understanding the stock market, stock watch

Begin Part 3 of 4

POST-SPLIT BEST PLAYS:
1) DGX - Poised for another move
2) BAX - Hard fall

DGX (Quest Diagnostics--$72.35; -0.07; optionable): Health services. Split 2:1 June 1.
http://biz.yahoo.com/p/d/dgx.html
STATUS: After breaking out yet again last week, the stock has made an orderly pullback, today closing with a doji over the support of its 10 day MVA (71.26) and its up trendline (connecting March-May closing lows), which is at 71. DGX has been very strong, on its fourth move now along its up trendline established from the March low near 40, breaking out in stair-step fashion from consecutive handles to a cup. We will see how much more it has, but will carefully protect positions on a move up from here, with stops. Target: 80.
PLAY: On a bounce over 73 with increased volume near the average (452,400; today 317,400), stock and/or August $70 calls to buy (DGX HN). Stop: 67.89.

BAX (Baxter International--$48.50; -0.49; optionable): Health Services. Split 2:1 effective 5-30-01.
http://biz.yahoo.com/p/b/bax.html
STATUS: BAX, which had been so strong, has taken it on the chin since receiving an analyst downgrade. Strangely, a strong run can lead to a downgrade because of analysts' lack of understanding of stock movements, but if a stock does not make a quick recovery it is a sign of trouble. BAX took out its 50 day MVA (49.31) Tuesday, but after gapping back up to open today, it fell right back through on big volume (3.37 million; average 1.78 million). We will see if it tries the 50 day one more time, and if it fails and sells back on continued strong volume, a put play. There is potential support from March-May highs (and late May lows) at 48, but we will target the 200 day MVA, at 44.51, as a potential sell point.
PLAY: On a move down on continued strong volume after a failed test of the 50 day, August $52.50 puts to buy (BAX TX).
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PRE-ANNOUNCEMENTS REMAINING PLAYS
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KRB (MBNA Corp--$33.50; -0.18; optionable): Forecast to announce a split on 7-10-01 or 7-11-01 in conjunction with earnings; however, the company will not confirm the date and they do not make it public.
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 taken a strong fall the past month from the 38 range, going the opposite direction of most banks. After the initial round of selling the stock has not fallen through the floor, but is merely hanging on below its 18 day MVA (34.13; 50 and 200 day 34.82 and 35.37, respectively). The stock tested the 18 day at its Thursday high before pulling back to close with a doji. Not looking strong, and we are not looking at positions Friday. We will look at its action going into the Tuesday or Wednesday announcement and see if it presents an opportunity for a quick play.

ADVS (Advent Software--$55.99; -2.42; optionable): Forecast to announce a split on 7-17-01 after the close in conjunction with earnings.
http://biz.yahoo.com/p/a/advs.html
BACKGROUND: Last announced a 2:1 split on 2-17-00 in conjunction with a board meeting. The stock price was $80. Prior to that announced a 3:2 split on 7-13-99 in conjunction with earnings. The stock price was $75. The annual shareholder meeting was on 5-3-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: Was moving nicely in the handle to nine-month cup with handle pattern, but took a severe drop this week. Tuesday the stock gapped down to open at its 200 day MVA (53.62), but a bounce up failed at the 50 day (59.93). Today was no more encouraging, as the stock dropped back again on big volume (1.94 million; average 545,600). Nothing for Friday, as we watch to see if the stock can recover off of its 200 day as we go toward the forecast.

DFXI (Direct Focus--$44.86; +0.90; optionable): Forecast to announce a split on 7-18-01 in conjunction with earnings. At this time the company has not confirmed the time of the release.
http://biz.yahoo.com/p/d/dfxi.html
BACKGROUND: A frequent splitter, it last announced a 3:2 split on 12-12-00 in conjunction with a board meeting. The stock price was $44. Prior to that announced a 3:2 split on 6-28-00 in conjunction with a board meeting. The stock price was $44. See a pattern here? The annual shareholder meeting was on 6-4-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: A very solid stock that has performed well, and is proving to be a consistent splitter. It broke from a cup (and subsequent ascending wedge) recently and has made two solid surges, hitting 48 last week before pulling back to test its 18 day MVA (42.49). It bounced back up the last two sessions from that level, but could be in for another test of support after closing well off of its intraday high today (it hit 46.47), moving on light volume of 253,000 (average 324,700). If it can hold the 18 day we will see if it can mount a stronger move.
BUY POINT: After holding the 18 day, a move back up over the 10 day (currently 43.98) on above average volume.
POSITION: Stock and/or October $40 calls to buy (DQF JH).

THQI (THQ Inc.--$57.00; -0.11; optionable): Forecast to announce a split on 7-20-01 in conjunction with the shareholder meeting (earnings 7-26-01).
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 is on 7-20-01 at which time authorized shares will be increased. The company has sufficient shares for a 2:1 split.
STATUS: THQI has really been hanging in there, continuing to show strength after a long, steady run. We have been looking for a test back to its 50 day MVA (49.79), as strong stocks will often do, but it continues to hold the range of its 18 day (55.39). It made a brief visit to the 50 day during last Friday's wild session, but rallied to close, and since then has made a quiet pullback to support. Today saw THQI make a tight doji over the 10 day (56.72), and looks poised for another move if the market gives it a chance.
BUY POINT: Aggressive: A bounce back up from here over 58, looking at possible resistance from the high at 62. We are still looking for THQI to pull back and try a consolidation over its 50 day MVA.
POSITION: Aggressive: Stock and/or September $55 calls to buy (QHI IK).

CHV (Chevron--$90.39; +0.93; optionable): Forecast to announce a split on 7-24-01 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: CHV has taken a hard fall with its sector. It made a bit of a relief bounce, but could not hold a move over its 10 day MVA (91.92), closing well off of its high of 92.54. The pattern indicates another drop back, and we can look at a quick put play back to the 200 day MVA (87.40).
BUY POINT: A move back down from here on continued strong volume (2.97 million today; average 2.33 million).
POSITION: August $100 puts to buy (CHV TT).

CEFT (Concord EFS--$54.58; -0.87; 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: Has been very erratic since its brekaout move of two weeks ago. The stock tested all the way back to its 50 day MVA (50.35) last Friday, but rebounded and is now holding the 10 day (54.14). Volume has been rather light on the moves (down to 2.23 million today; average 3.6 million), but frankly this one is not giving many signals about what it intends to do next. It has been quite strong but needs to settle down a bit. We will look for a breakout for positions.
BUY POINT: Over the high of 56.93 on above average volume.
PLAY: Stock and/or September $50 calls to buy (CQF IJ).

ACS (ACS Inc.--$71.64; +0.68; optionable): Forecast to announce a split on 7-31-01 before the market opens in conjunction with earnings.
http://biz.yahoo.com/p/a/acs.html
BACKGROUND: Last announced a 2:1 split in October 1996 at a stock price of $60. The annual shareholder meeting was on 10-26-00 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: Has been trending up solidly the past year, making a new high at 55 in December and continuing up along its 50 day MVA. The stock pulled back last week, and continued down and through the 50 day (72.03) Tuesday, testing that level today but not able to break back through. Volume was weak on the attempt, coming in at 295,900 (average 756,500), and a recovery does not appear imminent. It has support from recent levels at 70-72, and we will see if it can hold and try a move back up.
BUY POINT: Aggressive: A move back over 74 on above average volume in a strong Nasdaq. We will probably not see that Friday.
POSITION: Stock and/or October $70 calls to buy (ACS GN).

NVDA (Nvidia--$83.26; -6.51; optionable): Semiconductor. Forecast to announce a split on 8-15-01 in conjunction with its annual shareholder meeting or on 8-13-01 during the market in conjunction with earnings.
http://biz.yahoo.com/p/n/nvda.html
BACKGROUND: 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 made at least four trend runs up its trendline connecting March and May closing lows, but after the last run (which hit up to 100) the stock pulled back. It tried to hold its 50 day MVA (86.50), but today fell through that support, dropping on volume that remained below the average at 4.25 million (average 5 million). It had been looking good in a tightening pattern, but today's move does not indicate health, so we will see if it can make a quick recovery or if it continues to founder. Nothing for Friday.

FISV (Fiserv--$57.63; -1.87; 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 made a solid breakout move from a base-over-base pattern (ascending wedge formed after a cup with handle), but this week has fallen back quickly and wiped out the breakout gains. Volume has been strong on the selling as well (1.63 million today; average 1.12 million), and it tapped its 50 day MVA today at its low of 56.91. Stopped out of positions, and we will not be interested again until it shows that it can hold the 50 day and make a strong move back up. It might need to consolidate a bit first.
BUY POINT: After showing that it can hold the 50 day, and perhaps consolidating a bit, a strong move back over 60 in a strong market.
POSITION: Stock and/or September $55 calls to buy (FTQ IK).

FDC (First Data--$64.25; -1.23; 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: Still looking weak, FDC tried a bounce back over the 50 day MVA (65.33), but could not hold on, gapping down today and continuing down toward support at 64. Volume was not heavy on the selling, so we will see if it can again hold this level, which represents the lows in its May-June range. It had been in a promising pennant pattern, but took a strong drop last Friday, and if it cannot hold this support, we can look at a put play. On a drop we will target the 58-60 range.
BUY POINT: On a drop through 63.50 on above average selling volume.
POSITION: August $70 puts to buy (FDC TN).

PRE-SPLITS REMAINING PLAYS: With these stocks we keep an eye out, waiting for the start of a pre-split run.

KG (King Pharmaceuticals--$51.90; -0.44; optionable): Splits 4:3 on or about July 19.
http://biz.yahoo.com/p/k/kg.html
STATUS: Has pulled back from its break from a cup with handle (high of 57.88), but it is pulling back more than we would like to see. It took out support at its short-term MVA's (10 day at 53.23), and is now right at the lows of its former handle, above the 50 day (49.87). It could be wanting to test the 50 day after having made a very strong breakout run in May and June, but we will watch to see if it has support here, and look for the start of a pre-split run.
PLAY: On a move over the 10 day MVA on continued strong volume (1.47 million Thursday; average 1.14 million), stock and/or August $50 calls to buy (KG HJ).

TARO (Taro Pharmaceutical--$84.09; -0.10; optionable: Drugs. Splits 2:1 July 27.
http://biz.yahoo.com/p/t/taro.html
STATUS: Broke out from a cup with handle last October and has increased more than fourfold since. It pulled back a bit in recent sessions but, still exhibiting strength, caught support at its 18 day MVA (79.58), pushing back up slightly today after gapping down near that level. Volume was well down on the move, so we will see if the stock needs a bit of rest here before making another surge going into the split.
PLAY: Aggressive: From here or after another test of the 18 day, a move over 85 on increased volume near the average (421,000; today 221,100), with stock and/or August $75 or $80 calls to buy (QTT HO - low open interest, or QTT HP).

End Part 3 of 4

understanding the stock market
stock watch