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us stock market, stock watch
Begin Part 3 of 4
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 - Moving up after the test
2) CPRT - May not have a lot of volume, but is making the move
3) FMIB - Volume spike on a test of near term support
4) KIM - Good bounce from support
SASR (Sandy Springs Bancorp--$45.21; +0.85; no options): Splits 3:2 on 12-21-01.
http://biz.yahoo.com/p/s/sasr.html
STATUS: SASR made a very nice breakout last week, and after making a nice, lower volume test back all of this week that held support at the 10 day MVA (43.70; over prior pattern highs at 43), SASR made the move back up today. A solid move with sharply higher volume (14,600; average 17,950), we are now looking for a move over the high to continue the pre-split run. As always, we look carefully at the chart for topping signs that signal a time to exit a pre-split run; stocks can be volatile during this period, and we are quick to take profits when the stock shows it is about to drop and then starts to do so. Because of the volatility, we often will get a chance to play another move before the split (although SASR is now just a week away from the split). With that in mind, targeting 49.
PLAY: Over the high: 45.80 on above average volume, with stock. Stop: 43.
CPRT (Copart--$35.00; +1.28; optionable): Auto parts. Splits 3:2 effective 1-22-02. Catch our audio report on www.On24.com!
http://biz.yahoo.com/p/c/cprt.html
STATUS: Trying to move up. This has been an excellent sector (witness the move by AZO) and CPRT has moved well this year. The stock recovered from the September lows and formed something of a double bottom over the support of its 50 day MVA (then 30, now 32.04). It recently broke to a new high, hitting 37.37 before drifting back and testing the 18 day (33.86) and former pattern highs on low volume over the past week. It made a strong price move Friday on slightly increased volume of 306,200 (average 741,800). The low volume is not our favorite, but with pre-splits after a good pullback, we don't care that much abouve volume: get a few points and bank it and move on.
PLAY: 35.25. Breakout: 36.12 on above average volume, January $32.50 calls to buy (KQJ AZ - under 100 open interest). Stop: 33.80.
FMBI (First Midwest Bancorp--$35.00; -0.11; 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 but breaking through Tuesday with a nice move. It took a breather for a couple of sessions, dipping back with loose dojis over 35 on lower, below average volume, but today there was more activity. FMBI tapped all the way down to its 18 day MVA (34.49) before pulling back up for another loose doji, moving on much higher volume of 152,400 (average 91,800). With the recovery we will see if the upward momentum continues. The high is 35.50, made on an October intraday spike, with this week's high at 35.26. Target: 40.
PLAY: 35.62 on continued strong volume. Stop: 33.50. Stock only. Aggressive: 35.38 on continued strong volume. Stop: 33.50.
KIM (Kimco Realty--$49.69; +0.49): Splits 3:2 effective 12-24-01.
http://biz.yahoo.com/p/k/kim.html
STATUS: Took a big gap down after KIM announced the issuance of additional shares. It had recently broken from a large ascending wedge (pattern highs at 50), and was making a test of the move when the announcement came. The good news is that the stock held its 50 day MVA (49.27), and then Friday made bit of a bounce on huge volume (506,900; average 180,000), larger than we saw on the initial selling on the news. KIM tapped up to its short-term MVA's (49.89) at its high, and we will look for a strong move over that level and its former pattern highs for positions on a run back up going into the split. It could take a few more sessions to wait for the move, but we have seen these drops on news of new issuances, and solid stocks in good pattern have a tendency to recover nicely. Target: 54.
PLAY: 50.32 on continued strong, above average volume, with stock. Stop: 48.75.
PAST SPLITS BEST PLAYS
FIC (Fair Isaac & Co--$62.20; +1.04; optionable): Business services.
http://biz.yahoo.com/p/f/fic.html
STATUS: Great breakout move last week, with FIC now coming back to test the move. We were concerned about the strong selling Thursday, but FIC held over the former handle highs (60) and its 18 day MVA (60.30) at its low Friday, managing to push back up on very solid, increased volume of 331,200 (average 189,300). A solid hold and move back, so we will see if it can continue to hold over 60 and give it a hard move back up. Has been a strong performer, and still looks good. Target: All-time high at 69.90.
BUY POINT: Aggressive: A move over 63 on continued strong volume. Stop: 58. The recent breakout high was 65.
POSITION: Stock and/or April $60 calls to buy (FIC DL).
CONTINUING CANDIDATES BEST PLAYS:
1) IGT - Trying to breakout
2) AZO - A good test of the massive breakout
3) RMD - Ready to move down
4) APPB - Looking to break out again
IGT (International Game Technology--$64.85; -0.31; optionable): Merger with SLOT approved.
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: Announced after hours Friday that the company's merger with SLOT cleared regulatory scrutiny. We will see if that has any effect on the pattern; at any rate, IGT has been looking pretty good, breaking out of its cup with handle on decent volume last week in the rally, continuing a run from the bottom of the handle at the 18 day MVA (then 59, now 62.57). It hit 66.20 before pulling back, now holding over its 10 day MVA (64.03). It has edged up with some tight patterns, Friday hitting the buy point but with reduced volume (1.35 million; average 1.28 million), pulling back to close with a doji off of its high of 66.63. Still looking pretty solid, and we will see how things react Monday, looking for it to hold the 10 day to make another move that it can hold. Targeting 75.
BUY POINT: 66.75 on volume of 1.6 million. Stop: 63.
POSITIONS: Stock and/or January $60 calls to buy (IGT AL).
AZO (Autozone--$73.50; -0.25; optionable): Auto Parts
http://biz.yahoo.com/p/a/azo.html
BACKGROUND: Last announced a 2:1 split in March of 1994 at a price of $58. The annual shareholder meeting was on 12-14-00 at which time no additional shares were authorized.
STATUS: Still holding nicely on the test. AZO gave us an amazing breakout last week (gapping up from a lengthy consolidation over 65), hitting a high of 79.90 on huge volume when it announced its earnings. Since then it gradually pulled back to support and has shown four consecutive dojis over the 10 day MVA (72.73; low on the gap up at 71.85). Volume moved back up to about the levels we have seen on the pullback and consolidation (1.44 million; average 1.58 million). After such an orderly pullback on lower volume, AZO could be ready to move up from these dojis over support. We are initially targeting the breakout high, and see how it handles that.
BUY POINT: Aggressive: From here or after continuing to hold support, a move over 75 on increased volume. Stop: 69.76 (7%, 18 day MVA at 70.49).
POSITION: Stock and/or March $70 calls to buy (AZO AN).
RMD (Resmed--$54.90; +0.90; optionable): Health services.
http://biz.yahoo.com/p/r/rmd.html
BACKGROUND: Last announced a 2:1 split on 2-25-00 with a board meeting. The stock price was $68.
STATUS: We were looking for a bounce to set up a put play, and we got it Friday. RMD gapped below the 50 day MVA (56.28) Monday, and then solid down on higher volume before showing a doji Thursday. The high-volume doji pointed toward a possible bounce, but the move back up was on much weaker volume of 99,200 (average 229,400). After this weak move up, we are looking for the selling to come back strong. The target on a put is the 200 day MVA (51.26).
PLAY: From here: A drop through 54 on above average volume. If we get a bit more of a move up toward 56, we can look at more aggressive entry points on strong selling volume.
POSITION: January $60 puts to buy (RMD AL).
APPB (Applebee's--$35.96; +0.48; optionable): Restaurants.
http://biz.yahoo.com/p/a/appb.html
STATUS: Another strong move today, making a new closing high. After last week's nice breakout, APPB drifted laterally a bit, converging on its 10 day MVA (34.95), and we were looking for a bit more of a lateral consolidation before another move. However, volume kicked in Friday to push APPB again (up to 628,100; average 429,000). Has been a strong performer, and we are riding existing positions and looking for new ones on a continued move over the high (today at 36.25). Target: 40.
BUY POINT: 36.37 on continued strong volume. Stop: 34.
POSITION: Stock and/or February $30 calls to buy (AQB BF - low open interest currently).
POST-SPLIT BEST PLAYS:
1) AMHC - Nice pullback looks to set up another move
AMHC (American Healthways--$36.35; +0.10; no options): Health Services. Split 3:2 effective 11-26-01.
http://biz.yahoo.com/p/a/amhc.html
STATUS: Broke to a new high early this week (37.32, following a late November breakout of a 4-week handle to a cup dating back to July), and is now consolidating over the 36 level. Friday saw AMHC show another doji, this one a perfect one as volume was lower but still strong at 254,400 (average 172,500). This nice consolidation sets up nicely for another move; although this stock has made a great move already, it got new legs with good news on a deal on Monday, and with this pattern it looks like it has some more to go. Carefully protective of profits from here, but ready to play a solid move up. Target: 42.
PLAY: On a move over 37.44 on increased volume, we can look at additional positions with stock. Stop: 34.80 (7%, 10 day MVA at 34.41).
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REMAINING PLAYS:
****
PRE-ANNOUNCEMENTS REMAINING PLAYS:
Watchlist:
TRDO ($27.98; +1.98): Working on a date. TRDO continues to be erratic, blasting back up over the 50 day and short-term MVA's (27.35 and 27.73, respectively) Friday as volume jumped back up (670,600; average 334,700). Trying to form the right side of a cup (left side high from October at 33.79), and from here we can look at aggressive positions on a continued run, with the recent high to watch at 31.20. Stock and/or February $25 calls to buy (UNC BE).
JCI ($78.49; +0.37): Forecast to announce a split on 1-18-02 in conjunction with earnings. At this time, the company cannot confirm this date. Dipped back hard Monday after a downgrade, and now JCI is struggling under its short-term MVA's (79.27). Has some support here from recent lows, with the 50 day at 76.85. May take a while, with the buy point 82.82 on volume of 700,000, with stock and/or January $75 calls to buy (JCI AO - low open interest).
SRCL ($61.64; +0.84): Forecast to announce a split on 2-19-02 after the market closes in conjunction with earnings. Continued up on lighter volume Friday (127,200; average 291,500), closing just below Thursday's high (61.75) and toying with its upper channel trendline, currently at 63. Watching with care as the stock takes on the trendline, looking for a move back toward the short-term MVA's (10 day at 59.19) for a bounce up with new positions.
GNSS ($69.81; +5.61): Working on a date. Has made a nice run, and continued with another one of those 5 point moves Friday. Volume was up again at 3.13 million (average 2.45), and the stock is now at its upper channel from its September-November run. We are being protective with existing positions as GNSS is due for a test back down, with the recent support of the 10 day MVA at 62.77, but it might need to test a bit lower (18 day at 59, up trendline from September at 60).
EDS ($67.33; -0.27): We are researching a date. Has made recent double tops and fallen back. After some hard selling Thursday, EDS could try to hold the 50 day (66.46), which has a lot of support from March-July highs. Volume was way down on Friday's move (2.38 million; average 3.36 million), so we will see. It has already dropped from 72, but we can look at a put play if it can increase the selling pressure on a breach of support, with a target of 62. The aggressive can play a move below 66 on volume of 4 million, with January $70 or $75 puts to buy (EDS MN or EDS MO).
MI ($62.12; +0.82): We are researching a forecast date. MI could have another run in it, but the play is aggressive as MI has made four runs up from the support of its 18 day MVA (61.78) on this trend. The stock has given up the 18 day before, as it did Thursday, but as in the past, Friday saw MI make a move back over that line. However, volume was lower at 232,100 (average 254,500), and we could see a drop back to the 50 day (60).
BMS ($49.26; -0.04): We are researching a date in January. After the weak breakout last week, BMS has pulled back steadily, giving up its 18 day MVA (49.98) but holding up with a 'hammer' doji Friday. It could still drop to the 50 day, but we will keep our eyes on it for a move back up toward its high of 52.47.
THQI ($55.58; -1.27): We are working on a date. A failed breakout, and Friday it dipped back below the 50 day (54.14), rallying back to close over that level. We will see if it holds the 50 day, which has been strong support of late, but selling was very strong last week.
XL ($91.78; +1.48): Researching a date. Has dipped back a bit but is holding the 50 day MVA (89.98), moving up a bit Friday after four consecutive dojis. Volume continued to be low and the stock could not clear the short-term MVA's (closed at the 18 day). 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 92.25 (18 day at 91.78) on above average volume, both with stock and/or January $90 calls to buy (XL AR).
SONC ($35.13; +0.61): We are working on a date. SONC continued up and made a new high (35.30) Friday, but volume has been very low on recent sessions, and only 83,200 Friday (average 263,000). Not the kind of volume that can support a move, so protecting any existing positions from a drop back.
Plays:
NDN (99 Cents Only Stores--$38.33; +0.81; optionable): Retail. Researching a date.
http://biz.yahoo.com/p/n/ndn.html
STATUS: Holding in a handle. NDN held the 18 day MVA (37.05, with some October-November highs) and moved up the last two sessions, but volume was low on the move (down to 155,400 Friday; average 415,900). NDN gapped up and hit 42 last week before reversing on big volume, but after dipping back is forming a handle to a cup (with something of a double bottom configuration) dating back to early October. If it can continue to hold it could set up for another run. We are using the recent high, other than last week's wild spike, for the breakout point. It can make some very solid, abrupt moves up that can just as quickly top and reverse. We will watch the recent high at 42 on a move up, targeting 45.
BUY POINT: Breakout: 39.57 on volume of 600,000. Stop: 36.80 (7%).
POSITION: Stock and/or March $35 calls to buy (NDN CG).
WLP ($114.73; -0.17; optionable): Working on a date.
http://biz.yahoo.com/p/w/wlp.html
BACKGROUND: Based upon our research it does not appear that WLP has ever split its stock. The annual shareholder meeting was on 5-8-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: WLP is in a large cup dating back to late December 2000 (left side high: 120). It was in a nice handle consolidation, but dropped out of it this week, and volume picked up Wednesday as the stock fell to the 50 day MVA (113.61). It has held the last three sessions, testing the 50 day at its intraday lows on some very good volume. WLP has made some solid bounces from this level, so we will see if it can do it again. Recent high at 122.90.
BUY POINT: Aggressive: Over the short term MVA's (10 day at 116.82) on increased volume (up Friday to 740,800; average 734,700). Stop: 112
POSITIONS: Stock and/or January $115 calls to buy (WLP AC).
End Part 3 of 4
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us stock market
stock watch
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