us stock market, stock watch

Begin Part 2 of 3

Team Trades (continued)

All the while we were watching the indexes. About 35 minutes later the SOX hit our aggressive buy point as it moved up over some resistance at 535. We like to catch the option moves when they start, this was the first level of resistance. We moved in with January 530 options; the spread was varying between $3 and $4. It ran to 540 before we could really get our order together, and it fell back to 538 to test the move; beautiful. We were able to catch the spread when it was $3 on the pullback.

We also picked up some PMCS when the Nasdaq broke its 200 day MVA and when it moved higher late in the session. On top of that we had some BRCD as well. There were other breakouts we picked up on as well. It was one of those days.

THE PLAYS: Breakouts and moves all over the report! Pre-Split CACI and recent bonus plays EXLT, RI, ASIA and LXK all broke out, as did market favorites QLGC, NVDA and KLAC.

Targets and Stops: 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:

SDS (Sungard--$27.86; +0.26; optionable): Software.
http://biz.yahoo.com/p/s/sds.html
STATUS: An old friend we got a lot of nice moves from earlier this year on the report, it is back as a bonus play because it has formed a cup with handle. It broke out of a very brief handle in mid-November, but abruptly pulled back and has formed a longer consolidation, holding the 18 day MVA (27.52) on low volume. Today it tested through the 18 day but pulled back up for a doji as volume dipped a bit to 931,400 (average 1.8 million). We are looking for a breakout, and will use the highs in the most recent consolidation to determine the buy point, but watch the earlier breakout high (29.70) as it runs. Target: 32.50 (all-time and left side highs).
BUY POINT: 28.62 on volume of 2.7 million. Stop: 26.62 (7%; 50 day at 26.40).
POSITION: Stock and/or January $25 calls to buy (SDS AE).

BGEN (Biogen--$59.41; +2.06; optionable): Biotech.
http://biz.yahoo.com/p/b/bgen.html
STATUS: Finally broke through a long down trendline (from February), and has pulled into the handle of a three-month saucer. Resistance in the handle is supplied by the 200 day MVA (59.28), but today BGEN closed over that mark. The move was solid, as the stock tapped the 50 day at its low of 56.60 and then powered up on much higher volume of 4.07 million (average 3.1 million). Looking for more, watching for a move over the handles' intraday high (59.95) and a run to a target of 70 (left-side saucer highs at 62.80).
BUY POINT: 60.07 on volume of 4.5 million. Stop: 56.
POSITION: Stock and/or January $55 calls to buy (BGQ AK).

TERN (Terayon--$13.06; +1.54; optionable): Telecom
http://biz.yahoo.com/p/t/tern.html
STATUS: Making a good move up in the handle to its year-long saucer base. Volume was up to 1.85 million (avg. 2 million), and we are looking for a breakout over the November high (14.34). TERN has huge money flow and buying. This saucer is the bottom of a 21-month base with highs near 143. Target: 17 (initial)
BUY POINT: 14.47 on volume of 3 million or higher. Stop: 13.46 (7%). A buy to 15.19 on breakout.
POSITION: Stock and/or January $10 calls to buy (TUN AB).

SOX (Phili Semiconductor--$544.11; +33.11; optionable):
STATUS: The index made its move today, hitting our aggressive buy point at 537 on a strong move higher. It is now getting close to the 200 day MVA (at 561.50). Breakout from the ascending wedge-type pattern from since mid-November is over the high at 553.60, so we will look for a move over the resistance (562 range). Aggressive players can look at getting in for the ride from here, watching the approaching 200 day resistance.
BUY POINT: Riding positions taken at 537. Aggressive entry point from here: 545 in a continued rally. Breakout: 561.63 in a continued rally.
POSITION: Aggressive: December $530 or $540 calls to buy (SJX LF or LH). Breakout: December $550 or $560 calls to buy (SJX LJ or LL).

QQQ (Nasdaq 100--$40.83; +1.86; optionable):
STATUS: The index rallied up to its 200 day MVA (41.07) today on stronger volume (79 million; avg. 86 million). We will look at taking positions on a break over the MVA, which would constitute a breakout from the ascending wedge formed since mid-November. The index hit our aggressive buy point at 40.50. Target: 44
BUY POINT: Breakout over the 200 day MVA: 41.20 volume in the range of 114 million. Stop: 38.32 (7%).
POSITION: January $33 calls to buy (QQQ AG).

BEST PLAYS: Besides the plays set forth below as best plays, there are some other stocks that also look good. These include Pre-Announcements THQI and BBY; Pre-Splits KIM and PSC; Continuing Candidate APPB; and Post-Split MIKE and AMHC.

PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: IGT is forecast for Tuesday or Wednesday, and TJX is a wildcard for tomorrow after announcing a dividend today. We are still watching TRDO for a possible announcement as well. No announcement from AZO, but it blew out earnings today!

PRE-ANNOUNCEMENT BEST PLAYS
1) IGT - Trying to move in the handle as we go toward the forecast
2) BMS - Setting up to breakout
3) THQI - What a move!
4) TJX - Still could announce, made a good bounce

IGT (International Game Technology--$62.62; +1.11; optionable): Forecast to announce a split on 12-5-01 or 12-6-01 in conjunction with a board meeting. The company will not confirm this date, but based upon our research the board will meet on one of those days.
http://biz.yahoo.com/p/i/itg.html
BACKGROUND: Based upon our research it does not appear that IGT has ever split its stock. The annual shareholder meeting was on 3-5-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: Near the breakout level. IGT broke out of a rather jagged 4-month cup-with-handle in early November, and after hitting a high of 63.62, pulled into a handle consolidation. The stock bounced from the 18 day MVA (60.04) last week, but has slowed a bit as it reaches handle highs, today making a bit of a push off of the 10 day (61.25) on increased volume (1.28 million; average 1.3 million). With the possible announcement in the next couple of sessions, we are watching closely for the breakout, which could take off on its own or be pushed by the actual announcement. The initial target is 73, but we are carefully watching the left side (and all-time) highs a 65 for possible resistance.
BUY POINT: Breakout: 63.74 on minimum volume of 2 million. Stop: 59.28 (7%).
POSITIONS: Stock and/or January $60 calls to buy (IGT AL).

BMS (Bemis--$50.80; +0.81; optionable): We are researching a date in January.
http://biz.yahoo.com/p/b/bms.html
BACKGROUND: Based upon our research it does not appear that BMS has ever split its stock. The annual shareholder meeting was on 5-3-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: BMS broke from a reverse head-and-shoulders pattern early in November (at 45.50), and made a nice climb to a high of 51.50 before pulling off into a flying plateau. The stock has held its price through earnings and a downgrade last week, keeping support at its 18 day MVA (49.47) for intraday lows. It tapped that support again today before moving up in the handle on reduced volume of 283,100 (average 216,000). Solid, and we are looking for the breakout, and targeting 60.
BUY POINT: 51.62 on volume of 275,000. Stop: 48.50.
POSITION: Stock and/or January $45 calls to buy (BMS AI).

THQI (THQ Inc.--$60.66; +2.74; optionable): We are working on a date.
http://biz.yahoo.com/p/t/thqi.html
BACKGROUND: Last announced a 3:2 split on 10-26-99 in conjunction with earnings. The stock price was $44. Prior to that announced a 3:2 split on 7-23-98 in conjunction with earnings. The stock price was $33. The company has sufficient shares for a 2:1 split.
STATUS: Has really made a move the last week. After dancing on its 50 day MVA (52.71) for a time, THQI made a big bounce up last week, and after testing support on low volume Monday, it continued the move today. The run took out its recent highs at 60, and volume was pretty solid at 1.6 million (average 1.3 million). It now faces an intraday spike which makes the all-time high at 62. With current positions we are targeting 70, but at this point we would not be surprised to see a bit of profit-taking, looking for THQI to hold the 58 range for a move back up.
BUY POINT: After a test back to 58-59, a move back over 60 on increased volume. Stop: 56 (just under the 10 day MVA).
POSITION: Stock and/or January or March $55 calls to buy (QHI AK or QHI CK - low open interest for the January).

TJX (TJX Companies--$37.00; +1.05; optionable): Retail. Forecast to announce a split on 12-5-01 in conjunction with a board meeting. The company will not confirm this date, but based upon our research this is the date for the board meeting.
http://biz.yahoo.com/p/t/tjx.html
BACKGROUND: Last announced a 2:1 split on 4-8-98 with a board meeting. The stock price was $43. The annual shareholder meeting was on 6-5-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: We are still watching for an announcement with a board meeting, but the company announced a dividend today, which in some (but not all) cases makes an announcement less likely. At any rate, TJX made a nice bounce back from its 50 day MVA (35.64) today after its hard drop to that level Monday. Strong volume on a test of the 50 day MVA is okay as it shows institutions jumping back in at this key point. While Monday's volume was huge on the drop and bounce at the 50 day, the continued rebound today was on lower, but still strong volume of 1.68 million (average 1.34 million), which was more than we saw in last week's action. We can look at a continued strong move over the 10 day MVA (just ahead at 37.10) for aggressive positions, and an announcement could send the stock over the recent double tops at 38.51.
BUY POINT: Aggressive: 37.25 on increased volume. Stop: 35.50. Breakout: 38.63 on increased volume. Stop: 35.81 (7%).
POSITION: Stock and/or January $35 calls to buy (TJX AG).

PAST SPLITS BEST PLAYS: These are former splitters that look ready again.
1) LUV - Tight consolidation in its LUV-handle

LUV (Southwest Airlines--18.84; +0.34; optionable):
http://biz.yahoo.com/p/l/luv.html
STATUS: LUV continues to pull laterally over the 10 day MVA (18.53), tightening in a consolidation that is something of a cup with handle. Today LUV moved back up off of the 10 day, with volume slightly higher at 2.97 million (average 4.22 million). Looking really good and ready to spring, and a strong move will give us another buy point for long-term positions.
BUY POINT: 19.09 on volume of 6 million. Stop: 17.57 (7%).
POSITION: Stock.

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) LYTS - Still in the handle after the big move

LYTS (Lsi Industries--$25.25; -0.03; no options): Splits 3:2 effective 12-7-01.
http://biz.yahoo.com/p/l/lyts.html
STATUS: Still holding up well after an outstanding pre-split move. LYTS has gradually pulled back on declining volume toward its 10 day MVA (24.74), today gapping back toward that level (24.85) but pushing back up to close. This is the kind of pullback we like, but with the split Friday we are ready for another move out of LYTS. The prior move started from the recent lows at 22, and the stock is now lurking just below resistance from its October high at 25.95. Looking for a blast up from here, watching for it to take out that resistance, but will heed topping signs as we go. Excellent money flow and buying.
PLAY: Aggressive: 25.60 on volume near the average (24,600; today down to 7500). Stop: 24.65 (just under 10 day). Breakout: 26.07 on volume of 37,000. Stop: 24.50. Stock only.

CONTINUING CANDIDATES BEST PLAYS:
1) AZO - Blew out earnings!

AZO (Autozone--$66.59; +0.32; optionable): Did not announce, but beat earnings by a mile.
BACKGROUND: Last announced a 2:1 split in March of 1994 at $60.
http://biz.yahoo.com/p/a/azo.html
STATUS: Ah, a good friend when the bear market was still raging, and a continued winner for us. AZO is holding a tight lateral pattern. The stock made a couple of great moves (starting at the mid-40's) since September, and for the past three weeks has tightened up in a consolidation over its 10 day MVA (66.31), using the 18 day (65.35) for intraday lows. Today it tapped down to the 18 day but again recovered for a doji on increased volume that remained below average (852,400; average 1.3 million). After hours the stock reported blowout earnings and was trading anywhere from 69.50 to 71.50. The pattern looks poised for a move, and after the earnings announcement Tuesday evening it could be ready to take off. Targeting 80 on a breakout.
BUY POINT: 68.12 on volume of 1.9 million. Stop: 63.75. Aggressive: Over 67.50 on average volume. Stop: 63.
POSITION: Stock and/or March $65 calls to buy (AZO CM).

POST-SPLITS BEST PLAYS:
1) PSC - Looking good on support post-split

PSC (Philadelphia Suburban--$24.00; +0.23; no options): Water utility. Splits 5:4 effective 12-3-01.
http://biz.yahoo.com/p/p/psc.html
STATUS: We have seen some stocks do well post split if they can hold in their patterns initially, and PSC is doing just that. It broke from a consolidation last week before the split, but has gently pulled back to test the breakout and the 10 day MVA (23.82) since. Today it showed another doji over that level, with volume spiking up again to 116,100 (average 83,700). Holding up well, and with the high-volume doji we could be looking at a strong move. The all-time high in as intraday spike up to 24.64. Excellent money flow. Target: 27.50.
PLAY: 24.43 on increased volume, with stock. Stop: 23.50 (18 day at 23.60).

MARKET FAVORITES BEST PLAYS:
1) CSCO - Strong move today on positive comments continues the pattern
2) EMLX - Could be ready to move again
3) AMD - Broke out today

CSCO (Cisco--$20.52; +0.66; optionable): Computer Hardware.
http://biz.yahoo.com/p/c/csco.html
STATUS: Reassuring comments from the CEO helped this and other techs as the market rallied, and CSCO moved up from its 10 day MVA (19.88) in the handle to its cup (deep in its base). This was a good volume move (99 million; average 77 million), unlike some of the recent moves up. In a continued rally we are looking for a breakout, with an initial target of 25. Good relative strength and money flow.
BUY POINT: Breakout: 20.89 on volume of 115 million. Stop: 19.43 (7%).
POSITION: Stock and/or January $17.50 calls to buy (CWQ AW).

EMLX (Emulex--$32.71; +1.22; optionable): Computer Hardware.
http://biz.yahoo.com/p/e/emlx.html
STATUS: Broke from its cup with handle last week when we were last writing EMLX as a play on the report, and it has rested a bit since. It hit a high of 33.24 Friday with a doji, and predictably pulled back off of that pattern, testing the 10 day MVA (30.46) at its lows Monday and today before pushing back up. Volume was up and solid Tuesday (9.6 million; average 7.77 million) as EMLX closed just over the prior breakout closing high. In a continued rally we are looking for another surge, targeting 38.
BUY POINT: 33.36 on increased volume. 31.02 (7%).
POSITION: Stock and/or January $30 calls to buy (UMQ AF).

AMD (Advanced Micro Devices--$14.90; +0.85; optionable): Semiconductor.
http://biz.yahoo.com/p/i/ibm.html
STATUS: Broke out of an extended (4-week) consolidation over its 50 day (12.71) and short-term (18 day at 13.37) MVA's today. The consolidation formed after AMD had climbed back from early October lows below 8, still deep in its base and trying to build up the right side. Volume was up on today's move, coming in at 7.7 million (average 5.9 million). Still a buy up to 15.40, looking for increased volume in a tech rally. Targeting 17.50 on this move.
BUY POINT: A buy up to 15.40 on increased volume. Stop: 14-14.32.
POSITION: Stock and/or January $12.50 calls to buy (AMD AS).

****
REMAINING PLAYS:
****
PRE-ANNOUNCEMENTS REMAINING PLAYS:

Watchlist:

EASI ($42.12; -1.38): Forecast to announce a split on 12-10-01 in conjunction with earnings. At this time, the company cannot confirm this date. Continues creeping up toward the 50 day (44.19). Volume is low, and a move over resistance does not look promising at the moment. As we draw toward the forecast, we will watch for signs of strength.

GTK ($44.90; +0.20): 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. The move up from the 18 day MVA (43.96) has been on low volume, and now it is hitting its prior high (45.62). After a test back to support, we will keep our eyes on a possible break to a new high on above average volume, with March $40 calls to buy (GTK CH -low open interest).

BBY ($72.37; -0.18): Forecast to announce a split on 12-18-01 in conjunction with earnings. The company has not confirmed a time for the release. A bit precarious here, and we are watching positions for a possible drop back through the 10 day MVA (69.97). Looking for a gradual pullback on low volume to perhaps test the 18 day and set up a move.

DHR ($58.59; +2.33): Forecast to announce a split in late January in conjunction with earnings. At this time, the company cannot confirm a date for earnings release. Made a pretty solid bounce after its hard fall to the 50 day (57.07). We will see if the recovery can continue, looking for a buy point of 61.92 on volume of 1.9 million, with stock and/or January $55 calls to buy (DHR AK).

XL ($94.00; +0.75): Researching a date. Tightening into a pennant pattern, as volume remained low (785,800; average 2 million) with XL pushing back up from the short-term MVA's (18 day 92.70). The break to a new high is a move over 96.50 on volume of 2.7 million, and the aggressive play is on a move over 95 on above average volume, both with stock and/or January $90 calls to buy (XL AR).

EDS ($69.92; +1.27): We are researching a date. Holding support (18 day at 68.50) after the strong pullback that followed a weak move up. Looking for it to hold and show us a handle with continued low volume (down to 1.62 million; average 3.26 million).

FDC ($75.45; +1.71): Working on a forecast date. Made the breakout today, but a precarious one, as volume dipped sharply to 1.35 million (average 2.05 million). A weak move, so with existing positions we are cautious of a drop back, which could be abrupt. The next consolidation could again be at the 18 day (72.38) but the 50 day is possible (69.38).

MI ($61.36; +0.98): We are researching a forecast date. Struggling now to hold its short-term MVA's (18 day at 60.90) after falling back from its last breakout attempt. Could need to test the 50 day, back at 59.17.

SONC ($32.72; +0.43): We are working on a date. Holding the 50 day MVA (32.04), bouncing again today on low volume. We will see if it can hold on and set up.

Plays:

TRDO ($26.25; +0.09): 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/t/trdo.html
BACKGROUND: Based upon our research it does not appear that TRDO has ever split its stock. The annual shareholder meeting was on 6-26-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: Struggling now, not able to make a move back over the 50 day (26.97; 18 day at 27.09). It dropped hard Monday, but again caught itself at recent lows (25.23) today and pushed back up on lower, strong volume (389,400; average 318,500). It might take a while to make a move back over resistance and form a cup (recent high from October at 33.79), but with an announcement we could get a quick run, watching the recent high as the target.
STATUS: Aggressive: With an announcement we will look at a move over 27.35. Stop: 25.44 (7%).
BUY POINT: Stock and/or February $25 calls to buy (UNC BE).

End Part 2 of 3

us stock market
stock watch