|
|
us stock market, stock split
Begin Part 2 of 4
THE PLAYS:
We are getting more and more split announcements, with several last week and already a couple of more this week. As the market starts to show signs of coming back, the excitement translates into splits! We are continually conducting research on the best candidates, following those that are in potential split range and forming the best patterns.
Remember in this market that targets, although set at generally conservative levels, are 'loose' and we are watching for topping signs on moves that would point to our taking profits. We will continue to point out those topping signs as we see them, and let you know when we are contemplating taking profits. The stops are initial stops that we place within 7% of the buy point, typically below support. In this market we are moving up the stops to protect profits as we realize gains.
BONUS PLAYS:
BBI (Blockbuster--$24.90; +0.40; optionable): Video Stores
http://biz.yahoo.com/p/b/bbi.html
STATUS: Earnings were up and so was volume today (1.47 million; avg. 697,363) as BBI continued its consolidation above 24 and the 10 day MVA (24.52), moving up from a tap at 24. Since the first of the month volume decreased while BBI formed an ascending wedge/trading range type lateral pattern, but with the rising volume the stock can breakout. The consolidation came after the stock broke out of a cup base (once it recovered after September 11). Buy point is just above the recent highs tapped several times at the 25.50-25.75 range. Target: 31
BUY POINT: Over 25.75 on continued rising volume. Stop: 23.95
POSITION: Stock and/or January $22.50 calls to buy (BBI AX).
DYII (Dynacq Intl--$17.37; -0.15; no options): Health Services
http://biz.yahoo.com/p/d/dyii.html
STATUS: Trended up nicely from the first of the year, ultimately reaching the June high near 21 on a breakout from a short base. From there the stock formed a cup with handle and is currently pulling back in the handle on steadily decreasing volume (down to 89,700; avg. 122,181). DYII tried to break out earlier this month and volume was huge on the run up the right side of this cup, so the drop back in volume now looks good. We are looking for a breakout over 20.65, where we are placing the buy point. Target: 25
BUY POINT: Aggressive: 19, on rising volume. Stop: 17.75. Breakout: 20.78, on volume of 183,000. Stop: 19.33
POSITION: Stock.
ACTN (Action Performance--$24.64; -0.27; optionable): Basic Materials Wholesale
http://biz.yahoo.com/p/a/actn.html
STATUS: Another cup with handle, this one dating from early September (highs at the 29 range). Currently ACTN is pulling back in a short handle (at this point, of 2 days) with volume dropping back to low levels (103,400; avg. 393,000). The 10 day MVA is at 24, level of other price support since June. Looking for the breakout over the October high at 26.20. The pattern formed after a breakout from an earlier flat base, the move down the left side of the cup testing the 200 day MVA (14 at the time). Showing super money flow and buying. Target: 32
BUY POINT: Breakout: 26.33 on volume of 590,000 or higher. Stop: 24.40
POSITION: Stock and/or January $20 calls to buy (QNC AD; low open interests).
AFCE (Afc Enterprises--$24.70; -0.35; optionable): Restaurants
http://biz.yahoo.com/p/a/afce.html
STATUS: Testing the breakout from a cup/flat base pattern formed since May. The stock ran to the October high of 25.87 then pulled back as volume decreased nicely, at a low 36,900 Tuesday (avg. 132,000), though that was slightly up from the previous day. The stock is holding support at the low (24.50), just above the 10 day MVA at 24.32. Looking for a strong move back up from today's doji (or from the 10 day MVA) to take out the October high. Strong money flow and high relative strength. Target: 31
BUY POINT: Aggressive: 25.25 on strong and rising volume. Stop: 23.48 (just below the 18 day MVA at 23.57).
POSITION: Stock and/or November (aggressive) $22.50 calls to buy (KQP AX; 30 open interests), or February $22.50 calls to buy (KQP BX).
PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: No announcements from SUI or AHC (long-shot) today. We are looking ahead to KRON, NNS, FLIR and NOC.
BEST PLAYS: Besides the plays set forth below as best plays, there are some other stocks that also look good. These include Pre-Announcements MI, XL and FDC; PRE-SPLIT PCL; Continuing Candidates BJ and MIKE; and Post-Splits JNJ and CEFT.
PRE-ANNOUNCEMENT BEST PLAYS
1) KRON - Holding in the pattern going into the split
2) FLIR - Ditto
3) NOC - Part of three-way acquisition drama
4) NNS - Another player in the drama
KRON (Kronos--$57.38; +1.30; no options): Business equipment. Forecast to announce a split on 10-24-01 after the market closes in conjunction with earnings.
http://biz.yahoo.com/p/k/kron.html
BACKGROUND: Last announced a 3 for 2 split on 2-8-99 at a stock price of $43. The annual shareholder meeting was on 2-8-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: KRON is in a 2-year cup pattern, moving now in a handle consolidation after a massive move up the right side in early October. It dipped back in the handle and held support near the 10 day MVA (55.65) and recent highs, moving back up a little bit the last few sessions as volume remains quite low (85,500 today; average 188,200). Tuesday saw the stock reach past the high of the last two sessions at 57.50 (intraday high 58.90), but it could not hold and closed with a 'star' doji. Off of this pattern we could see another test back to the 55 range, but if it can hold that level or make a move up going toward the close we can look at positions going into the forecast. It has lacked strength on its recent upward moves within the handle, and we want to see volume as it heads back toward the recent tops (61). Target: 70.
BUY POINT: Aggressive: Going into the split, holding 55 on a pullback and continued low volume. Stop: 52. From here: A move over 59 on increased volume near the average. Stop: 57. Breakout: 61.12 on minimum volume of 225,000. Stop: 57.
POSITION: Stock only.
FLIR (Flir Sys--$43.27; +1.47; optionable): Electronics. Forecast to announce a split on 10-25-01 before the market opens in conjunction with earnings.
http://biz.yahoo.com/p/f/flir.html
BACKGROUND: Based upon our research it does not appear that FLIR has ever split its stock. The annual shareholder meeting was on 7-24-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: After three consecutive dojis on the 18 day MVA (41.55), FLIR started the move today, jumping back up on sharply higher volume (324,300; average 300,100). FLIR found the 18 day after a drop with the market last Wednesday. The stock had broken out of a long cup with handle in June, and since then trended up steadily along its short-term MVA's, testing its 50 day MVA (currently 36.39, then 27) for a couple of weeks in August-September. After that test it resumed its move up along the short-term MVA's, and has managed to hold up pretty well after the selling last week (which dropped FLIR from its new all-time high at 47). Looking toward the forecast Thursday morning, we will see if it can continue the momentum upward Wednesday, continuing the trend. Target: 54.
BUY POINT: A continued move over 44.50 on increased volume. Stop: 41.50.
POSITION: Stock and/or January $40 calls to buy (FFQ AH - very low open interest).
NOC (Northrup Grumman--$100.00; -5.50; optionable): Aerospace/Defense. Forecast to announce a split on 10-24-01 in conjunction with earnings. The company has not confirmed a time for the release, although it appears to be a pre-market or morning time.
http://biz.yahoo.com/p/n/noc.html
BACKGROUND: Based upon our research it does not appear that NOC has ever split its stock. The annual shareholder meeting 5-17-00 at which time no additional shares were authorized. We are working on the number of authorized shares.
STATUS: GD and NOC have been looking at acquiring NNS (see below). It was announced today that NOC's bid for NNS has met approval from the Pentagon, as GD's bid raised antitrust concerns. With that, we must consider that the acquisition could take NOC's focus away from a stock split, especially with the proposed acquisition being partly in stock. At any rate, the initial reaction appears to be negative, as although the news came out after hours there was some earlier reporting of the outcome. NOC dropped sharply Tuesday, taking out its 18 day MVA (79.88) on big volume (2.38 million; average 907,000). This is not the move we were looking for to set things up, and with the split announcement in serious doubt, we will now have to see how the market reacts tomorrow. It has moved solidly since the attacks, although steadily pulling back the last couple of weeks from its new high of 110.56.
BUY POINT: Aggressive: On a move back over 105 on continued strong volume. Stop: 99.
POSITION: Stock and/or January $100 calls to buy (NOC AT).
NNS (Newport News Shipbuilding--$69.11; -0.73; optionable): Aerospace/Defense. Forecast to announce a split on 10-24-01 before the market opens in conjunction with earnings. However, circumstances make an announcement highly unlikely.
http://biz.yahoo.com/p/n/nns.html
BACKGROUND: Based upon our research it does not appear that NNS has ever split its stock. The annual shareholder meeting 5-18-01 at which time no additional shares were authorized. The company has sufficient shares for a 3:2 split.
STATUS: Another part of the acquisition saga, NNS is the target of NOC and GD. It dropped back as the news developed today, appearing to take GD out of the picture and putting NOC in control. The stock had been holding nicely at its 18 day MVA (69.85), showing a doji Friday, but fell back through that support today on increased volume of 1.59 million (average 608,000). Because of its position as the potentially acquired, the possibility of a stock split it quite dim, and the drop prompted by news was not the move we were looking for, and we will likely get more of a drop. We will see if it settles out and is able to avoid a major drop, but the pre-announcement play appears to be out for now.
BUY POINT: Aggressive: A move to 70.50 on continued strong volume. Stop: 67.50.
POSITION: Stock and/or February $65 calls to buy (NNS BM).
PRE-SPLITS 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.
1) FULL - Trying to test the low-volume breakout
FULL (H.B. Fuller--$52.70; -0.32; optionable): Chemicals. Splits 2:1 effective 11-19-01.
http://biz.yahoo.com/p/f/full.html
STATUS: Made a good move out of its pennant pattern Monday, although volume was not as strong as we would have liked. The breakout stalled a bit today, but FULL tested the breakout and moved back up from the former pivot point, closing with a loose doji on higher volume (63,300; average 60,700). We will see if it can continue to hold 52, and make a stronger move up. FULL Fell hard with the market in September, but has climbed back and is near the recent high before the drop, at 55.25.
PLAY: After holding 52, a move 53.25 on volume of 80,000, with stock and/or November $50 calls to buy (FUQ KJ). Stop: 48.50.
CONTINUING CANDIDATE BEST PLAYS:
1) CBH - Nice flat consolidation in the handle
2) RMD - A pullback could give us new entry points.
3) STJ - Holding up well
4) TECD - Building for another move
CBH (Commerce Bancorp--$70.75; +0.03; 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: Since July, CBH has formed the familiar 'v'-shaped cup we have seen since the attacks, recently pulling back into a handle. CBH took out its 50 day MVA (69.91) and hit 72.70 before pulling back with the market last Wednesday. Since that time it has held strong at the 10 day MVA (70.69), showing three consecutive dojis on rather light volume (124,000 Tuesday; average 144,500). Looking for a bounce up toward the breakout. The former pattern high is at 77.90, made on a break from a cup with handle in July. That is the initial target.
BUY POINT: Aggressive: A move back over 72 with increased, above average volume. Stop: 69. Breakout: 72.82 on volume of 225,000. Stop: 69.
POSITION: December $70 calls to buy (CBH LN).
RMD (Resmed--$57.04; -0.21; optionable): Health services.
http://biz.yahoo.com/p/r/rmd.html
BACKGROUND: Last announced a 2:1 split on 2-25-00 with a board meeting. The stock price was $68.
STATUS: Had been poised in a small ascending wedge before being hit with last Wednesday's selling, but has recovered. RMD blasted up on Monday, gapping and then continuing up to take out its recent highs (54.50) on big volume. The move stalled today, testing back to 56.20 but closing with a tight doji on sharply reduced volume (310,800; average 227,000). We will see if the stock is merely resting or if it will move back and test the breakout. RMD is still in the range of its former cup pattern, but trying to make a move toward the August breakout high of 61.39.
BUY POINT: Continuing to ride positions on a move up. If we get a test of the 55 range, we can look at a move back up over 56 on increased volume. Stop: 52.
POSITION: Stock and/or January $50 calls to buy (RMD AJ). Stop: 52.
STJ (Saint Jude Medical--$74.35; -0.28; 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: Broke out recently from its double bottom with handle. The breakout was initially hamstrung by last Wednesday's market action, but it continued up on decent volume to end last week. We have seen STJ pull back slightly the last couple of sessions, but holding up well as volume decreases (down to 670,500 today; average 639,200). Today's action showed a loose doji, but we could get a little more retreat, and we will look for that to hold the 10 day MVA (72.52). On holding that level, we will look at new positions on a strong move back up. Good relative strength, money flow and buying. Target remains 85.
BUY POINT: After a lower volume test that holds the 10 day, a move back over 74 on increased volume. Stop: 70.
POSITION: Stock and/or January $70 calls to buy (STJ AN).
TECD (Tech Data--$43.60; +0.65; optionable): Computers wholesale. 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 made a nice breakout move recently, but pulled back and is now trying to form a new handle to its cup (dating back to September 2000). The pullback off of the breakout went a bit further than we would have liked, dipping through the former pivot just over 42, but TECD held the 18 day MVA (41.62) and has tried to move back up. Today saw the stock reach up to 45 (the breakout high was 45.25), but pull way back to close, as volume was decent but relatively low compared to some of the recent upward moves (849,500; average 795,600). Off of the pattern we could get a pullback, and if it hold the 10 day (42.50, which it tapped at today's low) or the 18 day it could be setting up a pennant. However, we will still look for a stronger move from here. It has made some nice moves since the markets re-opened, but after this rest we will look for it to continue to build the right side of its cup (prior highs at 55). On the next move we are setting an initial target of 50. Solid money flow.
BUY POINT: From here: 45.37 on volume in the 1.2 million range. Stop: 42.25. Pullback: After holding the 42 range on a lower volume drop, a move back over 44 on increased volume. Stop: 41.50.
POSITION: Both buy points: Stock and/or December $40 calls to buy (TDQ LH).
POST-SPLITS BEST PLAYS:
1) WFMI - Making a bid for a new high
2) JNC - Still in an ever so tantalizing pattern
WFMI (Whole Foods--$35.54; +0.79; optionable): Grocery Stores. Split 2:1 June 5.
http://biz.yahoo.com/p/w/wfmi.html
STATUS: WFMI has made a solid move back up from the 50 day MVA (32.52) over the past week. The stock has been moving in a range roughly from 32 to 36 since its big breakout move in July, excepting its drop back below the 50 day after the attacks. After a solid move Friday, WFMI rested a couple of sessions before taking off again today. The stock hit a high of 36.25, breaking out but not quite sporting the volume we wanted (sharply up to 825,400; average 718,000). The pullback from the intraday high could indicate that the stock is going to test back toward support, and we would look for the 10 day MVA to hold at 34 as the stock forms a handle to its small cup. Still strong, and we will continue to look for a breakout, either from here or after the handle formation on a test of support. On a solid move over the high we will look at 41.50 as a target.
PLAY: Breakout: 36.37 on volume of 1.1 million, with stock and/or February $30 calls to buy (FMQ BF). Stop: 34. Test: After a lower volume test of 34 a move back over 35 on above average volume, with stock and/or February $30 calls to buy (FMQ BF).
JNC (John Nuveen--$46.84; -0.11; 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 that continues to extend, holding over its 10 day MVA (46.65). Volume has been below average and sometimes extremely low, but today was back up to its typical consolidation levels at 65,900 (average 59,700). Still looking for a breakout move where we are targeting 52.
PLAY: A move to 47.50 on increased volume in the 90,000 range. Stop: 45. Stock only.
* * *
PRE-ANNOUNCEMENTS REMAINING PLAYS
* * *
JEC (Jacobs Engineering--$65.54; -2.31; optionable): Construction. Forecast to announce a split on 11-1-01 in conjunction with earnings.
http://biz.yahoo.com/p/j/jec.html
BACKGROUND: Based upon our research it does not appear that JEC has ever split its stock. The annual shareholder meeting was on 2-13-01 at which time no additional shares were authorized. The company has sufficient shares for a 2 for 1 split.
STATUS: JEC is trying to build the right side of its base, forming somewhat of a handle at the July high. The handle is not the norm as it makes strong surges and regular pullbacks. The last couple of moves from the support of the 18 day MVA (65.91) have not been strong. Indeed, it is forming somewhat of a descending wedge, but in handle action that is not necessarily bad; we want to see a series of lower intraday lows as it angles lower. After Monday's feeble move up, the stock turned back down today and closed below the 18 day. Volume remained low on the selling (163,700; average 269,000), and it is at the support of its September high, and the 50 day MVA is just below at 63.74. Breakout of the handle is at 72.19. The all-time high, from the left side of the cup, is at 75.67.
BUY POINT: Aggressive: After holding the 64-65 range, a move back over 68 in a stronger market. Stop: 65. Breakout: 72.35 on volume over 400,000.
POSITION: Stock and/or January $65 calls to buy (JEC AM).
End Part 2 of 4
|
us stock market
stock split
|
