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us stock market, stock watch
Begin Part 4 of 4
FORMER SPLITS REMAINING PLAYS: As the market finds itself, we are focusing on some of the stocks that have shown a propensity to split and which are looking solid.
Watchlist:
LUV (18.32; -0.18): After checking in with LUV on its move over the 200 day MVA (45.04), it gapped up and pulled back Friday on increased volume. That pattern indicates a further drop, and we will look for it to catch support and set up a move back up.
Plays:
SCHL (Scholastic Corp--$44.07; +0.25; optionable): Publishing.
http://biz.yahoo.com/p/s/schl.html
STATUS: Fell out of bed. SCHL was tightening in its handle consolidation (to a cup dating back to February), but after holding the short-term MVA's at 46 the stock took an abrupt drop Thursday, closing back below its 50 day MVA (44.17). We were looking for a failed move back over that former support to set up a drop and put play, and Friday SCHL made that move, tapping 44.87 at its high before pulling back to close. Volume was slightly up at 379,700 (average 237,000), and the pattern suggests the drop is coming. On the drop we are targeting the 200 day MVA, at 41.77.
BUY POINT: A drop through 43.50 on continued strong volume.
POSITION: December $55 puts to buy (USC XK - January available Monday - check open interest, price, delta, etc. with your broker for both months as not available at the time of writing).
TARO (Taro Pharmaceuticals--$38.14; +0.14; optionable): Drugs.
http://biz.yahoo.com/p/t/taro.html
STATUS: Got the move down to trigger the put on Tuesday, and hit our target at 34 on Wednesday before recovering to close, moving on strong volume. It has steadied the last couple of sessions, holding on with dojis Thursday and Friday, tightening up the intraday range Friday as volume dropped way off (203,000; average 740,000). We could see a test back toward the 50 day (39.85), and with positions we did not get out of on the move up Wednesday we are still looking for a failed test and move back down. We can look at new or additional positions if we get another test of the 50 day, followed by retreat on big volume. Target: Still 34, with that potential support at 36. The 200 day MVA is at 32.33.
BUY POINT: Test: After another failed attempt at the 50 day, a drop back below 38 on increased volume in the range of 1 million. From here: A drop through 36 on increased volume.
POSITION: Test: December $50 puts to buy (QTT XJ). From here: December $47.50 puts to buy (QTT XA).
PRE-SPLITS REMAINING PLAYS:
Watchlist:
PBG ($46.26; +0.54): Splits 2:1 effective 12-5-01. PBG did not give us the 50 day MVA (46.32) bounce, and after giving up that level is trying to hold on. Not looking like much from here, so we will see if it forms up.
FULL ($57.80; -0.88): Splits 2:1 effective 11-19-01. Made a nice pre-split run, but gapped up and reversed on huge volume Friday (144,600; average 59,500), indicating a reversal. We have been looking for one with the lower volume ascent and the split Monday. We will see where it catches support (10 day at 56.12).
SIB ($30.69; +0.02): Splits 2:1 effective 11-20-01. Has simply crept up, not making a solid move along the way. The split is Tuesday, and although we could get the move over 31 off of the recent dojis, that is an aggressive play with stock.
Plays:
MIKE (Michaels Stores--$56.50; -1.96; optionable): NEW INFORMATION: Splits 2:1 effective November 27.
http://biz.yahoo.com/p/m/mike.html
STATUS: Pulling back. As expected, MIKE pulled back Friday off of the preceding doji (hit a high of 59.83). It tapped back near its 10 day MVA (55.49), which has been solid support on its run up from 35 since early October. Because it has been so relentless on this run up, making three distinct runs up after the breakout, we need to be careful with any existing positions for a possible breach of the 10 day. Typically stocks need a more extended rest after four runs, so it may have another one in it. Volume was lower on the pullback (down to 568,900 Friday; average 499,000), so we will see how it handles the 10 day, and it could potentially make one more pre-split run. That is what we look at these for!
PLAY: Watching to see if it holds the 10 day, and if it can on continued lower volume, the aggressive can look at a move back over 57 on increased volume, keeping stops close to protect profits. December $55 calls to buy (IKQ LK - January available Monday).
EPIQ (Eqiq Sys--$37.37; +1.39; optionable): Splits 3:2 effective December 1.
http://biz.yahoo.com/p/e/epiq.html
STATUS: Erratic after its breakout, having gapped up and reversed three times now between modest moves which added up to gains on the breakout for those who stayed in. The breakout has taken EPIQ over the highs in the left side of its cup (37.39, from June), and we are looking for a move down to recent support (10 day at 34.99) where hopefully it will settle down and start making steady bounces up from the short term moving averages. These can be some of the best entry points after a breakout: it has shown the breakout holds and it usually makes for such runs before a deeper test. The high on the breakout (from Thursday is 39.05).
PLAY: After pulling back and holding the 10 day, a move back over 36 on continued strong volume (up to 219,600 Friday; average 131,700). Stop: 35.
ITG (Investment Tech Group--$64.25; -1.09; optionable): Announced a 3:2 stock split Tuesday! It will be effective December 10.
http://biz.yahoo.com/p/i/itg.html
STATUS: Got the announcement this week, and ITG continues to move in a lateral pattern along the short-term MVA's (10 & 18 day at 64.49 and 63.77, respectfully). It made a strong move to clear resistance in October and has bounded up the 18 day MVA four times since then, so it is running out of steam. After having gradually pulled up over a few sessions, we were looking for a test back, and Friday ITG dipped back toward the 18 day. Volume was lower at 154,600 (average 239,600), which is what we want on a pullback. Still, after the number of bounces, it may test back toward the 50 day MVA at 60.60. If it does and bounces there on high volume, that is a good entry point. Recent high is Thursday's level at 66.15.
BUY POINT: Aggressive: a bounce up off of the 50 day MVA (66.60). If it holds here and moved up, 66.27 on volume of 300,000. Stop: 62.50
POSITION: Stock and/or January $60 calls to buy (ITG AL).
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.
Watchlist:
AZO ($64.80; -1.70): Pulled back from the recent highs (68) and caught support over the day MVA (64.46) Friday, as volume increased to 1.75 million (average 1.36 million). Has made quite a move and is still extended, so we will see if it can hold here or at the 18 day (62.51).
SLM ($86.70; -0.31): The weak run has peaked, and a further pullback would not be surprising, given the low volume on the breakout attempt. We will see if the selling gets ugly or if it can hold near support (18 day at 85.05; long-term trendline just below that), but from what we have seen of late it could need to test its 50 day MVA, back at 83.16.
STJ ($70.86; +0.31): Has not been able to bounce from the 50 day (69.92). From here it looks like it will test that support again, and if it can hold, we will see if it can surge over 72 on above average volume, with stock and/or January $65 calls to buy (STJ AM).
TECD ($42.23; -0.55): Little change Friday as TECD still holds the 50 day MVA (41.67), and still showing erratic volume and movement, bouncing around between the 50 day and short-term MVA's (10 day at 43.41). When we see a stronger bounce on increased, above average volume (down sharply Friday to 576,400, average 898,000), the buy point is 44.75. Stock and/or December $40 calls to buy (TDQ LH).
THC ($58.10; +0.15): THC has fought back over the 50 day MVA (57.54), but on low volume. It is holding, but we need to see more of a pattern develop.
Plays:
ACS (Affiliated Computer--$94.87; -0.97; optionable (ACS): Information Software
http://biz.yahoo.com/p/a/acs.html
STATUS: Closed the week with a lower volume pullback. ACS took a rest Friday after hitting the upper channel Thursday and starting the pullback as volume fell to 568,200 (average 735,100). We are still riding current positions, but for short term positions, we are not interested in riding it back down to the up trendline at 87.50. For longer term positions we are still looking for the upward momentum to continue toward the target in the 100-105 range. However, we are still not looking at new positions here.
APPB (Applebee's--$33.20; +0.17; optionable): Leisure: Restaurants
http://biz.yahoo.com/p/a/appb.html
STATUS: Tried the breakout move Friday on stronger volume, but gave back most of the gain on the session though it did manage to hold above the pre-correction high in September. Never a good sign right after a breakout move, so we will have to watch positions carefully; we do not want the stock to fall back in the pattern right off the bat. The intraday high was 33.91 as volume shot up to 659,400 (average 415,800). We will see if APPB can catch support at 33. Money flow, buying and relative strength remain excellent. Target: 40
BUY POINT: After catching support at 33 (or the 10 day at the lowest), we are looking for a move over Friday's closing high of 33.20 on above average volume. Stop: 31.50 (18 day MVA is at 31.60).
POSITION: Stock and/or December $25 (AQB LE; 0 open interests) or February $25 calls to buy (AQB BE; low open interests thus far).
CBH (Commerce Bancorp--$73.95; -0.56; 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: Still consolidating over support. CBH pulled back a bit more Friday, this time to the 18 day MVA (73.82) as volume remained low at 86,500 (average 157,000). As we have discussed before, CBH has made four moves up along the 18 day MVA since the markets re-opened, the most recent occurring last week where it approached the left side high (77.90, from the v-shaped cup that dates back to early August). After four moves we often see a longer rest with a deeper pullback, so if it cannot hold here we will watch the 50 day (72.10) for a possible test. As it is, this controlled pullback looks pretty good and we will continue to watch for a possible breakout from here. Target: 85.
BUY POINT: From here: 75.86 on volume of 230,000. Stop: 73.
POSITION: Stock and/or December $70 calls to buy (CBH LN - January available Monday).
JEC (Jacobs Engineering--$69.99; -4.05; optionable): Construction. Did not get the announcement Thursday.
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: Strong drop Friday. The pattern indicated a pullback, and news of a downgrade added fuel to the fire, as JEC took a hard drop Friday, falling back through the short-term MVA's (10 day at 71.84, 18 day at 70.58), and into the range of the former pattern highs (rolling channel during October), before pulling up slightly at the close. Volume was huge on the move, up to 620,400 (average 208,000) and stronger than anything we have seen since early August. The 50 day is at 67.22, and JEC could be headed for a test of that level. Might need to rest on support a bit, especially given the smaller gains on low volume and the weak breakout attempt that preceded this big selling.
BUY POINT: We will have to see it hold support and settle down before we get an upside buy point. That could come at the 50 day MVA or we may have to wait for the breakout way up at 75.82.
POSITIONS: Stock or January $70 calls to buy (JEC AN).
PEP (Pepsico--$49.76; -0.46; optionable): Has not announced yet.
http://biz.yahoo.com/p/p/pep.html
BACKGROUND: Last announced a 2:1 split in April 1996 at a stock price of $60. The annual shareholder meeting was on 5-2-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: More of a pullback Friday. PEP gapped up a bit at the open, but then fell back and tested toward the 10 day MVA (49.44) and former pattern highs as volume fell to 3.81 million (average 5.37 million). With the weak breakout from its long, ragged cup with handle, the drop is not surprising. However, selling was not strong and we will see if it can hold over support. From here we would like to see this pullback set up into a lateral or slightly descending consolidation over the 10 day MVA on continued low volume to set up a stronger breakout attempt (while still looking for that announcement, as it is clearly in range, with Pepsi Bottling (PBG) announcing in this range recently). Target: 60.
BUY POINT: After a low volume consolidation in 49-49.50 range, the breakout: 50.58 on volume of 8.2 million. Stop: 47.50.
POSITION: Stock and/or January $45 calls to buy (PEP AI).
RMD (Resmed Inc.--$56.55; +0.61; optionable): Medical instruments.
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: Testing the 50 day. RMD turned back up Friday, but volume was still weak, though sharply increased to 209,900 (average 244,400), and the stock could not clear the 18 day MVA (56.62). After four decent runs up the right side of its ragged cup, we are not surprised by this test back, and the volume on the selling indicates that it could hold and try a move back up. RMD has shown some nice bounces up from the 50 day before, but we may see more of a consolidation between the short-term and 50 day levels first.
BUY POINT: Perhaps after another test of the 50 day, a move back over the 10 day MVA (currently 56.94) on above average volume. Stop: 54. Could take a couple of sessions to rest before trying a move.
POSITION: Stock and/or January $55 calls to buy (RMD AK).
POST SPLITS REMAINING PLAYS:
Watchlist:
JNJ ($59.92; -0.08): Still easing up the 10 day MVA (85.83). Needs to settle back a bit to become a buy again, and we are dropping.
RMCI ($21.93; -3.60): Split 3:2 effective 11-2-01. RMCI gave us a great move up, but fell from the high of 27.45 Wednesday, and ended the week with a very strong drop through the short-term MVA's that closed just over the 50 day at 21.09 (volume shot up to 537,100, average 169,200). Dropping.
Plays:
JNC (John Nuveen--$49.37; +0.04; no options): Financial Services. Split 3:2 effective September 28.
http://biz.yahoo.com/p/j/jnc.html
STATUS: Still holding over 49. We have seen little movement since Tuesday's nice breakout; JNC has shown very small intraday ranges and closed with three consecutive dojis as volume has faded away to nearly nothing (Friday down to 3,700, average 60,900). The consolidation price/volume action looks good, and although we may see more of a breakout test (perhaps down to the 10 day MVA at 48.63), we are just waiting for a volume surge to carry the next move up. Target 57.50.
PLAY: From here: A move over 49.58 (Wednesday high) on increased, above average volume, with stock. Test: After a test of the 10 day, a move back over 49 on above average volume, with stock.
WFMI (Whole Foods--$39.80; -0.95; optionable): Grocery Stores. Split 2:1 June 5.
http://biz.yahoo.com/p/w/wfmi.html
STATUS: Dipped back from the breakout move. Friday WFMI gapped back to open, and after running up toward Thursday's breakout high of 41.14 (and all-time high), the stock pulled back to close with a tight doji on sharply decreased, but still strong volume of 1.49 million (average 648,200). Normally we like to breakouts last longer than a single session, but we have not seen a lot of that lately. WFMI made a terrific move yesterday (out of a shallow cup-with-handle dating back to early September) so this quick profit taking isn't terribly surprising, and may give us another opportunity to get in if the upward momentum can resume quickly.
PLAY: After a lower volume test of the breakout at 38.82, a move back up on continued strong volume, with stock and/or February $35 calls to buy (FMQ BG).
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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us stock market
stock watch
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