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us stock market, understanding the stock market
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6/9/01 Stock Split Report
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Stock Split Report Subscribers:
Due to the disastrous flooding in the Houston area, we are unable to bring you a market and economic summary this weekend. We apologize for the inconvenience, but ask for your understanding as we fight to save homes and property.
Overall market stats:
VIX: 21.41; -0.20.
VXN: 52.79; +0.09.
Put/Call ratio (CBOE): 0.72; -0.01.
NASDAQ:
Stats: Down 48.90 points (-2.16%) to close at 2215.10.
Volume: 1.439 billion shares (-13.4%). Down volume led 1.095 billion shares to 329 million to the upside.
A/D and Hi/Lo: Decliners led advancers 2.06 to 1 (advancers led decliners Thursday 1.27 to 1). New highs fell to 98 (-15) and new lows dropped to 36 (-1).
The Chart: http://www.investmenthouse.com/cd/$compq.html
Dow/NYSE:
Stats: Down 113.74 points (-1.0%) to close at 10.997.
Volume: NYSE volume dropped as the exchange experienced a trading system glitch that closed trading part of the day, coming in at 723.5 million shares (-33.6%). Down volume was at 459 million, with up volume at 251 million.
A/D and Hi/Lo: Decliners had the advantage 1.32 to 1. New highs fell to 89 (-46) and new lows dipped to 26 (-2).
The Chart: http://www.investmenthouse.com/cd/$dja.html
S&P 500:
Stats: Down 12 points (-0.9%) to close at 1264.96.
Volume: NYSE volume dropped as the exchange experience a trading system glitch that closed trading part of the day, coming in at 723.5 million shares (-33.6%).
The Chart: http://www.investmenthouse.com/cd/$spx.html
Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.
6-13-01
Export Prices ex-ag., May (8:30): 0% versus 0% prior.
Import Prices ex-oil, May (8:30): -0.5% versus -0.5% prior.
Retail Sales, May (8:30): 0.3% versus 1.1% prior.
Retail Sales ex-auto, May (8:30): 0.4% versus 0.8% prior.
6-14-01
Initial Claims, 6/9 (8:30): 425K versus 432K prior.
PPI, May (8:30): 0.3% versus 0.3% prior.
Core PPI, May (8:30): 0.2% versus 0.2% prior.
Business Inventories, April (8:30): -0.1% versus -0.3% prior.
6-15-01
CPI, May (8:30): 0.4% versus 0.3% prior.
Core CPI, May (8:30): 0.2% versus 0.2%.
Industrial Production, May (9:15): -0.3% versus -0.3% prior.
Capacity Utilization, May (9:15): 78.0% versus 78.5% prior.
Mich Sentiment-Prel., June (10:00): 91.0% versus 92.0% prior.
THE PLAYS: A lot of stocks that could make solid moves from support.
BONUS PLAYS:
OCLR (Ocular Sciences--$22.77; -0.12; optionable (QLO): Health Service
http://biz.yahoo.com/p/o/oclr.html
STATUS: Still testing the breakout, but the pennant pattern formed is tightening up. Volume dropped back down to 86,500 (avg. 116,000); volume is below average the last three days as the stock shows a 3-day lateral consolidation of dojis. Money flow is huge as we look for a breakout. The pattern formed after a strong mid-May breakout. Target: $30.
BUY POINT: 24, on volume of 157,000 or better. Stop: 22.32 (10 day MVA, 22.58).
POSITION: Stock and/or October $20 calls to buy (QLO JD).
ABGX (Abgenix--$44.09; -0.61; optionable): Biotech
http://biz.yahoo.com/p/a/abgx.html
STATUS: Trying to make its way up in the right side of its base, but still quite low in the overall pattern. After a nice move took the stock to 46.50 in May, it has pulled back but, after finding support at the 18 day MVA (then in the 39 range), the stock has made a move back up. The last part of this week it has gradually pulled back on decreasing volume, Friday tapping down near its 10 day MVA (42.63) before closing with a tight doji. Looks like it could move. Target: We will watch possible resistance at 46.50, and then look for a move up toward the 200 day MVA, at 50.90.
BUY POINT: Over 45.60 on above average volume (1.77 million; Friday down to 1.23 million). Stop loss: 42.40.
POSITION: Stock and/or October $40 calls to buy (AZG JH - under 100 open interest).
PDLI (Protein Design Labs--$84.69; -0.57; optionable): Biotech
http://biz.yahoo.com/p/p/pdli.html
STATUS: Another biotech that is trying to make its way up in the lower part of the right side of its base. The stock has made a solid move the last two months, this week running up and through its 200 day MVA (78.54), hitting a high of 90.93 before pulling back. The drop has been on ever-decreasing volume (down to 1.33 million Friday; average 1.83 million), with Friday's loose doji holding well over its 10 day MVA (81.75). Looking for a hold here and a strong run back up. Good relative strength and money flow. Target on a breakout: 105-110.
BUY POINT: Aggressive: A move back over 87 on increased volume near the average. Stop loss: 80.90. Breakout: Over 90.93 on above average volume. Stop loss: 84.56.
POSITION: Both buy points: Stock and/or August $85 calls to buy (RPV HQ).
ENZN (Enzon--$75.39; -1.02; optionable): Biotech
http://biz.yahoo.com/p/e/enzn.html
STATUS: Moving up in the right side of its seven-month base, closing Friday back on a trendline connecting April-May closing lows. The stock broke from a smaller cup with handle pattern within the larger base in May, and has now pulled back from its second surge up on the breakout (third overall along the up trendline). The stock tapped its 10 day MVA (74.23) at its low Friday as volume dipped below the average (852,000; average 1 million), so we will see if it can make a strong move up from here, with the breakout high ahead at 79.40. On another breakout, the high in the left side of the cup is at 84.13. Good relative strength and strong money flow.
BUY POINT: Aggressive: A move up over 77 with increased volume. Stop loss: 71.61 (18 day MVA at 71.39). Breakout: Over 79.40 with above average volume. Stop loss: 73.84.
POSITION: Both buy points: Stock and/or August $75 calls to buy (QYZ HO).
NPIX (Network Peripherals--$12.70; -0.47; optionable): Software
http://biz.yahoo.com/p/n/npix.html
STATUS: In an eight-month base, and the past three weeks has been moving in a handle. The stock dropped back through recent support in its 10 day MVA (12.91) Friday, but it is still within the price rang of the handle and above the 18 day MVA (12.40). Volume picked up on the selling, coming in at 181,200 (about average), so we will see if this is a shakeout leading to a strong breakout move. Solid relative strength and good buying. Target on breakout: 17-18.
BUY POINT: Breakout: 14.47 on volume of 270,000. Stop loss: 13.46. Aggressive: Over 13.50 on above average volume. Stop loss: 12.55 (or perhaps just below the 18 day MVA, currently at 12.40).
POSITION: Breakout: Stock and/or August $12.50 calls to buy (XMQ HV). Aggressive: Stock and/or August $10 calls to buy (XMQ HB).
LZ (Lubrizol--$32.14; -0.10; optionable): Chemicals
http://biz.yahoo.com/p/l/lz.html
STATUS: Has formed a cup since mid-April, and this week pulled into a lateral handle. The stock has been tapping up at its intraday highs at the 32.40 level (handle high at 32.48), showing a couple of dojis and a looser doji pattern as volume decreases (down to 80,800 Friday; average 211,800). We prefer a handle that pulls back slightly, but it is still pretty solid and we will look for positions on a breakout. Target: 38-40.
BUY POINT: 32.61 on volume of 315,000. Stop loss: 30.32 (50 day MVA at 30.58).
POSITION: Stock and/or August $30 calls to buy (LZ HF).
PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: None scheduled for this week, but with earnings season approaching we will be seeing another surge ahead!
NEW PRE-ANNOUNCEMENT PLAY:
KRB (MBNA Corp--$36.85; -0.10; optionable): Forecast to announce a split on 7-10-01 in conjunction with earnings. At this time the company cannot confirm an earnings date.
http://biz.yahoo.com/p/k/krb.html
BACKGROUND: Last announced a 3:2 split on 7-14-98 in conjunction with earnings. The stock price was $40. KRB is a holding company and does not hold annual shareholder meetings.
STATUS: Has formed a cup with handle since January, and at the beginning of the month tested the 50 day MVA (35.79) as it dipped back within the handle. It pushed back up with a solid move, but before reaching the handle high of 38.45 (hit a high of 38 Tuesday) the stock pulled back. However, on this drop the stock appears to have support at its short-term MVA's (18 day at 36.74), showing a doji there Friday after catching that level the session before. Volume has steadily dropped with the price, coming in at 719,800 Friday (average 2.47 million). Looking for a breakout as we head toward the forecast.
BUY POINT: 38.58 on volume of 3.7 million.
POSITION: Stock and/or September $35 calls to buy (KRB IG).
BEST PLAYS: Besides the plays set forth below best plays, there are some other stocks that also look good. These include Pre-Announcements CEFT and FDC; Our new Pre-Split plays; Continuing Candidate IGT, and Post-Splits STZ, IVX and GENZ.
PRE-ANNOUNCEMENT BEST PLAYS:
1) FITB - Nice-looking test of the breakout
2) CHV - Ascending Wedge
FITB (Fifth Third Bancorp--$59.93; -0.29; optionable): Forecast to announce a split on 6-21-01 in conjunction with earnings. At this time the company cannot confirm the date.
http://biz.yahoo.com/p/f/fitb.html
BACKGROUND: Last announced a 3:1 split on 6-20-00 at a stock price of $61. The annual shareholder meeting was on 3-20-01 at which time authorized shares were increased.
STATUS: Testing its breakout from a cup with handle, the stock again tapped its 10 day MVA at its low Friday of 59.51 before closing with a tight doji. It is FITB's second consecutive doji over that support following a pullback from Tuesday's breakout, and volume remained low at 827,800 (average 1.77 million). The stock appears poised to make a move back up after this test, which also has the stock above its pivot point and the high in the left side of the cup (59.23 and 59.50, respectively). The stock shows money flow and solid buying. We are targeting the 68-70 level for this one.
BUY POINT: A move up from here on increased volume. The breakout high was 61.11.
POSITION: Earnings play, so we take short-term options positions to ride up to the split, taking profits on the move up to that time, then ride stock and/or longer-term options positions through the announcement. Stock and/or July and August $55 calls to buy (FTQ GK and FTQ HK).
CHV (Chevron--$96.44; +0.43; optionable): Forecast to announce a split on 7-25-01 before the open in conjunction with earnings. At this time the company cannot confirm the date.
http://biz.yahoo.com/p/c/chv.html
BACKGROUND: The annual shareholder meeting was on 4-25-01 at which time authorized shares were increased.
STATUS: With Exxon-Mobil announcing, we are looking at some other of the big oils to follow suit, and CHV looks prime. The stock has pulled back to its short-term MVA's (10 and 18 day at 96.27 and 95.87, respectively) and the up trendline of its ascending wedge (down at 95.25). The stock has shown three consecutive dojis after gapping down from near the high of the pattern (which is 98.49), and we are looking for CHV to hold here and make a move back up and over that level. The stock shows good money flow. Our target on a breakout is the 110-115 range.
BUY POINT: A move over 98.59 on continued strong volume (down to 1.58 million; average 2.44 million).
POSITION: Stock and/or September $95 calls to buy (CHV IS).
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 $4 moves running into the split. Not huge money, but it can be very steady.
1) LOW - Strong, but could give us a pullback
LOW (Lowe's--$73.57; -0.43): Splits 2:1 on or about June 29.
http://biz.yahoo.com/p/l/low.html
STATUS: LOW broke out again to a new high Thursday, but in Friday's market could not sustain the move, slowing with a doji as volume dropped to nothing (813,800; average 3.36 million). The move up Thursday was not on great volume either, so we could see the stock test its 10 day MVA (71.40) again before making another move. Relative strength has broken to a new high, and money flow is very strong.
BUY POINT: From here A move back over 74 with increased volume near the average, with stock and/or July $70 calls to buy (LOW GN). Pullback A move up on stronger volume after a pullback to the 10 day MVA that holds, with stock and/or July $65 calls to buy (LOW GM).
CONTINUING CANDIDATE BEST PLAYS: Some puts in here.
1) ACF - Waiting for the move
2) NVDA - Controlled pullback
3) MIKE - Holding up on the breakout
ACF (Americredit--$51.30; +0.14; 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: ACF is one of the stocks that have made a very strong run for us on the report, making a great move mid-May. From the high established at 55 the stock has gradually pulled back, giving up its 10 day MVA (51.64), but it is still holding the 18 day MVA at 50.90. Volume has drifted back the last couple of sessions as the stock showed consecutive dojis, and we will continue to wait for ACF to make a strong move out of this consolidation. If it does, we are going to be diligent in protecting positions with stops.
BUY POINT: A move over 52.50 on above average volume (962,500; today 564,700).
POSITION: Stock and/or August $50 calls to buy (ACF HJ).
NVDA (Nvidia--$96.75; -2.58; optionable): Semiconductor.
http://biz.yahoo.com/p/n/nvda.html
BACKGROUND: The company last announced 5-16-00 after the close with earnings. Price was at $94, but the stock rose $8.74 that day in anticipation.
STATUS: Thursday NVDA broke out of the small ascending wedge it had formed after its recent breakout from a cup with handle, but pulled back a bit Friday off of that move. The base-on-base pattern is very bullish, and we like to see the ascending wedge form over a former base from which a stock has broken out. The pullback Friday was not bad, holding up rather well over its 10 day MVA (down at 92.80) and former closing high in the pattern at 92.85, and volume was not strong on the selling (2.97 million; average 5.6 million). We will look for NVDA to hold this range, and if it drops more for it to hold the 94 range with low volume selling. From there we would look for a strong move back up. Initial target on the move back up: $107-110.
BUY POINT: From here A move over 100 on above average volume. Pullback After holding the 94 range, a move back up on increased volume near the average.
POSITION: From here Stock and/or September $95 calls to buy (RVU IS). Pullback Stock and/or September $90 calls to buy (RVU IR).
MIKE (Michaels Stores--$40.50; +0.45; optionable): No announcement this week, but broke out.
http://biz.yahoo.com/p/m/mike.html
BACKGROUND: Based upon our research it does not appear that MIKE has ever split its stock. The annual shareholder meeting was on 9-13-00 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: MIKE broke out last Friday from its cup with handle, and this week has been able to continue the move, although the last few sessions is has pulled laterally. It tested back toward its 10 day MVA (39.02) at Friday's low of 39.35, managing to forge a gain as it moved back up near the breakout high of 40.62. Volume was up at 275,900 (average 248,800), and we will look for a continued strong move up, keeping an eye on the 41.19 level, the high in the left side of the former cup, as possible resistance. We have a target of about 46 on this one.
BUY POINT: A move up on increased volume.
POSITION: Stock and/or September $35 calls to buy (IKQ IF).
POST-SPLIT BEST PLAYS:
1) BAX - Another doji on support
2) BRCD - Held support
3) DGX - Also holding strong on support
4) PKI - Ready to spring
5) FIC - Quite a run, but could do more
BAX (Baxter International--$49.99; +0.21; optionable): Health Services. Split 2:1 effective 5-30-01.
http://biz.yahoo.com/p/b/bax.html
STATUS: Has been really strong post-split, testing its breakout from an ascending wedge and moving up strong. It has since pulled back again, but is holding support at its 10 day MVA (49.59), which it again tapped at its low on Friday before closing with a second consecutive doji. Volume dried up Friday, coming in at 966,600 (average 1.5 million). We are looking for BAX to make a strong move up off of these dojis, running back up to the breakout high of 51.10 and beyond. We are always cautious with post-split plays, but if it moves over the breakout high we are looking at a possible target at 55.
PLAY: A strong move up from here, with stock and/or August $45 calls to buy (BAX HI).
BRCD (Brocade--$45.09; -1.71; optionable (UBF): Telecom
http://biz.yahoo.com/p/b/brcd.html
STATUS: BRCD has made a decent move back up, recovering from last week's steep tech drop that took it back below its 50 day MVA (42.04). After a nice move Thursday, the stock peeled back a bit Friday, but tapped down at its 10 day MVA (43.56) at its low of 43.26. Volume was also weaker on this pullback (10.16 million; average 14.4 million), so all in all a very modest move back. If we can get a market rebound from Friday's doldrums, BRCD is in a good position to move. The May high is ahead at 55.25.
BUY POINT: In a strong market, a move up on increased volume, with stock and/or October $40 calls to buy (UBF JH).
End Part 1 of 3
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us stock market
understanding the stock market
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