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us stock market, stock watch
Begin Part 4 of 4
PRE-SPLITS REMAINING 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.
ADVP (AdvancePCS--$73.33; -6.49; optionable): Health services. Announced a 2:1 stock split, effective date TBA.
http://biz.yahoo.com/p/a/advp.html
STATUS: ADVP broke out to a new high with a strong move Monday, but quickly retreated today. This could be as a result of competitor Medco's signing of a contract with Oxford health, as ESRX dropped severely today as well as they lost that business. Despite the drop, the failure to secure Oxford (not the best piece of pharmacy benefit business out there) as a client should not affect business significantly. We will see if ADVP, now that we were stopped out of adjusted stops, can hold support (18 day at 72, in its recent range of the handle to its very small cup pattern). Volume was huge on the drop, however, at 4.35 million (average 1 million). If it holds, we will look for positions again as this news should not last and ADVP should resume strength.
BUY POINT: After holding support on lower volume, a run back over 75 on continued strong volume. Stop: 72.
POSITION: Stock and/or December $70 calls to buy (QVD LN).
CONTINUING CANDIDATES REMAINING PLAYS: When splits are not announced, we will keep the best split prospects on the report rather than continue to carry all of them in case there is a an unexpected announcement. We will continue to monitor the stocks that are trimmed and add them again when we ascertain a revised split announcement date.
ACS (ACS Inc.--$90.62; +1.88; optionable): Computer Software & Services
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: Bounced back up again after its quick pullback, but the move up was not on the strong volume we were looking for (498,200; average 736,000). The move does not inspire much confidence in a continued run, so we will continue to se if the stock can consolidate a bit over the recent highs, which are just below the 10 day MVA (87.55). It has made a very strong run and has been a leader through a tough market, but would appear to need a rest. We have brought stops to just under the 10 day. Target on the next run up: 100.
BUY POINT: Riding existing positions now. Pullback: After holding support at the 87-88 range, a move back over 90 on volume of 1 million or better. Stop: 85.50.
POSITION: Stock and/or January $85 calls to buy (ACS AQ).
AZO (Autozone--$58.06; +1.33; optionable): Auto Parts
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: Another stock that has been running, and instead of pulling back off of a weak Monday move, the stock found more strength and ran up again on sharply higher volume (1.42 million; average 1.2 million). Still enjoying those existing positions, but for new ones will be looking for a move back to digest the gains a bit on lower volume. We will see if the stock moves into a stable, lower volume consolidation over the 10 day MVA (55) and set up the next run. Despite today's strength, still exercising care with stops to preserve profits, ready for the potential drop. Target on the next move up: 60.
BUY POINT: Aggressive: After a lower volume consolidation in the 55 range, a move back up on continued strong volume. Stop: 53.
POSITION: Stock and/or December $50 calls to buy (AZO LJ).
BJ (BJ Wholesale--$52.85; +1.95; optionable): Retail - Discount
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: Is looking pretty good, moving up again today and taking out the recent highs. The stock has fought back over its 50 day MVA (49.46), making a strong move over that level last week, and since gapping up further last Thursday and holding a lateral consolidation until today's move. The stock is back in its July-August range, and the high is up at 57.24 (from July). Volume was a bit down on today's move, but still above average at 646,300 (average 632,000). We thought we might see some more consolidation before this move, so with existing positions we will carefully protect profits.
BUY POINT: Still an aggressive momentum play as it makes its way up in the right side of its base. Still a buy up to 53.50 on this move, looking for increased volume and carefully protecting positions. Stop: 50.
POSITION: Stock and/or December $45 calls to buy (BJ LI - under 100 open interest).
BRL (Barr Laboratories--$88.20; +1.38; optionable):
http://biz.yahoo.com/p/b/brl.html
BACKGROUND: Last announce a 3:2 split on 5-31-00 with a board meeting. The stock price was $52. The annual shareholder meeting 10-26-00 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: Friday BRL broke out of its 7-week V-shaped cup with handle. Problems: the handle tried to wedge higher on us and the breakout volume was just slightly above average. That volume is much weaker than we have seen with recent selling that occurred in the handle (another less than great sign). However, given that the stock is still moving up, today running a bit on steady volume (858,800; average 868,000). We are still watching this move cautiously, and are waiting to take positions until we see a more stable, lateral consolidation closer to 90 (the recent double tops) that leads to a solid breakout move.
BUY POINT: From here or after a bit of consolidation after a gentle pullback, a move to a new high (over 90.60) on volume of 1 million or greater. Stop: 85.
POSITION: Stock and/or February $85 calls to buy (BRL BQ).
CBH (Commerce Bancorp--$72.35; +0.29; optionable): Banking
http://biz.yahoo.com/p/c/cbh.html
BACKGROUND: Last announced a 5:4 split on 6-29-98. The stock price was $54.63. The annual shareholder meeting was on 6-20-00 at which time no additional shares were authorized. The company has insufficient shares for a 2:1 split.
STATUS: After struggling to sustain a move over the 50 day MVA (69.73), the stock finally cleared that level mid-week, but the move appears to be losing some steam. Monday saw a loose doji after the stock tested support at the 10 day (70.57), and today the move up was on volume that was much weaker at 124,900 (average 147,000). The stock is trying to show some strength, but this upward volume is still much weaker that that we saw recent selling, so we are still watching for a gentle pullback and a lower-volume consolidation over support to set up new moves. The former pattern high is at 77.90, made on a break from a cup with handle in July.
BUY POINT: After holding a lower-volume consolidation in the 70 range, a move back over 72 with increased, above average volume. Stop: 69.
POSITION: December $70 calls to buy (CBH LN).
FRX (Forest Labs--$74.67; -5.61; optionable): Drugs.
http://biz.yahoo.com/p/f/frx.html
BACKGROUND: Last announced a 2:1 split on 12-18-00 with a board meeting. The stock price was $135. Prior to that announced a 2:1 split on 2-23-98 in conjunction with a board meeting. The stock price of $62. The company has sufficient shares for a 2:1 split.
STATUS: Came crashing back down today as a reaction to its numbers. The stock had just broken from the reverse head and shoulders, but without the required volume we were looking for to take positions. We were hoping it would perhaps gain strength or set up a stable consolidation, but now that it has taken out existing positions we will see if it can hold the 50 day MVA, just below at 74.20. If so, we will see if it can then consolidate and build some strength. Nothing new for now.
MIKE (Michaels Stores--$47.45; +0.02; optionable):
http://biz.yahoo.com/p/m/mike.html
BACKGROUND: Based upon our research it does not appear that MIKE has ever split its stock. The annual shareholder meeting was on 9-13-00 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: After gapping way out of the former pennant pattern last Thursday on solid news, MIKE has shown resilience in this move, but it could be ready to come back a bit and rest. The stock is just below its high at 49.12, and with that resistance and today's tight doji we will prepare for a pullback, watch for it to hold the 46 range (10 day below at 44).
BUY POINT: After holding a pullback at 45-46, a move back up on continued strong volume (down to 684,200; average 340,000). Stop: 44.
POSITION: December $40 calls to buy (IKQ LH - under 100 open interest).
MKC (McCormick--$44.97; +0.59; optionable): Food & Beverage.
http://biz.yahoo.com/p/m/mkc.html
BACKGROUND: Last announced a 2:1 split in November 1991. The annual shareholder meeting was on 3-21-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: Monday MKC dipped back out of its small pennant it had formed after climbing back up into the range of its former cup with handle (from which it fell with the market drop in September). It is in a head and shoulders pattern, and today turned back up before dropping as far down as its 50 day MVA (44.03). We were looking for it to hold the 10 day (44.94), and the drop back mean we will have to see it set up again for another try to get past its highs. Targeting 52 initially.
BUY POINT: Breakout: A move to 46.67 on volume in the 250,000 range. Stop: 44.25.
POSITION: Stock and/or December $40 calls to buy (MKC LH).
STJ (Saint Jude Medical--$71.80; +1.50; optionable): Health Services. Forecast to announce a split on 10-18-01 in conjunction with earnings.
http://biz.yahoo.com/p/s/stj.html
BACKGROUND: STJ last split its stock 3:2 in late 1995 at a price of approximately $60. The company has sufficient shares for a 2:1 split.
STATUS: Started up Monday, and today gapped up to a breakout, moving on huge volume of 2.09 million (average 680,000). The stock reached as high as 73.23, but pulled back to close. With the high volume and the pullback, we will see if the stock hangs on or tries to pull back to test the breakout. The buy point was 72.18, but the recent levels are in the 71 range (10 day MVA at 70). Still a buy on a strong move up to 75.60, but if we get a pullback that holds 71-72 we will need to see a strong move back up for new positions. The target is 85.
BUY POINT: Still a buy up to 75.60 on a continued strong move. On a test, looking at a move back over 73 after a successful test of the 71-72 range. Stop: 70.
POSITION: Stock and/or January $70 calls to buy (STJ AN).
THC (Tenet Health Care--$61.39; -0.81; optionable):
http://biz.yahoo.com/p/t/thc.html
BACKGROUND: Last announced a stock split in September 1991 in the $45 range. No additional shares will be authorized at the annual shareholder meeting, but the company has sufficient shares for a 2:1 split.
STATUS: Did not get the announcement last week and THC pulled back to the 18 day MVA (59.55), but bounced up from that level Monday to a new high. Volume was not great, however, and the stock pulled back a bit today, showing a loose doji on increased volume. Has been a steady performer, trending upward, but with the lower volume move up Monday it could be in for a trip back down to the 18 day again for a test. We will monitor it carefully, checking the volume as we do not want to ride it back down on a high-volume breach of that support. We got some strong selling on the last move down, but it held. If it can hold again and give us a better move up, we are still targeting 70.
BUY POINT: Aggressive: After holding the 18 day on a lower-volume drop, a move back over 60.50 on increased volume. Stop: 58.50.
POSITION: Stock and/or February $55 calls to buy (THC BK).
POST SPLITS REMAINING PLAYS:
ATK (Alliant Techsystems--$84.15; -0.32; optionable): Aerospace/Defense. Split 3:2 effective 9-10-01.
http://biz.yahoo.com/p/a/atk.html
STATUS: One of the stocks that is becoming a leader and regular splitter. It made a great run with the sector after the tragedy, but has pulled back of late, again with the sector. It has dipped back and is trying to hold the 18 day MVA (84.73), showing a doji just below that level today. Holding support here is key, and we have been looking for a lateral consolidation. Once ATK has a chance to rest, we will look for a volume surge toward the recent high of 93.40 to trigger additional positions. We can be patient.
PLAY: After holding and consolidating here, a strong move up on increased, above average volume, with stock and/or February $85 calls to buy (ATK BQ). Could take a bit of time before we get a consolidation that will support another strong move after what we have already seen.
CECO (Career Education Corp--$28.04; -0.02; no options): Education services. Split 2:1 effective 10-1-01.
http://biz.yahoo.com/p/c/ceco.html
STATUS: CECO made a strong post-split move, but has now given up the support of the short-term and 50 day MVA's (50 day at 28.79). Today the stock showed a second consecutive doji after reaching up to tap the resistance at the 50 day, moving on much lower volume of 406,600 (average 373,400). Not much of a play from here, and we will see if it can recover. It could give us a drop, but a bit tight for a put play. Nothing for now.
CEFT (Concord EFS--$28.18; +0.13; optionable): Split 2:1 effective 10-01-01.
http://biz.yahoo.com/p/c/ceft.html
STATUS: Has been moving up strong, making a solid recovery post split. It has bounced from the 50 day (26.26), making its way up to resistance at 29 (all-time high at 30.83) but looking like it is running out of gas. It has shown some intraday volatility, not giving us the volume we needed on the last move and today gapping up and then dropping back on lower volume (3.35 million; average 3.04 million). Forming a cup, and we will see if it forms a solid-looking handle here, dropping back slightly on lower volume.
PLAY: Aggressive momentum: From here, a move over 29 on increased volume in the 600,000 range. Stop: 27. We are protecting profits carefully on these momentum plays.
ESRX (Express Scripts--$51.89; -5.70; optionable): Split 2:1 June 25.
http://biz.yahoo.com/p/e/esrx.html
STATUS: ESRX took a big hit today on news that it lost a contract with Oxford health. The stock dropped back through its 50 day MVA (53.73) on huge volume of 6.37 million (average 1.2 million), taking out any remaining upside positions. It received a downgrade on losing the business, and this one could be set up for a quick put play on a failed test of the 50 day MVA, with the 200 day as an initial target below at 48.68. Recent lows go down as far as 45.
PLAY: Aggressive: After a failed test of the 50 day, a drop back through 53 on continued strong volume, with November $60 puts to buy (XTQ WL).
JNC (John Nuveen--$46.50; -0.30; no options): Financial Services. Split 3:2 effective September 28.
http://biz.yahoo.com/p/j/jnc.html
STATUS: Has been a solid, steady performer as it has trended up over many months. JEC broke out at the first of October, and has now pulled into a flying plateau pattern, although it is dropping back off a bit. Nothing catastrophic, as it is still holding the 10 day MVA (46.33), but volume has picked up on the selling, today at 82,700 (average 61,000). We will carefully watch to see if it can hold support, and if it can, we will still look for a breakout move where we are targeting 52.
PLAY: A move to 47.50 on increased volume in the 100,000 range. Stop: 45. Stock only.
KMP (Kinder Morgan--$37.90; +1.34; optionable): Energy. Split 2:1 effective Sept. 4.
http://biz.yahoo.com/p/k/kmp.html
STATUS: Broke out today, making a new high over its August-September highs (its saucer and ascending wedge before the severe September drop. Volume was up and above average at 206,300 (average 174,000), although a bit lower than what we were looking for. We will look for more with current positions, but with earnings out Wednesday after close we will consider taking profits if we get a bit more, although we are still looking at an overall target of 42. A buy up to 39.29, but we will also look for a test of the breakout and a move back up for new positions.
BUY POINT: For new positions, after a test of the 37.30 range, a strong move back over 38 on increased volume, with stock and/or December $35 calls to buy (KMP LG). Stop: 36.
PDLI (Protein Design Labs--$29.51; +0.02; optionable): Biotechnology. Splits 2:1 effective October 12.
http://biz.yahoo.com/p/p/pdli.html
STATUS: Still in a downtrend and locked in battle below the 200 day MVA (30.04). There is further resistance here, as the stock closed at its down trendline connecting November and June closing highs, today showing a 'star' doji after reaching up to 30.89 intraday. We will need to see it take out the 200 day on stronger volume, and after today's action we will likely see it pull back before it tries it again. Initial target: 35.
PLAY: A move to 31 on volume of 4 million, with stock and/or November $25 calls to buy (PQI KE). Stop: 28.50.
SFD (Smithfield Foods; $19.99; +0.14; optionable). Food & Beverage. Split 2:1 on Sept. 17.
http://biz.yahoo.com/p/s/sfd.html
STATUS: We finally got the move down and out of its lateral consolidation last Friday, but after gapping down to our first support level at 19 Monday, the stock move back up a bit. However, it tapped the 10 day MVA at its high of 20.47 today before pulling back to close with a loose 'tombstone' doji on huge volume (1.77 million; average 285,000). That action indicates a drop back, so if the action did not take us out of positions, we would be inclined to continue to ride them and see if we get a continued move down, targeting the 200 day MVA at 18.36.
PLAY: A bit tight for new plays given the put deltas and prices, so we are looking to ride current positions.
Good Investing!
Jon L. Johnson and the Stock Split Report Staff.
All of the foregoing is commentary for informational purposes only. All statements and expressions are the opinion of Online Investment Services, LP or its paid consultants and are not meant to be a solicitation or recommendation to buy, sell, or hold securities. We are not licensed or registered in the securities industry. The information presented herein and on our related web site has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. The security portfolio of Partners of Online Investment Services, LP or its paid consultants may, in some instances, include securities mentioned herein and on our web site. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future developments may differ materially due to many factors.
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