trade stock, stock split

Begin Part 2 of 4

TEAM TRADES

BRO: On the SSR and in a flat base, we were looking for BRO to make a move. It had shown some volume spikes three weeks ago and then volume died down. Today it roared up early on strong volume, and we wanted to get in. No options, so when the stock hit the buy point at 42.84 about a half hour into the session we were very interested. The stock ran up to 43 and then pulled back to test the move. We decided to get in if it broke over that first high, so we put in an order at 43.03. The stock moved on up and the trade was done. We were not done, however, as the stock continued to perform well the entire session. So, we looked again before the close and saw strong volume. The stock had pulled back a bit from 44.20 down to 44, and we were interested in more stock. We fired out a Market Alert and then put in a quick order at the ask that was also taken care of and the stock closed near 44.25 on strong volume. That was averaging up into a position.

BJ: A retailer that has been performing very well, we were looking for BJ to breakout to a new high, and today it did just that. It hit the pivot of 55 about an hour into the session and the Market Alert went off. The stock had made a strong gap move to the pivot point, so another Market Alert went out and then we put in our order to buy. Again we were not done with this stock. A poor market, but the stock was behaving well. We checked heading into the close and the stock was showing excellent volume but had pulled back a quarter or so from the session high. We wanted to use this weakness to add to positions. Another Market Alert was fired off detailing this plan. Then we were back at it and picked up some more at the ask with about 15 minutes left in the session.

THE PLAYS: BMET announced its split Monday, as forecast! Some big moves, despite the down day overall, from BJ, BRO and ACF!

BONUS PLAYS: A couple that we have seen before.

ROOM (Hotel Rsrvations--$48.05; +3.35; no options):
http://biz.yahoo.com/p/r/room.html
STATUS: Recently broke from a long, flat consolidation that was a handle to a cup formed in a lengthy rolling range. The breakout hit 50.99 before coming back to test the 18 day MVA (43.57), and today it blasted back up with big volume behind it (1.09 million; average 238,200). However, it hit up to 49.95 and pulled back to close; that can mean trouble, but we like what we see on this move. Great relative strength, money flow and buying. Target: 55.
BUY POINT: Over 49 on continued strong volume. Stop: 45.57. If we get a lower-volume pullback, we can look at positions on a strong move up after testing the 46 range. Stop: 42.78.
POSITION: Stock only.

PDCO (Patterson Dental--$35.99; +1.68; optionable): Wholesale equipment.
http://biz.yahoo.com/p/p/pdco.html
STATUS: Broke from a saucer in May, and after pulling back to the 50 day MVA (32.73) in something of a pennant it has made another big move over the past two sessions. Today it blasted up on slightly lower volume of 507,000 (average 208,200), pulling back from its intraday high of 36.88 to close (prior breakout high 36. We will see if the pullback leads to some profit-taking, but we are watching for a solid move back up. Target: 41.
BUY POINT: From here or a move back up after a lower-volume test of the 35 range. Stop: 32.55.
POSITION: Stock and/or October $30 calls to buy (DOU JF - very low open interest).

PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: Now that BMET has announced, we are looking at PDII, BRO, and KRB this week!

BEST PLAYS: Besides the plays set forth below as best plays, there are some other stocks that also look good. These include Pre-Announcements MNC, THQI and CEFT; Pre-Split RAVN; Continuing Candidates CHBS and ASFC; and Post-Split JNJ.

PRE-ANNOUNCEMENT BEST PLAYS
1) BRO - Big move and forecast for Thursday
2) BJ - Breakout!
3) PDII - Wildcard for Wednesday and looking for a bounce
4) KRB - Forecast for Wednesday but continues to struggle
5) ADVS - A put play
6) ADVP - Dropping

BRO (Brown & Brown--$44.25; +1.55; no options): Insurance Brokers. 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: After a huge move in April (high of 46.10) the stock pulled back and formed a nice, tight, lateral consolidation along its 50 day MVA (40.95). Today, it made a nice move as it broke out of its recent range and continued up in the right side of its saucer on sharply increased volume of 113,000 (average is 37,000). Looking for more going into Thursday's forecast, watching the left side highs for resistance as it continues up. Strong relative strength, money flow and buying. Target: 49.
BUY POINT: A continued move on strong volume. Stop: $41.15.
POSITION: Stock only.

BJ (BJ Wholesale--$54.40; +1.32; optionable): Forecast to announce a split on 8-21-01 in conjunction with earnings. At this time the company cannot confirm this date.
http://biz.yahoo.com/p/b/bj.html
BACKGROUND: Last announced a 2:1 split on 2-4-99 at a stock price of $44. The annual shareholder meeting was on 5-24-01 at which time no additional shares were authorized. The company has sufficient shares for 2:1 split.
STATUS: Broke out today, moving out of an ascending wedge formed since mid-June. Volume was solid breakout volume (1.04 million; average 665,000), and BJ is still a buy up to 57.75. The stock has been very strong, breaking from a cup with handle in February, and then surging again after a March-May pullback. Target: 62.
BUY POINT: Over 55.76 on continued strong volume. Stop: 51.86 (50 day MVA at 50.40).
POSITION: Stock and/or September $50 calls to buy (BJ IJ).

PDII (Professional Detailing--$83.78; +0.58; 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: Is holding onto the double support of its 50 and 200 day MVA's (at 82.57 and 82.66, respectively), showing consecutive dojis as we go into the forecast. Today the stock reached up to tap its 10 & 18 day MVA's at its high of 85.30, but pulled back to close as volume continued to decrease (88,800; average 176,700). We will see if the stock can mount a bit of a move back up going into meeting Wednesday morning, catching the move and riding it on an announcement. Beyond the 10 day MVA the recent high is up at 94, with the short-term down trendline connecting the May-June highs at 90.
BUY POINT: Aggressive: A bounce on increased volume going toward the shareholder meeting. The safer play would be a bounce back over the 10 day MVA, but we might not get it before the announcement. Stop: 78.12.
POSITION: Stock and/or October $80 calls to buy (PKU JQ).

KRB (MBNA Corp--$32.60; 0.00; optionable): Forecast to announce a split on 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. It gapped up today off of Monday's doji, but it could not get past the 10 day MVA (33.18) and it pulled back from there on big volume of 3.65 million (average 2.31 million). Not good action for upside plays, especially going into an announcement. This would only be for the very aggressive, especially given the company's reluctance to issue earnings information.
BUY POINT: Very Aggressive: A strong move back over the 10 day MVA, carefully protecting positions along the way.
POSITION: Stock and/or September $30 calls to buy (KRB IF).

ADVS (Advent Software--$53.14; +2.02; 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 last week, and is now struggling with its 200 day MVA (53.33). It fell through that level Monday and took a relief bounce today, reaching back up to 55.07 at its high but retreating back to close as volume remained above average at 677,200 (average 568,200). This failed attempt to rally back over the 200 day was what we were looking for on a possible put, and we can now look toward strong selling back down. It will be a quick play as we are heading into the forecast (although it is well out of its recent split range), with an initial target of 45.
BUY POINT: A drop back below 51 on increased volume.
POSITION: August $60 puts to buy (UIV TL).

ADVP (Advancepcs--$55.35; -1.91; 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 is still tumbling, dropping hard today on increased volume (687,800; average 730,200), and closing at the low of its last fall in June. It has been a steady two-week drop for the stock, interrupted only by a failed attempt to bounce after having broken down and through its 50 day MVA (59.71). We suspect it will try to hold support here and perhaps take a bounce, but we are prepared for continued weakness and will look for a fall back below today's low of 54.75. There is potential support at April lows (and highs in its former double bottom pattern) in the 50 range, which will be our initial target (200 day MVA at 47.76).
BUY POINT: After a failed bounce from here, a drop back through 54.75 on increased 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 - Still holding
2) KG - A decent pattern

HRB (H&R Block--$65.93; -1.07; 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 early last week with a solid move. Since that time it has pulled back a bit to test the move, holding over its 10 day MVA ($65.85) and breakout point ($65.50). Today the stock gapped up only to close down on above average, but still steadily decreasing volume (645,100, average is 551,000). Today's pattern is not a great sign, but we are looking for HRB to hold here or the 18 day MVA, just below at 64.90, and make another run. The recent high is 69.60.
PLAY: From here, a move up over $67.50 on continued strong volume, with stock and/or October $65 calls to buy (HRB JM). On a test of 18 day, a move back over the 10 day, with stock and/or October $60 calls to buy (HRB JL).

KG (King Pharmaceuticals--$53.28; +0.33; 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), and has pulled into another handle. Today it gapped back over its short-term MVA's (18 day at 53), but could manage no more than a loose doji over that support as volume fell (838,700; average 1.13 million). Not a great move, but we will see if it can hold this support and mount a move going into the split.
PLAY: Over 55 on increased volume near the average, with stock and/or August $50 calls to buy (KG HJ).

CONTINUING CANDIDATE BEST PLAYS: Some puts in here.
1) ACF - Broke out!
2) CBH - Still looking for a move
3) IGT - Falling

ACF (Americredit--$56.17; +2.03; 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 made a strong move today, breaking out of a small ascending wedge handle to a small cup pattern on very strong volume (1.99 million; average is 1.06 million). Still a buy up to 57.75. ACF has been a tremendous performer, rising almost fourfold in the past 12 months. Target: 62-63.
BUY POINT: A move over 56.76 on strong volume. Stop: 52.78.
POSITION: Stock and/or August $50 calls to buy (ACF HJ).

CBH (Commerce Bancorp--$70.10; +0.10; optionable):
http://biz.yahoo.com/p/c/cbh.html
BACKGROUND: Last announced a 5:4 split on 6-29-98. The stock price was $54.63. The annual shareholder meeting was on 6-20-00 at which time no additional shares were authorized. The company has insufficient shares for a 2:1 split.
STATUS: CBH is looking pretty good in a small saucer with handle, formed after a failed breakout from a larger cup with handle. After a doji on its 10 day MVA (70.08) Monday the stock could only gap up and retreat back to that support today, moving on volume that dipped back again below the average (130,200; average 147,100). Looking for a breakout. Relative strength has broken out. Target: 80.
BUY POINT: 71.83 on volume of 220,000. Stop: 66.80.
POSITION: Stock and/or September $65 calls to buy (CBH IM).

IGT (International Game Technology--$56.65; -2.47; optionable):
http://biz.yahoo.com/p/i/igt.html
BACKGROUND: Based upon our research, it does not appear that IGT has ever announced a split. The annual shareholder meeting was on 3-5-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: IGT made the move we were looking for after crashing through its 50 day MVA (60.07) Friday, gapping down Monday but on a relief bounce not able to make it back to the 50 day. It gave up today, turning back down on continued strong volume of 1.46 million (average 806,600). We will look for the strong selling to continue, watching possible support from the May lows in the 53-54 range, and targeting the 50-52 range (200 day MVA at 49.34).
BUY POINT: A drop through 56 on continued strong volume.
POSITION: August $65 puts to buy (IGT TM).

POST-SPLIT BEST PLAYS:
1) LH - Making a move in its handle
2) GENZ - Continues to look strong
3) CAKE - Still testing the breakout

LH (Laboratory Corp--$81.50; +2.60; optionable): Health Services. Split 2:1 June 11.
http://biz.yahoo.com/p/l/lh.html
STATUS: LH has held on nicely after its recent split in a handle to the cup that has been forming since the beginning of the year. Today it made a solid move up on stronger volume (625,900, average is 477,800), and is once again approaching its handle high of 82.50. Now we are looking for a clear breakout move over that level on significantly higher volume. Relative strength broke out, and money flow remains strong.
PLAY: Breakout: 82.63 on volume of 717,000 with stock and/or August $80 calls to buy (LH HP). Stop: 76.85.

GENZ (Genzyme--$58.22; -0.13; 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 made a gradual drop from there, but found support at its 18 day MVA (56.68) and has tried to move back up the last couple of sessions. Today it reached 59.89 but pulled back as volume spiked up to 4.16 million (average 2.95 million), so we will see if the stock has to retest the 18 day or if it can mount a move from here. Our target on the initial breakout was 65. Excellent relative strength and has very good money flow and buying.
PLAY: 60 on increased volume, with stock and/or October $55 calls to buy. Stop: 54.17. Stop: 55.80.

CAKE (Cheesecake Factory--$26.95; +0.07; optionable): Restaurant. Splits 3:2 effective 6-19-01.
http://biz.yahoo.com/p/c/cake.html
STATUS: The stock is testing its strong breakout from a double bottom, and Tuesday saw its third straight doji over the support of its 10 day MVA (26.71, which is right in with its former breakout level). Volume remains below average at 316,600 (average 410,600), but it could spring at any time, and we have seen some explosive moves from CAKE recently. The breakout high was 28.50.
PLAY: 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 26.15).

End Part 2 of 4

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