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Free Weekend Newsletter for October 28, 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

KRON (Kronos--$58.15; -0.34; no options): Business equipment. Announced a 3:2 stock split Thursday after hours! It is effective on or about November 15.
Company Profile
STATUS: KRON waited a day after the forecast with earnings to announce its stock split, but with that announcement we are looking for good things. It tried a breakout intraday Thursday but pulled back to close, and then tapped back to its 18 day MVA at Friday’s low of 55.10, but rallied back up to close, showing a ‘hammer’ doji with increased, strong volume of 258,000 (average 189,400). The pattern with high volume over support indicates a possible strong move back up, and we will look for that to propel a breakout. Target: 70.
BUY POINT: Bounce: Over 59 on continued strong volume. Stop: 55. Breakout: 62.07 on continued strong volume (minimum of 225,000). Stop: 57.
POSITION: Stock only

Click here for more information on our Stock Split Report!

NPSP (Nps Pharmaceuticals--$36.30; +2.59; optionable): Biotechnology.
Company Profile
STATUS: Breaking out of a 4-month cup with handle that included a trading range we played as a rolling pattern not too long ago. On strong volume of 612,300 (avg. 346,318), NPSP closed right at resistance at the upper reaches of the pattern (36.30 is the high; stronger resistance was at 35.50). The momentum was certainly there Friday, so we are looking for a continued breakout. The pattern traced the bottom of the stock’s 4-month cup, part of a larger base that started last fall. Target: 44
BUY POINT: 36.65 on continued strong volume. Stop: 33.50. A buy to 38.22 on the breakout.
POSITION: Stock and/or December or February $30 calls to buy (QKK LF, 0 open interests; or QKK BF, 50 open interests).

Click here for more information on our Technical Traders Report!

SDC - Santa Fe International Corp. is currently trading at $25.37. The December $25 Calls (SDCLE) are trading at $2.10. That provides a return of about 7% if SDC is above $25 on expiration Friday in December.
Company Profile

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