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us stock market, stock watch
Begin Part 2 of 3
THE PLAYS: More great moves from CHBS, WEDC and WFMI, and others that broke out behaving very well.
BONUS PLAYS: What a nice move by WEDC!
CYT (Cytec Industries--$26.66; +0.90; optionable): Chemicals.
http://biz.yahoo.com/p/c/cyt.html
STATUS: Since the big drop in September CYT has been gradually working its way back. It has formed something of an extended ascending wedge over the last several months, and made another higher low this week and powered back up with a strong move today. CYT took out its 50 day MVA (25.91) with volume escalating to 231,100 (average 207,200). Just below the pattern high of 27.21. Targeting the 200 day MVA, at 31.15.
BUY POINT: 27.33 on volume of 310,000. Stop: 25.42 (7%).
POSITION: Stock and/or February $25 calls to buy (CYT BE - under 100 open interest).
RSG (Republic Services--$18.52; +1.47; optionable): Waste management.
http://biz.yahoo.com/p/r/rsg.html
STATUS: After a huge fall with the market after the attacks from the 20 range, RSG formed a double bottom under the resistance of the 200 day MVA. It pulled back into a handle, and made a very big move today from the base of the handle, taking out the 200 day (18.32) on huge volume (1.16 million; average 463,500). It is now just under the recent (handle) high at 18.69, and we are looking for a break over that level to carry the stock up to a target of 20.50.
BUY POINT: 18.81 on continued strong volume (minimum 750,000). Stop: 17.50 (7%).
POSITION: Stock and/or January $17.50 calls to buy (RSG AW).
BNE (Bowne & Co.--$13.30; +0.42; optionable): Business services.
http://biz.yahoo.com/p/b/bne.html
STATUS: In a large cup dating back to March of 2000 (high of 14.38). BNE made a great move over recent highs in mid-November, and since has pulled into a lateral handle consolidation over the 10 day MVA (12.93). Today the stock made a very strong move up, closing just over the consolidation of 13.27 with volume of 198,300 (average 62.700). Looking for a continued move on the breakout. Target: 16.
BUY POINT: 13.43 on continued strong volume (minimum 100,000). Stop: 12.50.
POSITION: Stock and/or January $12.50 calls to buy (BNE AV).
BEST PLAYS: Besides the plays set forth below as best plays, there are some other stocks that also look good. These include Pre-Announcements MI and TRDO and Post-Splits MIKE, WFMI and PDLI.
MARKET FAVORITES BEST PLAYS:
1) MERQ - Good action
2) INKT - Strong breach of resistance
MERQ (Mercury Interactive--$35.00; -0.78; optionable): Software.
http://biz.yahoo.com/p/c/csco.html
STATUS: MERQ looked iffy as it pulled back recently and tested in 50 day MVA (29.89, with its August high), but with the rally this week it took off on big volume. After a great surge Wednesday to break over its recent double tops in a ragged handle, MERQ rested today, pulling back on much lower volume (3.25 million; average 3.98 million). It held over its recent highs (34.38) to close, and is looking solid with this good price/volume action. We will see how the market acts, watching for MERQ to show strength by holding over the recent high on low volume, setting up the next run. Very good money flow. Target: 41.
BUY POINT: After holding 34.38, a move over 35.78 in a rally on above average volume. Stop: 32 (7%).
POSITION: Stock and/or January $30 calls to buy (RQB AF).
INKT (Inktomi--$6.61; +0.79; optionable): Internet software.
http://biz.yahoo.com/p/e/emlx.html
STATUS: INKT tested below its 50 day MVA (5.10) twice in the last month, but after tapping 4.60 twice this week the stock blasted up the last two sessions, with today's move even stronger then what we saw in the Wednesday rally. The move took out major resistance at the point of its November high (6.45) and 200 day MVA (6.42). Volume rose Thursday to 11.7 million (average 3.65 million). Still a buy up to 6.77, but we could see a test back to the 200 day if we get a bit of a pullback in the market. That would be fine, and if it holds on a lower-volume test, we can look for a resumption of the move with a good market. Target: 7.75.
BUY POINT: After a test of the 200 day MVA on lower volume, a buy up to 6.77 on a strong move back up in a good market. Stop: 6-6.30 (7%).
POSITION: Stock and/or January $5 calls to buy (KFN AA).
PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: EASI is forecast for next Monday, and we are still watching TRDO for a possible announcement as well. No announcement from IGT, but it gave us a terrific run, and we will keep an eye on it.
PRE-ANNOUNCEMENT BEST PLAYS
1) SONC - Trying to mount another run
2) SRCL - A short breather
3) EASI - Forecast for next week
SONC (Sonic--$33.27; -0.33; optionable): We are working on a date.
http://biz.yahoo.com/p/s/sonc.html
BACKGROUND: Last announced a 3:2 split on 11-14-00 in conjunction with a board meeting. The stock price was $36.69. The annual shareholder meeting was on 1-30-01 at which time no additional shares were authorized. The company has sufficient shares for a 3:2 split.
STATUS: SONC broke out but fell, but held fast on the 50 day MVA (32.15) on its most recent drop. It bounced nicely in the rally Wednesday. Today it started up, tapping 33.95 but stopping short of the recent high of 33.92, pulling back to close. Volume was much lower, however (180,500; average 256,200), and that is the price/volume action we like. SONC is fighting back from an early November drop when it announced reduced expectations, and that news killed a strong breakout and tanked the price. However, it has held up on the 50 day, and after a low-volume consolidation we got Wednesday's move. We are still a bit cautious, but like the recent action, and are looking at a move over the recent high for new positions. The recent breakout and all-time high is 35.25, and we will watch that level carefully on a move up, targeting 38.
BUY POINT: 34.04 on volume of 500,000. Stop: 31.75.
POSITION: Stock and/or March $30 calls to buy (ZSQ CF).
SRCL (Stericycle--$59.24; -0.02; optionable): Waste management. Forecast to announce a split on 2-19-02 after the market closes in conjunction with earnings.
http://biz.yahoo.com/p/s/srcl.html
BACKGROUND: Based upon our research it does not appear that SRCL has ever split its stock. The annual shareholder meeting was on 5-15-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: A nice bounce after testing the 18 day MVA (55.44) earlier in the week, running back up off of a 'hammer' doji. It is having some difficulty with 60, tapping that level the last two sessions, and today SRCL touched down to 57.92 before running back up, making the move on sharply down volume (224,700; average 277,300). This lower volume rest could be a short break before continuing up; the stock is making its third run from the short-term averages after having tested the 50 day (51.49) in early November. From here we are still targeting 65, although we could see another test which we could play toward that target on a good bounce.
BUY POINT: From here: 60.17 on above average volume. Stop: 56. Test: After a low volume test of the 55.50-56.50 range, a strong move back up on above average volume.
POSITION: Stock and/or February $55 calls to buy (URL BK).
EASI (Engineered Support--$42.50; -1.30; optionable): Aerospace/Defense. Forecast to announce a split on 12-11-01 before the open in conjunction with earnings.
http://biz.yahoo.com/p/e/easi.html
BACKGROUND: EASI last announced a 5:4 split on 2-1-2001 with a board meeting at a price of $28.50. Before that it announced on 6-12-98 at a price of $26.50. The company has sufficient shares for a 3:2 split.
STATUS: Clearly in range, but the pattern has certainly not been promising. EASI has been creeping upward in a consolidation under its 50 day MVA (44.11), with volume remaining low. Today volume dipped a bit to 169,800 (average 456,200) as the stock fell back from the 50 day. It is trying to recover from a severe drop in November out of a promising little cup with handle, and besides the 50 day also faces resistance from its October lows. We will see if it succeeds in breaking resistance, and if it does we can take positions in anticipation of the announcement.
BUY POINT: A move over the 50 day on volume of 500,000 or better. Stop: 41.25.
POSITIONS: Stock and/or February $40 calls to buy (UFE BH - low open interest).
PAST SPLITS BEST PLAYS: These are former splitters that look ready again.
1) FIC - A bit of profit taking after the breakout
FIC (Fair Isaac & Co--$62.45; -0.38; optionable): Business services.
http://biz.yahoo.com/p/f/fic.html
STATUS: FIC made a fine breakout from its three-week handle yesterday, moving out of the pattern on good volume. It gapped back a bit today, but held on with a loose doji, comfortably over the former handle highs (60), moving on much weaker volume (134,600; average 183,400). Watching for FIC to continue and hold up on this move, keeping volume low if we get any more retreat, and wanting it to hold over 60 on the test. Good pattern and has continued to show strong money flow. Target: 70.
BUY POINT: After holding the 61-62 range on a low volume pullback, a run back up on increased volume. The technically safer play is a move over 63 on above average volume. Stop: 59..
POSITION: Stock and/or January $60 calls to buy (FIC AL).
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) SASR - A new play!
2) CBH - A controlled pullback
SASR (Sandy Springs Bancorp--$42.75; +1.25; no options): Splits 3:2 on 12-21-01.
http://biz.yahoo.com/p/s/sasr.html
STATUS: Strong move up in its ascending wedge pattern. SASR has made a steady run up this year from the 22 range, and since early October has formed an ascending wedge. It tested back to near its 50 day MVA (39.90), but on the last push it held its short-term MVA's (10 day at 41.38), setting up today's solid move. SASR made a new closing high, and is now just below its all-time high of 42.99, made on an intraday spike back in October. Volume on today's move was very strong, coming in at 31,100 (average 16,600). Looking for the run to continue, targeting 47 initially.
PLAY: 43.11 on continued strong volume, with stock. Stop: 40.75.
CBH ($78.11; -0.45): Splits 2:1 effective 12-19-01.
http://biz.yahoo.com/p/c/cbh.html
STATUS: Broke out of its ascending wedge handle (to a four-month cup) on Wednesday, taking out the left-side highs (77.90) as well. The extended, wedging handle made the pattern somewhat iffy, but the move was decent as the stock is getting into the volatile time for pre-splits. Today it showed a pretty healthy pullback, testing 77.27 at its low (prior handle highs at 76, with the 10 day MVA) before pulling back up to close on sharply decreased volume (120,300; average 148,800). We could see another test lower, so some might be in a position to take profits here and wait for another run. We will see if can hold support if it does make a test, and look for a strong bounce back up for as we go toward the split. We were targeting 83 on a strong breakout, but are being careful with this one.
PLAY: From here: Over 78.64 on above average volume, carefully protecting profits with stops (initial at 75), with stock and/or January (very low open interest currently) or March (under 100 open interest) $70 calls to buy (CBH AN or CBH CN). Pullback: After a low volume test of the 77 range, a move back over 78 on above average volume, wit the same positions. Stop: 75.
CONTINUING CANDIDATES BEST PLAYS:
1) IGT - Breakout is up against some resistance
2) APPB - A breakout test
IGT (International Game Technology--$66.04; +1.34; optionable): Did not get the announcement.
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: IGT broke out of its cup with handle on good volume Wednesday, continuing a run from the bottom of the handle at the 18 day MVA (then 59, now 61.11). A pretty good run, and IGT closed today right at the left side high in its cup (and former all-time high), pulling back from 66.20. Volume was down on the continued move (1.27 million; average 1.2 million), so with the resistance here we could get a rest. We are riding positions toward the target of 73, but will watch any selling carefully, looking for lower volume and for it to hold the recent highs in the handle, at 63.62.
BUY POINT: Still a buy on strength up to 66.80 (looking for increased volume). Stop: 62.12. Pullback: After holding 63.62 on lower volume dip, a move back up on increased volume. Stop: 60.
POSITIONS: Stock and/or January $60 calls to buy (IGT AL).
APPB (Applebee's--$34.75; -0.60; optionable): Leisure: Restaurants
http://biz.yahoo.com/p/a/appb.html
STATUS: After trying repeatedly to break out and finally making a weak move Tuesday, APPB tore to a new high in the rally Wednesday, moving on very impressive volume. A large move for the stock from the base of its recent handle, so today's pullback is not surprising. Volume dipped way back again, which is good action (357,700; average 425,000), and it closed comfortably over the former highs (33.91). Looking for APPB to hold the former high or higher on this pullback, with continued low volume, and if support holds we will have confidence to take new or additional positions on a strong move back up. Still targeting 40.
BUY POINT: After a continued low volume pullback holds the 34 range, a move back over 35 on volume of 500,000 or better.
POSITION: Stock and/or February $30 calls to buy (AQB BF; under 100 open interests thus far).
****
REMAINING PLAYS:
****
PRE-ANNOUNCEMENTS REMAINING PLAYS:
Watchlist:
BBY ($69.48; -3.83): Forecast to announce a split on 12-18-01 in conjunction with earnings. After the steady run up the 10 day, we were looking for a gradual pullback. Today the drop started on high volume (7.6 million; average 3.67 million) when sales came in at 5.5% for November versus the 5.7% expected by analysts. We will see if it can hold the 18 day (68.20), but we are wary of the heavy volume, which makes selling calls on holds less attractive vis- -vis exiting.
EDS ($70.70; -1.05): We are researching a date. Made a strong move up in the rally, but it could not get past the late-November high, pulling back today and forming a potential double top. Still looking for it to hold and show us a handle on low volume, but beware if volume ramps higher as double tops can send the stock much lower.
FDC ($76.50; -0.10): Working on a forecast date. Holding on after the low volume breakout. Still cautious of a drop back, which could be abrupt. The next consolidation could again be at the 18 day (73.21) but the 50 day is possible (69.93).
THQI ($58.24; -5.05): We are working on a date. A failed breakout. Big volume today as THQI fell back, taking out the support of the recent highs, and closing over the 10 day MVA. There could be more, with the recent support of the 50 day below at 53.37. With any existing positions not stopped out, we could see a relief bounce to give a better exit point.
XL ($92.32; +0.22): Researching a date. Still tightening into a pennant pattern, finally getting a bit of volume on a test of the 50 day Wednesday (89.73). 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).
NDN ($37.77; -0.93): Researching a date. Gapped up and hit 42 Wednesday but reversed on big volume. That signals more of a drop, gapping down today but trying to hold the October-November highs at 37. If it can hold here it could set up another move.
Plays:
GTK (Gtech Holdings--$47.08; -0.37; 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: GTK has been such a steady performer. It made a move to a new high Wednesday, moving on higher, above average volume. It is hitting up against its up trendline from the September low, and pulled back from there slightly today on lower volume (301,100; average 336,000). A good breakout move in October, and lately the move has been on rather low volume, so any new positions are precarious and we are protecting carefully. Going toward the forecast we will see if it can hold up and set up something solid.
BUY POINT: Aggressive: After a test back to the 10 day MVA (45.46, with recent highs), looking for a move back up with volume in the 700,000 range, with March $40 calls to buy (GTK CH -low open interest).
BMS (Bemis--$52.14; -0.02; 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: Weak breakout. 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. Wednesday's rally produced a move, but volume was not there. Today it hung on with a 'hanging man' doji on even lower volume (150,000; average 220,000). With the weak move and the topping doji, we will look for a dip back toward recent support at the 18 day MVA (50). We will see if it can set up again and make a stronger move from there.
BUY POINT: After a pullback that holds the consolidation, the breakout is 52.59 on volume of 330,000.
POSITION: Stock and/or January $50 calls to buy (BMS AJ).
DHR (Danaher--$62.73; +0.20; optionable): Forecast to announce a split in late January in conjunction with earnings. At this time, the company cannot confirm a date for earnings release.
http://biz.yahoo.com/p/d/dhr.html
BACKGROUND: Last announced a 2:1 split on 3-6-98 with a board meeting. The stock price was $70. The annual shareholder meeting was on 5-1-01 at which time authorized shares were increased. The company has enough shares for a 2:1 split.
STATUS: Made a hard bounce from the 50 day MVA (57.50) this week after its abrupt visit to that level. We had been wary of its upward drifting consolidation after moving over the neckline of its reverse head and shoulders, but the rebound is impressive. The stock took out the November high 61.80 and its down trendline from December 2000 (at 62). Today the stock hit 64.10 but pulled back to close, showing the classic topping 'tombstone' doji, with volume down but still strong at 1.59 million (average 1.34 million). We will see if it can hold 62, and if so we will look at positions on a strong continuation of the move. Target: Highs at 69.70.
BUY POINT: After holding the 62 range on lower volume, a run over 63 on increased volume. Stop: 57 (200 & 50 day MVA's at 57.50).
POSITION: Stock and/or March $60 calls to buy (DHR CL).
MI (Marshall & Ilsley--$63.30; +1.30; 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 continues to make dips and bounces on high volume. MI broke out of a 'flying w' with handle in early November, since then continuing to move by bouncing up along the short-term MVA's (18 day at 61.26). Today it made another move to a new high with strong volume (up to 327,700; average 242,500). This is the fourth run up the short-term MVA's since the breakout, so we are very careful in playing fourth runs and often we do not get a fifth. We are also cautious given the volume, which has been just as strong on selling as with buying. We were looking at 70 on the original breakout, but at this point that is optimistic, so while we are still riding any positions, we are protective with profits.
BUY POINT: Very aggressive: A move over 63.50 on increased volume. Stop: 60.25.
POSITION: Stock and/or January or March $60 calls to buy (MI AL or MI CL).
End Part 2 of 3
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