stock watch, stock split

* * * *
10/29/01 Stock Split Report Market Summary
* * *
Stock Split Report Subscribers:

MARKET ALERT SERVICE

Subscribers to the current reports can sign up at the following link:
http://www.investmenthouse.com/alertssr.htm

PLAYS TO LOOK AT:

BONUS PLAYS:

DJX (1/100 Dj Indu--$92.69; -2.76; optionable (DJV):
STATUS: Opened where it closed Friday, above the 50 day MVA, then broke that support and the 18 day MVA (92.90) as volume slipped lower below average to 1.1 million (avg. 1.2 million). The index closed right at its low, so we are looking for a continued move down to potential initial support at the 91.60 range; below that, 90. That is close, so this is an aggressive play. On heavy selling we can get a move down to 87.
BUY POINT: Aggressive: 92.60 on continued selling.
POSITION: Aggressive: December $96 or $94 puts to buy (DJV XR or XP, respectively).

OEX (Standard & Poors--$553.34; -14.64; optionable (OEB):
STATUS: This index, too, opened above the 50 day MVA, then slid below lower support of the 10 and 18 day MVAs as volume shrank back, too, reaching 11.1 million (avg. 1.3 million). It closed just above possible support at 549.38, and on a break of that level we will look at taking downside positions for a move to 539-540 for the initial target. The aggressive can look at playing it from here in continued selling. Target below 540: 522.
BUY POINT: Aggressive: 552 on continued selling. Break of support: 549 in continued market selling.
POSITION: Aggressive: December $560 puts to buy (OEB XL).

HCC (Hcc Insurance--$28.36; -0.06; optionable): Property & Casualty
http://biz.yahoo.com/p/h/hcc.html
STATUS: In a cup with handle that started mid-April (high at 29.65). The stock has pulled back to the 18 day MVA (28) on steadily decreasing volume in the handle, and made a small move up from the opening price of 28.12, closing just under the 10 day MVA, even as it continued the pullback. It looks ready to move up, and we look for at least a hold at this support until it does. Volume was even lower at 168,900 (avg. 416,272). The action looks good, and money flow and buying are strong. Target: 35
BUY POINT: 29.32, on volume of 624,000 or better. Stop: 27.27 (below the 18 day MVA at 27.97).
POSITION: Stock and/or December $25 calls to buy (HCC LE; 0 open interests)

PRE-ANNOUNCEMENT: Also looking at NDN, JEC and PEP.

EPIQ ($30.10; +0.03): Forecast to announce a split in the beginning of December in conjunction with a board meeting. EPIQ pulled back in the handle today, but held support. After gapping back down through the 10 day MVA (29.76) to open, EPIQ initially tapped up toward the recent highs (around 31.60, high today 31.39), but could not hold on and closed well off the intraday high. Volume was sharply lower at 66,400 (average 104,800). We are looking for support in the handle to hold through any additional market weakness while we wait for a breakout over 33.07 on minimum volume of 160,000. The aggressive play remains 32 on volume of 160,000. With either buy point, stock and/or January $30 calls to buy (FQU AF - low open interest).

GTK ($39.64; -0.61): Forecast to announce a split on 12-13-01 in conjunction with earnings. Today GTK gapped up at the open, but after briefly hitting a high of 40.83, the stock reversed itself and tested back toward the recent pivot (39.38) on sharply lower, but still above average volume of 882,200 (average 237,800). Considering the overall market weakness, and the strong moves GTK made over the previous two sessions (great breakout Friday), this lower-volume move is not terribly troubling. From here we could get a bit more to the downside, but we are looking for the stock to continue to hold over the pivot (the 10 day MVA is at 38.70) on low volume. Then we can look at additional positions on a move over 40 on stronger volume with stock and/or December $35 calls to buy (GTK LG).

MI ($58.64; -0.76): We are researching a forecast date. MI pulled back a bit more today, but support is holding. After testing down to the 10 day MVA (57.98), MI caught itself and pulled up to close as volume fell to 210,700 (average 207,800). The stock is still holding over the center of its large 'flying W' pattern (59.98), so we will watch for this support to continue, as we look for MI to either pull into a lower-volume handle here, or mount the next move up more quickly. In either scenario, we will look at stock and/or December $55 calls to buy (MI LK) on a buy point of 60.10, with volume of 300,000 or better.

FORMER SPLITS: Looking at KRON as well.

TARO ($43.69; -0.02): Volume fell quite a bit to 249,100 (average 704,500), as TARO gapped up but pulled back in similar action to Friday's. After Thursday's strong breakout, the stock is still holding over the prior consolidation highs and the 10 day MVA (42), and in the range of the late-August consolidation. We want to see this breakout test continue to hold that support as we watch for a move over 45.72 on increased, above average volume with stock and/or January $40 calls to buy (QTT AH). We may see something of a handle here first.

PRE-SPLITS:

FULL ($52.39; -0.36): Splits 2:1 effective 11-19-01. The consolidation continues and is still looking good. Volume fell to 24,800 (average 58,400) as FULL closed with a small loss on the day, but still held support over 52 (10 day MVA at 51.53). From here we are looking for the pattern to hold while we wait for an above average volume surge to carry a move to the buy point of 53.74, with stock and/or November $50 calls to buy (FUQ KJ).

PCL ($28.40; -0.14): Splits 5:4 effective 12-3-01. The gentle pullback continues. PCL is tightening in the pennant-shaped handle consolidation (formed after the recent lower volume breakout) and holding over the 28 level (and the 10 day MVA at 28.06) as volume remains steady (today at 481,100, average 607,000). This pattern and price-volume action look good. From here we are just looking for a move over 29.10 on volume of 900,000, with stock and/or November $25 calls to buy (PCL KE).

PSC ($28.55; -0.32): Splits 5:4 effective 12-3-01. PSC tried to break out of its pennant-handle Friday, but gapped back today. It briefly pushed back up toward the August highs (left side of cup) at 29, but volume was sharply decreased today (down to 60,300, average 76,400), and the stock fell back to close with a loose doji. Still holding over the 10 day MVA (28.14), and we will see if it holds while we look for a move through 29.32 on volume of 114,000, with stock.

CONTINUING CANDIDATES:

BJ ($50.75; -1.42): Volume increased slightly as BJ fell back to support at the 18 day MVA (50.54, 50 day at 50.02). The stock is looking good as it is holds something of a loose pennant in a handle pattern (formed after the last breakout hit 53.70)). From here we are looking for a breakout move over 53.82 on volume of 900,000 (429,300 today; average 604,000). Stock and/or December $50 calls to buy (BJ LJ - under 100 open interest).

TECD ($43.63; -0.07): Today TECD gapped back to open just over the 18 day MVA (42.59), and after briefly pushing up through 40, pulled back to close just over the 10 day (43.47) as volume fell slightly to 809,700 (average 832,800). The stock is still holding over the early October breakout point (42.73), and if it holds here is working on an ascending wedge in the handle to its cup pattern. Looking for a breakout, with a buy point of 46.11 on volume of 1.2 million. Stock and/or December $40 calls to buy (TDQ LH).

POST-SPLITS: ATK is also holding up well.

JNC ($47.48; +0.18): JNC has spend most of October consolidating in a flying plateau pattern right at 47 (10 day MVA at 46.93). Today it tried to break out, but after hitting a high of 47.75, the stock ran out of steam (volume was quite light and decreased at 27,600; average 59,400) and fell back to close with a small gain on the day. We may see a bit of a pullback into the former pattern, and are looking for that support to continue to hold while we wait for a volume surge. After that pullback, on a move over 47.75 on increased volume in the 90,000 range, with stock.

JNJ ($58.56; -0.11): Gapped down but held onto the 10 day MVA (58.19), then climbed back to a high of 59.47 before retreating to close. Volume remained low (up to 6.2 million; average 7.95 million), and the pullback continues to look solid, holding its prior intraday high (58) as well at the 10 day. JNJ still might not be ready just yet, but we will see if it can continue to hold the 58 level in a consolidation on continued low volume, setting up well. After a continued consolidation on low volume that holds 58, a move over 59 on above average volume, with stock and/or January $55 calls to buy (JNJ AK). Stop: 55.

SUMMARY:
- Market tanks on lower volume. No distribution, but plenty to be wary about with such large point losses.
- Find a scapegoat: war, Argentina, economic news to come, mutual fund profit taking after year-end window dressing.
- Stocks were ready to fall after recent rally.
- Several stocks still breaking out today, but other recent breakouts fell back hard.
- Subscriber Questions

Heavy price decline on low volume for now.

We were looking for some pullback after the Nasdaq, the leader in the market since the September bottom, closed out another 150-point or so run. The Dow and the S&P 500 were expected to follow as they had been tagging along most of the way up and were not showing very good price/volume action.

We got the pullback, but it was a lot more in one session than anticipated. Indeed, the Nasdaq blew through a couple of potential resting points and tanked all the way to support near 1700. Much more than anyone wanted on the first day of selling. The S&P and Dow also popped levels of near term support, but they are still significantly above the next levels of real support and thus are not in much immediate distress.

Volume was lower, indicating that despite the high point losses, institutions were not dumping shares Monday. It is always a bad sign when institutions, the buyers on the way up, start dumping or selling shares in large quantities. That did not happen today, but the high point losses might trigger a Pavlovian response among some, leading to stronger selling volume in sessions to come. During the downtrends in the bear market, we would often see weak moves up met with a day of light volume selling (the turning point), followed by aggressive, high volume selling the next session.

This is not the same market that we had in the throes of the steep downtrends in 2000 and earlier this year, but the rally is still new and green. It has suffered two days of clear distribution over the past 9 sessions, and another couple of quick sessions would potentially set up a violation of the September low. Volume was not heavy today, but it was not light. In a way that is good; to top today's selling volume there will have to be serious sellers in the market. Given the indexes' ability to recovery from each selling attempt, that is a positive. Still, not a pleasant day at all with 4%, 3%, and 2.5% losses on the Nasdaq, Dow and S&P.

Today's potential scapegoats were many, but a late-day 'terrorism alert' may really be a burden.

Although the indexes were indicating an interim top based on the pattern of moves off the bottom, the financial news always has to find 'the' reason for the selling. Today offered up a smorgasbord of potential reasons for the selling, something not too unusual over the past several weeks. First, it was stated that the heavy economic news calendar caused some nervousness. Heck, we have had a load of economic news the past three weeks and that did not phase the market. The idea that suddenly the anticipation of more economic news caused the market to sell is pretty weak. Second, there was the story that EBAY stated its 2002 earnings, and those would be less than the market expected. Again, hard to pin the market on EBAY. Third was a bit more plausible as Argentina was rumored ready to default on $38 billion in debt and seek a voluntary restructuring of its entire $132 billion debt load. This news is always destabilizing as foreign debt directly impacts financial institutions around the world, and that has significant economic repercussions. Finally, it was suggested that funds ran up the market last week prior to year-end reporting cutoffs and that today's action was the start of profit taking after that. When you talk with mutual fund managers, very few will ever say that they do this. Many floor traders taking their orders say this rarely happens. If it did last week, we are glad the selling today was on lower volume as that would indicate they were not immediately dumping shares following the buying.

New terrorism alert will weigh further on the market.

The number of stories may have caused some selling Monday, but we note that the market started lower on no real news and never seriously attempted a rally. After hours the new terrorism alert issued will most likely weigh the market down further on the open tomorrow. This is the second such alert, and the first one was never rescinded. On top of that, several warnings were issued after Monday's close, more sauce for the goose. It looks as if we are going to see if this market can again rally from selling. Last time this happened the markets sold down the following session, but then stemmed the tide and started to rise with the Nasdaq leading the way.

End Part 1 of 2

stock watch
stock split