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Begin part 3 of 3
THE PLAYS:
Good movers: AEOS; CVD; CWTR; DIOD; HYSL; LVS; NVDA; VIP; WEBX; WST; ATW
New Plays:
New Post-Split Play:
Play Date: 09/12/2006
QLGC (Qlogic--$19.15; +0.34; optionable): Storage network infrastructure
http://biz.yahoo.com/p/q/qlgc.html
STATUS: Cup w/handle. Some very good volume the past two weeks as QLGC broke higher and through the 200 day SMA (18.22) then moved laterally to test, waiting for the 10 day EMA (18.65) to rise up to meet it. Nice 17 week pattern has formed and this lateral move is setting the next break higher. Been awhile since we were really interested in making a play on QLGC, but this has set up well and sports 5 to 2 accumulation (5 up price weeks on rising volume to 2 down price weeks on rising volume). Plenty of buying has set up the break higher. The target is a bit lower; looking to use options to leverage our gain but stock can bring a nice return as well.
Volume: 2.56M Avg Volume: 1.978M
BUY POINT: $19.28 Volume=2.8M Target=$21.75 Stop=$18.52
POSITION: QLC AW - Jan. $17.50c (66 delta) &/or Stock
http://www.investmenthouse.com/cs/qlgc.html
Play Date: 09/12/2006
WBSN (Websense--$22.40; +1.04; optionable): Employee internet management and web security software
http://biz.yahoo.com/p/w/wbsn.html
STATUS: Test 50 day EMA. WBSN was a strong leader in 2004 and 2005 then the tank ran dry in late 2005 and early 2006, forming a broad top and rolling over into a 6 month downtrend below the 18 day EMA. It bottomed in July and started back up, clearing the 50 day EMA (20.44) in mid-August, then spending the rest of that month and this one consolidating laterally above that level. Volume started to tick higher sporadically this month and then Tuesday it jumped well above average as WBSN broke hard off the 50 day. Looking to start some positions as it continues higher. A bit riskier down here, but a good rounded bottom to buy off of.
Volume: 1.841M Avg Volume: 848.371K
BUY POINT: $22.57 Volume=850K Target=$25.95 Stop=$20.99
POSITION: DQH AX - Jan. $22.50c (63 delta) &/or Stock
http://www.investmenthouse.com/cs/wbsn.html
New Leader Play:
Play Date: 09/12/2006
CRM (Salesforce.com--$35.12; +1.82; optionable): On demand customer relationship management
http://biz.yahoo.com/p/c/crm.html
STATUS: This was a big winner for us in late 2005, and after that run it needed a breather. It came off the bottom of its 7 month base with a reverse head and shoulders pattern, gapping higher in mid-August and then consolidating that move without losing ground as it moved laterally over the 200 day SMA (32.58). Tuesday it surged again Tuesday on a shot of above average volume. Money flow is surging higher and we are looking for CRM to continue the move and we are ready to move in.
Volume: 2.561M Avg Volume: 2.074M
BUY POINT: $35.55 Volume=3M Target=$41.95 Stop=$33.65
POSITION: CRM AG - Jan. $35c (59 delta) &/or Stock
http://www.investmenthouse.com/cs/crm.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
AGN: 9-20-06 at 10:00PT. Held the 50 day EMA and bounced on Friday
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. Still at the 90 day MA.
CPRT: 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. Nothing this week thus far as DHR continues to flounder at the 50 day EMA.
DIOD: Forecast early November.
DRQ: Announced the split but was in a nasty, trend-breaking dive when it came. Managed to pull out of the dive at the 200 day SMA but has not moved up yet.
DVA: Mid-September
ESRX: Hearing talk of something in September, but no confirmation information yet. Nice recovery showing some progress.
FMX: Tentatively set at 10-27-06
LVS: Researching the date.
SRCL: Forecast tentatively 10-25-06
TRMB: Reported earnings 7-25-06
VMSI: Forecast tentatively 10-27-06. 44 gave way and it tumbled to the 200 day SMA
WST: Researching date.
WYNN: Wildcard. No splits in its history but tentatively looking at late October, early November.
NEW PRE-ANNOUNCEMENT PLAYS:
Play Date: 09/12/2006
GIL (Gildan Activewear--$50.52; +1.21; no options): Activewear manufacturing
BACKGROUND: Last announced a 2:1 split on 5/5/2005 at $44.20
http://biz.yahoo.com/p/g/gil.html
STATUS: Double bottom w/handle. Strong volume Tuesday as GIL came off the 18 day EMA (49.23), looking for the breakout from its 25 week base, ready to move to an all-time high. Strong technical pattern and one of the best set of fundamentals in the sector. Money flow is surging higher ahead of the price and we are looking to move in as GIL makes the breakout on some more solid trade.
Volume: 291.8K Avg Volume: 205.417K
BUY POINT: $50.88 Volume=210K Target=$58.50 Stop=$48.84
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/gil.html
New buy point on current play:
Play Date: 09/12/2006
CPRT (Copart--$28.87; +1.17; optionable): Salvage vehicle sales via the internet. Forecast in September.
BACKGROUND: Last announced a 3:2 split on 12-12-01 at $34.80. Was a frequent splitter at this level.
http://biz.yahoo.com/p/c/cprt.html
STATUS: Reverse head and shoulders breakout. Strong volume Tuesday as CPRT finally made the breakaway move from its 6 month base. It tried the move in mid-August, but the volume was just not quite there. It bounced along the 18 day EMA (27.70) the past three weeks and then the Thursday blast higher. Looking to move in with some positions on a further move and then add to it when CPRT tests the breakout, holds and then starts the move back up.
Volume: 563.69K Avg Volume: 322.028K
BUY POINT: $29.04 Volume=325K Target=$33.95 Stop=$27.57
POSITION: KQJ AE - Jan. $25c (71 delta) or KQJ AF - Jan. $40c (49 delta) &/or Stock
http://www.investmenthouse.com/cs/cprt.html
CONTINUING PRE-ANNOUNCEMENT PLAYS:
Play Date: 08/19/2006
CTSH (Cognizant Technology--$71.70; +2.08; optionable): Custom IT software. Forecast 10-31-06
BACKGROUND: Last announced a 2:1 split on 4-12-04 at $47.
http://biz.yahoo.com/p/c/ctsh.html
STATUS: Ascending base. Volume was up but still below average Tuesday as CTSH posted a strong price gain. It is trying to make the break from its base; just needs some volume. To recap: CTSH made us some nice money earlier in the year and it has set up to make us more, split or no split. CTSH broke higher from a 12 week base in early August, came back to test the move and the 50 day EMA, and is now moving laterally in a flat consolidation over the 18 day EMA. A top stock in terms of pattern and fundamentals strength.
Volume: 1.121M Avg Volume: 1.388M
BUY POINT: $72.15 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: 09/09/2006
DE (Deere & Co.--$81.10; +1.42; optionable): Farm & construction machinery
BACKGROUND: No splits in DE's history, but others in its field have announced.
http://biz.yahoo.com/p/d/de.html
STATUS: Double bottom w/handle. Still working on the handle, trading up and down day to day as it works laterally and slightly lower over the 90 day MA (78.88). Just being patient and letting the move come to us. To recap: They say nothing runs like a deer, and the green and gold looks ready to gallop once this base completes. Nice surge in late August to finish the right side of its 9 week base. Now working laterally on lower volume, forming the handle where the near term profit takers are shaken out. Strong earnings helped propel it to that big gain, and after this shakeout toward 80 it will be ready to make the break and put some more serious mileage on to the upside.
Volume: 3.138M Avg Volume: 2.641M
BUY POINT: $82.78 Volume=4M Target=$93.00 Stop=$79.95
POSITION: DE LP - Dec. $80p (60 delta) &/or Stock
http://www.investmenthouse.com/cs/de.html
CONTINUING POST-SPLIT PLAYS:
Play Date: 09/07/2006
IGT (International Game Technology--$39.25; +0.74; optionable): Computerized gaming machines
http://biz.yahoo.com/p/i/igt.html
STATUS: Ascending base. Volume was up again Tuesday as IGT danced with the breakout and the buy point. Solid move and a solid pattern. Looking to step in as it continues higher and shows us the breakout. To recap: Tried the breakout last wee on volume, bouncing back just below the breakout from its 18 week base formed along the 50 day EMA (37.65). Excellent 6 to 2 accumulation (6 up price weeks on rising volume to 2 down price weeks on rising volume) shows plenty of buying as IGT sets up for the breakout. This is part of a much larger 2 year base and this is the handle to that pattern. Like the vices as the economy may get a bit softer.
Volume: 2.844M Avg Volume: 2.206M
BUY POINT: $39.35 Volume=2.3M Target=$45.50 Stop=$37.45
POSITION: IGX AH - Jan. $40c (52 delta) &/or Stock
http://www.investmenthouse.com/cs/igt.html
Play Date: 09/11/2006
XRAY (Dentsply--$32.23; +0.03; optionable): Dental instruments
http://biz.yahoo.com/p/x/xray.html
STATUS: Test breakout. Still testing the 50 day EMA (31.64), reaching down to the 50 day intraday Monday and Tuesday, then rebounding on solid trade. This looks to have completed the test. To recap: Taking another look at WEBX as it comes off a test of the mid-August breakout from a 14 week ascending base. Strong breakout on strong volume and now a good test on lower, below average volume. Money flow is moving higher ahead of price. Strong 5 to 2 accumulation (5 up price weeks on rising volume to 2 down price weeks on rising volume) show solid buying in the base. Looks ripe to break higher once more to a 5.5 year high.
Volume: 833.496K Avg Volume: 729.577K
BUY POINT: $32.45 Volume=740K Target=$36.50 Stop=$31.55
POSITION: XEQ AZ - Jan. $32.50c (51 delta) &/or Stock
http://www.investmenthouse.com/cs/xray.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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