXN 05/28 Cup hdl 20.5 +0.26 20.85 24.75 10M 16M 19.39
Current. Out of the blocks like a ball of fire Wednesday, but
could not follow through late in the week.
UNT 05/28 Cup hdl 22 +0.39 22.25 26.75 210K 366K 20.84
Buy Not Hit. Showing some better, average volume Friday as it looks
ready for the breakout.
UNTD 05/29 Flat 21.54 +0.55 22.08 26.66 1.7M 2M 20.88
Buy Not Hit. Nice doji on rising, above average volume. Getting ready.
USAI 03/25 Cup hdl 38.24 +1.17 29.12 33.55 9.9M 8.3M 35.25
Current. Another excellent surge on rising, average volume to
cap a solid week.
UTHR 04/30 Cup hdl 20 +0.25 18.12 21.75 89K 226K 19
Current. Strong move Tuesday and then gave back a good part
of it late in the week on lower volume. Great rebound
and was takign a breather.
VRTS 08/19 CCall 27.72 +0.48 19.76 20 12M 8.5M 24.92
Current. Excellent week on strong volume.
WMT 02/05 Put 52.61 -0.2 0 0 11M 8.2M 0
Continues to struggle below the 50 day MVA.
WWCA 05/22 BO 10.7 +0.28 9.68 13 1.1M 824K 9.45
XMSR 04/07 Test BO 11.22 +0.04 6.95 8.42 3.8M 6.5M 10
Current. Good break higher Wednesday and then held the gains
taking a breather on lower volume the rest of the week.
YHOO 12/11 Test 50 29.84 -0.31 17.32 25 16M 20M 27.55
Current. Strong move Tuesday and then lateral drift the rest
of the week.
Good Investing!
Jon L. Johnson and The Daily 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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us stock market
stock split
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