us stock market, trade stock

Stock Split Notices       Investing Q & As       Glossary

- Stocks hang in there, finish second positive week.
- GDP lower but better than expected with strong business investment.
- Michigan sentiment solid, Greenspan tries to make entitlements an issue.
- Techs, chips and small caps lead Friday but SOX still below 18 day EMA & other indexes face more resistance this week.
- Republican convention, pre-Labor Day week likely to keep volume modest and stocks struggling to advance.
Read Full Weekend Summary

Learn more about our Daily Newsletter with Stock Picks! - Issued 5 Times Per Week

2) Stock Splits

Playing stock splits can be very profitable, but it takes know-how.

Our stock split service focuses on three main types of plays:

1) pre-announcement (where we forecast an upcoming split prior to the company making the announcement); 2) pre-split (these plays are made in the days leading up to the actual split day); and 3) post-split plays (plays made after the actual stock split where the stock is showing continued or renewed strength).

We play pre-split plays as short-term plays. We get in when the technical indicators show us things look right, grab as much as we can, and get out, always being conscious of resistance and support. These stocks are highly volatile at this time, and can turn on you quickly. Don't let good profits disappear. Watch for turns, especially when a stock trades in a wide range and finishes off its high. That is a sign these stocks often give you that they are running out of steam. We usually get out and ask questions later. We can always get back in. We like to play in the money calls, preferably two strike prices in the money as this usually gives us a greater delta (the percent an option will mover versus the stock's movement). We prefer deltas of 75 or better. This means if the stock moves 1 point, the option should move three-fourths of that point. That means up or down.

Remember, wait to see the stock start to move up. Don't just blindly make a play and don't try to guess tops and bottoms. We can look at indicators to give us a clue as to what will happen, but we need the stock to confirm it for us. Here's a pre-split play to watch and our current analysis.

Chart by StockCharts.com

Company Profile
STATUS: Cup w/handle. POOL spent last week trying to form a handle to its short 8 week base. It was cheating higher to end the week, rising above the 50 day SMA (43.14) as volume moved lower and lower; that is not the best handle action as you want to see it fade on the intraday lows so that it shakes out the weaker holders. It is a pre-split, however, and they tend to generate their own momentum. Want to see volume kick higher as it makes the move through the buy point.
Volume: 177.723K Avg Volume: 288.336K
BUY POINT: $44.94 Volume=300K Target=$48.92 Stop=$43.22
POSITION: QCL AI - Jan. $45c (42 delta).

Learn more about our Stock Split Report - Issued 5 Times Per Week