stock watch, 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) HRB - Still looks ready

HRB (H&R Block--$67.04; +0.75; 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 then it has pulled back a bit to test the move, finding support at its 10 day MVA (66.12) and prior breakout point (65.50). Friday the stock opened just above the 10 day, but could not muster much of a move on decreased, below average volume (469,100, average 551,800). From here, we are still looking for a strong move up over the recent high of 69.60 as we head into the split.
PLAY: From here, a move up over $67.50 on increased volume, with stock and/or October $65 calls to buy (HRB JM).

CONTINUING CANDIDATE BEST PLAYS:
1) KMP - Tough sector, but looking good

KMP (Kinder Morgan--$71.50; +0.44):
http://biz.yahoo.com/p/k/kmp.html
BACKGROUND: Based upon our research it does not appear that KMP has ever split its stock. KMP is a master limited partnership and therefore does not have annual shareholder meetings.
STATUS: The stock has made a decent move back up from its recent range at the 50 day MVA (69.36), forming a small saucer and then pulling into a handle this week. It has shown progressively tighter dojis, each holding strong over the 10 day (70.86) on generally below average volume. Friday the stock finally got some volume (sharply up to 127,000; average 125,800), moving up slightly in the handle. A nice pattern, and the increased volume is a good sign, so we will see if the stock can make a solid breakout move. Showing good relative strength and constant money flow. Target: 82.
BUY POINT: Breakout: 72.43 on volume of 190,000. Stop: 67.36.
POSITION: Stock and/or September $70 calls (KMP FN).

POST-SPLIT BEST PLAYS:
1) LH - Broke out!
2) CAKE - Another breakout!
3) DGX - Can it do it again?
4) ESRX - Creeping up toward the breakout

LH (Laboratory Corp--$83.98; +2.67; optionable): Health Services. Split 2:1 June 11.
http://biz.yahoo.com/p/l/lh.html
STATUS: After its recent split, LH has held on nicely in a handle to the cup that has been forming since the beginning of the year. Within the handle, the stock has pulled back to test its 50 day MVA (74.97) in late June, and since has pushed up along its short-term MVA's (18 day at 78.18), seeing resistance at the handle high of 82.50. Friday the stock cleared that hurdle, breaking out on above average volume of 627,200 (average 477,900). Still a buy up to 86.63. We are looking for another move up on increased volume. Relative strength and money flow are excellent. Target: 96.
PLAY: Continued breakout move: 84.50 on increased volume (we were looking for breakout volume of 1.5 times the average, or 716,000), with stock and/or August $80 calls to buy (LH HP). Stop: 78.60.

CAKE (Cheesecake Factory--$28.55; +0.58; optionable): Restaurant. Splits 3:2 effective 6-19-01.
http://biz.yahoo.com/p/c/cake.html
STATUS: After splitting in mid-June, CAKE popped up twice, before pulling back to test the most recent breakout (from a double bottom) with a string of dojis holding over the 10 day MVA (27.25). We saw a strong move up Thursday, and Friday it continued the move, breaking out on slightly increased, above average volume of 469,500 (average 410,600). From here we are looking for another move up, on above average or stronger volume. Still a buy up to 29.93. Target: 33.
PLAY: 28.80 on continued strong volume, with stock and/or October $25 calls to buy (CFQ JE). Stop: 26.78.

DGX (Quest Diagnostics--$70.03; -0.42; optionable): Health services. Split 2:1 June 1.
http://biz.yahoo.com/p/d/dgx.html
STATUS: The stock has peeled back through its up trendline (connecting March-May closing lows, currently at 75), and is hanging on in the range of its late June consolidation and 18 day MVA (69.91). After the rather gentle pullback of the last couple of weeks, the stock looked ready to take off again after Wednesday it showed a high volume doji with a long 'tail' that tested the 50 day MVA (65.26), but it has yet to make the move. We saw the third consecutive doji on Friday, again on lighter, but above average, volume (522,800, average 449,600). Still looking for the bounce. The recent high was 75.75.
PLAY: Aggressive: A move over 72 on increased volume, with stock and/or August $70 calls to buy (DGX HN). Stop: 66.96.

ESRX (Express Scripts--$54.52; +0.87; optionable): Split 2:1 June 25.
http://biz.yahoo.com/p/e/esrx.html
STATUS: The stock is moving in a handle of large cup pattern (dating back to the beginning of 2001), and after its recent split it tested its 50 day MVA (50.20). Earlier this week the stock hovered between its 18 and 50 day; Thursday we saw a nice move up past the short term MVA's, and Friday the move continued, on sharply increased volume (1.48 million, average 620,000). The handle high is 58, made on a wild intraday run in the handle, but we are focusing on the 55.82 as the breakout point (the stock has retreated three times from that level in the handle). Relative strength and money flow are excellent, and we are watching for the breakout on continued strong volume. 64.
PLAY: 55.95 on continued strong volume, with stock and/or August or November $50 calls to buy (XTQ HJ or XTQ KJ).
* * *
PRE-ANNOUNCEMENTS REMAINING PLAYS
* * *
ELN (Elan--$61.40; +1.80; 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: ELN tried to make a move Wednesday out of its pennant, but dropped back abruptly. It rebounded Friday to close back on its up trendline (connecting April-June closing lows, at 61), but it is not looking too strong as volume dipped back to 1.29 million (average 1.49 million). The pennant formed after having recently broken from a cup with handle, hitting a high of 65. With the forecast Wednesday, we will see if the stock can hold onto this level for a run back up.
BUY POINT: A move over 63.20 on above average volume.
POSITION: Stock and/or October $60 calls to buy (ELN JL).

CHV (Chevron--$89.40; +0.34; 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, making a couple of decent put plays. It bounced back up from its 200 day MVA (87.53) on Thursday, but could only reach its 10 day (90.06) before falling back to close with a loose doji. Not looking very good in either direction right now, so we will see what develops next week.

CEFT (Concord EFS--$59.19; -0.05; 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: Made a nice breakout this week, moving up out a short consolidation it formed after settling down a bit from the erratic movements it showed after a breakout (from a cup with handle) in June. After two good moves, the stock tested back to 57.43 at its low Friday (breakout point was 56.93; 10 day MVA at 56.32), but managed to recover and close with a doji on higher volume (4.46 million; average 3.42 million). Off of this pattern we could see another test back toward support, but in that event we will watch for support to hold and make a strong move back up. If we get a strong move up from here, it is still a buy up to 59.78. Target: 65.
BUY POINT: From here: Over 59.75 (a buy up to 59.78) with increased volume. Stop: 55.57. Pullback: A move up on continued strong volume after a lower-volume pullback that holds the 57 range. Stop: 53.
PLAY: Both buy points: Stock and/or September $55 calls to buy (CQF IK).

ATK (Alliant Techsystems--$90.99; -0.65; 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: ATK is making a good effort to recover after a big drop from a double top (recent high at 101.24). The stock started the current move from in the 85 (showing a double bottom), but after closing over the 50 day MVA (91.21) Thursday the stock gapped back below that level and showed a doji. Volume has not been great on the run up, and was down Friday at 94,200 (average 168,500). It looks like it might retreat, and we will see whether it can hold near support (18 day MVA at 89.57) or if it drops back down.
BUY POINT: Upside momentum: After holding the 18 day, a move back over 92.50 on above average volume. Stop: 86. Downside: A drop back through the 10 day MVA (currently 88.84) with above average volume. We are initially targeting the recent lows at 84-85 on the play.
POSITION: Upside: Stock and/or November $90 calls to buy (ATK KR - low open interest). Downside: August $100 puts to buy (ATK TT).

RHB (Rehabcare--$50.09; +0.09; no options): Hospitals. Forecast to announce a split on 8-7-01 in conjunction with earnings. At this time the company cannot confirm this date, but based upon our research this should be the date.
http://biz.yahoo.com/p/r/rhb.html
BACKGROUND: Last announced a 2:1 split on 5-15-00 at a stock price of $41. The annual shareholder meeting was on 5-3-01 at which time additional shares were authorized.
STATUS: Made a big breakout move Thursday out of its cup with handle (with the handle in something of an ascending wedge configuration), but lacked volume. Friday saw volume kick in (309,100; average 130,000) as the stock hit up to 51.16, but late in the day it pulled back to close. The close well off the intraday high signals a possible pullback before we see more to the upside. If we do get the downside move, we will look for the stock to hold the breakout point of 49. On a move up, the stock is a buy on this move up to 51.45, but we will need to watch the all-time high at 52.50 as possible resistance. Target: 54-55.
BUY POINT: From here: A move over 51.16 (but up to 51.45) on continued strong volume. Stop: 47.58. Pullback: On a lower volume move that holds 49, a move back over 50 on volume of 195,000. Stop: 46.50.
POSITION: Stock only.

NVDA (Nvidia--$80.96; -1.71; 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 is now struggling under its 50 day MVA (85.11) after crashing through that level over a week ago. The stock had made a very solid run over the past several months, but after topping at 100 it made a gradual pullback that turned a bit ugly on the breach of support, but the stock found support in the range of its May lows. It has tried a bounce but has shown consecutive dojis under the 10 day MVA (83.05), with volume rather weak (down to 2.88 million Friday; average 4.65 million). We will see if a stronger market move can get the stock over stiff resistance (18 day is also ahead at 85.36), but we are still looking at a failure and a possible play back down to the 70 range (March highs; the 200 day MVA is at 65.18).
BUY POINT: Strong selling back down below 79 on above average volume. A weak market would make a safer play.
POSITION: August $95 puts to buy (RVU TS).

BJ (BJ Wholesale--$56.00; -0.49; 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: BJ has been a very strong performer, and broke out yet again this week. After showing topping signs (a lower volume move up and then a tight doji on high volume), the stock tested all the way back to 54.29 intraday (10 & 18 day MVA's at 54.90 and 54, respectively) before rebounding to get back most of that move. Volume remained strong (1 million; average 665,000), so we will see if BJ has to make another test or if it can surge on from here. Target: 62.
BUY POINT: Pullback: After a lower volume pullback that holds the 10 day MVA, a move back over 56 on above average volume. Stop: 52.08. Breakout: Over 56.95 on continued strong volume. Stop: 52.96 (50 day MVA at 51.05).
POSITION: Pullback: Stock and/or September $50 calls to buy (BJ IJ). Breakout: Stock and/or September $55 calls to buy (BJ IK).

ADVP (AdvancePCS--$61.40; -0.71; 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 rebounded after a repeat of its June drop, falling back from the 65 range but finding support around 55. The moves up on Wednesday and Thursday were strong, and it rested Friday, tapping its 18 day MVA (60.36; 50 day at 59.84) at its low before closing with a perfect doji. The move was on very low volume (358,200; average 730,200), which is quite healthy. The center of the double bottom is at 65.39, but we can look at aggressive positions on a move over its short-term down trendline drawn from mid-May through late-June highs. Target on new high: 75.
BUY POINT: Aggressive momentum: Over the down trendline (at 63) on above average volume. Stop: 58.59. Breakout: 65.52 on volume of 1.1 million (stock's high at 68.59). Stop: 60.93.
POSITION: Both buy points: Stock and/or September $60 calls (QVD IL) to buy.

FISV (Fiserv--$61.05; -2.13; 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: Quite volatile of late, but the upside is winning. FISV made a very strong, sustained bounce back up from its 50 day MVA (57.61) this week, finally pulling back Friday on slightly lower volume (1.07 million; average 1.04 million). The drop held the 10 day MVA (60.90), and if FISV has strength it will continue to hold and mount a move back up. The stock had broken out from an ascending wedge formed over a cup with handle (breakout high 64.63), but before the present move made an abrupt drop back to its 50 day as the initial breakout failed. Target on a breakout: 73.
BUY POINT: Aggressive: After holding here, a move back over 63 on increased volume. Stop: 58.59. Breakout: Over 64.63 on increased volume. Stop: 60.10.
POSITION: Both buy points: Stock and/or September $60 calls to buy (FTQ IL).

FDC (First Data--$69.35; -0.15; optionable): Working on a forecast date.
http://biz.yahoo.com/p/f/fdc.html
BACKGROUND: Last split was a 2:1 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: Made a great breakout move Thursday, and continued for a bit Friday, hitting up to 70.90 but retreating to close slightly down for the day. The pattern closed as a 'tombstone' doji, which indicates a pullback. Volume was even larger Friday at 3.25 million (average 1.45 million). We will look for the pullback to hold the breakout range of 68.85, but that is pretty tight so it could head back to 68 before putting on the brakes. If it can hold that level, we will look for the stock to regain its strength and continue the breakout move. Target: $79
BUY POINT: After a lower volume pullback holds the 68 range, a move back up on increased volume. Stop: $63.24.
POSITION: Stock or November $65 calls to buy (FDC KM).

End Part 3 of 4

stock watch
stock split