us stock market, trend trading stock

- National ISM falls through 50 and stocks struggle on the news.
- The ISM decline and the economic cycle: has the Fed done it to us again?
- Economic data blitzkrieg continues to dog a tired market, but can new money come to the rescue?

Here's a trade from "The Daily" and insights into our trading strategy:

Chart by StockCharts.com

Company Profile
STATUS: Double bottom w/handle. After a big 2005 move HOLX needed a break and it fell into the current 8 month base. It is now setting for the next break higher. Got a bit rough in November, falling out of the handle but then getting right back into the saddle. Last week it bounced up to the top of the handle and some resistance at 50, fading Friday to test near support at the 10 day EMA. Money flow continues moving higher ahead of price. After this pullback to test near support we are looking for HOLX to deliver a new breakout and start its next run higher.
Volume: 619.792K Avg Volume: 1.054M
BUY POINT: $50.44 Volume=1.5M Target=$60.45 Stop=$47.72
POSITION: QHX CJ - Mar. $50c (53 delta) &/or Stock.

Learn more about "The Daily" with Stock Picks! - Issued 5 Times Per Week

Playing stock splits can be very profitable, but it takes know-how. Our stock split service focuses on three main types of plays:

1) pre-announcement (where we forecast an upcoming split prior to the company making the announcement); 2) pre-split (these plays are made in the days leading up to the actual split day); and 3) post-split plays (plays made after the actual stock split where the stock is showing continued or renewed strength).

For post-splits, we can play them as we would pre-splits (very short term), but we prefer to stretch our horizons, playing the trend. When playing options, we look further out, 2 or more months at least. We let the trend carry us along if there is one, but we will also take profits if the technical pattern degenerates, e.g., breaks a trendline. The main difference between post-splits and pre-splits plays is that we really have to like the pattern. Pre-splits can run right before their splits even with poor technical indicators. For post-splits, we are looking at the stocks from more of a longer term "would I buy this stock at this juncture?" position. Now there are times when a hot stock splits and investors pile in to get in while the stock is 'cheaper.' We play those, but with more of a short-term, pre-splits mentality in that we will be ready to get out fast if the momentum fades.

Remember, everything we do has to pass muster with the market that day ... don't fight the market on these plays.

Here's a post-split play and our current analysis.

Chart by StockCharts.com

Company Profile
We always troll the post-split plays as they tend to set up good bases following their splits, and those bases lead to great breakouts and runs. Now at $6 you would not consider SPIL, a chip equipment company, a regular stock split candidate, but in its 5 year history it has three splits. We watched it as it set up a long, 9 month base, keeping it on the watchlist as we waited for it to show a breakout move. Volume started to climb at the end of October, just as it approached the breakout point from its base. We put it on the report on Halloween and then waited for it to show us a breakout move on strong volume.

On 11-6-06 it broke higher, clearing the handle in the base on strong, above average volume. We moved in with some stock positions at $6.54 and some January $5 call options at $2.40. We love moving in on price breakouts from solid patterns on strong volume. Why? Because they tend to move rapidly. That is not such a big issue with stock positions, but with options you want the stock to move in your direction and to do it quickly. Heck, even with stock we want it to move in our direction quickly.

SPIL did just that. It gapped higher the next session, hesitated, and then moved higher for a week with steady, daily moves up the 10 day EMA. It tested the move on 11-22, but as it held the 10 day EMA on the low and bounced we did not sweat it one bit. It gapped higher the next session and logged a strong move. It gapped higher again on 11-27 (Monday), but then started to give back the move, heading to close off its high. After the strong run it has hit our initial target and was showing some wear and tear; it was time to take some gain. We sold some stock at $7.95 or a 21.5% gain and some options for $3.50, a 45% gain. It faded to the 10 day EMA the next session, gapping lower but managing to hold that near support. It was back up to the prior high to end the week despite the overall market. Yep, love to play solid post-split stocks.

Learn more about our Stock Split Report and how we have made gains of 321% with our powerful stock split plays!
Details Here.