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Stock Split Notices       Investing Q & As       Glossary

- Market limps home with small Friday gain, small consolation prize after the selling.
- Economic data overload, but data showing Q3 stronger than Q2.
- Friday fails to change market complexion.
- Early results disappointing, but the torrent starts this week.
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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).

For post-splits, we can play them as we would pre-splits (very short term), but we prefer to stretch our horizons, playing the trend. When playing options, we look further out, 2 or more months at least. We let the trend carry us along if there is one, but we will also take profits if the technical pattern degenerates, e.g., breaks a trendline. The main difference between post-splits and pre-splits plays is that we really have to like the pattern. Pre-splits can run right before their splits even with poor technical indicators. For post-splits, we are looking at the stocks from more of a longer term "would I buy this stock at this juncture?" position. Now there are times when a hot stock splits and investors pile in to get in while the stock is 'cheaper.' We play those, but with more of a short-term, pre-splits mentality in that we will be ready to get out fast if the momentum fades.

Remember, everything we do has to pass muster with the market that day ... don't fight the market on these plays. Here's a post-split play to watch and our current analysis.

Chart by StockCharts.com

Company Profile
After Hours: $40.85
STATUS: Breakout test. Another tap at the 18 day EMA (40.21) on the Friday low and then a rebound to recoup much of the loss. VLO surged on a breakout in late August, and as the oil stocks sold off on high volume, VLO eased back on lower trade, holding a natural support level at the 18 day EMA. That shows very few sellers. This move follows a short 9 week cup with handle base and breakout. Excellent money flow and a relative strength breakout on the stock price move. Still looks ready to resume the upside move. Just being patient to let it do so.
Volume: 3.134M Avg Volume: 4.972M
BUY POINT: $42.06 Volume=5.5M Target=$48.55 Stop=$41.05
POSITION: VLO AV - Jan. $42.50c (45 delta).

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