us stock market, stock watch

Begin Part 2 of 4

Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.

7-2-01
Personal Income, May (8:30): 0.2% actual versus 0.3% expected and 0.3% prior.
PCE, May (8:30): 0.5% actual versus 0.4% expected and 0.4% prior.
Construction Spending, May (10:00): 0.1% versus 0.3% prior.
NAPM Index, June (10:00): 44.7% actual versus 42.5% expected and 42.1% prior.

7-3-01
Factory Orders, May (10:00): +2.5% actual versus 1.5% expected and -3.4% prior (revised from -3.0%).

7-5-01
Initial Claims, 6/30 (8:30): 399K actual versus 393K expected and 392K prior (revised from 388K).
Auto Sales, June (0:00): 6.4M versus 6.4M prior.
Truck Sales, June (0:00): 7.1M versus 7.2M prior.
NAPM Services, June (10:00): 52.1% actual versus 47.0% expected and 46.6% prior.

7-6-01
Nonfarm Payrolls, June (8:30): -40K versus -19K prior.
Unemployment Rate, June (8:30): 4.6% versus 4.4% prior.
Hourly Earnings, June (8:30): 0.3% versus 0.3% prior.
Average Workweek, June (8:30): 34.3 versus 34.3.

TEAM TRADES

BORL: We bought BORL on the breakout at about $12 a few weeks back and let it form its subsequent ascending wedge and breakout of that pattern. It rallied to $15.75 on 6-29 and showed a doji. We should have sold at the end of that session, but did so early the next session as the stock opened just a bit lower and started to sell more. It tanked more on Tuesday and then today fell again on higher volume, but showed a tight doji that tapped the 18 day MVA on its low. That is an indication that the move back up will start, particularly as that held above the ascending wedge breakout. We put in an order to buy the options back at 1.70 (they were bidding 1.65 by 1.90). We got the fill later in the session, and now we will be ready to play the move back up. If it breaks down, we will exit. A variation on what we discussed in the summary session above.

BVF: BVF closed at 43.42 with a tight doji Tuesday, at support in its cup with handle pattern. Thursday the stock opened right there and moved up and was at 44.38 by 9:15, on volume of 105,000. Now previous volume had been a low 376,800 (avg. volume is 665,000), but that was higher than that of the session before, and the stock looked like it might move. As we looked at Thursday's intraday chart, the stock stalled and dropped back to test the 44.20 level, and by 9:43 was holding there on volume of 230,000. So, volume was at least moving up decently by this time. Things became more interesting when the stock popped up to 44.35, but then watched the stock drop back to test just 44.04 (44 marks price support early in the base).

We were thinking of taking some positions on a move up form there, but decided to see how the stock would move later in the session. With 15 minutes left in the session, the stock was back down to 44.31, with volume at 561,000--a better entry point if we did get in. Now volume was above average and higher than Tuesday's volume, and this was looking like the start of a breakout move. It was one of the better movers in the session as we reviewed the board, but still no breakout yet. So, we decided to split the baby with a partial position. We put in an order for the stock at 44.45 and that was done with about 10 minutes before the close. The stock closed at 44.48. We are anticipating the breakout a bit, but we liked what we saw a the end of the session and will complete the position with the breakout. Averaging up.

THE PLAYS:

BONUS PLAYS:

BVF (Biovail--$44.48; +1.06; optionable (BVF): Drug delivery
http://biz.yahoo.com/p/b/bvf.html
STATUS: The stock moved up on stronger volume (605,900; avg. 637,045), up from the 10 day MVA (43.42), current support in the handle to the 4-month cup base (prior high 47.72). We are looking for a breakout on continued strong volume. Solid money flow, and relative strength is breaking out ahead of price. Target: $52-54.
BUY POINT: Breakout: 45.23, on volume of 956,000 or better. Stop: 42.06 (7% below the buy point and under 42.60, the 18 day MVA).
POSITION: Stock and/or October $40 calls to buy (BVF JH).

BMS (Bemis Co--$40.64; +0.59; optionable (BMS): Packaging
http://biz.yahoo.com/p/b/bms.html
STATUS: The stock is approaching the buy point in its pennant pattern (that formed above its 50 day MVA, currently at 38.53) after getting a strong shot of volume Thursday (231,600; avg. 141,636). Looking good in the pattern, and the stock shows huge money flow and high relative strength as well. The pattern formed after the stock broke out of a lengthier base (it is testing that breakout). Initial target: $46.
BUY POINT: 41, on continued strong volume (minimum breakout volume is 191,000). Stop: 38.13 (just under the 50 day MVA).
POSITION: Stock and/or October $35 or $40 calls to buy (BMS JG or JH).

EDMC (Education Management--$39.00; -0.02; no options): Education and training
http://biz.yahoo.com/p/e/edmc .html
STATUS: Education still looks good! Covered last on June 27. Testing the recent breakout from its 15-week cup with handle base (inside a larger 6-month base), finding support at the 10 day MVA (38.42) as volume was very low for the second day (66,600 Thursday; avg. 198,000). That is very nice price/volume action, and we are looking for a move up from this doji. Breakout high is 41.15. Big money flow and buying looks good. Target: $45.
BUY POINT: Aggressive: Over 41 on a strong volume surge. Stop: 38.13 (below the 10 day MVA, 38.42).
POSITION: Stock and/or September $35 calls to buy (UKN IG).

PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: None for this week, but we are looking at BMET, KRB, PDII and new play BRO next week!

NEW PRE-ANNOUNCEMENT PLAY:

BRO (Brown & Brown--$42.74; +1.54; no options): Forecast to announce a split on 7-12-01 in conjunction with earnings or on 7-25-01 in conjunction with a board meeting. At this time the company has not confirmed a time for the release of earnings and has not confirmed the date of the board meeting.
http://biz.yahoo.com/p/b/bro.html
BACKGROUND: Last announced a 2:1 split on 7-26-00 in conjunction with its regularly scheduled board meeting. The stock price was $48. The annual shareholder meeting was on 4-18-01 at which time authorized shares were increased.
STATUS: Insurance Brokers. After a huge move in April (high of 46.10) the stock pulled back and has formed a nice, tight, lateral consolidation along its 50 day MVA (40.69). Today the stock made a solid move up, closing just under last week's high of 42.84 and running on solid volume of 40,100 (average 38,000). Looking for more. Relative strength is solid, and the stock shows good money flow and buying.
BUY POINT: A move over 42.84 on increased volume.
POSITION: Stock only.

BEST PLAYS: Besides the plays set forth below as best plays, there are some other stocks that also look good. These include Pre-Announcements FITB, FDC (put) and THQI; Pre-Splits KG and TARO; Continuing Candidates CBH, CECO and KMP; and Post-Splits CAKE, GENZ, FIC and WFMI.

PRE-ANNOUNCEMENT BEST PLAYS
1) PDII - Doji on support
2) FITB - Regional bank looking solid.
3) ELN - Still testing the breakout
4) BMET - Forecast for Monday
5) ATK - A put
6) ADVP - Also a put

PDII (Professional Detailing--$86.67; -1.38; optionable): Business Services. Wildcard Forecast to announce a split on 7-11-01 with its annual shareholder meeting.
http://biz.yahoo.com/p/p/pdii.html
BACKGROUND: PDII has never split its stock. The annual shareholder meeting is scheduled for 7-11-01 at 10:30 am ET at which time additional shares will be authorized.
STATUS: Took a big drop from last November to February, and gradually showed strength by climbing back up steadily through May. It has since dropped back from that intermediate high of 97.83, finding support at 73 before making a strong move back up over the last couple of weeks. After hitting a high of 94 on the last run the stock has eased back, but showed a doji today over its 10 day MVA (86.81) on strong volume of 231,400 (average 177,000). Looking for a bounce up from here, and eyeing the recent high on a continued move as this stock most likely will try a run to 100. Stocks that get close to 100 tend to make the move fast.
BUY POINT: A bounce over 88 on continued strong volume.
POSITION: Stock and/or October $85 calls to buy (PKU JQ).

FITB (Fifth Third Bancorp--$61.21; +0.09; optionable): Looking for an announcement with earnings on 7-16-01 before the market open.
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: Has pulled back into another handle after having broken out of a nice handle to its cup pattern two weeks ago. It is still looking pretty good, holding support at its 18 day MVA (60.64), today moving on very low volume of 589,800 (average 1.69 million). It is still in the upper range of its prior handle, and is right at the highs in the left side of the cup. Looking for another breakout, with the breakout high of 63. Still in split range and the forecast is drawing near. Target on breakout: 70.
BUY POINT: Aggressive: Over 62 on above average volume. Stop: 57.66. Breakout: 63.13 on volume of 3 million. Stop: Just below the 50 day MVA, at 58.60.
POSITION: Breakout: Stock and/or August and October $60 calls to buy (FTQ HL and OKC JL).

ELN (Elan--$60.30; +0.05; optionable): Forecast to announce a split on 7-18-01 in conjunction with earnings. The company has not confirmed this date.
http://biz.yahoo.com/p/e/eln.html
BACKGROUND: Last announced a 3:2 split on 3-2-99 in conjunction with a board of director meeting. The stock price was $76.88. Prior to that announced a 3:2 split on 8-15-96 at a stock price of $63.
STATUS: The stock has been moving well, recently breaking from a ten-month cup with handle base, and then coming back to test the breakout. After a quick move up last week, the stock has pulled back again, but on low volume and is holding its 18 day MVA (60.19), which is above the prior breakout point of 59.10. The pattern Thursday was a doji with continued rather low volume (752,600; average 1.55 million), so we will see if it can hold this support and try another move toward the breakout high of 65. Good money flow and buying.
BUY POINT: A move back over 62 on increased volume near the average.
POSITION: Stock and/or October $60 calls to buy (ELN JL).

BMET (Biomet--$45.13; -1.12; optionable): Medical equipment. No announcement with the board meeting, but we are looking at 7-9-01 before the open with earnings.
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: BMET has given up support of its 18 day MVA (46.58), and sold back again today, heading toward its 50 day (44.66). The stock has been quite strong, making steady if not spectacular moves up, and we will see if it can hold the 50 day Friday, giving us the opportunity to take positions before the close in anticipation of earnings Monday. The selling was on below average volume (1.55 million; average 1.6 million), and it is not unusual for strong stocks to periodically test their 50 day MVA's. Looking for BMET to hold that level and make a move back up. The recent high is 49.18.
BUY POINT: After showing that it can hold the 50 day, a move up on increased volume. We may have to wait for the close to do it. Stop: 41.53.
POSITION: Stock and/or October $40 calls to buy (BIQ JI).

ATK (Alliant Techsystems--$87.50; +0.49; optionable): Forecast to announce a split on 8-7-01 in conjunction with its annual shareholder meeting.
http://biz.yahoo.com/p/a/atk.html
BACKGROUND: Last announced a 2:1 split on 11-2-00 in conjunction with earnings. The stock price was $89. The annual shareholder meeting is scheduled for 8-7-01 at 2:00 pm CT at which time additional shares will be authorized.
STATUS: After a big drop (recent high at 101.24, 50 day MVA at 91.97), the stock found support in the 85 range, but its move up has met stout resistance at the 10 day MVA (88.58). The stock dropped back from that level Monday, but could not hold a move back over that resistance today, pulling back from a high of 89 to show a doji. Off of this pattern we will look for a continued drop back. On a drop we will watch the recent low at 84.10, and on a drop below that we are targeting 78-80.
BUY POINT: On a move below 86.50 on average or better volume (180,700; today 105,700).
POSITION: August $95 puts to buy (ATK TS).

ADVP (Advancepcs--$59.00; -1.80; 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 suffered from weak volume on a climb in May, but recovered from an abrupt drop below the 50 day MVA (60.04) toward the end of June. However, that move up was also plagued with rather weak volume, and the stock has turned south yet again. Today ADVP took out the 50 day, and selling volume spiked up to 1 million (average 762,000). We will see if the stock tests the 50 day, and on a failure of that move we can look at puts on a strong drop back down. The May low was 54.57, and there is support at April lows in the 50-52 range, which will be our initial target (200 day MVA at 47.35).
BUY POINT: After a failed test of the 50 day, selling back on continued strong volume.
POSITION: August $65 puts to buy (QVD TM).

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) HRB - Testing the breakout
2) ING - Looking like another run
3) RAVN - Still in a nice consolidation

HRB (H&R Block--$66.60; -0.70; optionable): Tax services. Splits 2:1 August 1.
http://biz.yahoo.com/p/h/hrb.html
STATUS: Recently broke from a 22-month cup with handle, and after testing that break with a long, lateral consolidation, it broke out again Monday with a solid move. Since that time it has pulled back a bit to test the move, but is holding comfortably over its 10 day MVA (65.33) and breakout point (65.50). Volume continued to be very strong as the stock tapped 66 at its low before recovering to close, so we will see if it can hold the 10 day and make a strong move back up.
PLAY: After holding the 65 to 65.50 level, a move up over 66 on continued strong volume, with stock and/or October $60 calls to buy (HRB JL).

ING (Ing Groep--$66.25; -0.95; optionable): Life Insurance. Splits 2:1 effective July 13.
http://biz.yahoo.com/p/i/ing.html
STATUS: ING made a nice move back over its 50 day MVA (65.36) and late June high of 66.06, but has pulled back the last two sessions. It looks like a healthy pullback, however, coming on relatively low volume (64,200 today; average 112,800), and showing a doji Thursday right at the level of that June high. From the doji on support we can look for a bounce back up to start another pre-split run. The 200 day MVA is potential resistance at 68.95 (that level pushed the stock back down three times in April).
PLAY: A bounce over 66.75, with stock and/or August $65 calls to buy (but very low open interest).

RAVN (Raven Ind--$27.00; -0.10; no options): Textile Manufacturing. Splits 3:2 effective July 16. Thinly traded, but we had good success with these this year.
http://biz.yahoo.com/p/r/ravn.html
STATUS: Made an outstanding move in May and early June, rising from 19 up to 28, but has since pulled back into a nice, tight consolidation of dojis over its 10 day MVA (26.88). There have been a few 'get ready' volume spikes in the past two weeks, with volume on the rest of the sessions very low, like today's volume of 1100 (average 5,772). That is a thinly traded stock, but although we in most circumstances avoid them because of liquidity issues, with pre-splits we have had quite a bit of success on the report taking positions with these thinly traded stocks. TWRI is one such stock. Relative strength and buying are still strong.
PLAY: On a move over 27.25 on average or better volume, stock.

CONTINUING CANDIDATE BEST PLAYS: Some puts in here.
1) MIKE - Looking for another try
2) ACF - Nice little consolidation
3) CHBS - A put

MIKE (Michaels Stores--$40.20; -0.10; 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 broke out last Friday, but closed well off of its intraday high on that run (42.06), and has pulled back a bit since. However, the pullback has been on modest volume (down to 137,200 today; average 220,000), and it is holding support at its 10 day MVA (39.75), in the upper range of its handle. It is still looking good, showing a tight doji over the 10 day, and we will look for a bounce up and run to a breakout. Target: 47.
BUY POINT: Aggressive: A move over 41 on above average volume. Stop: 38.13 (or just under the 50 day MVA, at 37.40). Breakout: 42.19 on volume of 330,000. Stop: Just under the 50 day MVA.
POSITION: Aggressive: Stock and/or September $35 calls to buy (IKQ IF). Breakout: Stock and/or September $40 calls to buy (IKQ IH).

ACF (Americredit--$53.03; +0.40; 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 3:2 split.
STATUS: ACF has made a pretty nice move up from its 50 day MVA (48.40), forming a small, six-week cup. It is not the best type of cup pattern, short and in a slight "v" shape, but the last week it has formed a small ascending wedge pattern. Today was a second consecutive doji pattern over its 10 day MVA (51.94), with volume coming in somewhat low at 663,000 (average 1 million). Target: 62-63.
BUY POINT: Breakout: Over 55 on volume of 1.35 million. Stop: 51.15.
POSITION: Stock and/or August $50 calls to buy (ACF HJ).

CHBS (Christopher & Banks--$28.86; -1.34; optionable): No announcement this week.
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: The stock has been in a serious downtrend from its late May high at 47.50, and has been riding down its 10 day MVA (31.22) the last couple of weeks. Today it took a strong fall, gapping up initially to the 10 day but tumbling back on strong volume (755,000; average 556,500). It closed just above the 200 day MVA (28.65), and we will see if it can hold, but on a strong drop through the support and a failed attempt to climb back over, we will be ready for a put play down to 24-25.
BUY POINT: After a drop through the 200 day and a failed test of that level, a strong drop back down with continued strong selling volume.
POSITION: August $40 puts to buy (URH TH).

End Part 2 of 4

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