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Begin part 3 of 3
THE PLAYS:
Good movers: GRMN; HOC; HWAY; JCOM; LUK; MDR; OII
New Pre-Split Plays:
Play Date: 05/25/2006
EXPD (Expeditors Intl.--$97.49; +0.23; optionable): Air delivery. Splits 2:1 on 6-26-06
http://biz.yahoo.com/p/e/expd.html
After Hours: $97.50
STATUS: Test breakout. Big gap higher in early May on the announcement and a three week pullback since, filling part of the gap and finding support at 95 the past week. Mostly lower volume on the pullback and then traded kicked up this week in the market volatility as EXPD showed some intraday volatility but held its range. Looking for a break higher on some better volume to enter this play. A move to the target lands us a 80%ish gain.
Volume: 804.513K Avg Volume: 1.08M
BUY POINT: $98.95 Volume=1.5M Target=$110.00 Stop=$95.05
POSITION: URP HS - Aug. $95c (66 delta)
http://www.investmenthouse.com/cs/expd.html
Play Date: 05/25/2006
CLB (Core Labs--$56.57; +1.85; no options): Oil and gas services. Splits 2:1 on 7-10-06.
http://biz.yahoo.com/p/c/clb.html
STATUS: Test 50 day EMA. Taking another look at CLB as it caught itself and held the 50 day EMA (55.79), moving laterally the past week. Looked pretty bad Wednesday as it closed below the 50 day EMA on a volume spike. Thursday it was right back up but volume faded below average as it did. It has to show us some good upside volume as it makes the move higher for us. It is set up well, but as we say, until it shows the move it is just a pretty picture.
Volume: 199.1K Avg Volume: 221.817K
BUY POINT: $57.75 Volume=275K Target=$68.00 Stop=$55.12
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/clb.html
New Post-Split Play:
Play Date: 05/25/2006
DGX (Quest Diagnostics--$56.96; +0.47; optionable): Medical labs
http://biz.yahoo.com/p/d/dgx.html
STATUS: Test 18 day EMA. DGX is making its second test of its April breakout from an 11 month base that took DGX to a new all-time high. Huge gap higher on the breakout move, followed by a test of the 10 day EMA (now at 57.22) in early May. That precipitated another move higher and during the last week in the selling it faded back for its second test, but unlike other stocks it did so on very low volume. DGX has roughly held the 18 day EMA (56.82) on the closes, setting up the next run higher in this breakout move. Solid money flow is leading higher even as DGX makes this second test. Ready to move in as volume jumps back up as DGX moves up through the 10 day EMA.
Volume: 658.6K Avg Volume: 1.123M
BUY POINT: $57.65 Volume=1.2M Target=$66.50 Stop=$55.68
POSITION: DGX KK - Nov. $55c (62 delta) &/or Stock
http://www.investmenthouse.com/cs/dgx.html
Play Date: 05/25/2006
RMD (Resmed--$45.18; +0.52; optionable): Medical appliances
http://biz.yahoo.com/p/r/rmd.html
STATUS: Test breakout. We let RMD make its test and now it looks ready to move higher again. It broke out from a 5 month ascending triangle in early May with a big gap higher. It has come back in a rather volatile fashion the past three weeks, but managed to hold the 50 day EMA (44.14) Wednesday after undercutting that support intraday. Nice volume on the test lower and reversal that day, holding the breakout move. Looking for volume to jump up again as RMD moves through the 10 day EMA (45.58) on strong volume.
Volume: 318.4K Avg Volume: 443.667K
BUY POINT: $45.75 Volume=500K Target=$52.95 Stop=$43.94
POSITION: RMD JI - Oct. $45c (59 delta) &/or Stock
http://www.investmenthouse.com/cs/rmd.html
Leader Play:
Play Date: 05/25/2006
DRIV (Digital River--$46.77; +0.67; optionable): e-commerce outsourcing solutions (design, hosting, optimization, etc.)
http://biz.yahoo.com/p/d/driv.html
STATUS: Ascending base. DRIV broke to a 6.5 year high in mid-March as part of a 3.5 month run off of the lows hit in November 2005. After that move it formed the current 10 week base that has moved roughly laterally in a range from 42.50 to 47.50, making higher lows as the 50 day EMA (44.13) rose to meet it. Excellent 4 to 0 accumulation in the lateral base (4 up price weeks on rising volume to 0 down price weeks on rising volume) shows buyers still want the stock. Moved up toward the top of the range this week but volume has remained below average. Nice pattern but we are not going to rush it. Just going to let it show us the break higher with some strong volume to show us the buyers are piling in again.
Volume: 615.688K Avg Volume: 971.533K
BUY POINT: $47.55 Volume=1.5M Target=$57.00 Stop=$45.57
POSITION: DQI II - Sept. $45c (63 delta) &/or Stock
http://www.investmenthouse.com/cs/driv.html
PRE-ANNOUNCEMENT PLAYS
We have considered many stocks for pre-announcement plays over the past few weeks, but have rejected many based on their technical pattern being too weak to do us any good, split or no. Many we considered have announced, but have not fared well given the market was top-heavy and ready to sell or their technical patterns were garbage. LOW is a classic example. We figured it would announce a split but it is in a 3 month downtrend, and a stock split announcement is not likely to reverse a weak pattern. Low announced and bounced $1.38, but is still below resistance.
The key today is to find stocks in strong patterns or that are ready to rebound off support. A split announcement will amplify the move higher in these cases as we enjoy moves from strong leaders in position to run higher. We won't chase a stock in a poor technical position even if we know it is going to split; it simply won't do us any good, i.e. it won't make us any money to the upside. We could list all stocks we think are going to split, but again, that won't make us any money unless we are in an office pool as to what stocks will or won't announce a stock split.
Current Pre-Announcement Plays:
This is a list of stocks we are looking to announce splits. We are not in all of the potential splits plays but are letting them set up for the next move. In each report we look at the candidates that are in the best patterns ahead of their potential announcements. This focus on leaders in good patterns allows us to make good money even if companies do not announce the split. The key with splits is the pattern.
BA: Researching the date. Wildcard with no prior splits.
CWTR: Forecast 5-24-06. Set up well to bounce but it did not do it. It sold off Wednesday ahead of the news and then gapped lower Thursday.
DAKT: May get the announcement 5-24-06 with earnings or the June 1 board meeting. Announced the split and enjoyed another move higher.
ESI: Researching the date.
FTI: Wildcard with no split history, but an excellent breakout test.
HWAY: Forecast 6-20-06
LCAV: Researching split date
PLCE: Looking at the shareholder meeting on 6-22-06. Needs to recover.
RNT: Forecast in mid-July
SHFL: Forecast in June. Gapped lower last Friday as downgraded and still trying to recover. It hasn't given up any ground, but it has not recovered yet either.
SNDK: Researching the date. Struggling a bit just below the 50 day EMA but still working laterally in the big picture.
TRMB: Researching the potential split date
WCN: Forecast 5-25-06. Really struggling and has set up a toppish pattern.
CONTINUING PRE-ANNOUNCEMENT PLAYS:
Play Date: 05/06/2006
LCAV (LCA-Vision--$55.61; +0.58; optionable): Laser vision centers. Announced earnings 4-25-06. Researching split date.
BACKGROUND: Last announced a 3:2 split on 11-17-04 at $32.20.
http://biz.yahoo.com/p/l/lcav.html
STATUS: Test breakout. Just about boring you to death as it continues its 5 week lateral move with an occasional reach down to the 50 day EMA (52.73). Just being patient and waiting for it to show us the breakout with a solid volume increase. To recap: LCAV gapped higher 4 weeks back on very strong volume, rallying on strong earnings results. That move took it out of an 11 week cup base in one quick move. It has spent the past three weeks testing, a lateral move with on low, below average volume. Positive accumulation in the base shows net buying as LCAV sets up for a new all-time high with a continuation of its breakout move.
Volume: 378.928K Avg Volume: 631.205K
BUY POINT: $57.98 Volume=1.1M Target=$69.50 Stop=$55.00
POSITION: JVQ IL - Sept. $60c (49 delta) &/or Stock
http://www.investmenthouse.com/cs/lcav.html
Play Date: 05/24/2006
RNT (Aaron Rents--$27.17; -0.34; no options): Rental & leasing services. Forecast for mid-July
BACKGROUND: Last announced a 3:2 split on 7-12-04 at $32.60. Before that a 3:2 split on 7-21-03 at $27.20.
http://biz.yahoo.com/p/r/rnt.html
STATUS: Test breakout. Continued the recent lateral move testing the strong surge higher last week. Lower volume as RNT held above the 10 day EMA (26.98) on the low. Getting set to continue the upside move. To recap: Broke out from a 8 month cup with handle base in February and rallied up the 18 day EMA (now at 26.85). It topped in late April and fell below the 50 day EMA (26.51) but rebounded last week on strong volume, making a new breakout, or really continuing the prior breakout run. After that Friday blast higher RNT faded back this week to test the 18 day EMA Wednesday and rebounding for a gain on stronger volume. Relative strength broke out on the move, a very good indication for the continued move higher. Strong money flow is leading higher and after this test RNT is ready to follow it once more.
Volume: 359.9K Avg Volume: 265K
BUY POINT: $28.35 Volume=398K Target=$34.00 Stop=$26.37
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/rnt.html
Play Date: 05/18/2006
TRMB (Trimble Navigation--$46.78; +0.78; optionable): GPS, robotic optical surveying instruments, etc. Researching the date.
BACKGROUND: TRMB announced its only split, 3:2, on 2-3-04 at $38.20.
http://biz.yahoo.com/p/t/trmb.html
After Hours: $46.82
STATUS: Test 50 day EMA. TRMB continues to work up off the 50 day EMA (45.09) but after the strong volume Tuesday, trade petered out. Still looks ready to continue the bounce higher, just want to see that volume pick up a bit more once again. To recap: TRMB surged higher in April on strong earnings, breaking from a 9 month cup with handle base. It moved laterally after that breakout in the market weakness, and finally came back to test the move this past week, falling to the 50 day EMA. That stopped it cold and TRMB showed a nice hammer doji at that level Thursday. A good full test of the breakout, and we are looking to move in as TRMB makes its rebound to continue the breakout run.
Volume: 230.22K Avg Volume: 316.916K
BUY POINT: $46.55 Volume=400K Target=$55.75 Stop=$44.72
POSITION: TUH HI - Aug. $45c (56 delta) &/or Stock
http://www.investmenthouse.com/cs/trmb.html
CONTINUING PRE-SPLIT PLAYS
Play Date: 05/20/2006
CLDN (Celadon Group--$28.02; +0.66; no options): Air delivery and freight. Splits 3:2 on 6-16-06
http://biz.yahoo.com/p/c/cldn.html
STATUS: 50 day EMA test. Gapped higher Thursday but on lower, below average volume. Want to see more trade on this move. Friday it is likely to come back to test the 18 day EMA (27.38) and then start the move back up next week. To recap: Another strong stock testing its 50 day EMA, setting up the next move. CLDN just split in February, formed an 8 week double bottom with handle base, and then broke out for the next move, just what a strong stock will do. It rallied to 30 on the run and then in the market selling it faded back to the 50 day EMA (25.09) to end the week on below average volume. Have to like that as it shows no heavy selling, no dumping of shares. That means when this test is over those buyers that held it will be buying into it once more. That is the move we want to take part in. As CLDN starts back up on volume we will be ready to move in.
Volume: 141.039K Avg Volume: 226.597K
BUY POINT: New: Test 27.50, then 27.88 on the rebound (orig. $27.05) Volume=250K Target=$32.50 Stop=$25.72
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/cldn.html
Play Date: 05/23/2006
KEX (Kirby--$73.93; +1.98; optionable): Shipping. Splits 2:1 on 6-1-06
http://biz.yahoo.com/p/k/kex.html
STATUS: Test 50 day EMA (71.06). Tanked to the 50 day EMA Wednesday on strong volume, but held just above that level. It rebounded Thursday but on below average volume. Want to see a bit more volume as KEX moves through the near resistance. To recap: Looking for another run out of KEX as it heads toward its June split. It broke out in late January and rallied up the 18 day EMA (74.71). After that run peaked in early May it needed a rest and has come back toward the 50 day EMA to make a deeper test. If it is strong and still wants to run, it will clear the 10 and 18 day EMA on some volume. We have a target, but we will take what it will give us on this run if it can break through the short term MA on volume.
Volume: 227.4K Avg Volume: 264.803K
BUY POINT: New: $74.88 (orig. $75.55) Volume=350K Target=$86.95 Stop=$71.88
POSITION: KEX IO - Sept. $75c (52 delta) &/or Stock
http://www.investmenthouse.com/cs/kex.html
CONTINUING POST-SPLIT PLAYS
Play Date: 05/22/2006
VMSI (Ventana Medical Sys.--$47.24; +0.35; optionable): Medical instruments
http://biz.yahoo.com/p/v/vmsi.html
STATUS: Test breakout. VMSI keeps edging higher as it moves up the 18 day EMA (45.99). No volume Thursday as VMSI gapped higher but posted just a modest gain. Want to see strong volume as it makes a breakaway move from this test. To recap: Tremendous breakout in late April, blasting out of a 11 month base on strong earnings. It came back to test the break over the next two weeks, but it held the move, rebounding before hitting the 50 day EMA (43.90). Moved up the past week as the market sold, showing some better volume. Nice price move Monday but no volume. Wednesday showed some good trade, but that was on the test and rebound. The rest of the week, zip. Money flow is still running higher, and relative strength broke out ahead of price, a bullish indication for VMSI to follow it higher. Nice leader that last split in March 2005, set up in the new base, and is not ready for the next run.
Volume: 214.631K Avg Volume: 312.536K
BUY POINT: $47.85 Volume=425K Target=$56.95 Stop=$45.32
POSITION: UMI II - Sept. $45c (65 delta) &/or Stock
http://www.investmenthouse.com/cs/vmsi.html
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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