us stock market, stock watch

Free Weekend Newsletter for December 2, 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

LYTS (Lsi Industries--$25.25; -0.13; no options): Splits 3:2 effective 12-7-01.
Company Profile
STATUS: Holding up well after an outstanding pre-split move. LYTS made it back over its 50 day MVA (23.60) and made a big move up last Friday, and continued up this week before dipping the last three sessions. This is a healthy pullback, with LYTS showing loose dojis on decreasing volume (11,500 Friday; average 25,200), Friday dipping down to 24.91 but managing to recover to close. This has been quite a move from the recent lows at 22, and the stock is now lurking just below resistance from its October high at 25.95. After this bit of rest, we will look for LYTS to make another move up and over resistance. If it can, we will carefully watch resistance from the all-time high of 27.65, which was our initial target on this move; if it can clear that, we are looking at 30, but will heed topping signs as we go. After the recent move it could still drop off, so we are protecting existing profits, but it is looking pretty strong at the moment. Excellent money flow and buying.
PLAY: From here: 26.07 on volume of 37,000. Stop: 24.50. Stock only.

Click here for more information on our Stock Split Report!

PHM (Pulte Homes--$39.25; +1.87; optionable): Materials & Construction.
Company Profile
STATUS: Breaking out of an ascending wedge that formed at the bottom of the stock’s correction from the April high (50.24). Now in a cup, this break can help PHM move into the upper reaches of the right side of that bigger pattern; it is currently at the mid-point. Volume shot up to 1 million Friday (avg. 534,000), far above the 721,000 needed for the breakout. With price inside our 5% limit for buying on breakouts (buy point was 39.28), there are still good entry points here. Money flow looks good and relative strength is breaking out. Target: 47
BUY POINT: Remains a buy up to 41.24 on continued strong volume. Stop: 38.35 (7%).
POSITION: Stock and/or January $35 calls to buy (PHM AG).

Click here for more information on our Technical Traders Report!

TGT - Target Corp. is currently trading at $37.54. The January $37.5 Calls (TGTAU) are trading at $2.05. That provides a return of about 6% if TGT is above $37.5 on expiration Friday in January.
Company Profile

Click here for more information on our Covered Calls Service!

UBS Warburg said on Friday it filed an incorrect sell order for shares of top Japanese ad agency Dentsu Inc (4324.T), which made its debut on the Tokyo Stock exchange earlier in the day.

UBS Warburg did not specify the size or the precise time of the order.

(This IPO story is continued on our website in the IPO Forum.)