us stock market, stock watch

* * * * *
5/21/01 Stock Split Report Market Summary
* * * *
Stock Split Report Subscribers:

Plays to look at: Another great day as stocks all over the report were blasting up, with very big moves or breakouts by LOW, BMET, CEC, IGT, ACF, BRCD, EMLX, SEBL and STZ!

PRE-ANNOUNCEMENTS: No announcement from LOW, which blasted up on earnings, but we are still looking ahead to May 25 for it. Besides the plays listed below, FDC, CORS and BMET are strong.

CEFT ($49.00; +1.89): Forecast to announce a split on 5-24-01 in conjunction with its annual shareholder meeting. Well in its split range and close to its high of 49.94, moving up strong today with good volume of 4.13 million (average 3.66 million). On the move the stock took out March-April highs at 47.50. Looks good as we approach the split, and we might get a bit of profit taking as it is at resistance. On a move back up after a dip back to the 48 range, stock and/or August $45 calls to buy (SQL HI).

MIKE ($37.46; +1.01): Wildcard Forecast to announce a split on 5-30-01 after the market opens in conjunction with earnings. After breaking from a cup with handle pattern last week the stock has rested a bit, dipping back Friday but charging back up today on sharply higher volume (257,200; average 240,500). It hit 37.95 at its high today, and on a move over 38 with continued strong volume, stock and/or June and September $35 calls to buy (IKQ FG - under 100 open interest, and IKQ IF).

ESRX ($92.50; +2.40): Forecast to announce a split on 5-23-01 in conjunction with its annual shareholder meeting. The handle to its former cup formed a double bottom pattern, and ESRX broke over the center of that configuration today. Volume was quite weak, however, so we will see if it can gather strength to go toward the 'handle' high of 96.34 as we go toward Wednesday's forecast. If it pulls back, looking for it to hold 90, and on a move up from there on increased volume (390,400 today; average 772,100), with stock and/or August $85 calls to buy (XTQ HQ - low open interest).

OMC ($95.81; +1.96) Wildcard Forecast to announce a split on 5-22-01 in conjunction with its shareholder meeting. Looking at the announcement with the meeting tomorrow, and OMC made a strong move up today after gapping down to open. Volume was not too good, however, showing the unhealthy trend of decreasing while the price has increased (686,900 today; average 1.08 million). It is near resistance from a year-old high at 97.50, so we will watch carefully tomorrow. If we get a slight pullback that holds the 95 range with continued low volume, we can look at taking positions on a stronger move back up. An announcement could drive it over the 97.50 level, but we would need to watch that resistance carefully and protect profits given the price/volume action we have seen lately. Stock and/or July $90 calls to buy (OMC GR).

NVDA ($90.20; +3.90): Forecast to announce a split May 22 after the close with earnings. NVDA has battled back and today reached up to 92, near the high of 95.28 set earlier in the month. Volume was up but remained below average, and we will see if the stock gets a boost going into earnings. We can look at positions on a move up with more volume (up to 4.44; average 5.14 million), also taking advantage of any pullback we get at the end of the session to get into positions. Stock and/or June (to sell at day's end if we get a nice run) and September $85 calls to buy (RVU FQ and RVU HQ).

PRE-SPLITS: STT and SDS are also in good position. We are protecting positions with PKI.

BAX ($98.16; +1.88): Splits 2:1 effective 5-31-01. Broke from its ascending wedge pattern last week, and after a brief, low volume pullback Friday it charged up again today. At a new high, and on a continued move, stock and/or July $95 calls to buy (BAX FS).

FIC ($73.86; +0.86): Splits 3:2 effective June 4. Remains in a nice lateral consolidation over its 10 day MVA (72.79), holding over that level as volume drops off (down to 50,900; average 79,800). A good flying plateau, and we will see if it can make a strong move. The aggressive can play a strong move from here, with the safer play on a move over 75, with stock.

CONTINUING CANDIDATES: ASFC, KMI and MERQ are also looking good.

MMM ($123.09; +0.04): Has come back to test the breakout, looking good in the process. Volume has dipped way back (1.4 million today; average 2.36 million), and the stock showed a tight doji today. Looks good, and we will see if it can make a strong move back up. The breakout intraday high was 127. Stock and/or July $120 calls to buy (MMM GD).

CBH ($71.68; +1.88): CBH finally broke out, and this time got some solid volume behind it on the move (242,700; average 159,000). The breakout point was 70.40, so still a buy on a strong move up, with stock and/or June $65 calls to buy (CBH FM).

FHCC ($53.77; +2.27): Moved back up to a new closing high today after having tested back to its 10 day MVA (52) after two other tests of the breakout (at 50) could not start a new run. The intraday high is ahead at 55.15, so we will watch that level on a continued move up. On a continued run on increased volume (473,500 today; average 159,000), stock.

GENZ ($108.94; +2.60): Made the move back over 108, and finally got some serious volume behind it as it recovers from a slump. Friday's dip back held the 10 day MVA (106), and after hitting 105.05 today the stock broke back over the most recent highs. The all-time high is ahead at 111.50. On a continued move with continued strong volume (3.5 million; average 2.7 million), stock and/or July $105 calls to buy (GZQ GA).

ITG ($54.80; +0.91): Has relaxed a bit after having made a good move up last week from a little consolidation it formed after making a move out of a pennant pattern. It is now is something resembling a cup with handle, and today it inched up on volume that remained low at 175,800 (average 232,000). On a move to 55.88 on volume of 345,000 (average 232,000; today 175,800), stock and/or July $50 calls to buy (ITG GJ).

POST SPLITS:

BRCD ($53.26; +7.35): Made a solid move off of last week's dojis on the 10 day MVA (45.44), blasting out over its recent highs in its descending consolidation at 50.75. Volume supported the move, up at 17.3 million (average 15.5 million), and in a strong market we could see more strong moves. On a continued move in a good market, stock and/or July $40 calls to buy (UBF GH).

EMLX ($48.44; +4.91): Like BRCD, it bounced up off of consecutive dojis on the 10 day MVA (42.45) with a strong move that took it over recent highs in its recent consolidation, at 47.85. On a continued move the 200 day MVA is ahead at 54.71. On a continued move in a good market, stock and/or July $45 calls to buy (UMQ GI).

IVX ($30.25; +1.91): A strong move on the split, bounding up in its handle to a cup pattern. The handle high is way up at 32.56 (made when the stock broke out of the cup), and the stock has near resistance from its recent high at 30.40. Looking for a move over that level with continued strong volume (up to 1.85 million today; average 1 million), using care with stops. Stock and/or September $28 calls to buy (WMD IW).

* * THE SUMMARY * * *

TONIGHT:
- Analysts tried to stop the move, but to no avail as Nasdaq enjoys an explosive Monday.
- Volumes up across the board.
- Breakouts galore as plays explode out of patterns.
- SOX makes an important move to the upside.
- Still doubters saying sell into the rally. Wish there were more.
- Treasury Secretary O'Neill says no recession.
- Team Trades.

THE SUMMARY

As we expected, the analysts were out today trying to do battle with the recent turn up in the market. Makes you think that a lot of the big brokerages are short the market and are trying to get points of exit by making some negative calls. It is not working well for them.

Today the semiconductors were being dogged by the same old analysts from Merrill Lynch as he cut estimates on INTC, AMD and company. Toys 'r' Us (TOY) was downgraded as well even though its earnings were not bad. It was somewhat touch and go at the open; futures were up on the Nasdaq, down on the Dow. That did not deter investors as they seized upon the weakness.

We also suspected that any weakness would be viewed as a buying opportunity by investors. That is exactly what happened as money poured into technology and powered the index higher on strong volume after just a bit of hesitation at the open. Volume surged to 2.3 billion shares, up 28% on the buying. NYSE volume jumped up as well; not as much, but it managed a gain (after a lot of indecision) on a gain in volume.

Breakouts continue to come forth with individual stocks and the indexes.

One of the keys to any new bull rally is the follow through by individual stocks that break out of solid patterns and that break over resistance that has kept them down. This rally we are seeing solid patterns yield solid breakouts on high volume. Today saw LOW, ORLY, PL, and WMS broke out or continued their moves out of their bases. We are also seeing stocks such as SEBL, BRCD, EXTR, VRTS, and VRSN reassert themselves as they break resistance, test it, and then power ahead on high volume. On top of that we saw TXN, PRGN, JBL and STMC breakout of the ascending wedges we were watching. Strong moves on high volume make for strong support of a new bull rally.

It is not just the stocks, but the indexes as well. The S&P broke out of a cup with handle pattern last Wednesday and the Nasdaq broke out of its ascending wedge pattern today, clearing resistance at 2250. The SOX also cleared some resistance at 695, though it still has to top its 200 day MVA at 718.38. It has been a long time since the index was above that level (last September).

A mixed view on the future.

After the close today Legg Mason was saying to stay away from tech and to sell into any rally at 2400 or 2500. We heard LEH say sell tech stocks right before last Wednesday. We are not saying that there is no resistance at 2500; there is some from an old consolidation back in the first half of 1999. It just seems kind of premature to be calling an end to any rally at an arbitrary level when we are seeing strong buying on the up days and light selling on the down days. We prefer to let the market tell us more of what is going on directly than guessing on tops.

More to the point. We are seeing the Nasdaq handle what could have been some pesky resistance with relative ease. We saw the big caps and the Dow pause and then blow through resistance. These indexes could be breaking through levels of resistance in this bull rally as easy as they broke through levels of support on the bear drop. The market is showing us good things. Be cautious, but don't start feeling as if you can see through walls or guess what card the dealer is holding. In short, LM is telling us to stay away from stocks such as BRCD and SEBL that have given us moves of $11 and $15 since we bought into them last week. If the Nasdaq does run to 2500 and stall, those stocks will more than likely give us a lot more upside. If we protect ourselves properly we will have enjoyed a nice gain and be out on any selling as opposed to just sitting and watching while they moved higher or got into some other stocks that move $3 to the upside during that time. The point: if the market is showing good action, take advantage of it.

Treasury Secretary Paul O'Neill today said he believed the economy was going to skate by a recession. That is good to hear from a man such as O'Neill who is a respected corporate leader. While we would argue that the U.S. has already suffered a recession in fact due to the sharp GDP drop in just a few months, we don't mind someone looking at the numbers and drawing a positive conclusion. The timing was good: let the markets break higher on their own and then when the first wave of buying is quieting down, goose them with some good news. We still think the economy is dicey, but for now the collective of investors is banking on better times before the end of the year.

End Part 1 of 2

us stock market
stock watch