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Begin part 2 of 3
Economic Calendar
6-02-03
Auto sales, May: 5.4M expected, 5.4M April
ISM Index, May (10:00): 48.5 expected, 45.4 April
Construction spending, April (10:00): 0.2% expected, -1.0% March
6-03-03
Productivity, revised Q1 (8:30): 2.0% expected, 1.6% prior.
ISM services, May (10:00): 51.0 expected, 50.7 April
6-05-03
Initial jobless claims (8:30): 420K expected, 424K prior.
Factory orders, April (10:00): -0.9% expected, 2.2% March.
6-06-03
Non-farm payrolls, May (8:30): -25K expected, -48K April
Unemployment, May (8:30): 6.1% expected, 6.0% April
Hourly earnings, May (8:30): 0.2% expected, 0.1% April
Average workweek, May (8:30): 34.2 expected, 34.0 April
Consumer credit, April (2:00): $3.0B expected, $0.9B March
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: APOL; BCR; FDX; GSPN; ICST; LGTO; MDCTA; MVL; NSM; NTN; NVDA; TRMB; TWTC
Best Plays:
1) AMCC: Ready at the breakout.
2) ICOS: Excellent breakout test.
3) BGEN: The test looks over.
4) ONXX: Very nice test of the breakout appears over.
5) SGMS: Ready to go.
6) SRNA: Still in the great pattern.
7) STK: Making the breakout.
NEW PLAYS:
Upside:
Play Date: 05/31/2003
AMCC (Applied Micro Circuits--$5.03; +0.03; optionable): Semiconductor integrated circuits
http://biz.yahoo.com/p/a/amcc.html
STATUS: Cup w/handle. AMCC is trying to make the breakout from a 7-month cup with handle base showing excellent 9 to 5 accumulation (9 up weeks on rising volume to 5 down weeks on rising volume). AMCC is a former leader that is attempting to rally off of the bottom, and there are many buyers right now as money flow is strong along with that accumulation. Thursday and Friday volume jumped sharply as AMCC tried to make the breakout but then could not hold the move. Just going to let it make the breakout and see it holding toward the close.
Volume: 11.95M Avg Volume: 2.971M
BUY POINT: $5.18 Volume=4.5M Target=$6.85 Stop=$4.82
POSITION: AEX HA - Aug. $5c (56 delta) &/or Stock
http://www.investmenthouse.com/ct/amcc.html
Play Date: 05/31/2003
CKP (Checkpoint Systems--$13.75; +0.15; optionable): Security services
http://biz.yahoo.com/p/c/ckp.html
STATUS: Testing the 18 day MVA. CKP surged out of a base in April and ran up the short term MVA in a strong run. It has spent the last three weeks testing that move, holding the 18 day MVA (13.36). Thursday and Friday volume started surging higher as CKP edged higher. We look at this kind of like crouching and gathering itself before a spring higher.
Volume: 346.7K Avg Volume: 156.282K
BUY POINT: $13.92 Volume=250K Target=$16.75 Stop=$13.25
POSITION: CKP HV - Aug. $12.50c (75 delta) &/or Stock
http://www.investmenthouse.com/ct/ckp.html
Play Date: 05/31/2003
ICOS (Icos Corp.--$31.65; +0.62; optionable): Drug manufacturer
http://biz.yahoo.com/p/i/icos.html
STATUS: Testing the breakout. ICOS broke out of a 6-month reverse head and shoulders 5 sessions back on a strong volume surge. The pattern showed solid accumulation, and this test is on lower volume as it should be, showing that those that just bought the stock are not eager to sell it on this pullback. It is holding well above the neckline at 28 and the 10 day MVA (30), a sign of its strength as it shows a very tight doji Friday. That indicates the pullback may be over, and we are looking for a higher volume move back up to enter.
Volume: 3.064M Avg Volume: 1.858M
BUY POINT: $32.05 Volume=2.8M Target=$38.38 Stop=$29.81
POSITION: IIQ JF - Oct. $30c (63 delta) &/or Stock
http://www.investmenthouse.com/ct/icos.html
Downside:
Play Date: 05/31/2003
WTW (Weight Watchers--$42.58; +1.14; optionable): Weight loss services
http://biz.yahoo.com/p/w/wtw.html
STATUS: Put. WTW is in a continuing downtrend after toppign on low volume in April. It has brokend down and is now trending down the short term MVA (18 day MVA at 43.04). The stock bounced Friday but on continued below average volume. It continues under heavy distribution and money flow continues to tank ahead of the price. Looking for it to complete the test of the 18 day MVA and then roll over on rising volume.
Volume: 351.7K Avg Volume: 604.164K
BUY POINT: Test 43, then $42.72 on the fall back down. Volume=600K Target=$39.52 Stop=$43.45
POSITION: WTW SI - July $45p (-70 delta)
http://www.investmenthouse.com/ct/wtw.html
CONTINUING PLAYS:
Play Date: 05/20/2003
ADVP (AdvancePCS--$33.1; +0.39; optionable): Specialized health services
http://biz.yahoo.com/p/a/advp.html
STATUS: Testing the breakout. ADVP is still moving laterally over the 18 day MVA (32.31) after the strong breakout in early May. It is moving in a nice, tight, lateral range on low, below average volume as the final sellers are shaken out of the stock as they get impatient that it is not running higher. That is just what we want, because when they are gone then the stock can start to rally again as demand will outsrip supply because there are no more ready sellers. Looks very solid.
Volume: 1.017M Avg Volume: 1.546M
BUY POINT: New: $33.45 (orig. $32.85) Volume=2M Target=$39.22 Stop=$31.92
POSITION: QVD IF - Sept. $30c (66 delta) &/or Stock
http://www.investmenthouse.com/ct/advp.html
Play Date: 05/21/2003
APC (Anadarko Petroleum--$49.28; +0.54; optionable): Independent natural gas & oil
http://biz.yahoo.com/p/a/apc.html
STATUS: Cup w/handle. APC is still working on a small handle right at 50, the high on the left side of the base that was hit in December. It tried to break higher early in the week but faded to tape back to the 10 day MVA (48.50). Friday APC started higher on rising, average volume. This may be the move that finally breaks it higher.
Volume: 2.214M Avg Volume: 2.129M
BUY POINT: $49.75 Volume=3M Target=$56.88 Stop=$47.96
POSITION: APC HW - Aug. $47.50c (66 delta) &/or Stock
http://www.investmenthouse.com/ct/apc.html
Play Date: 05/24/2003
BGEN (Biogen--$42.42; +0.74; optionable): Biotechnology
http://biz.yahoo.com/p/b/bgen.html
STATUS: Testing the breakout. BGEN broke out from a reverse head and shoulders pattern Tuesday on strong volume. It tested back in the general biotechnology choppiness the rest of the week, but started up Friday after testing toward the 10 day MVA (40.97) on the low. Volume was not there on the rebound, and we are looking for that to come back in as the stock continues its recovery from this test.
Volume: 3.635M Avg Volume: 3.913M
BUY POINT: New: 43.05 (orig. $42.35) Volume=4.5M Target=$49.55 Stop=$39.39
POSITION: BGQ JU - Oct. $37.50c (69 delta) &/or Stock
http://www.investmenthouse.com/ct/bgen.html
Play Date: 05/03/2003
NBIX (Neurocrine Biosciences--$50.7; +0.99; optionable): Biotechnology
http://biz.yahoo.com/p/n/nbix.html
STATUS: Cup w/handle. NBIX is still working to consolidate that big Tuesday move. Price was back up NBIX but volume was low again, coming in below average. It is still in very good shape as it moves in a nice uptrend after the breakout. Some more upside volume presents another entry point.
Volume: 297.871K Avg Volume: 397.726K
BUY POINT: New: $51.06 (orig. $48.20) Volume=600K Target=$54.25 Stop=$48.25
POSITION: UOT HI - Aug. $45c (64 delta) &/or Stock
http://www.investmenthouse.com/ct/nbix.html
Play Date: 05/21/2003
NCN (NCE Petrofund--$8.4; +0.1; no options): Asset Management
http://biz.yahoo.com/p/n/ncn.html
STATUS: Cup w/handle. NCN is making the move with volume rallying as it moved through the buy point Friday. Solid action as it moved out of the handle to the 11 week base with 4 to 2 accumulation and surging money flow. Still a buy.
Volume: 446.5K Avg Volume: 201.113K
BUY POINT: New: $8.45 (orig. $8.38) Volume=254K Target=$10 Stop=$8.08
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/ncn.html
Play Date: 04/23/2003
NSCN (Netscreen Technologies--$22.36; -0.11; optionable): Security software
http://biz.yahoo.com/p/n/nscn.html
STATUS: Testing the breakout. NSCN continues to consolidat the breakout, setting up for the next move. Thursday and Friday NSCN held over the 10 day MVA (22.05) as volume backed off and the trading range was tight. It looks as if it is tightening up, ready for the next break higher. When it goes it can be explosive.
Volume: 1.038M Avg Volume: 1.793M
BUY POINT: New: $22.88 (orig. $21.17) Volume=2.5M Target=$25.42 Stop=$20.94
POSITION: QKN ID - Sept. $20c (63 delta) &/or Stock
http://www.investmenthouse.com/ct/nscn.html
Play Date: 05/19/2003
ONXX (Onyx Pharmaceuticals--$10.10; +0.13; optionable): Biotechnology
http://biz.yahoo.com/p/o/onxx.html
STATUS: Testing the breakout. ONXX blasted out of its base 6 sessions back on strong volume, rallied some, and then came back to test the breakout. It has held, tapping the 18 day MVA on the Friday low (9.61), the point that also marks the breakout point. It rallied back on solid volume, showing a doji on the candlestick chart. Looks very solid and ready to move back up here for new positions.
Volume: 456.961K Avg Volume: 174.269K
BUY POINT: $10.55 Volume=300K Target=$12.25 Stop=$9.38
POSITION: OIQ HU - Aug. $7.50c (83 delta) &/or Stock
http://www.investmenthouse.com/ct/onxx.html
Play Date: 05/29/2003
SGMS (Scientific Games--$7.71; -0.04; optionable): Computer systems
http://biz.yahoo.com/p/s/sgms.html
STATUS: Cup w/handle breakout. Friday SGMS showed a tight doji that used the 10 day MVA as support. It still looks very good here in the extension of its handle to the 4-month base showing accumulation at 7 up weeks on rising volume to 5 down weeks on rising volume. Money flow is excellent. It held up very well to the Lehman cut to equal weight, and we are just going to let it make its breakout move.
Volume: 458.5K Avg Volume: 425.516K
BUY POINT: $8.08 Volume=571K Target=$9.95 Stop=$7.51
POSITION: TUJ JU - Oct. $7.50c (61 delta) &/or Stock
http://www.investmenthouse.com/ct/sgms.html
Play Date: 05/28/2003
SRNA (Serena Software--$19.78; +0.26; optionable): Business software
http://biz.yahoo.com/p/s/srna.html
STATUS: Reverse head & shoulders. SRNA continues to butt up against resistance at 20, the point that has stopped its advance the past two weeks as it works on the handle to its 6-month base. Volume was up Wednesday and Thursday, then backed off Friday as SRNA again tested 20. Accumulation is excellent at 7 to 2 and money flow is still strong and above current price. Just being patient with this one and letting it make the breakout in its own time. Really like this pattern.
Volume: 827.7K Avg Volume: 472.898K
BUY POINT: $20.35 Volume=700K Target=$24.45 Stop=$18.78
POSITION: NHU HD - Aug. $20c (52 delta) &/or Stock
http://www.investmenthouse.com/ct/srna.html
Play Date: 04/28/2003
STK (Storage Technology--$27; +0.79; optionable): Data storage devices
http://biz.yahoo.com/p/s/stk.html
STATUS: Cup w/handle. Finally getting some volume to push it out of the 5-month cup with handle base. It is finally starting to follow that money flow as well. Solid move with good accumualtion to boot. Still a buy on this move.
Volume: 866.2K Avg Volume: 688.076K
BUY POINT: New: 27.38 (orig. $26.55) Volume=1M Target=$31 Stop=$25
POSITION: STK IX - Sept. $22.50c (64 delta) &/or Stock
http://www.investmenthouse.com/ct/stk.html
Play Date: 05/24/2003
WSTC (West Corp.--$24.90; -0.15; optionable): Business management services
http://biz.yahoo.com/p/w/wstc.html
STATUS: Testing the 18 day MVA. Still working in a tight range over the 10 day MVA, tapping that level on the Friday low (24.69) and showing a nice, tight doji. Volume surged to above average levels as it did. Super money flow and accumulation. Getting ready for the next big move up.
Volume: 250.588K Avg Volume: 215.357K
BUY POINT: New: $25.55 (orig. $25.20) Volume=215K Target=$28 Stop=$23.82
POSITION: HUD GX - July $22.50c (75 delta) &/or Stock
http://www.investmenthouse.com/ct/wstc.html
Downside:
Play Date: 05/24/2003
BRL (Barr Labs--$52.75; +0.47; optionable): Generic drugs
http://biz.yahoo.com/p/b/brl.html
STATUS: Put. BRL is in a descending triangle that started in early April. It has made a series of lower highs while bouncing up off 52. This is a bearish pattern, and combined with the declining money flow and distributive price/volume action, we believe the breakdown is coming. Friday BRL bounced up off 52, but volume was low and after tapping at the 50 day MVA on the high (53.44) it gave back much of the gain.
Volume: 735K Avg Volume: 878.313K
BUY POINT: $51.94 Volume=1.4M Target=$48.06 Stop=$52.95
POSITION: IOB TY - Aug. $53.38p (-52 delta)
http://www.investmenthouse.com/ct/brl.html
End part 2 of 3
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