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us stock market, stock split
Begin Part 3 of 4
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, watching for topping signs and potential resistance. Not huge money, but it can be very steady. We set our initial stops at the 7-8% range below the purchase price (or just below obvious support), and move them up on a move to preserve our profits.
1) LOW - Still showing strength
2) CAKE - Holding support with a doji
3) LNCR - Big move back up
4) FRED - Doji on support
LOW (Lowe's--$72.93; -0.97): Splits 2:1 on or about June 29.
http://biz.yahoo.com/p/l/low.html
STATUS: LOW is still looking good, in a small ascending wedge after having broken to a new high last week. Volume remains somewhat light, but is showing decent action, down to 1.73 million (average 3.16 million) as it dipped back today. It tapped its 10 day MVA at its low of 72.31, pulling back up to close. A nice pattern heading into the split. Relative strength is right at its high, and money flow is very strong.
BUY POINT: Over 74 on above average volume, with stock and/or July $70 calls to buy (LOW GN).
CAKE (Cheesecake Factory--$36.04; -0.37; optionable): Restaurant. Splits 3:2 effective 6-19-01.
http://biz.yahoo.com/p/c/cake.html
STATUS: Made a nice move the past week, but after hitting up to 37.20 at its intraday high Wednesday and then pulling back to close (a clear topping sign), the stock held strong today, showing a doji on its down trendline connecting its November-February closing highs. Support also exists here in the form of its 50 day MVA (36.08). Going into the split we will see if CAKE can hold on and make another move. Given the market and the stock's recent struggles, we will be carefully protecting profits.
PLAY: A move over 36.50, with stock and/or July or October $35 calls to buy (CFQ GG or CFQ JG).
LNCR (Lincare Holdings--$62.00; +2.40; optionable): Health Services. Splits 2:1 effective 6-25-01.
http://biz.yahoo.com/p/l/lncr.html
STATUS: Made a nice breakout last week, hitting a high of 65.88 before pulling back steadily. However, today the stock gapped down to its 50 day MVA (57.21) but used that support to blast back up, making an intraday move of almost $5 as volume towered over what we had seen on the selling (1.06 million today; average 595,300). Strong momentum, and we will look for the run to continue. Good relative strength and buying.
PLAY: A continued strong move, with stock and/or August $60 calls to buy (LQN HL).
FRED (Fred's--$28.44; -0.06; no options): Retail. Splits 2:1 effective 6-19.
http://biz.yahoo.com/p/f/fred.html
STATUS: Has been solid on a move up since mid-April, but has shown some of that volatility for which pre-splits are famous. It recently hit up to 30.20 before pulling back down to support at the 10 day MVA (28.37), on which it showed a doji today after Wednesday's pullback. Volume was not extreme on yesterday's selling, about the same as today, coming in at 40,000 (average 64,400). Off of this pattern we could see a bounce that we can play, keeping an eye on that recent high.
PLAY: A move up from here, with stock.
CONTINUING CANDIDATE BEST PLAYS: Some puts in here.
1) NVDA - Holding its up trendline
2) MIKE - Still testing the breakout
3) CECO - Looking good
4) ITG - A put
NVDA (Nvidia--$93.59; -0.20; 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: NVDA has pulled back and is testing the breakout from the ascending wedge formed in May. After pulling back Wednesday the stock held up well in Thursday's action, showing a doji over its 18 day MVA (91.91) and up trendline connecting March and May closing lows. It is still looking strong despite the market, having shown recent strength by breaking from a cup with handle before forming the recent ascending wedge. We could get a bounce tomorrow, perhaps with the market after some initial selling. If we do not, we will need to see it weather market weakness, and on a return of some strength in the Nasdaq, and in that event NVDA could take off. Initial target on a new high (over 100): $107-110.
BUY POINT: Aggressive: After holding support here, a run back up in a stronger market, looking for increased volume (3.94 million today; average 5.57 million). Stop: 87.
POSITION: Stock and/or September $90 calls to buy (RVU IR).
MIKE (Michaels Stores--$38.51; -0.51; optionable):
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 is testing the breakout from its cup with handle, dipping back a bit today but holding support at its 18 day MVA (38.32) and its former pivot point (38.22). Volume continues to be modest as the stock pulls steadily back from the breakout high (40.62), so we will see if MIKE can hold support here and make a move back up. It has been strong, and is acting right in a good pattern. Good relative strength and solid buying. Target on breakout: 46.
BUY POINT: Aggressive: A move over 40 on increased volume (114,500 today; average 219,500). Stop: 37.20. Breakout: Over 40.62 on above average volume. Stop: 37.78.
POSITION: Both buy points: Stock and/or September $35 calls to buy (IKQ IF).
CECO (Career Education--$53.95; -0.70; no options):
http://biz.yahoo.com/p/c/ceco.html
BACKGROUND: Last announced a 2 for 1 split on 8-1-00 in conjunction with earnings. The stock price was $57. The annual shareholder meeting is scheduled for 5-11-01 at 1:00 pm CDT at which time additional shares will be authorized. The company has sufficient shares for a 2 for 1 split without increasing authorized shares.
STATUS: Got another 50 day MVA bounce, making a great move up Wednesday, back over its 10 day MVA (53) and closing just below its high of 56.10. today the stock pulled back, but on mellow volume of 150,600 (average 275,200). A nice move, and the gentle pullback today is not a bad sign. We will look for CECO to hold here and make a move back up. The stock shows excellent relative strength, with great money flow and buying. Has been on a steady move up along its 50 day MVA since breaking from a cup in late January. Target: On a break to a new high, the 60 range.
BUY POINT: Aggressive: A move up from here on increased volume near the average. Stop: 50.22 (50 day MVA at 50.48).
POSITION: Stock only.
ITG (Investment Tech Group--$49.35; -1.10; optionable):
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: ITG has been quite erratic, but has dropped back strong and steady from the 55 range. The stock took out its 50 day MVA (51.33) and up trendline at that level (connecting March and April lows as it built the right side of a cup) on Wednesday, and today dropped below its most recent low at 50. Volume has decreased on the steady fall (159,200 today; average 231,400), so we will see if it tests that level again on a bounce up, looking for a move back down on heavier volume for a possible put play. It might not come Friday, but we will pay attention. On that move, a target of 46 on the move down.
BUY POINT: After a failed bounce up, a move back down from the range of the 50 day MVA with increased volume.
POSITION: July $60 puts to buy (ITG SL).
POST-SPLIT BEST PLAYS:
1) BAX - Holding up well
2) STT - Showing a put
BAX (Baxter International--$49.78; +0.25; optionable): Health Services. Split 2:1 effective 5-30-01.
http://biz.yahoo.com/p/b/bax.html
STATUS: Has pulled back to test its breakout from an ascending wedge, dropping from a high of 51.10. Has been strong post-split, and has held its 18 day MVA (49.21) on the recent pullback. Today BAX moved up slightly as volume remained around the average (1.53 million; average 1.55 million), showing a doji just over its 10 day MVA (49.56). We are always cautious with post-split plays, but the pattern appears to be holding and price/volume action has been solid. If it moves over the breakout high we are looking at a possible target at 55.
PLAY: Aggressive A over 50.25 with increased volume near the average, with stock and/or August $45 calls to buy (BAX HI). Stop: 46.73 (or just below the 50 day at 47.76).
STT (State Street--$51.63; -1.34; optionable): Banking. Split 2:1 effective 5-31-01.
http://biz.yahoo.com/p/s/stt.html
STATUS: Is losing it as it pulls back in the handle. This is one that was looking promising in a handle to a cup pattern, but the pullback has not stopped, and today it gapped down below the 50 day MVA (52.90). Volume increased on the selling as well (1.18 million; average 926,100), and this one could give us a put play on a failed test of the 50 day MVA. We will see if it gives us a bounce, and when that fails we can look at a put on continued strong selling volume. Initial target: 48.
PLAY: After a failed move up toward the 50 day, a move back down on increased volume, with August $60 puts to buy (STT TL).
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PRE-ANNOUNCEMENTS REMAINING PLAYS
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CHBS (Christopher & Banks--$32.75; -1.52; optionable): Forecast to announce a split on 6-21-01 in conjunction with earnings.
http://biz.yahoo.com/p/c/chbs.html
BACKGROUND: Last announced a 3:2 stock split on 1-17-01 at a price of $34. Before that CHBS also had 3:2 splits in July of 2000 at $35 and in December 1999 at $26.
STATUS: CHBS could not hang near its 50 day MVA (37.64), instead dropping hard this week. It gapped down today, showing a hammer doji that indicates a bounce back up. However, we are not looking to play such a bounce, but will see if it can put anything together that could give us a reasonable chance at a pre-announcement play. No positions for now.
CHV (Chevron--$95.66; -1.49; 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: Still looking good although it pulled back today. The stock managed to close on its up trendline (connecting December, February and May closing lows) that is supporting it in its ascending wedge. Volume dipped on the drop, coming in today at 1.55 million (average 2.4 million). Still a good pattern, and we are looking for a move back up and a breakout. With Exxon-Mobil announcing, we are looking at some other of the big oils to follow suit, and CHV looks ready. Good money flow. Our target on a breakout is the 110-115 range.
BUY POINT: A move over 98.59 on volume of 3.25 million. Stop: 91.69 (50 day MVA at 94.28).
POSITION: Stock and/or September $95 calls to buy (CHV IS).
CEFT (Concord EFS--$50.81; -2.12; optionable): Forecast to announce a split on 7-25-01 in conjunction with earnings. At this time the company cannot confirm this date, but based upon our research this is the date for the release.
http://biz.yahoo.com/p/c/ceft.html
BACKGROUND: Last announced a 3:2 split on 8-26-99 at a stock price of $37. Prior to that announced a 3:2 split on 5-14-98 in conjunction with its annual shareholder meeting. The annual shareholder meeting is scheduled for 5-24-01 at 9:30 am CST at which time additional shares will be authorized.
STATUS: The stock showed topping signs recently, Wednesday dropping on strong volume after pulling back off of new high made intraday, and today saw a strong drop back. CEFT had broken out last week from a lateral consolidation it had formed after breaking from an ascending wedge and then a larger cup pattern (from early March, with highs at 50). It is now resting on the 18 day MVA (50.67), so we will see if it can hold, with lows in its recent consolidation at 49 and the 50 day MVA at 48. Since it has been in a strong overall pattern, we will see if it can hold and try to make a move back up. Plenty of time before the forecast. No positions for Friday.
THQI (THQ Inc.--$51.10; -4.93; optionable): Forecast to announce a split on 7-26-01 in conjunction with earnings. At this time the company cannot confirm this date.
http://biz.yahoo.com/p/t/thqi.html
BACKGROUND: Last announced a 3:2 split on 10-26-99 in conjunction with earnings. The stock price was $44. Prior to that announced a 3:2 split on 7-23-98 in conjunction with earnings. The stock price was $33. The annual shareholder meeting was on 7-21-00 at which time no additional shares were authorized; however, the company has sufficient shares for a 2:1 split.
STATUS: Has been a strong performer, breaking from a cup with handle in January and making several trend runs since then, going steadily upward. It is a solid split candidate, although we are looking for a pullback and possible test of the 50 day MVA (44.77), or a consolidation that will bring the price closer to that 50 day level. Consequently, we are not taking positions at the moment, but are looking for such a consolidation or test for our next entry point. Strong stocks tend to test that level after 4 -5 runs up the short term trendlines. That is a great entry point.
BUY POINT: After a lower-volume (up to 843,100 today; average 583,000) pullback and perhaps a consolidation in the 47-50 range, a strong move back up on continued strong volume.
POSITION: Stock and/or September $40 or $45 calls to buy (QHI IH or QHI II).
FISV (Fiserv--$55.72; -2.09; optionable): We are working on a date.
http://biz.yahoo.com/p/f/fisv.html
BACKGROUND: Last announced a 3:2 split on 3-25-99 in conjunction with its annual shareholder meeting. The stock price was $52. FISV's last two splits were announced in conjunction with its annual shareholder meeting. The company currently has sufficient shares for a 2:1 split.
STATUS: FISV is trying to make its way back up after having tested its breakout from a cup with handle (formed out of a large descending wedge). It is making some pretty wild intraday price swings in the process, Wednesday hitting all the way up to 59.25 before pulling back to close (that usually indicates a pullback), and today dropping back to come to rest on the 18 day MVA (55.64). That level has served as decent support as the stock has climbed since early April, but intraday low have dipped as much as $1.50 below that level. We will see if it can hold this support, looking for a break over the 58 level for positions.
BUY POINT: A move over 58 on above average volume (down to 1.07 million today; average 1.46 million).
POSITION: Stock and/or September $55 calls to buy (FTQ IK).
ADVP (Advancepcs--$60.50; -1.36; optionable): Health services. We are working on a date for this one.
http://biz.yahoo.com/p/a/advp.html
BACKGROUND: Last announced a 2 for 1 split on 10-12-99 at a stock price of $50. The annual shareholder meeting was on 12-7-00 at which time no additional shares were authorized. 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: ADVP has been trending up this year, and has recently dipped back below its short-term MVA's (18 day at 62.19) to visit the 50 day MVA (59.42). Today the stock pulled back from the 18 day and tapped the 50 day at its low. It has tapped the 50 day several times the last few weeks, and its holding up indicates some institutional support. Strong stocks often test their 50 day MVA's after trending up along the shorter-term averages; however, it cannot appear to make a strong move up, so we will see if it can continue to hold, not taking positions until we finally get strong volume behind a run back toward the high of 68.59.
BUY POINT: Aggressive A move over 63 on above average volume (850,000; today down to 334,000).
POSITION: Stock and/or June $60 calls to buy (QVD FL).
FDC (First Data--$65.54; -0.87; optionable): Working on a forecast date. Earnings were announced on 4-12-01.
http://biz.yahoo.com/p/f/fdc.html
BACKGROUND: Last split was a 2 for 1 on 11-18-96 at a stock price of $80. The annual shareholder meeting was on 1-11-01 at which time authorized shares were increased. The company has sufficient shares for a 2:1 split.
STATUS: FDC is again finding support at its 50 day MVA (64.88) and its mid-May low when it tested its break from a cup with handle. The stock tapped the 50 day at its low for the second time in three sessions, pulling back up to close. Since early May it has set up a rolling range from 64 up to 69, but the attempt to move back up Tuesday aborted at 67.20 on Wednesday. We will see if it can make another attempt.
BUY POINT: Aggressive: Over 67.20 on above average volume (1.63 million; today down to 1.15 million). Breakout: A new high (68.85) on above average volume. Stop: just below 64.
POSITION: Both buy points: Stock and/or August $65 calls to buy (FDC HM).
PRE-SPLITS REMAINING PLAYS: With these stocks we keep an eye out, waiting for the start of a pre-split run.
KKD (Krispy Kreme--$70.20; -1.68; optionable): Splits 2:1 effective June 15.
http://biz.yahoo.com/p/k/kkd.html
STATUS: Has been quite a story, surging up after its March split, and then announcing another split as it moved to the NYSE. The stock's move hit 77.09 before pulling back, and it has caught support at its 18 day MVA (67.77) and consolidated a bit. Splits Friday, so we are not too excited about it at the moment as the huge run pre-split will be over. It is not bad in this consolidation, however, so we will see if it can hold up post-split or make a drop back. Could be a quick short if we get a drop next week.
PLAY: Aggressive: A hard move up from here in a market bounce, with stock and/or August $65 calls to buy (KKD HM). Likely a quick play, protecting positions carefully.
SDS (Sungard Data--$54.11; -1.29; optionable): Announced a 2:1 split, effective June 18.
http://biz.yahoo.com/p/s/sds.html
STATUS: Suffered a downgrade and dropped out of its fine pattern (cup with handle) recently, and the last two days has given up support on which it was trying to hold, the 50 day MVA (56.75). Volume has increased with the last two days' selling (945,100 today; average 925,000, so the damage might not be done. We will see if it takes a relief bounce Friday, and if it does, we will look at a possible short as it moves past the split. Nothing for now.
DP (Diagnostic Products--$76.40; -2.30; optionable): Splits 2:1 effective 6-19-01.
http://biz.yahoo.com/p/d/dp.html
STATUS: Broke out in April, then made another move in May out of a lateral consolidation. The stock hit a high of 83.55 before pulling back, and is now trying to hold on. It was using the 18 day MVA (76.94) as support, but gave up that level today as it touched 75.20 at its low. We will see if it can hold the 75 level and make a move back up going into next week's split. Only two more sessions.
PLAY: A strong move back up in a market move up, with stock and/or September $75 calls to buy (DP IO - low open interest).
End Part 3 of 4
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us stock market
stock split
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