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stock watch, stock trading
Begin Part 2 of 4
TEAM TRADES
AZO is an auto parts stock, a leading sector. The pattern is a lower volume pullback to support, a test of the July breakout. We were looking for a move up from the 18 day MVA, after a pattern had formed on the pullback similar to that from which AZO had initially broken out. Our buy point was higher, at 49.33, for a move over the last high, but when we noticed the stock heading up early in the morning decided at that time to look at taking aggressive positions since the breakout move could be starting here and investors tend to move counter to what is getting sold off (techs today). AZO opened at 45.80, just up from the previous close, but by the time we looked the stock had already taken out the early morning high in the 46.40 range, and was pulling back to 46.35. It hung there for a minute or so, then headed back up, the point at which at least partial positions could be taken. Volume was decent at 239,000. Average volume on this stock is 818,000, and the current volume hadn't come close to that of the previous day (410,000), and didn't appear to be screaming up. Held back for a bit to see how things panned out.
At 10:30 AZO started moving laterally on lower intraday volume which looked like a precursor to a breakout, and volume was up to 306,000. The options were at 8.60 by 8.30, so we put in a limit order at 8.40 and somehow that worked. That move was rewarded as the stock broke out twice after that, ultimately reaching a high of 47.20 on the move. We had left things alone during that time, letting a stop loss at 8.00 handle things, and upon checking back just before the close, were chagrined to see the move had pulled back (stock at 46.72, options bidding at the buy of 8.40). AZO looked like it was holding steady just prior to the close (46.75), though, with volume closing higher than that of the previous day, a nice 1 million. Not good on the pullback from the high, but the pattern still looks good despite that, so we will stay in the play for now.
THE PLAYS:
BONUS PLAYS:
DJX (1/100 Dj Indu--$103.93; +0.47; optionable):
STATUS: The index dropped to a low of 102.72 but headed up and moved back over its opening price (103.42), halting at resistance (the short term MVAs). Volume was just a hair higher at 1.06 million (avg. 1.1 million). This is a higher low than the previous two, which tested the lower support at 102 (the support that the index has yet to break for
the put play). At any rate, the higher low is bullish, so in light of the reversal in the indexes on the whole today, we are turning bullish ourselves for an upside play. Our buy point is just over the 18 day MVA (104.21) since that is the resistance that has recently pushed the index back down. Target: initial, 106 (200 day MVA).
BUY POINT: 104.25, on average or better volume. Stop: 103.71
POSITION: September $104 calls to buy (DJV IZ). Please check with your broker in the morning for deltas.
PG (Procter & Gamble--$74.19; +2.01; optionable): Conglomerate
http://biz.yahoo.com/p/p/pg.html
STATUS: A breakaway gap on strong volume (4.3 million; avg. 2.87 million). The move is propelling the stock up toward completion of the 5.5-month base, with prior highs at 77. Looking for an aggressive play up to that level from here; we can then watch for the stock to form a handle. Shows great money flow, and relative strength has broken out. Target: Initial, 77. On a breakout: 86-88.
BUY POINT: Aggressive: 74.52 (above the intraday high) on continued rising volume, 4.4 million+. Stop: 70.50.
POSITION: Stock and/or October $70 calls to buy (PG JN).
CCEL (Cryo-Cell Intl--$9.26; +0.41; no options): Health services
http://biz.yahoo.com/p/c/ccel.html
STATUS: In an ascending wedge that formed after a strong July run to 9.94. Volume was up sharply from below average levels to 352,800 (avg. 206,000) on a bounce up from the 18 day MVA, tested on the low of 8.75. Looking for a breakout here. Target: 12.
BUY POINT: 10.00, on continued rising volume (min. breakout volume is 278,000). Stop: 8.25 A buy on the breakout up to 10.50.
POSITION: Stock.
PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: No announcement from DV today.
BEST PLAYS: The pre-announcements continue to look very good. Besides the plays set forth below as best plays, there are some other stocks that also look good. These include our Pre-Announcement NDN and Continuing Candidate BRO.
PRE-ANNOUNCEMENT BEST PLAYS
1) THC - Solid consolidation
2) BJ - Forecast for Tuesday and looking pretty good
3) AZO - Trying to move out of the consolidation
4) MI - In a handle
5) CRY - Dojis on support
6) TTC - Cup with handle
THC (Tenet Health Care--$55.65; +0.30; optionable): Researching a date.
http://biz.yahoo.com/p/t/thc.html
BACKGROUND: Last announced a stock split in September 1991 in the $45 range. The annual shareholder meeting was on 10-11-00 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: THC showed a small gain today, on slightly increased volume of 920,200 (average 1.77 million), and is still moving within the flat consolidation. The pattern formed after THC broke from a trading range in June and then made a solid move in July out of a lateral consolidation. In the current pattern THC has been moving on generally below average volume, hitting a high of 57 early on, then dipping back to hold nicely over its short-term MVA's (10 day at 55.09). We are still looking for a volume surge to support a breakout; the aggressive play remains a strong move over recent resistance at 56. Relative strength has broken out ahead of price. Target: 65.
BUY POINT: Aggressive: Over 56 with above average volume. Stop: 54.50. Breakout: 57.12 on volume of 2.38 million. Stop: 54.50.
POSITION: Aggressive: Stock and/or November $50 calls to buy (THC KJ). Breakout: Stock and/or November $55 calls to buy (THC KK).
BJ (BJ Wholesale--$55.41; -0.25; 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: As expected, BJ is testing the short-term MVAs, tapping through the 18 day (55.25) yesterday and again today, before pulling up to close over the 10 day (55.50) and slightly down for the day. Volume has remained below average on the moves, up slightly today to 389,700 (average 622,400). BJ is still holding the pennant pattern, and is one of the retailers that is showing some strength; relative strength and money flow are very high, and the pattern is solid. Going into the forecast, we are looking for the volume necessary to carry the breakout move. The recent highs in the pattern are at 56.90, with the overall pattern high at 57.24. Breakout target: 66.
BUY POINT: Aggressive: A move over 56.20 on above average volume. Stop: 54. Breakout: 57.37 on volume of 840,000 or more. Stop: 55.
POSITION: Stock and/or September $55 calls to buy (BJ IK).
AZO (Autozone--$46.75; +1.10; optionable): Auto Parts. Forecast to announce a split on 9-25-01 in conjunction with earnings. At this time the company has not confirmed a time for the release.
http://biz.yahoo.com/p/a/azo.html
BACKGROUND: Last announced a 2:1 split in March of 1994 at a price of $58. The annual shareholder meeting was on 12-14-00 at which time no additional shares were authorized.
STATUS: Showing some strength today, pushing up from the recent series of tight, lower volume dojis, and making a nice gain on very strong volume of 1.27 million (average 817,800). AZO hit our aggressive buy point before pulling back to close. The move comes off of a gradually descending consolidation over the 18 day MVA (45.83), that formed after a pullback from a solid breakout move in July (high: 49.20). AZO is showing solid relative strength and money flow, and the sector has been strong. We are looking for this momentum to continue, target on breakout: 60.
BUY POINT: Breakout: 49.33 on volume of 1.1 million. Stop: 46.
POSITION: Stock and/or September $45 calls to buy (AZO II).
MI (Marshall & Ilsley--$59.40; +0.24; optionable ): Banking: Regional. We are researching a forecast date.
http://biz.yahoo.com/p/m/mi.html
BACKGROUND: Based upon our research it does not appear that MI has ever split its stock. The annual shareholder meeting was on 4-24-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: Continuing in a handle consolidation, moving in a base of over 20 months. MI pulled up from this week's earlier test of the 18 day MVA (58.61), today pushing up from the 10 day (59.06) to close with a loose doji on decreasing, below average volume of 153,600 (average 205,100). We are looking for a volume surge to carry the stock over the handle high at 59.93. Money flow and relative strength are solid. Target: 70.
BUY POINT: Breakout: 60.06 on volume of 276,700. Stop: 58.
POSTIONS: Stock and/or September 55 calls to buy (MI IK).
CRY (Cryolife--$41.43; -0.31; no options): Biotechnology. Working on a date.
http://biz.yahoo.com/p/c/cry.html
BACKGROUND: Last announced a 3:2 split on 11-27-00 with a board meeting. The stock price was $43. The annual shareholder meeting was on 5-17-01 at which time no additional shares were increased. The company has sufficient shares for a 2:1 split.
STATUS: CRY is testing the recent breakout of an ascending wedge, but has dipped back through the July highs in that pattern (43 range), and is currently holding support at the 18 day MVA (41.34). Today CRY showed a fairly tight doji on steady, below average volume of 86,300 (average 127,500), just dipping below the up trendline connecting March and July closing lows (at 42). The consolidation is tightening, we are looking for a solid move up toward the recent high of 44.82. Relative strength is solid. Target: 52.
BUY POINT: Aggressive: Over 43 on above average volume. Stop: 41. Breakout: 44.94 on above average volume. Stop: 41.
POSITION: Stock only.
TTC (Toro--$48.61; +0.06; no options): Manufacturing. Forecast to announce a spit on 8-22-01 before the market opens in conjunction with earnings.
http://biz.yahoo.com/p/t/ttc.html
BACKGROUND: Based upon our research it does not appear that TTC has ever split its stock. The annual shareholder meeting was on 3-13-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: TTC made a solid breakout last week (high: 48.99), followed by lower volume selling that held support in the range of the May high (48). Wednesday the stock made a strong move up from the 10 day (47.84) on increased volume, and today closed with a doji on steady, above average volume of 57,000 (average 54,000). The stock tested down to the 10 day before closing with the doji, and we could get another test of that level. Going into the forecast, we are looking for TTC to continue to hold support over the 10 day, possibly settling into a handle-type consolidation before making another move up. Buying is solid and relative strength is high. Target: 58.
BUY POINT: After holding the 10 day MVA, a move to 49.11 on stronger than average volume. Stop: 46.50.
POSITION: Stock only.
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.
These are looking just primed to move.
1) ALLY - Solid move
2) ATK - Forming a handle
3) KMP - ditto
4) FFIC - Still looking like it can move
5) NVDA - Solid bounce
ATK (Alliant Techsystems--$102.77; +1.44; optionable): Announced a 3:2 stock split, effective September 8.
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 was held 8-7-01 at 2:00 pm CT at which time additional shares were authorized.
STATUS: After testing the recent breakout, as expected, ATK is pulling into a lower volume consolidation over support in the range of the left side highs (101). The stock made a nice gain today, tapping toward the breakout high of 103.95 before pulling back a bit to close. Volume was lower on the move, down to 119,400 (average 147,100). A nice-looking consolidation may continue a bit longer before the move up resumes. We have plenty of time before the split. Target: 115.
BUY POINT: 104.07 on above average volume. Stop: 99.75.
POSITION: Stock and/or November $100 calls to buy (ATK KT).
KMP (Kinder Morgan--$73.75; -0.02: optionable): Splits 2:1 effective September 4.
http://biz.yahoo.com/p/k/kmp.html
STATUS: After last week's solid, albeit brief breakout, KMP is showing signs of moving into a handle just under the 74 level (left side high: 73.98). Since the strong breakout test earlier this week, the stock recovered, but has yet to resume the move. Volume is dropping as KMP has showed lower volume dojis, and closed slightly down today (volume down to 109,900, average 113,200). From here, we still could see another test of the 10 day, and we are still watching carefully to see if it holds, as we have seen a lot of short-lived breakout attempts in this market. If we see a further pullback, we have time before the split to watch for a recovery. Target: 82.
PLAY: From here: Over 74.50 on above average volume, with stock and/or September $70 calls (KMP FN). Stop: (just below 18 day)
FFIC (Flushing Financial--$25.49; +0.09; no options): Banking. Splits 3:2 effective 8-31.
http://biz.yahoo.com/p/f/ffic.html
STATUS: Trying to move out of the consolidation. After hitting our buy point on solid volume Wednesday, FFIC showed a low volume doji today, testing back to the 10 day MVA (25.15) before pulling up to close just slightly up for the day (volume down to 15,500, average 31,100). The low volume indicates the stock may be resting, and we may see another test of the 10 day from here, before we see a solid breakout move. We have time. Target: 30.
PLAY: After a test of the 10 day, on a move back over 25.50 with above average volume. Stock only. Stop: 24.
ALLY (Alliance Gaming--$35.83; +1.94; no options): Splits 2:1 effective 8-21-01.
http://biz.yahoo.com/p/a/ally.html
STATUS: Nice move today! Followed Wednesday's low volume doji (tapped back to the 10 day intraday) by gapping back down, but followed with a terrific push up on very strong volume of 650,300 (average 348,300). Going into the split, we are looking for the momentum to continue. If we get profit taking before then, we are looking for support at the 34 level to provide support for a bounce up (the convergence of the short-term and 50 day MVAs is at the 32.25 level). Late June high: 41.
PLAY: From here: 36.50 on continued strong volume. Stop: 34. After moving up from a low volume test of the 34 level, a move over 35. Stop: 33. Stock only.
NVDA (Nvidia--$89.57; +3.62; optionable): Semiconductor. Announced a 2:1 split as forecast, effective August 28!
http://biz.yahoo.com/p/n/nvda.html
STATUS: NVDA gapped down to its 50 day MVA (83.76) today, but was able to make a nice surge back up of over 5 points to close just under its recent highs. Volume was not the greatest, down sharply to 4.28 million (average 4.6 million), but we are closing in on the split and will see if it can put together a move. It can really run when given the opportunity. The recent high is at 90.72 and the all-time high is up at 100. Target: 100.
BUY POINT: 90.85 on above average volume. Stop: 85.
POSITION: Stock and/or September $85 calls to buy (RVU IQ).
CONTINUING CANDIDATE BEST PLAYS:
1) ACS - Taking a breather
ACS (ACS Inc.--$83.40; -0.41; optionable):
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: ACS made a solid run into earnings at the end of July, but settled back to test its 50 day MVA (77.34) and June high (77.50). This week it turned back up, taking out resistance at its short-term MVA's (10 day at 81.07) with a bit of a volume surge. Jtoday is slowed, testing back to 82.27 before closing with a loose doji, with volume dipping back a bit to 543,400 (average 520,000). We will see if it holds up here, perhaps resting before another surge. The high is 86, and we will carefully watch that as a resistance. If we can get a strong breakout, we will target the 100 range, but as always in this market carefully protecting positions. Still well within split range.
BUY POINT: Aggressive: A move over 84 on increased volume. Stop: 80
POSITION: Stock and/or October $75 calls to buy (ACS JO).
POST-SPLIT BEST PLAYS:
1) ESRX - Making a move in the pennant
2) WFMI - Holding strong
ESRX (Express Scripts--$57.51; -0.70; optionable): Split 2:1 June 25.
http://biz.yahoo.com/p/e/esrx.html
STATUS: Trying to break from its post-split pennant pattern. We saw a good move up from the 10 day MVA (56.04) Wednesday, with the stock closing just under the early August high of 58.69. It hit up to 58.68 today, closing down a bit after hitting down near the 10 day at 56.60. Volume was low, so the stock is still looking like it could put together a move here, although on any run we will be careful at resistance (high in the pattern is 61.45) due to the strong selling we have seen in the pattern after lower-volume rises. Target: 65.
PLAY: 58.82 on volume of 1.2 million (average 850,000), with stock and/or November $55 calls to buy (XTQ KK). Stop: 55.25.
WFMI (Whole Foods--$33.10; 0.00; optionable): Grocery Stores. Split 2:1 June 5.
http://biz.yahoo.com/p/w/wfmi.html
STATUS: After its massive breakout in late July the stock has made an orderly pullback, holding its 10 day MVA (32.71) and forming something of a pennant pattern. It has inched back toward the 10 day the last two sessions, today showing a loose doji on continued low volume of 410,800 (average 602,100). Looking good, and we are watching for another good move. Breakout high was 35.13. Target: 40.
PLAY: A move to 34 on average or better volume, with stock and/or October $30 calls to buy (FMQ HE). Stop: 32.50.
* * *
PRE-ANNOUNCEMENTS REMAINING PLAYS
* * *
TECD (Tech Data--$37.39; +0.46; optionable): Computers wholesale. Forecast to announce a split on 8-29-01 after the market closes in conjunction with earnings.
http://biz.yahoo.com/p/t/tecd.html
BACKGROUND: Last announced a 2:1 split in March 1994. The annual shareholder meeting was on 6-19-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: TECD is moving in the right side of a 12 month cup base (September highs at 55.88), and trying to make its way out of a smaller base within that pattern, which started with the high of 39.50. The stock is in something of a handle and has tried a couple of moves, hitting 39 Tuesday but pulling back off quickly. Today it gapped through recent support at the 18 day MVA (36.67), but volume was down and weak at 333,000 (average 576,300). It needs more volume, and for positions we want to see a breakout as we get closer to the forecast. Strong money flow, and relative strength is at its highs. Target on a breakout: 45.
BUY POINT: Breakout: 39.12 on volume of 864,000. Stop: 36.50.
POSITION: Both buy points: Stock and/or September $35 calls to buy (TDQ IG).
CPRT (Copart--$25.25; -0.45; optionable): Auto parts. Forecast to announce a split in August in conjunction with earnings. At this time the company cannot confirm a date.
http://biz.yahoo.com/p/c/cprt.html
BACKGROUND: Last announced a 2:1 split on 12-28-99 at a stock price of $41. The annual shareholder meeting was on 12-5-00 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: CPRT had been moving in a pennant begun in late June, but has fallen out. We looked at a put play recently, and the stock found the first level of support at 24 and turned back up. However, its move up has been very weak, finding resistance at its 10 day MVA (25.88). Today it gapped down and hit as low as 24.19 before recovering, but volume was very low at 175,800 (average 583,000). We will still look at a put play on strong selling, with support at the 200 day MVA (21.62).
BUY POINT: A move below 24 on above average volume.
POSITION: September $30 puts to buy (KQJ UF).
End Part 2 of 4
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