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us stock market, understanding the stock market
Begin Part 3 of 4
POST-SPLIT BEST PLAYS:
1) DGX - Poised for another move
2) BAX - Still a put
3) GENZ - Doji on support
4) CAKE - Test of the breakout
5) LH - In the handle still on low volume
DGX (Quest Diagnostics--$73.15; +0.80; 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, holding again Friday over its 10 day MVA (71.61) and its up trendline (connecting March-May closing lows), which is at 71.25. 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, looking for more volume on a move up from here (down to 221,000 Friday; average 447,200). We will carefully protect positions on a move up from here, with stops. Recent high was 75.75. Target: 80.
PLAY: A move over 74 on increased volume near the average, with stock and/or August $70 calls to buy (DGX HN). Stop: 68.82.
BAX (Baxter International--$47.90; -0.60; 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 (49.25) Tuesday and could not hold a move back over Thursday, finally ending the week by gapping down and showing a loose doji. Volume continued to be strong at 2.57 million (average 1.77 million), and we could see a bounce back up here to test the 50 day; however, we will be carefully watching for that move to fail, which could give us a put play back down. There is potential support from March-May highs (and late May lows) at 48, but we will target the 200 day MVA, at 44.55, as a potential exit point for the play.
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).
GENZ (Genzyme--$57.13; -0.33; optionable): Split 2:1 effective 6-4-01.
http://biz.yahoo.com/p/g/genz.html
STATUS: Biotechnology. Broke out a week ago, but closed well off of its intraday high of 64 and subsequently pulled back. The stock has gradually pulled back to its 10 day MVA (57.17), in the range of its pre-breakout highs, and showed a doji over that support Friday. Not a bad pullback for a stock that has been quite strong, and we will see if it can muster a strong bounce back up from here. Our target on the initial breakout was 65.
PLAY: A bounce over 58.25 on average or better volume (2.98 million; Friday 2.58 million), with stock and/or October $55 calls to buy. Stop: 54.17.
CAKE (Cheesecake Factory--$26.90; -0.12; optionable): Restaurant. Splits 3:2 effective 6-19-01.
http://biz.yahoo.com/p/c/cake.html
STATUS: The stock made a strong breakout of a double bottom last week, but has steadily pulled back to test that breakout this week. Friday saw another mild gap down and doji with rather low volume (199,000; average 411,500), with the stock managing to close over its 10 day MVA (26.61) and holding over its 200 day at its low of 26.36. Not a bad pullback, but we need to see it stop here, looking for a strong move back up from support on big volume. The breakout high was 28.50.
PLAY: After holding here, a move back up over 27.25 on above average volume, with stock and/or October $25 calls to buy (CFQ JE). Stop: Just under the 18 day MVA (currently 25.95).
LH (Laboratory Corp--$77.50; -0.51; optionable): Health Services. Split 2:1 June 11.
http://biz.yahoo.com/p/l/lh.html
STATUS: Has been trying to hold on post-split, moving in a handle to its cup (dating back to the beginning of the year). It has recently edged back up from its 50 day MVA (74.08) and is currently moving somewhat laterally over its short-term MVA's (10 day at 77.52). Volume is low (down to 245,800 Friday; average 475,000), so we will see if it can hold here and make a run at the handle high of 82.50. Solid relative strength and money flow.
PLAY: Aggressive: A move back over 81 on above average volume, with stock and/or August $75 calls to buy (LH HO).
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PRE-ANNOUNCEMENTS REMAINING PLAYS
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FITB (Fifth Third Bancorp--$60.09; -1.12; 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: Still hanging on, holding recent lows in its second handle to a cup pattern. It broke out two weeks ago from a prior handle, but that move lasted on session and took the stock up to 63 before gradually pulling back. It is now in the range of that prior handle, dipping back Friday through its short-term MVA's (10 day at 60.87), holding the recent low in the 60 range. Volume was not that significant on the selling, coming in at 1 million (average 1.65 million), so we will see if it can hold and make a move back up toward the breakout as the forecast draws 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 58.66.
POSITION: Both buy points: Stock and/or August and October $60 calls to buy (FTQ HL and OKC JL). With earnings plays, we buy short-term options to sell before the announcement when the earnings run loses steam, and longer-term options to hold through the announcement.
ADVS (Advent Software--$54.90; -1.09; 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 (53.55), but a bounce up failed at the 50 day (59.73) and the stock spent the last two sessions dipping back toward the 200 day. Volume was very large on the drop back Thursday, mellowing Friday to 527,700 (average 559,000). We will see if the stock can recover off of its 200 day as we go toward the forecast.
ELN (Elan--$60.00; -0.30; 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 (hitting 65), and then coming back to test the breakout. A move up from that test could only reach 63.20 before pulling back this week, and the stock is currently holding its 18 day MVA (60.17) and its up trendline connecting April-June closing lows. Friday saw the second consecutive doji at that point, so we will see if it can hold this support and try another move. Good money flow and buying.
BUY POINT: A move back over 62 on increased volume near the average (up to 847,700 Friday; average 1.5 million).
POSITION: Stock and/or October $60 calls to buy (ELN JL).
DFXI (Direct Focus--$44.60; -0.26; 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. The stock tested its 18 day MVA (42.71) and then took a rather weak bounce up, hitting 46.47 Thursday before pulling back intraday and showing a doji Friday over its 10 day (44.10). It could be heading back to test the 18 day again, but we will see if it can hold here and make another move.
BUY POINT: Aggressive: A move over 46.50 on above average volume (325,300; Friday 234,000). Stop: 43.25. Breakout: Over 48 on above average volume. Stop: 44.64.
POSITION: Aggressive: Stock and/or August and October $40 calls to buy (DQF HH and DQF JH). Breakout: Stock and/or August and October $45 calls to buy (DQF HH and JH).
THQI (THQ Inc.--$56.55; -0.45; 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 (50.05), as strong stocks will often do, but it continues to hold the range of its short-term MVA's (10 & 18 day at 56.69 and 55.51, respectively). Friday saw its third consecutive doji over the 10 day (reaching below the 18 day at its low) as volume continued to be below the average. It is holding up well, and with a decent market THQI could make another move, although continuing to hold strong in a consolidation range would not be a bad thing.
BUY POINT: Aggressive: In a decent market, a bounce back up from here on above average volume (586,000; down to 412,800 Friday) 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--$91.00; -0.32; 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 took a relief bounce from the 88 level (200 day MVA at 87.41), but could not hold a move back over the 10 day MVA (91.76), falling back from that level Friday on lower, but continued solid volume (2.56 million; average 2.3 million). It rebounded from a low of 90.10 to close, but is a continued put play, with new positions if the stock tests the 10 day yet again and falls back. Our target is the 200 day.
BUY POINT: After another failed test of the 10 day, a drop back on continued solid volume.
POSITION: August $100 puts to buy (CHV TT).
CEFT (Concord EFS--$54.06; -0.52; 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 breakout move of two weeks ago. The stock tested all the way back to its 50 day MVA (50.51) on the wild final day of the quarter, but rebounded and is now holding the 10 day (54.13). Volume has been rather light on the moves (up to 2.38 million Friday; average 3.4 million), but is a tough one to read. Friday's loose doji on the 10 day gives some indication that it could try a move up, but with the volatility anything short of a breakout would be aggressive.
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.--$71.50; -0.14; 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, hitting a high of 77.68 in June. From that point the stock has pulled back, and took out its 50 day (72.01) on Tuesday. Not a good sign, and the stock has not been able to close back over that level, showing a doji Friday. It has tapped near 70 at its lows, which is in the May consolidation range. 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.
POSITION: Stock and/or October $70 calls to buy (ACS GN).
NVDA (Nvidia--$80.70; -2.56; 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 had made a very solid run over the past several months, but after topping at 100 it made a gradual pullback to the 50 day MVA (86.27). It has been trying to hold that support, but Thursday breached it easily, although on below average volume. In Friday's tech weakness the stock gapped down, but after hitting as low as 79.10 it managed to close with a loose doji on lower volume (3.34 million; average 4.68 million). From here we will look for a relief bounce, but be ready for continued weakness in the short-term, looking at a possible put play. Our initial target on such a play would be the 70 range.
BUY POINT: After a relief bounce fails in the range of the 50 day MVA, selling back down on average or better volume.
POSITION: August $95 puts to buy (RVU TS).
FISV (Fiserv--$58.53; +0.90; 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 did what many techs could not, which is hold support. The stock had made a strong breakout from a base-over-base pattern (ascending wedge formed after a cup with handle), but this week took a rapid fall that wiped out the gains. It tapped its 50 day at its lows Thursday and Friday, but was actually able to bounce back up Friday on increased, solid volume of 1.76 million (average 1.04 million). A good sign, but not a play yet; we will see if it can continue to hold through weakness and then 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 the 10 day MVA (currently 60.13) in a stronger market.
POSITION: Stock and/or September $55 calls to buy (FTQ IK).
FDC (First Data--$64.10; -0.15; 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 retreated back through its 50 day MVA (65.28) last week, and could not hold a bounce back over that level this week. The stock dropped back Thursday and Friday, and is now trying to hold on to its May lows in the 64 range (hit 63.48 at Friday's low). Volume was sharply up Friday at 1.57 million (average 1.45 million), so we could get another bounce up toward the 50 day. However, on another failure we can look at a put play with a target at the 58-60 range.
BUY POINT: After a failed move up to the 50 day, a drop through 63.50 on continued strong volume.
POSITION: August $70 puts to buy (FDC TN).
End Part 3 of 4
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us stock market
understanding the stock market
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