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Begin part 3 of 3
THE PLAYS:
Good movers: AAPL; CAM; CHAP; DRIV; HYSL; SHOO; SPIL; VIP
New Plays:
New Post-Split Play:
Play Date: 09/05/2006
GDI (Gardner Denver--$37.88; +0.59; no options): Compressor & vacuum products, fluid transfer products for various manufacturing industries
http://biz.yahoo.com/p/g/gdi.html
STATUS: Double bottom w/handle. Volume is creeping up the past week as GDI moves up toward the breakout from its 15 week base that formed as GDI split; it needed the breather after the strong run from July 2005 and the end of move gap higher in April 2006. This base has allowed it to consolidate the move and fill the gap. Indeed, the two legs of the double bottom held the gap up point from April, an indication that level is solid support. It is bumping up against the buy point now, and looking for volume to surge as it makes the move.
Volume: 491.8K Avg Volume: 679.132K
BUY POINT: $38.35 Volume=1.1M Target=$44.00 Stop=$36.45
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/gdi.html
New buy point on current post-split position:
Play Date: 09/05/2006
NVDA (Nvidia--$28.50; +0.61; optionable): Semiconductors
http://biz.yahoo.com/p/n/nvda.html
STATUS: Breakout test. Going back to the well again on this market leader as it comes back to once more test the 10 day EMA (27.74) and starts to bounce. This is the second move off of this level since breaking out of its 14 week cup with handle base in mid-August. Strong stocks such as this usually give us 4 to 5 such runs so we are looking to move in as it continues the bounce off the 10 day it started Tuesday.
Volume: 9.077M Avg Volume: 10.412M
BUY POINT: $28.72 Volume=10M Target=$32.95 Stop=$27.68
POSITION: UVA LY - Dec. $27.50c (60 delta) &/or Stock
http://www.investmenthouse.com/cs/nvda.html
New Leader Play:
Play Date: 09/05/2006
WEBX (Webex Communications--$36.66; +0.80; optionable): Web conferencing, etc.
http://biz.yahoo.com/p/w/webx.html
STATUS: Breakout test. Nice test of the 18 day EMA the past two weeks as WEBX tests the mid-August breakout from a 14 week ascending base. That took it to a new 5 year high. Excellent surge and an equally good test. Tuesday it bounced off the 18 day (35.66) on stronger, average volume. Money flow is leading higher and we are looking for WEBX to continue the move where we are going to move in and ride the next run higher. Things can get really interesting after a stock makes the first breakout test, i.e. it can really put on a good move.
Volume: 577.934K Avg Volume: 653.929K
BUY POINT: $37.05 Volume=600K Target=$42.50 Stop=$35.48
POSITION: UWB LG - Dec. $35c (65 delta) &/or Stock
http://www.investmenthouse.com/cs/webx.html
PRE-ANNOUNCEMENT PLAYS
We consider many stocks for pre-announcement plays every week. We get information regarding upcoming announcements and other data that leads us to conclude a split announcement is coming. Even then, however, we have to be discriminating, even more so in the current market. We have to see a strong technical pattern as well, and thus we reject many potential candidates based on a weak technical pattern. 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.
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 and of course the strong earnings growth that put it in the pattern in the first place.
AAPL: Forecast 10-18-06 after the close. Excellent break higher.
AGN: 9-20-06 at 10:00PT.
APH: Looking to third week of October for an announcement, and it will need to rally before then to be ready.
CMI: Tentative date is 10-31-06. Nice volume and a nice break higher off the 50 day EMA.
COG: Tentative: 10-26-06. Trying to bounce off the 50 day EMA
CPRT: Nothing to end August, but possibly early September. Hearing talk of a split in early September, but no definitive date.
CTSH: 10-31-06
CVD: Wildcard as no splits in CVD's history.
DHR: Some word on an announcement in the second week of September.
DVA: Mid-September
ESRX: Hearing talk of something in September, but no confirmation information yet.
FMX: Tentatively set at 10-27-06
LUFK: Looking at early September.
SRCL: Forecast tentatively 10-25-06
SU: Forecast 10-5-06 with a board meeting
TRMB: Reported earnings 7-25-06
VMSI: Forecast tentatively 10-27-06
WYNN: Wildcard. No splits in its history but tentatively looking at late October, early November.
XTO: Forecast 10-19-06
NEW PRE-ANNOUNCEMENT PLAYS:
Play Date: 09/05/2006
DRQ (Dril-Quip--$80.09; +2.09; optionable): Engineered offshore drilling and production equipment
http://biz.yahoo.com/p/d/drq.html
STATUS: Test trendline. DRQ has tested the trendline (77), tapping it on the Tuesday low once more and bouncing on rising though still below average volume. It was energized by the CHV Jack extension well, rallying up to the 50 day SMA (80.26) Tuesday where it stalled out for the day. This is its fourth bounce higher on this trend and stocks usually present 4 to 5 such bounces. Looking to play this move but want to see some more volume as it continues higher.
Volume: 339.3K Avg Volume: 453.138K
BUY POINT: $80.38 Volume=500K Target=$95.00 Stop=$77.00
POSITION: DRQ LP - Dec. $80c (59 delta) &/or Stock
http://www.investmenthouse.com/cs/drq.html
New buy point on current position:
Play Date: 09/05/2006
AAPL (Apple Computer--$71.48; +3.10; optionable): iPods, iMacs, and soon to come iTV?
http://biz.yahoo.com/p/a/aapl.html
STATUS: Reverse head and shoulders. Nice breakout once more Tuesday as AAPL cleared 70 on strong, above average volume. The company announced it is ready for movie downloads with Amazon and that helped the nice breakout from its 5 month base. Nice lateral move the past two weeks over the 200 day SMA (66.77) set up the next move, and that gave it the foundation to make the break higher. Money flow is running higher ahead of price and we are ready to add some positions as it continues.
Volume: 36.049M Avg Volume: 29.065M
BUY POINT: $71.65 Volume=29M Target=$79.95 Stop=$69.82
POSITION: QAA AE - Jan. $72.50c (56 delta) &/or Stock
http://www.investmenthouse.com/cs/aapl.html
CONTINUING PRE-ANNOUNCEMENT PLAYS:
Play Date: 08/19/2006
CTSH (Cognizant Technology--$71.50; +1.76; optionable): Custom IT software. No announcement w/early August earnings report. Researching next date.
BACKGROUND: Last announced a 2:1 split on 4-12-04 at $47.
http://biz.yahoo.com/p/c/ctsh.html
STATUS: Ascending base. Breaking higher off of the 18 day EMA (69.40) on rising volume. Ready to move in as it continues the move. To recap: Perennial market leader and ready to make the break higher. It has already made us some nice money and it is setting up to make us more, split or no split. CTSH broke higher form a 12 week base in early August, came back to test the move and the 50 day EMA (67.04), and then rebounded. It reached the early August high and started to move laterally on lower volume. A top stock in terms of pattern and fundamentals strength.
Volume: 1.289M Avg Volume: 1.456M
BUY POINT: New: $71.72 (orig. $71.11) Volume=1.8M Target=$79.00 Stop=$68.22
POSITION: UPU AN - Jan. $70c (57 delta) &/or Stock
http://www.investmenthouse.com/cs/ctsh.html
Play Date: 08/10/2006
ESRX (Express Scripts--$83.54; -0.67; optionable): Mail order prescription service
BACKGROUND: Last announced a 2:1 split on 5-25-05 at $94.70.
http://biz.yahoo.com/p/e/esrx.html
STATUS: Reverse head and shoulders. Still working over the 10 day EMA (82.98) as we wait for ESRX to deliver the breakout move. Set up well, just needs to drink now that it is at the water. To recap: We are early on ESRX, but would rather be early with this move that is underway. Reported earnings on 7-26-06, and that kept the base going. Breaking higher through the 200 day SMA (81.70) the second week of August, clearing interim resistance in its larger 7 month cup base. Excellent volume as it started higher on this move, and then a nice, low volume in the middle of the month. After that rest it is trying to make the break higher. Looking to move in and take some positions as it resumes the move higher. Moved up the buy point to allow for the resistance that built up during this lateral move.
Volume: 890.031K Avg Volume: 1.775M
BUY POINT: $84.88 Volume=2M Target=$94.90 Stop=$81.78
POSITION: XTQ KQ - Nov. $85c (52 delta) &/or Stock
http://www.investmenthouse.com/cs/esrx.html
Play Date: 08/29/2006
XTO (XTO Energy--$46.81; +0.58; optionable): Independent oil and gas.
BACKGROUND: Last announced a 4:3 split 2-16-05 at $39.10. Before that a 5:4 split on 2-17-04 at 28.50. Before that a 4:3 split on 2-18-03 at 24.20. You get the picture.
http://biz.yahoo.com/p/x/xto.html
STATUS: Reverse head and shoulders. Bounced off the 50 day EMA (45.19) on a strong shot of above average volume, the first in three weeks. Not bad and looking for more to give it the breakout. To recap: Some energy stocks have used the weakness in the sector to simply set up better bases. XTO looks to be one as it works on its 7 month reverse head and shoulder base. Held support at 46, bouncing off that level smartly intraday. Looking for a volume break higher from here to give us the entry.
Volume: 3.694M Avg Volume: 3.586M
BUY POINT: $47.25 Volume=5.5M Target=$54.00 Stop=$45.95
POSITION: XTO AI - Jan. $45c (63 delta) &/or Stock
http://www.investmenthouse.com/cs/xto.html
CONTINUING POST-SPLIT PLAYS:
Play Date: 09/02/2006
AMX (America Movil--$38.14; -0.21; optionable): Wireless telecom in Latin America
http://biz.yahoo.com/p/a/amx.html
STATUS: Test 18 day EMA. Gapped higher on low volume Tuesday and faded for a modest loss, still holding above near support at the 10 and 18 day EMA (37.79, 37.35). Still looks ready to make the move higher. To recap: We took the rest of our gain on AMX when it got overeager to the downside last Thursday, but said we would be back. AMX rebounded Friday on a very strong shot of volume, bouncing up off the 18 day EMA. Ready to move back on as it continues higher.
Volume: 2.773M Avg Volume: 5.128M
BUY POINT: $38.75 Volume=7.7M Target=$44.95 Stop=$37.15
POSITION: AMX AG - Jan. $35c (72 delta) &/or Stock
http://www.investmenthouse.com/cs/amx.html
Play Date: 08/31/2006
BHE (Benchmark Electronics--$25.15; -0.10; optionable): Printed circuit boards
http://biz.yahoo.com/p/b/bhe.html
STATUS: Cup. Holding steady on low volume, still setting up for the break higher. Disappointed it did not move with the rest of the market Tuesday, raising a question mark about its ability to run with the big dogs. We will continue watching it, however, because the pattern is solid and money flow is shooting higher. To recap: BHE is working on the bottom of its cup base, moving more or less laterally the past 12 weeks, forming the bottom of its 16 week pattern. Bounced up off the 200 day this week and has stalled near the prior highs in this part of the patter at 25. Has made the test of the 10 day EMA we were looking for, making a higher low to set it up to run higher and form the right side of its base. Strong money flow is surging higher ahead of price, and after this pause we are looking for BHE to continue higher.
Volume: 284.4K Avg Volume: 624.517K
BUY POINT: $25.52 Volume=725K Target=$29.00 Stop=$25.08
POSITION: BHE AE - Jan. $25c (54 delta) &/or Stock
http://www.investmenthouse.com/cs/bhe.html
Play Date: 09/02/2006
BOOM (Dynamic Materials--$37.36; +1.23; optionable): Industrial metal coatings
http://biz.yahoo.com/p/b/boom.html
STATUS: Cup. Nice break higher on rising, above average volume Tuesday, not waiting to form a handle to its base. If it continues from here we will take some positions. To recap: Took a 2-day breather in its 16 week base, coming back Thursday and Friday after a strong price and volume move Wednesday that took BOOM over the interim highs in the base at 35. It still may come on back to test 35 or the 10 day EMA (35.09) and form a handle; that would give a great entry point. We will, however, start some positions on a continued move higher this week and then see if we get the test.
Volume: 726.476K Avg Volume: 752.129K
BUY POINT: $37.48 (orig. $36.68). On a test of 35, 35.42 on the rebound. Volume=800K Target=$42.50 Stop=$34.48
POSITION: QCB LG - Dec. $35c (62 delta) &/or Stock
http://www.investmenthouse.com/cs/boom.html
CONTINUING LEADER PLAY:
Play Date: 08/26/2006
ASMI (ASM International--$17.56; +0.16; optionable): Chip equipment
http://biz.yahoo.com/p/a/asmi.html
STATUS: Double bottom w/handle. Getting some volume with a shot of slightly above average trade Tuesday as ASMI came off a 10 day EMA (17.30) test. Looking for more of a breakaway move to start the play. To recap: Excellent handle formed last week with a tight, low volume pullback to the 200 day SMA after surging through that level two weeks back on strong volume. Nice handle to the 16 week base, holding the 200 day SMA and ready to follow the rising money flow higher. Plenty of room to run upside, and it can do it quickly as demonstrated on the last two legs higher; just what we want for this week.
Volume: 167.465K Avg Volume: 181.405K
BUY POINT: New: $17.65 (orig. $17.55) Volume=285K Target=$20.97 Stop=$16.95
POSITION: IQB LW - Dec. $17.50c (52 delta) &/or Stock
http://www.investmenthouse.com/cs/asmi.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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