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Begin Part 3 of 4

AMAT (Applied Materials--$44.45; -1.03; optionable): Software.
http://biz.yahoo.com/p/a/amat.html
STATUS: Has made a steady trend back up after the September drop, and made an outstanding move this week, bouncing nicely from the 50 day MVA (39.02) and then making a very strong move over its 200 day MVA (44.27) Wednesday. After such a run it has to rest, but it has shown excellent action as it does so, with a lower volume doji Thursday and then a pullback to support on even lower volume Friday (16.6 million; average 18 million). AMAT tested 43.51 at its low, pulling back up to close just over the 200 day. We like the hold of support and the lower-volume pullback, and will be looking for positions with AMAT in a renewed rally. It is back in its July-August range, and we will initially target the August high at 50, taking more if the strength continues.
BUY POINT: On a hold of the 200 day, a move back over 45 in a market rally, looking for above average volume. Stop: 42. The breakout high was 46.58, and we can add to positions on a move over that level on continuing strong volume. Stop: 44.
POSITION: Stock and/or January $30 calls to buy (ANQ AH).

ERTS (Electronic Arts--$62.94; -0.19; optionable): Software.
http://biz.yahoo.com/p/e/erts.html
STATUS: ERTS has made a fantastic move of late, breaking out of a reverse head and shoulders. The most recent move started back at the 50 day MVA (then 54, now 55.75), and it hit an intraday high of 66.92 before pulling back. The drop was, as we would want, on sharply lower volume (3.35 million Friday; average 3.53 million), and it is now holding support of its highs in the left shoulder (from May). Holding up nicely after such a big move, and we will be ready to catch ERTS again as it moves back up from support in a rally. Good buying. Target: 71.
BUY POINT: Holding 61-62 through any more market weakness, and moving over 63 on above average volume in a rally. Stop: 60 (10 day MVA at 60.71).
POSITION: Stock and/or January or March $60 calls to buy (RQB AL or RQB CL).

PRE-ANNOUNCEMENT BEST PLAYS
1) DHR - Holding over support
2) EASI - Forecast for next week

DHR (Danaher--$62.78; +0.05; 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 (57.70) 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, and the stock is now holding its down trendline from December 2000 (at 62). It has tried to move the last two sessions, but each day pulled well off of its intraday high (64.10 Thursday) to close. Volume has been strong (1.7 million Friday; average 1.35 million), so we will be watch carefully for the stock to hold the trendline, wary of strong volume on a breach. Still riding existing positions toward the target of 69.70 (recent highs), and will add positions on a move over the recent intraday highs.
BUY POINT: 64.22 on continued strong volume. Stop: 60 (10 day MVA at 60.84). If we get a test of 62 and then a strong rally in the Dow, we can look at more aggressive positions on a strong move up from support.
POSITION: Stock and/or March $60 calls to buy (DHR CL).

EASI (Engineered Support--$42.96; +0.46; 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: In split range, but the pattern has certainly not been promising. EASI has been creeping upward in a consolidation under its 50 day MVA (44.07), with volume remaining low. After falling back from the 50 day Thursday, Friday saw EASI show a doji on the recent support of the 10 day MVA (42.63), with volume continuing to be quite low at 190,300 (average 455,500). It is trying to recover from a severe drop in November out of a promising little cup with handle, and besides the 50 day, at its current price 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).

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) FMBI - A new play looking to breakout!
2) MOVI - Another new play!
3) KIM - Pulling back to support
4) CBH - Still in a controlled pullback

FMBI (First Midwest Bancorp--$34.97; +0.46; no options): Splits 5:4 effective 12-17-01.
http://biz.yahoo.com/p/f/fmbi.html
STATUS: From August through November formed a 'flying w' with handle, failing at 35 three times. It has come back to test the 50 day MVA (33.65) in mid-November and early December, and has made a move up to challenge the pattern highs again. Volume has not been spectacular, coming in at 74,100 (average 93,600) as it moved up to hit a high of 35.08. Looking for a stronger move to take it on a breakout, and we are looking at the intraday high of 35.50 from early October. Target: 40.
PLAY: Aggressive: 35.20 on volume of 125,000. Stop: 33. Breakout: 35.62 on volume of 150,000. Stop: 33.50. Stock only.

MOVI (Movie Gallery--$27.77; -0.08; optionable): Retail. Splits 3:2 effective 1-4-02.
http://biz.yahoo.com/p/m/movi.html
STATUS: MOVI has been trending up steadily since May, making frequent visits to the 50 day MVA (23.82) and bouncing. It bounced twice from the 50 day in November, making a modest move up until Wednesday's jump on big volume, taking out its prior high (28 from early November) but pulling back to close off of the intraday (and now all-time) high of 30.24. We are now looking for MOVI to find support after gapping up and reversing Thursday, and showing a hammer doji Friday, with both moves on lower, decreasing volume (171,100 Friday; average 356,000). The early October and recent highs are in the range of the short-term MVA's (10 & 18 day at 26.32 and 25.61), so we are looking for that level to hold (rather than the 50 day) and propel MOVI back up. Target: 31.
PLAY: From here: A move over 28.25 on average or better volume. Stop: 26.27 (7%). Pullback: After holding the 26 range, a move back over 27 on above average volume in a rally. Stop: 25.25. Stock and/or January $25 calls to buy (QLV AE - low open interest).

KIM (Kimco Realty--$50.56; -0.44; no options): REIT. Splits 3:2 effective 12-24-01.
http://biz.yahoo.com/p/k/kim.html
STATUS: KIM broke out of the ascending wedge with great volume Wednesday, hitting a high of 51.10 before pulling back. After the 'hanging man' doji on Thursday we were expecting a dip back, and got it Friday; however, volume was very low on the retreat, and KIM closed comfortably over its former pattern highs (50.20) and 10 day MVA (50.18). Looking good for a hold of support on this test of the breakout, and we will look for new positions on a pre-split run back up. Targeting 55 initially.
PLAY: After a low volume pullback that holds the 50 range, a move back over 50.50 on continued strong volume. From here, on a move up we would need to see it take out 51.

CBH (Commerce Bancorp--$78.30; +0.19): 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 (which started at 74) was decent as the stock is getting into the volatile time for pre-splits. Moreover, after the move it is holding up very well, with volume decreasing significantly as the stock has pulled laterally and slightly back, Friday with a low doji (volume down to 78,500; average 148,300). We could still see another test lower, so some might be in a position to take profits if it show a stronger dip, and wait for another run if it can hold support. A successful test would hold the 76 level (10 day MVA at 76.50), and from there we can look for another run going 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 76.50-77 range, a move back over 78 on above average volume, wit the same positions. Stop: 75.

CONTINUING CANDIDATES BEST PLAYS:
1) APPB - A breakout test

APPB (Applebee's--$34.79; +0.04; 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. This has been a large move for the stock from the base of its recent handle, so the pullback with the market the last two sessions is not surprising. Not bad action on the drop, however, with volume back below average both days (363,700 Friday; average 421,000). Friday APPB showed a 'star' doji, testing near the 10 day MVA (33.96) at its low of 34.29. Looking for APPB to hold 34 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 holding 34, a move back over 35 on volume of 500,000 or better; in a rally we can look at more aggressive positions on the move back up from 34.
POSITION: Stock and/or February $30 calls to buy (AQB BF; under 100 open interests thus far).

POST-SPLIT BEST PLAYS:
1) LYTS - Holding its pattern post-split

LYTS (Lsi Industries--$17.04; +0.01; no options): Split 3:2 effective 12-7-01.
http://biz.yahoo.com/p/l/lyts.html
STATUS: We are cautious with upside plays on post-splits, as stocks that split often slump a bit just after. However, we have seen quite a few do very well of late, especially if they are in solid patterns. LYTS is in a cup with handle, and Friday tested back to the 18 day MVA (16.36) for the second time in three sessions, recovering back up to close with a doji. Volume was very low, however (9,300; average 25,000), and for a breakout of the pattern we will need to see the strong volume we normally want with breakouts. Great money flow and buying.
PLAY: Breakout: 17.32 on volume of 37,500. Stop: 16.25. Stock only.

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

Watchlist:

BBY ($70.16; +0.68): 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, but got very heavy selling Thursday when sales missed targets. It held the 18 day (68.41) Friday, bouncing slightly, and we will see if it can hold. However, we are wary of the heavy volume, which makes selling calls on stock positions on a continued drop less attractive vis- -vis exiting.

EDS ($70.10; -0.60): 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 and forming a potential double top. Still looking for it to hold (18 day at 69.15) and show us a handle on low volume, but beware if volume ramps higher as double tops can send the stock much lower.

FDC ($77.43; +0.93): Working on a forecast date. Just keeps pushing up, but volume, which was not really strong on the breakout, is diminishing (1.39 million Friday; average 2 million). We are cautious of a drop, which could be abrupt. The next consolidation could again be at the 18 day (73.65) but the 50 day is possible (70.22).

THQI ($57.70; -0.54): We are working on a date. A failed breakout. Big volume Thursday as THQI fell back, taking out the support of the recent highs. It managed to close with a 'hammer' dojo over the 10 day (57.56) Friday, but we are not looking to play a bounce, except to look for a better exit point with any remaining positions.

XL ($92.00; -0.32): Researching a date. Still tightening into a pennant pattern, finally getting a bit of volume on a test of the 50 day Wednesday (89.82). 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 ($38.32; +0.55): Researching a date. Gapped up and hit 42 Wednesday but reversed on big volume. It is now trying to hang on, showing consecutive sessions where is bounced up on decreased volume, unable to hold most of the move. That points to a possible further drop back, so we are eyeing support at the 18 day (36.53) and the 50 day (34.78).

Plays:

GTK (Gtech Holdings--$46.61; -0.47; 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 (connecting the September and late-October lows), and has pulled back from that line since Wednesday, but on much lower volume (113,000 Friday; average 339,200). A good breakout move in October, but lately the moves have 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 (45.67, 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).

SONC (Sonic--$33.72; +0.45; 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 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 a very strong move Wednesday. It has stalled a bit, pulling back Thursday and then pushing up Friday, but on very low volume (62,800; average 256,300). Still holding the short-term MVA's (10 day 33.05), and we can still watch for a move over the recent high with a return to solid volume. 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--$59.98; +0.74; 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: We got a move up after Thursday's rest, but it could not hold it, pulling back from an intraday high of 60.95. Volume was where we wanted it, back above average at 344,600 (average 278,500). This has been a nice bounce from the 18 day MVA (now 55.91), and it could still have some legs; however, we are prepared for the possibility of another test before it continues to run. It is having some difficulty with 60, pulling back to close just under that level Friday, so we would like to see it make another strong move over 60 to keep the run going. The stock is making its third run from the short-term averages after having tested the 50 day (51.82) in early November. Still targeting 65.
BUY POINT: For new or additional positions, after a test of 56-57.50, a move back up on increased volume.
POSITION: Stock and/or February $55 calls to buy (URL BK).

BMS (Bemis--$51.54; -0.60; 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: Testing a 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. It has pulled back, Friday dropping on decreasing volume (129,600; average 219,500), tapping its 10 day MVA (50.96) at its low. Given the light volume on the move up, we could get a test back to the 18 day (50.16), but we will see if it can continue to hold support on low volume, setting up a stronger move.
BUY POINT: After a pullback that holds the consolidation range at 50, the breakout is 52.59 on volume of 330,000.
POSITION: Stock and/or January $50 calls to buy (BMS AJ).

End Part 3 of 4

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