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us stock market, trade stock
Begin part 3 of 3
THE PLAYS:
New Plays:
New Pre-Split Play:
Play Date: 12/12/2006
SWS (SWS Group--$33.90; +0.54; optionable): Investment brokerage. Splits 3:2 on 1-3-06
http://biz.yahoo.com/p/s/sws.html
STATUS: Test breakout. SWS broke out from a 6 month double bottom w/handle in early November, and is now making its second test of that breakout, coming back to the 10 day EMA (33.43) the past week. Held that level and bounced Tuesday. Strong money flow is holding up and leading the way for price to follow. A stock will typically make 4 to 5 such bounces and that leaves plenty of room for SWS to continue stair-stepping higher.
Volume: 192.5K Avg Volume: 149.577K
BUY POINT: $34.21 Volume=200K Target=$39.25 Stop=$32.75
POSITION: SWS CG - Mar. $30c (55 delta, 160 OI) &/or Stock
http://www.investmenthouse.com/cs/sws.html
New Post-Split Plays:
Play Date: 12/12/2006
LEH (Lehman Brothers--$76.67; -0.28; optionable): Investment brokerage
http://biz.yahoo.com/p/l/leh.html
EARNINGS: 12-14-06
STATUS: Double bottom w/handle. LEH has formed this current 8 week pattern over the 50 day EMA (74.77), setting up for the move higher. This is actually the handle of an 8 month cup with handle. It tested lower toward the 50 day EMA on rising, above average volume on the GS news and managed to recover. Set up well to move, and after the initial earnings from the area are in we anticipate a continued move higher.
Volume: 4.374M Avg Volume: 3.665M
BUY POINT: $78.11 Volume=5.5M Target=$89.95 Stop=$75.65
POSITION: LES DP - Apr. $80c (50 delta) &/or Stock
http://www.investmenthouse.com/cs/leh.html
Leader:
Play Date: 12/12/2006
IBM (International Business Machines--$94.12; +0.48; optionable)
http://biz.yahoo.com/p/i/ibm.html
STATUS: Run to 100. IBM is working on a very large base. Strong surge in October on earnings results pushed it past the late 2005 highs. It started to stall in November, working laterally for four weeks then tested lower at the end of the month. It surged higher to start December, clearing the November high. It has come back to test the move, holding at the 10 day EMA (93.52). Tuesday volume jumped above average as the stock bolted higher. It closed off the high but looks ready to complete the run to 100. That is our initial target on the option play but with the momentum it generates, it can likely clear that in the push higher before weakening and coming back to test the century mark after clearing it.
Volume: 7.799M Avg Volume: 6.144M
BUY POINT: $94.65 Volume=8M Target=$104.95 Stop=$92.88
POSITION: IBM DS - Apr. $95c (55 delta)
http://www.investmenthouse.com/cs/ibm.html
Downside
Play Date: 12/12/2006
CVD (Covance--$60.38; -1.27; optionable): Pharma, biotech product development services
http://biz.yahoo.com/p/c/cvd.html
STATUS: Put. Imploded in late October after a three year run higher. A stock can get to a point where it just cannot grow the earnings enough to satisfy the street, and when it disappoints unexpectedly, gravity is a witch. It scratched out a rebound in November and on into this month, making it back to the 50 day EMA (61.40) the past week. Tried to move through that level Monday but no volume. The volume came in today, but it was downside. Money flow has turned back down once more ahead of the stock price, and we are ready to move in as CVD turns lower once more. A move to the target lands a 50%ish move.
Volume: 768.3K Avg Volume: 544.382K
BUY POINT: $60.18 Volume=550K Target=$58.05 Stop=$60.98
POSITION: CVD ML - Jan. $60p (-43 delta)
http://www.investmenthouse.com/cs/cvd.html
Play Date: 12/12/2006
TJX (TJ Max--$27.67; -0.50; optionable): Discount department stores
http://biz.yahoo.com/p/t/tjx.html
STATUS: Put. Another leader that going to the mattresses for awhile. Nice breakout and run from August through October, but the tank ran dry and it dumped lower the last half of November, falling through the 90 day SMA (27.99). That bounced it back up, but low volume has plagued it up to the 50 day EMA (28.16). Tuesday it turned down and back through the 90 day on a shot of much higher, average trade. Last time it did this it continued lower for another couple of points, and we are looking for the same move here. A move to the target lands a 40%ish gain.
Volume: 3.471M Avg Volume: 3.795M
BUY POINT: $27.49 Volume=3.5M Target=$25.84 Stop=$28.08
POSITION: TJX MF - Jan. $30p (-62 delta)
http://www.investmenthouse.com/cs/tjx.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. We have to see a strong technical pattern as well, and thus we reject many potential candidates based on a weak technical position. Some we consider have announced, but have not fared well given their technical patterns were weak to begin with.
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.
APH: Forecast 1-17-07
ATVI: Tentatively set 2-5-07
BCR: Forecast 12-13-06 with a board meeting. Nice test of the 10 day EMA ahead of the Wednesday board meeting.
BDX: Forecast 1-25-07
CLE: Looking in early January but pinpointing a date
CRDN: Forecast 12-18-06
CTSH: 2-9-07
DIOD: Tentatively set 2-5-07
GILD: Tentatively forecast 1-31-07
HET: Forecast 1-18-07
JCI: Forecast 1-25-07
JCP: Forecast 1-25-07
STT: Tentatively set for mid-December
UNP: Tentatively set for 1-25-07
XTO: Forecast with board meeting on 1-26-07
CONTINUING PRE-ANNOUNCEMENT PLAYS:
Play Date: 12/09/2006
BDX (Becton Dickinson--$72.55; -0.12; optionable): Medical instruments and supplies. Forecast 1-25-07.
BACKGROUND: Last split 2:1 on 8-20-98 at $82.76. Before that it split in 1996 and 1993 at roughly the same price.
http://biz.yahoo.com/p/b/bdx.html
STATUS: ascending base. Very nice, orderly fade to hold the 10 day EMA (72.34) Tuesday as BDX tries to make a higher low at that point and set up the breakout to a new all-time high. Solid pullback in a solid pattern. To recap: BDX is working on a 9 week base formed above the 50 day EMA (71.08), part of a bid stair-step up higher as BDX bases, rallies, bases, rallies. Positive accumulation in the pattern combines with surging money flow. Looks ready to make the break higher as it paused to end last week on lower volume, holding its gains. When the volume returns it will be ready to continue higher.
Volume: 708.5K Avg Volume: 919.657K
BUY POINT: $73.45 Volume=1.4M Target=$84.95 Stop=$71.78
POSITION: DBX CN - Mar. $70c (67 delta) &/or Stock
http://www.investmenthouse.com/cs/bdx.html
Play Date: 12/05/2006
CRDN (Ceradyne--$54.86; -0.33; optionable): Ceramic armor products. Forecast 12-18-06.
BACKGROUND: Announced a 3:2 split on 12-20-04 at $53.20. Prior to that a 3:2 split on 3-11-04 at $34.20.
http://biz.yahoo.com/p/c/crdn.html
STATUS: Double bottom w/handle. The excellent pullback continues with CRDN holding the 10 day EMA with a low volume doji after testing lower intraday. Great shakeout action and looking for a break higher off of this level. To recap: Strong volume surge Tuesday as CRDN broke higher out of the three week handle to its 9 month base. After a strong surge from 2003 through 2005 CRDN needed a break before running again, and this current base has done just that. Volume has returned en masse starting in November when the stock moved off the bottom of the pattern and started forming the right side of its base. That is exactly what you want to see as it starts up. It then dried up during the handle to below average, again just what you want to see. Then the big volume breakout, also just what you want to see. Money flow is screaming higher. CRDN looks to follow it.
Volume: 369.152K Avg Volume: 837.158K
BUY POINT: $56.55 Volume=845K Target=$67.95 Stop=$54.95
POSITION: AUE CK - Mar. $55c (58 delta) &/or Stock
http://www.investmenthouse.com/cs/crdn.html
CONTINUING POST-SPLIT PLAYS: Still looking ready to move.
Play Date: 12/02/2006
ANST (Ansoft--$27.50; -0.45; optionable): Electronic design automation software
http://biz.yahoo.com/p/a/anst.html
STATUS: Cup w/handle. Could not continue higher Tuesday though the volume came in. Trade moved up to average as ANST tested back, holding above the 10 day EMA on the close. Still set up very well for the breakout move. To recap: Nice surge 2 weeks back, showing volume unlike the market, rallying up the right side of a short 6 week base formed after ANST hit a new all-time high in mid-October. Nice stair-step higher as it broke out from a 4 month pattern in August that set up this run. Friday it was sold off but volume faded back to average as it tapped the 10 day EMA (26.52) on the low and bounced modestly. Going to be patient and wait for this test to complete; might form a handle here to this base. When it starts back up on volume we will move into this market leader.
Volume: 257.207K Avg Volume: 253.122K
BUY POINT: $28.08 Volume=400K Target=$35.97 Stop=$26.42
POSITION: UZD DE - Apr. $25c (66 delta, low OI) &/or Stock
http://www.investmenthouse.com/cs/anst.html
Play Date: 12/09/2006
ATW (Atwood Oceanics--$50.39; -0.37; optionable): Oil and gas offshore drilling
http://biz.yahoo.com/p/a/atw.html
STATUS: Cup w/handle. Low volume tap at the 10 day EMA (49.85) on the Tuesday low and a rebound to close flat. Nice test, holding near support and ready to bounce. To recap: Volume surged Friday as ATW started the breakout move from its 8 month base. One of the leaders in the 2005 run higher, this base has reset ATW for a new move higher. Friday it started that move. One of those patterns we talked about in the summary that shows what is ahead for oil prices.
Volume: 450.6K Avg Volume: 453.48K
BUY POINT: $51.48 Volume=475K Target=$60.95 Stop=$49.11
POSITION: ATW CJ - Mar. $50c (61 delta) &/or Stock
http://www.investmenthouse.com/cs/atw.html
Play Date: 12/07/2006
DBRN (Dress Barn--$24.16; -0.17; optionable): Apparel stores
http://biz.yahoo.com/p/d/dbrn.html
STATUS: Breakout test. Gapped lower and rebounded on volume Monday, then tested and held the move Tuesday (and the 10 day EMA) on lower, below average volume. Set up well to hold and break higher, following that strong money flow. To recap: DBRN formed something of a reverse head and shoulders the past 7 months and it blasted higher in late November, surging on strong volume and breaking from the accumulation pattern. It is testing the gain the past week on lower volume, refusing to give up the gain. May take another session or two to finish the test and then head up again as it looks for a new high on this run. A solid market leader that has based well, made the breakout, and is on the first test. That is one of our favorite entry points.
Volume: 834.275K Avg Volume: 1.091M
BUY POINT: $25.05 Volume=1.4M Target=$29.95 Stop=$23.68
POSITION: DTQ CE - Mar. $25c (53 delta) &/or Stock
http://www.investmenthouse.com/cs/dbrn.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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