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us stock market, stock trading pick
Begin Part 2 of 4
TEAM TRADES
EBAY formed a small ascending wedge in the right side of an 8-month base. The stock moved up Monday on stronger volume, so we were looking for an entry point on a continued move up in a rate cut rally.
The stock opened at 55.48 then raced up to 56.70, setting off an alarm at 9:23 CT that we had set at 56.29 (the April high and the high point in the pattern). The stock pulled back then, just what we were looking for in order to take positions. Volume was tapering off after rallying on the initial move up (and was just under 2 million; below that of the previous day's of 5.4 million; average is 5.6 million), but picked up again as the stock dipped lower to test the 55.75 level. Volume was looking good. The stock would move up and retest that level an hour later. At that point, we looked at taking positions as volume picked up again; it was now up to 3.5 million. Support looked good at 56 so we put in a limit order on the July $50 options at the ask as they were trading 11.20 by 10.80. Obviously we wanted to get in before a rally. Anyway, they had dropped down from an ask of 11.80 earlier in the morning. We then got a run up to 56.62 but volume just wasn't there and the stock drifted back down to test 55.75 again. That ended with news of the rate cut, when EBAY shot up to a new high at 57.05. That looked great, but action was pretty choppy (between 56 and 56.75) as the stock pulled back and bounced around until finally it ran back up to 57 as the Nasdaq rallied 40 points. Volume finally broke above average to 6.34 million. We put in a stop loss at 9 on the options.
By market close the stock had pulled back to 56.05 to close, the market giving back the rate cut pop. Options were back down to 11.10 by 11.70. Not a super-strong move, considering the volume, but the stock remains above support so we will see if the market can pick up and give a strong rally. Looking solid here.
For a review of frequently asked questions, please use the link below:
http://www.investmenthouse.com/1questions.htm
THE PLAYS: A lot of really SOLID plays on the report with great patterns.
PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: Got the announcement from SDS! Looking at ITG and GNTX tomorrow.
BONUS PLAYS:
CSGS (Csg Sys--$61.43; +3.11; optionable (QGA): Software
http://biz.yahoo.com/p/c/csgs.html
STATUS: Breaking out of a lengthy cup with handle base. Volume was just over average at 853,000 (avg. 751,000) as the stock shot over the handle high at 60.20.
Great money flow and good buying. Initial target: $69-72.
BUY POINT: 60.33, on volume of 1.1 million or better. Stop: 56.11 (50 day MVA is at 55.90).
POSITION: Stock and/or June $55 calls to buy (QGA FK; 93 open interests).
BEST PLAYS: Besides the plays set forth below best plays, there are some other stocks that also look good. These include Pre-Announcements NVDA, OMC, CEC, ADVP and FDC; Pre-Splits CHS and APPB; Continuing Candidates IGT, CECO and MERQ; and Post-Splits SOTR, EMLX and JNPR.
PRE-ANNOUNCEMENT BEST PLAYS:
1) GNTX - Forecast for tomorrow and in a nice handle
2) ITG - Forecast for tomorrow and broke over recent highs
3) LOW - Breaking out with good volume
4) BMET - A solid move back up on a huge volume surge
GNTX (Gentex--$27.41; -0.07): Forecast to announce a split on 5-16-01 in conjunction with its annual shareholder meeting. Perhaps not in split territory yet, but the right time of year and a good pattern.
http://biz.yahoo.com/p/g/gntx.html
BACKGROUND: Last announced a 2:1 split on 5-21-98 in conjunction with its annual shareholder meeting (the company has announced three splits with shareholder meetings). The stock price was $35. The annual shareholder meeting is scheduled for 5-16-01 at 4:30 ET at which time no additional shares will be authorized. The company has sufficient shares for a 2 for 1 split.
STATUS: GNTX is forecast for tomorrow but is a bit below its historic split price. However, it is in a nice cup with handle pattern that formed after the stock took a nice run back up from its recent lows below 18. It has pulling back nicely in the pattern for over three weeks, holding over its 10 day MVA (27.15), Tuesday with a tight doji on volume that has again tapered off after an attempted move last week (103,700; average 425,000). Looks good, and we are waiting for a breakout move.
BUY POINT: Aggressive A move over 28 on increased volume. Breakout 28.57 on volume of 635,000.
POSITION: Both buy points Stock and/or June $25 calls to buy (GXQ FE; next month out is September).
ITG (Investment Tech Group--$52.83; +1.21; optionable): Wildcard Forecast to announce a split on 5-16-01 in conjunction with annual shareholder meeting.
http://biz.yahoo.com/p/i/itg.html
BACKGROUND: Last announced a split on 11-19-97 at a stock price of $70, and in December 1995 at $65. The annual shareholder meeting is scheduled for 5-16-01 at 1:00 pm ET at which time no additional shares will be authorized. The company has sufficient shares for a 2:1 split.
STATUS: Another one forecast for tomorrow but a wildcard because it is a bit below its range. However, it is trying to make a move out of its pennant (formed since late March), today moving out over recent highs in the pattern. Volume was not strong though, continuing at the low levels we have seen (113,100; average 228,000). For positions we want to see stronger volume kick in, and an announcement would certainly supply that. Still showing good buying and improving relative strength. Has some recent highs in the pattern at 55.
BUY POINT: Aggressive A strong move up from here on increased volume.
POSITION: Stock and/or July $50 (no open interest for $45) calls to buy (ITG GJ).
LOW (Lowe's--$65.81; +1.01): Forecast to announce a split on 5-21-01 in conjunction with earnings, or more probably on 5-25-01 at its annual shareholder meeting.
http://biz.yahoo.com/p/l/low.html
BACKGROUND: Last announced a split on 5-29-98 in conjunction with its annual shareholder meeting. The stock price was $75. Prior to that announced a split on 3-4-94 at a stock price for $64. The annual shareholder meeting is scheduled for 5-25-01 at 10:00 ET at which time no additional shares will be increased. The company has sufficient shares for a 3:2 split.
STATUS: LOW broke out today, moving over its prior high from a breakout of a saucer pattern. Volume was excellent at 4.3 million (average 3.4 million), but the stock could not hold its intraday move that took it up to 66.65. It has been strong, looking good going into the forecast after catching support at its 18 day MVA (62.27) as its tested its breakout last week. We will see if it can continue the move, and the volume gives us a bit of confidence. LOW shows good relative strength, money flow and buying.
BUY POINT: A continued move up on strong volume.
POSITION: Earnings Play. Stock and/or June and July $60 calls to buy (LOW FL and LOW GL).
BMET (Biomet--$42.85; +1.37; optionable): Medical equipment. Working on a date for this one.
http://biz.yahoo.com/p/b/bmet.html
BACKGROUND: Last announced a 3:2 split on 7-6-00 at a stock price of $29. The annual shareholder meeting was on 9-16-00 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: After a disappointing drop from its breakout from an ascending wedge, BMET has charged back after catching support at its 50 day MVA (39.78). Today the stock launched back over the former pattern highs, with a very impressive volume surge behind it (3.22 million; average 1.7 million). It is now again just below its high of 43.68 (from the breakout), and we will look for it to continue up and over that level.
BUY POINT: From here A move up on continued strong volume. Breakout Over 43.68 on continued strong volume.
POSITION: Both buy points Stock and/or July $40 calls to buy (BIQ GH).
PRE-SPLIT BEST PLAYS: Remember, we try to grab these as they break out of good patterns or as they start a run right before the split. Not looking for home runs, but looking for those $3 to $3 moves running into the split. Not huge money, but it can be very steady.
1) CNL - Made the move
2) STT - Ready to make the move
3) DGX - Looking good in its pullback consolidation
4) PKI - Nice pattern
5) BAX - Rebounded off of support
6) SDS - Moving up in the cup with handle
CNL (Cleco--$47.11; +0.85): Utility. Splits 2:1 effective 5-22-01.
http://biz.yahoo.com/p/c/cnl.html
STATUS: We were just waiting as the stock showed numerous low-volume dojis along its 10 day MVA (46.13, tucked in with its other MVA's), and Tuesday CNL sprung upward out of that lateral consolidation, moving up on increased, strong volume of 143,800 (average 69,500). On the move the stock took out its most recent high of 46.96, and has resistance ahead from its April high at 48.47.
PLAY: On a continued move, stock.
STT (State Street--$106.27; +1.31; optionable): Banking. Splits 2:1 effective 5-31-01.
http://biz.yahoo.com/p/s/stt.html
STATUS: Another one that is crouched in an enticing pattern. STT is in a handle to a ragged cup, with the handle having turned into a pennant pattern. STT showed a doji on the 10 day MVA (105.06) Monday, and made a slight move up today but volume remains tame at 575,800 (average 1 million). However, we are getting into that range before the split when volume is not always necessary for a move; pre-splits are momentum plays for the most part. However, STT is in a solid pattern and we are looking for a strong move toward the breakout (handle high is 109).
PLAY: A move over the recent high of 107.20 on increased volume, with stock and/or June $105 calls to buy (STT FA).
DGX (Quest Diagnostics--$116.25; +1.73; optionable): Health services. Splits 2:1 effective June 1.
http://biz.yahoo.com/p/d/dgx.html
STATUS: Showing nice action as it forms a lateral consolidation in the base of its handle (to a cup that dates back to the beginning of the year). The handle high is back up at 125.50, but he stock is currently holding its 18 day MVA (113.39), and finally closed back over near-term resistance of the 10 day MVA (115.69). It looks like it could be preparing to spring.
PLAY: A move over 117 on average or better volume (342,100; today 278,300), with stock and/or June $115 calls to buy (DGX FC low open interest).
PKI (Perkinelmer--$64.75; +1.75; optionable): Technical Services. Splits 2:1 effective 6-4-01.
http://biz.yahoo.com/p/p/pki.html
STATUS: Is trying to build the right side of its base, but the past three weeks has pulled laterally into a nice, tight consolidation that is something of a pennant. Volume has been low (up to 350,200 Tuesday; average 668,700), which is what we like in this type of pattern. The stock held its 18 day MVA (62.72) again and pushed back up today, and we will see if it can continue pushing past recent highs in the pattern, at 66.45 and 67.85 (the pattern high).
PLAY: Aggressive Over 66.45 on increased volume near the average, with stock and/or June $60 or $65 calls to buy (PKI FL or PKI FM low open interest for the former). Breakout Over 67.85 on volume of 900,000, with stock and/or June $64 calls to buy (PKI FM).
BAX (Baxter International--$94.47; +1.67; optionable): Health Services. Splits 2:1 effective 5-31-01.
http://biz.yahoo.com/p/b/bax.html
STATUS: Broke from its pennant (that started forming in early March), hitting a high of 95.70 before retreating and now looks to be in an ascending wedge. The stock held a higher low at the 18 day MVA (92.66), right at its upper down trendline (connecting March and April closing highs). The stock made a nice push from that support today, running on sharply higher volume (1.28 million; average 1.47 million). The breakout is up at 95.70.
PLAY: Aggressive A continued move up on increased volume. Breakout Over 95.70 on increased volume. Positions for both moves are with stock and/or July $90 calls to buy (BAX FR).
SDS (Sungard Data--$58.95; +1.03; optionable): Announced a 2:1 split Monday, effective June 18.
http://biz.yahoo.com/p/s/sds.html
STATUS: Has pulled back into a handle to its cup pattern, but has a lot of strength and the recent announcement of a split did not hurt. The stock caught support at its 10 day MVA (57.31) on its recent pullback, and the last two sessions has headed back up, with today's action on increased volume (704,700; average 912,300). The handle high is up at 59.90.
BUY POINT: 60.03 on volume of 1.35 million.
POSITION: Stock and/or July $55 calls to buy (SDS GK).
CONTINUING CANDIDATE BEST PLAYS:
1) MMM - Still a good pattern
2) CHIC - Another good pattern and good news in its sector
3) KMP - Big volume surge
4) ACF - Broke out again
5) ASFC - Doji on support
6) KMI - Trying to break out
MMM (Minnesota Mining--$118.15; -0.15):
http://biz.yahoo.com/p/m/mmm.html
BACKGROUND: Last announced a 2:1 split on 3-15-94 in conjunction with a board meeting. The stock price was $102. The annual shareholder meeting is scheduled for 5-8-01 at 10:00 am CT at which time no additional shares will be authorized.
STATUS: MMM continues to consolidate laterally in its handle (to a cup), holding firm over its 10 day MVA (117.56). It reached up to 119.75 today before pulling back to show a tight doji, with volume up but still low at 1.42 million (average 2.28 million). The stock is near an all-time high (122.94), recently breaking from a cup within its larger cup pattern. We are looking for volume to come back in and push the stock to a breakout. The high in the handle is an intraday spike at 121.92, but we will look to the recent intraday high at 120.70.
BUY POINT: Breakout 120.83 on volume of 3.4 million.
POSITION: Stock and/or July $115 calls to buy (MMM GC).
CHIC (Charlotte Russe--$35.50; +0.31; no options):
http://biz.yahoo.com/p/c/chic.html
BACKGROUND: Based upon our research it does not appear that CHIC has ever split its stock, but apparel stocks tend to split at this level. The annual shareholder meeting was on 2-13-01 at which time no additional shares were authorized. The company has sufficient shares for a 2 for 1 split.
STATUS: Apparel. Trying to move after testing the breakout from its ascending wedge/saucer pattern, moving in another little ascending wedge now over its 10 day MVA (34.37). Volume spiked up today to 407,100 (average 300,300), a possible 'get ready' signal as the stock reached up near the breakout point of 36.60 (intraday high of 36.18). Looking for the breakout.
BUY POINT: Breakout Over 36.60 on above average volume.
POSITION: Stock.
KMP (Kinder Morgan--$71.99; +0.58):
http://biz.yahoo.com/p/k/kmp.html
BACKGROUND: Based upon our research it does not appear that KMP has ever split its stock. KMP is a master limited partnership and therefore does not have annual shareholder meetings.
STATUS: After testing the breakout of its saucer pattern, the stock has made steady progress but has pulled laterally the past few sessions. Of interest today is the huge volume spike (441,500; average 117,000) as the stock ranged from below support of the 10 day MVA (70.62) to its intraday low of 70, back up to close just below its high (72.50). Relative strength has broken out, and the stock shows excellent money flow and buying.
BUY POINT: Breakout Over 72.50 on continued strong volume.
POSITION: Breakout Stock and/or September $70 calls (KMP FN).
ACF (Americredit--$47.94; +1.92; optionable): Credit Services.
http://biz.yahoo.com/p/a/acf.html
BACKGROUND: Last announced a 2 for 1 split on 8-18-98 at a stock price of $35. The annual shareholder meeting was on 11-7-00 at which time no authorized shares were increased. The company does not have sufficient shares for a 2 for 1 split, but does have sufficient shares for a 3 for 2 split.
STATUS: Since pulling back to test its 18 day MVA (44.48) the stock has made a nice recovery, today running up for the second consecutive session as volume increases. The stock made a new closing high, and is just under its all-time high (from late March) of 48.23. Looking for a move over that level with continued strong volume (1.15 million today; average 872,000). Relative strength has broken out, and money flow and buying are excellent.
BUY POINT: A move over 48.23 on continued strong volume.
POSITION: Stock and/or August $45 calls to buy (ACF HI).
ASFC (Astoria Financial--$56.64; -0.09; optionable): Savings and Loan.
http://biz.yahoo.com/p/a/asfc.html
BACKGROUND: Last split its stock in 1996 with the split at a price of $56. The annual shareholder meeting was on 5-17-00 at which time no additional shares were authorized. The company has sufficient shares for a 2 for 1 split. The next annual shareholder meeting is scheduled for 5-16-01 at 9:30 ET.
STATUS: Has pulled back to test the breakout from a saucer pattern. It looks interesting as today its tapped down to 56.20 at its low but closed with a tight doji right at its 18 day MVA (56.92), which coincides roughly with the high in the left side of the cup. Volume spiked much higher, coming in very strong at 778,200 (average 383,300). We could be in for a strong spring upward from here, with the recent high at 58.50.
BUY POINT: A bounce up over its 10 day MVA (57.29) on continued strong volume.
POSITION: Stock and/or July $55 calls to buy (AQR GK).
KMI (Kinder Morgan--$59.75; +0.55; optionable): Gas Utility.
http://biz.yahoo.com/p/k/kmi.html
BACKGROUND: Last announced a 3:2 split in October 1998 at a stock price of $50. It also split 3:2 in the $40 range in 1993. The annual shareholder meeting was on 5-9-00. We are currently unable to determine if any additional shares were increased.
STATUS: The stock has moved back up near its recent highs in what has formed into an ascending wedge pattern. Today the move was modest but the volume kicked in to 770,200 (average 648,300). The highs are 60.
BUY POINT: Breakout 60.13 on volume of 1 million or better.
POSITION: Stock and/or August $55 calls to buy (KMI HK).
POST-SPLIT BEST PLAYS:
1) BRCD - A bounce on good volume
2) SEBL - Shooting star doji on support
BRCD (Brocade--$42.50; +2.41; optionable (UBF): Telecom
http://biz.yahoo.com/p/b/brcd.html
STATUS: BRCD made a nice little move going into earnings, jumping from its 50 day MVA (39.75) on solid, much heavier volume of 18.8 million (average 15.5 million). With earnings the stock held strong after hours, and with its solid pattern BRCD could be a mover with a solid market. It has recently pulled back into a nice handle (high 50.75) in the lower reaches of a forming cup. On a strong move in a good market, we are looking at a target of $50, then $56.
BUY POINT: Aggressive A move up from here in a strong Nasdaq, looking for continued strong volume.
POSITION: Aggressive: Stock and/or July $40 calls to buy (UBF GH).
SEBL (Siebel--$42.71; +1.47; optionable) (SGW): Application Software
http://biz.yahoo.com/p/s/sebl.html
STATUS: SEBL is one of the big names that has been trying to put together another move, but after pulling back is currently hanging at a confluence of MVA's (10 and 50 day at 43.07 and 42.08, respectively). Today was a shooting star doji, with the stock pulling back to close after trying a move that hit as high as 45.06. Volume was up but remained below average at 14.2 million (average 18.3 million). We want a sustained higher volume move, and if we get it we can add shares, and we are ultimately looking for a break over 49.50. Initial target: $54-57.
BUY POINT: Aggressive: A strong move back over 45 in a strong market with increased volume.
POSITION: Stock and/or August $40 calls to buy (SGW HH).
End Part 2 of 4
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us stock market
stock trading pick
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