|
|
us stock market, stock watch
Begin Part 2 of 2
TEAM TRADES
We were looking for downside and upside today. We were anticipating downside so we were looking at index put plays. Those showed up early, but we were waiting for the confidence numbers to take positions. It tried to bounce 15 minutes before the report, and when it came out the indexes started tanking fast. At that point we entered some new positions on OEX and DJX puts. It was a matter of stepping up and buying the put options. Nothing fancy, just put in a limit order ahead of the ask and let the fills occur. We were also riding down the SOX puts taken last week and some new ones today. The momentum shifted to the downside in a big way at 9:00 ET, and now we let them ride to see another test of the near support. The Dow and S&P may give us even more downside than that.
At the same time we were eyeing BRCD. In a down market it was buckign the trend early, moving in positive territory. It sold back on the consumer confidence report, but it would not sell back below 23.50. We were looking for it to move up to that first morning high near 24.25. It rallied up sharply at 10:20, and hit the point right after that. We moved in on some positions; we are building a position in BRCD, not buying all at once. It ran up to 25.20 a couple of times in the session, but then sold back to close at 24.20. It rose immediately after the close; it wants to hold up, and that is one reason we are building a position in it. We will see if it continues to hold up as the index tests lower.
THE PLAYS:
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: Some good movers on our recent bonus plays, and many of them are still in solid patterns. We feature more of those tonight.
EDS (Electronic Data--$63.89; -0.01; optionable): Software
http://biz.yahoo.com/p/e/eds.html
STATUS: Pulling back the last three days from a strong move up the right side of its 14-week cup base (previous high at 66.80). Looks as if it is forming a handle here, showing a tight doji with tail on rising, above average volume (3.7 million; avg. 3 million) after hitting a low at 63.27. Looking for a move up and breakout over the October high of 65.25 on stronger volume. EDS shows good money flow, positive buying, and relative strength is breaking out well ahead of price, a bullish indicator. Target: 78
BUY POINT: 65.38 on minimum breakout volume of 4.5 million. Stop: 60.80 (7% below the buy point), or, 62 (below price support at 62.50).
POSITION: Stock and/or January $60 calls to buy (EDS AL).
KLIC (Kulicke & Soffa--$13.54; 0.00; optionable): Semiconductor
http://biz.yahoo.com/p/k/klic.html
STATUS: Holding up very well in this market. Pulling off the October high that met the 200 day MVA at 14.38. Volume was dropping back the last 2 days but shot up today to 2.67 million (avg. 783,045) as the stock battled it out just above support of its 10 day MVA (tested on the low of 13.24). Showing a doji, we are looking for the buyers to eventually win out and head this one up and out of this rough little cup with handle pattern. The base formed just off the bottom of KLIC's nearly 2-year long base. Target: initial, 18
BUY POINT: Breakout: 14.51 on continued strong volume (min. breakout volume is 1.2 million). Stop: 13.49 (7% below the buy point), or, 12.76 (below the 50 day MVA, 13.01).
POSITION: Stock and/or January $12.50 calls to buy (KQS AV).
PG (Procter & Gamble--$74.20; +2.90; optionable): Conglomerates
http://biz.yahoo.com/p/p/pg.html
STATUS: Making a strong move up in the handle to its cup base of 10 months. The stock has been pulling back from the August high of 77.28, above which we are plotting the buy point. Volume was strong on the move, surging to 5.3 million (avg. 3.3 million), pumping up as the company beat earnings expectations. The stock beat some resistance just under the closing price, so we are looking for a continued move up from here. Target on a breakout: 92.
BUY POINT: Aggressive: Over the intraday high of 74.25 on continued strong volume (minimum breakout volume is 5 million). Breakout: 77.41 on continued strong volume. Stop: 71.44 (just below the 50 day MVA at 71.94). The 7% stop loss is right at the 50 day MVA so we are putting it below that support.
POSITION: Stock and/or January $70 calls to buy (PG AN).
PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: This week we are looking for JEC to announce on Thursday.
BEST PLAYS: Besides the plays set forth below as best plays, there are some other stocks that also look good. These include Pre-Announcements PEP and EASI; our new Pre-Split play SIB; Continuing Candidate MIKE; and Post-Split WFMI.
PRE-ANNOUNCEMENT BEST PLAYS
1) EPIQ - Nice pattern
2) GTK - Also a solid pattern
3) JEC - Forecast for Thursday
4) MI - Forming a handle
EPIQ (Epiq Systems--$29.56; -0.54; optionable): Forecast to announce a split in the beginning of December in conjunction with a board meeting. The company will not confirm the board meeting but based upon our research the board meeting should take place at this time.
http://biz.yahoo.com/p/e/epiq.html
BACKGROUND: Last announced a 3:2 split on 1-24-01 with a board meeting. The stock price was $24. The annual shareholder meeting was on 6-6-01 at which time authorized shares were increased. The company has sufficient shares for a 2:1 split.
STATUS: EPIQ is moving in a cup with handle pattern (prior high 37.39 in June), and the handle is looking good. It dipped back rather hard to test the 50 day MVA (26.38) earlier this month but bounced back up over the short-term MVA's. EPIQ has settled back a bit the last few days, and showed a doji today on the 10 day MVA (29.72), tapping the 18 day at its low of 29.03. Volume shot up on the doji, coming in at 178,500 (average 102,500), so we could be getting a move soon. Looking for a breakout, with the handle high at 32.95. Target: 40.
BUY POINT: Breakout: 33.07 on minimum volume of 154,000. Stop: 31. Aggressive: 32 on volume of 150,000. Stop: 30.
POSITION: Stock and/or January $30 calls to buy (FQU AF - low open interest).
GTK (Gtech Holdings--$39.99; +0.35; optionable): Forecast to announce a split on 12-13-01 in conjunction with earnings. At this time the company has not confirmed a time for the release.
http://biz.yahoo.com/p/g/gtk.html
BACKGROUND: Based upon our research it does not appear that GTK has ever split its stock. The annual shareholder meeting was on 7-9-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: Broke out from a cup with handle (making a new high), rambling up Friday on huge volume (1.2 million; average 223,300). It followed Monday with a gap up and reversal (high 40.83), a topping sign, but volume was much lower, and GTK was able to hold its 10 day MVA (38.94) at its low today and surge back up to close with a doji over its prior pivot point (39.25). Volume was up at 537,700 (average 242,000). Looking pretty good, holding support on the test, and we will look for a surge back up. GTK formed the cup starting in June, following an 8-month uptrend from the 15 range. A pretty pattern that could lead to some serious gains. Target: 48.
BUY POINT: 40.95 on continued strong volume. Stop: A buy up to 41.21 on continued strong volume. Stop: 38.50. The aggressive can jump in on a strong bounce up from here.
POSITION: Stock and/or December $35 calls to buy (GTK LG).
JEC (Jacobs Engineering--$65.76; -1.39; optionable): Construction. Forecast to announce a split on 11-1-01 before the open 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: Moving toward the forecast JEC continues to move in a somewhat choppy handle to a cup pattern dating back to June (high 75.67). It has bounced three times recently from handle lows at 64 (with the 50 day MVA now, at 64.32), and the last two sessions JEC pulled back toward that support from its last bounce. Volume has been consistently low and below average on the recent moves, which is fine within a handle as we look for it to settle down. We will see if it can generate a stronger move on the next bounce, and perhaps get a kick from an announcement. The handle high is at 72.19 but we are using a different high as 72.19 was hit on an intraday spike. Initial target is the left-side high.
BUY POINT: Aggressive: A move back over 67 (10 day MVA at 66.86) on increased volume. Stop: 63.75. Breakout: 70.90 on volume over 400,000. Stop: 67.50.
POSITION: Aggressive: Stock and/or January $65 calls to buy (JEC AM). Breakout: Stock and/or January $70 calls to buy (JEC AN).
MI (Marshall & Ilsley--$58.96; +0.32; optionable): Banking: Regional. We are researching a forecast date.
http://biz.yahoo.com/p/m/mi.html
BACKGROUND: Based upon our research it does not appear that MI has ever split its stock. The annual shareholder meeting was on 4-24-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: MI has made a strong push up to the left side high in its large 'flying W' pattern (59.98), stopping just short of that level and pulling back to start a handle. A good pattern, currently holding the 10 day MVA (58.16), to where the stock gapped down today before pushing back up on level volume of 214,700 (average 207,100). While the initial selling back last Friday was on higher volume, holding support at the 10 day is solid, and we will look for the stock to continue to hold, showing the lower volume that we look for in a quality handle. On a breakout, our target is 70.
BUY POINT: After holding the 58 range on a lower-volume handle consolidation, a move to 60.10 on volume of 300,000 or better. Stop: 57.40.
POSITION: Stock and/or December $55 calls to buy (MI LK).
FORMER SPLITS BEST PLAYS:
1) TARO - Low volume test
TARO (Taro Pharmaceuticals--$42.53; -1.16; optionable): Drugs.
http://biz.yahoo.com/p/t/taro.html
STATUS: In a choppy cup dating back to mid-July (choppy thanks to an August move up followed by crashing back with the market the next month). Not an unusual pattern these days, and TARO came back nicely and broke out of a handle last Thursday. It could not sustain the move, pulling back but doing so on lower volume (292,700; average 684,200), holding to close over the former handle highs (42) and 10 day MVA (42.05) after tapping 41.70 intraday. There is further support here from its late-August consolidation. We would like to see breakouts continue more than a single session, but the lower volume pullback and holding support in a rough market is not too bad, and we can look for TARO to try a move after holding solidly here. The high in the left side of the pattern is 49.38, with the breakout high at 45.60. Solid money flow. Target: 55.
BUY POINT: From here: A move over 44 on increased volume near the average. Stop: 41.50. Breakout: 45.72 on increased volume. Stop: 43.
POSITION: Both buy points: Stock and/or January $40 calls to buy (QTT AH).
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) PCL - Good handle
2) PSC - Looking good
3) BRO - Long tail on that high-volume doji
PCL (Plum Creek Timber Reit--$28.26; -0.14; optionable): Lumber. Splits 5:4 effective 12-3-01.
http://biz.yahoo.com/p/p/pcl.html
STATUS: PCL has pulled into a nice-looking handle to its double bottom pattern. The pattern formed with a severe drop in September (from left-side highs at 30), but it has recovered smartly this month, and after a breakout move last week it needed some more time to digest its gains, so it has pulled into this handle. The handle itself is progressing, holding over its 10 day MVA (28.09) and moving on the low volume we want in this type of pattern. The handle high is at 28.98. Targeting 34 on a breakout.
PLAY: 29.10 on volume of 900,000 (today up to 588,000; average 611,000), with stock and/or November $25 calls to buy (PCL KE). Stop: 27.
PSC (Philadelphia Suburban--$28.33; -0.22; no options): Water utility. Splits 5:4 effective 12-3-01.
http://biz.yahoo.com/p/p/psc.html
STATUS: Formed a small cup from mid-August, and after a massive climb to an intraday high of 30.80 and pullback (closed that day at 28.50), PSC has held up in the range of its short-term MVA's (10 day at 20.18, 18 day at 27.93) to form a handle. It was shaping up as a pennant, and tried a breakout move last Friday, but after reaching over the left side highs (29) and hitting 29.20 PSC has dipped back the last two sessions. Volume has dropped on the selling, however (41,300 today; average 75,800), and the stock continues to hold the short term MVA's. Looking for PSC to hold here and make a strong move back over 29. Target: 34, eyeing the intraday high along the way.
PLAY: 29.32 on volume of 114,000, with stock. Stop: 27.
BRO (Brown&Brown--$57.51; +0.01; no options): Insurance Brokers. Splits 2:1 effective 11-21-01.
http://biz.yahoo.com/p/b/bro.html
STATUS: BRO has been on a solid run, making a good move on the market reopen to make a new high. The stock consolidated the first half of this month, breaking out again last week before pulling into another consolidation. BRO pulled back Monday on higher volume, closing back below the 10 day MVA (57.80), but after testing all the way down to 54.50 today, BRO ran all the way back to close with a doji. Volume was huge at 546,400 (average 119,700), and the high volume doji with a long tail (a 'hammer') is a signal of a possible strong bounce. We will look for that move, watching for a run over the recent consolidation closing highs at 60 and last week's (all-time) high of 62.20. BRO has taken off on a steeper trend after the reopen, steeper than the trend it had followed for the prior 18 months, but we could still get another solid run. Initial target 66, but we will watch for topping signs as pre-splits can be volatile.
PLAY: A move over 59 on continued strong volume, with stock. Stop: 57.50.
CONTINUING CANDIDATE BEST PLAYS:
1) TECD - Doji in a solid pattern
2) CBH - Holding up
TECD (Tech Data--$43.11; -0.52; 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 has again held the 18 day MVA (42.64) on its pullback, forming what is shaping up as an ascending wedge handle (to the cup dating back to September 2000, highs at 55.88). The stock tried a breakout last Thursday, but pulled back on lower volume, today showing a doji over the 18 day on lighter volume of 680,100 (average 838,100). TECD has been strong and we will continue to look for a breakout. On the next move we are setting an initial target of 50. Solid money flow.
BUY POINT: Breakout: 46.11 on volume of 1.2 million. Stop: 42.25. Aggressive: 44.25 on above average volume. Stop: 42.
POSITION: Both buy points: Stock and/or December $40 calls to buy (TDQ LH).
CBH (Commerce Bancorp--$73.59; -0.01; 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: CBH made a low volume breakout Friday moving out of its cup with handle (the familiar 'v'-shaped cup we have seen since the attacks) dating back to July (high 77.90). It could not continue in Monday's market, showing a high-volume doji which often signals a pullback, and today it did test all the way back to the 10 day MVA (72.16) but managed to come back to close with a doji on lower volume (167,700; average 150,000). Showing some strength, and although it could again test back to the 10 day, we will keep our eyes open for a continuation of the breakout move. The initial target is the July high, but we are looking for a strong move to potentially carry CBH to the 85 range.
BUY POINT: A move over 74 on volume of 220,000. Stop: 70.
POSITION: December $70 calls to buy (CBH LN).
POST-SPLITS BEST PLAYS:
1) JNC - Maintaining the pattern
2) ATK - Has pulled back into a decent consolidation
JNC (John Nuveen--$47.30; -0.18; no options): Financial Services. Split 3:2 effective September 28.
http://biz.yahoo.com/p/j/jnc.html
STATUS: Patience is key as wait for stocks that form tight, lateral consolidations. We got an attempt at a breakout Monday at JNC moved over the buy point, but volume was never close and it closed with a doji before pulling back slightly today. The stock tested its 10 day MVA at its low of 47, tapping that level and climbing up to show another doji today on volume that was only slightly higher at 40,400 (average 58,700). JNC has been a solid, steady performer as it has trended up over many months. It broke out at the first of October, and has now pulled into a flying plateau pattern that continues to extend. Target: 52.
PLAY: A move to 47.87 on volume in the 90,000 range. Stop: 45. Stock only.
ATK (Alliant Techsystems--$87.55; +1.03; optionable): Aerospace/Defense. Split 3:2 effective 9-10-01.
http://biz.yahoo.com/p/a/atk.html
STATUS: ATK has been a great performer and is becoming a consistent splitter. In fact, with its recent move up after the attacks, it is again flirting with split range near 100. The stock's recent move hit up to 93.40, and since it has come back to rest, pulling into the range of its short-term MVA's (10 day at 86.49). Volume has been low, and after gitting as high as 91.23 last week, ATK has dipped back again, but held the 10 day with a tight doji on increased volume of 323,100 (back over the average 313,100). After a run like ATK has made, it could need to consolidate some more, but if we get a solid move it could start a run back to 100. New target: 105.
PLAY: Aggressive: A move over 90 on volume of 400,000 or better, with stock and/or February $85 calls to buy (ATK BQ). Stop: 85.
End Part 2 of 2
|
us stock market
stock watch
|
