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Free Weekend Newsletter for September 2, 2001

Free Stock Split Email Notices       Investing Q & As       Glossary

Be sure to read our Stock Splits Manual. 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

CTWS (Connecticut Water--$39.60; +1.30; no options): Utility. Splits 3:2 effective 9-10-01.
Company Profile
STATUS: CTWS has been making its way up in a jagged three-month cup pattern. Since an abrupt drop in June the stock has been pushing back up, roughly along its 50 day MVA (37.17). It has shown a lot of volatility of late, Friday gapping down and testing the 50 day before launching a move back up, closing just below this week’s high at 40. It is rather thinly-traded, with volume dipping to 6300 today (average 11,000), but we have had some success with such stocks as they can make strong moves in a short time. Target: 46.
PLAY: A move over 40, with stock. Stop: 38.50 (just under the 10 day MVA).

Click here for more information on our Stock Split Report!

URBN (Urban Outfitters--$15.99; +0.91; optionable): Apparel Stores.
Company Profile
STATUS: Breaking out of a cup with handle, and remains a buy on the move (buy point was 15.63). Volume was lower on the breakout move, coming in at average, but that is still considered strong volume and with the lower market volume Friday, we could see a change Tuesday (62,000). Previous highs in the 3-month base are at 16.20, so look for a move over that price and the stronger volume for taking potential positions. Looking for a trade up to the 20 range; URBN formed this pattern off the lows (8) in a big 20-month base. Shows strong money flow and good buying, with relative strength breaking out.
BUY POINT: A buy on this move up to 16.41. After a pullback, new or add-to positions can be taken on a move back over the breakout high. Stop: 15.25
POSITION: Stock and/or December $15 calls to buy (URQ LC).

Click here for more information on our Technical Traders Report!

FLR - Fluor Corp. is currently trading at $45.33. The October $45 Calls (FLRJI) are trading at $3.20. That provides a return of about 7% if FLR is above $45 on expiration Friday in October.
Company Profile