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Begin part 3 of 3
THE PLAYS:
Good movers: CELG; MON; NVLS; SWS; WFR
New Plays:
New Post-Split Plays:
Play Date: 12/16/2006
TALX (Talx Corp.--$26.93; +0.86; optionable): Payroll, human resources services
http://biz.yahoo.com/p/t/talx.html
STATUS: Reverse head and shoulders. Strong volume Friday as TALX started the breakout move from its 8.5 month pattern that is part of a larger 12 month cup base. This type of accumulation pattern often forms at the bottom of a cup and is what sends a stock higher. Strong run in 2005 and it needed a consolidation. This base has done that and TALX is now ready to make a run. It has plenty of upside room before it hits any resistance. That is always a plus, and catching it right as it breaks higher sets us up for great gains.
Volume: 727.067K Avg Volume: 269.429K
BUY POINT: $27.11 Volume=325K Target=$32.95 Stop=$25.65
POSITION: TUB CE - Mar. $25c (70 delta, 79 OI) &/or Stock
http://www.investmenthouse.com/cs/talx.html
Leader: No splits in its history, but in a prime spot to start and to make us some money
Play Date: 12/16/2006
BA (Boeing--$90.70; +0.77; optionable): Airplanes
http://biz.yahoo.com/p/b/ba.html
STATUS: Breakout test. BA has formed a 4 week ascending triangle that is consolidating the strong November breakout and run higher to 92. That move took it out of a 6 month base, airing it out a bit, so to speak. It is making higher lows along the 18 day EMA (89.25) as it bumps up into the 91 to 92 range that is the top of the pattern. Strongest volume of the month Friday as it continued the last bounce off the 18 day EMA. It was expiration, but some large caps were under accumulation. Looking to move in as BA continues higher on volume and clears the closing highs short term downtrend in this pattern. BA is a strong stock that has reached that $90 level that often is just a stopover on the way to 100. We are looking to grab onto that move.
Volume: 5.277M Avg Volume: 4.547M
BUY POINT: $91.05 Volume=6.5M Target=$100.00 Stop=$89.22
POSITION: BA ER - May $90c (57 delta)
http://www.investmenthouse.com/cs/ba.html
Play Date: 12/16/2006
LRCX (Lam Research--$53.34; +0.01; optionable): Chip equipment
http://biz.yahoo.com/p/l/lrcx.html
STATUS: Test 50 day EMA. Going to jump right back on the horse as LRCX bounced right back on Thursday after selling off below the 18 day EMA Wednesday. It is forming a short 4 week double bottom over the 50 day EMA (51.10), consolidating the strong November breakout from a 6.5 month cup with handle base. This is one of the chip leaders, and it is setting up to move higher again toward a new all-time high.
Volume: 3.526M Avg Volume: 3.892M
BUY POINT: $54.65 Volume=5.5M Target=$62.95 Stop=$51.95
POSITION: LMQ CK - Mar. $55c (51 delta) &/or Stock
http://www.investmenthouse.com/cs/lrcx.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. Really struggling right now. No current play.
ATVI: Tentatively set 2-5-07
BCR: No announcement with the board meeting on Wednesday. Researching the next date but looks like mid-January.
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. Has cascaded below the 200 day SMA. Not likely a split with this move.
DRI: Researching the date. Got some e coli and sold back through the 50 day EMA. Will see if it can feel better.
GILD: Tentatively forecast 1-31-07. Pretty ugly fall this month. Trying to hold above the 200 day SMA but the pattern is rather crappy right now.
GPRO: Researching the date.
HET: Forecast 1-18-07. With all the takeover talk it is not going to split unless it goes with that recapitalization option.
JCI: Forecast 1-25-07
JCP: Forecast 1-25-07. Testing that solid move off the 50 day EMA. Will watch it this week and see if it will give us an entry point.
STT: Tentatively set for mid-December. No split but surging higher.
UNP: Tentatively set for 1-25-07
XTO: Forecast with board meeting on 1-26-07
NEW PRE-ANNOUNCEMENT PLAYS:
Play Date: 12/16/2006
BPO (Brookfield Properties--$38.54; -0.15; no options): Property management. Forecast early February.
BACKGROUND: Last announced a 3:2 split on 2-11-05 at $37.30.
http://biz.yahoo.com/p/b/bpo.html
STATUS: Test 50 day EMA. Nice breakout in late August from a 5 month cup with handle base and bouncing up the 50 day EMA since. This is its third test of that key support level (38.07), showing a pair of tight dojis Thursday and Friday to end the week. Looking for it to hold at this level and deliver a strong volume surge as it rebounds through the 10 day EMA (39.14). Nice strength, solid momentum on this continuing breakout move.
Volume: 806.3K Avg Volume: 460.845K
BUY POINT: $39.25 Volume=695K Target=$46.75 Stop=$37.95
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/bpo.html
Play Date: 12/16/2006
FDX (Federal Express--$115.06; +0.09; optionable): Delivery service. Forecast 12-20-06.
BACKGROUND: Last announced a 2:1 split on 3-18-99 at $92.
http://biz.yahoo.com/p/f/fdx.html
STATUS: Test 50 day EMA. FDX is trying to hold the 50 day EMA (114.19) to end last week, undercutting it Wednesday but then immediately retaking that level. This is part of an 8 month reverse head and shoulders pattern that hit some bumpier roads the past four weeks, but is still holding up at key support ahead of the earnings this week.
Volume: 1.851M Avg Volume: 1.782M
BUY POINT: $116.15 Volume=2.7M Target=$130.94 Stop=$113.95
POSITION: FDX DC - Apr. $115c (54 delta)
http://www.investmenthouse.com/cs/fdx.html
Play Date: 12/16/2006
PLCE (Children's Place--$67.02; -0.03; optionable): Apparel store for kids. Forecast mid-February
http://biz.yahoo.com/p/p/plce.html
STATUS: Test 50 day EMA. PLCE broke out from a 5 month cup base in late September and rallied to 72, peaking in early November. It faded into the current base, a short 6 week double bottom using the 90 day SMA (63.63) as support. Volume picked up at the end of last week as PLCE bounced off the second leg. Friday it tried to extend the move but closed below the 50 day SMA (67.44), showing a doji. It may come back a bit to the 50 day EMA (65.90), but solid pattern and solid action, and we are looking to move in as it clears the 50 day SMA.
Volume: 532.617K Avg Volume: 608.697K
BUY POINT: $67.57 Volume=900K Target=$77.75 Stop=$65.77
POSITION: TUY CM - Mar. $65c (62 delta) &/or Stock
http://www.investmenthouse.com/cs/plce.html
Play Date: 12/16/2006
WWW (Wolverine World Wide--$29.11; -0.01; optionable): Footwear and accessories. Forecast 1-2-07
BACKGROUND: Last announced a 3:2 split on 12-15-04 at $31.10.
http://biz.yahoo.com/p/w/www.html
STATUS: Ascending base. Taking another look at WWW now that it has set up again and is heading toward the potential split date in early January. It broke higher in late November on rising volume, clearing an 8 week trading range above the 50 day EMA (28.20). It has spent this month testing, making a higher low at the 18 day EMA (28.84) last week. Volume shot higher on Friday as WWW showed a doji. Ready to break to a new high and we are ready to move in when it does.
Volume: 379.1K Avg Volume: 358.125K
BUY POINT: $29.55 Volume=438K Target=$35.48 Stop=$28.77
POSITION: WWW CF - Mar. $30c (50 delta) &/or Stock
http://www.investmenthouse.com/cs/www.html
CONTINUING PRE-ANNOUNCEMENT PLAYS:
Play Date: 12/07/2006
CLE (Claires Stores--$33.65; -0.36; optionable): Apparel stores. Forecast early January but could hold off until mid-February earnings
BACKGROUND: Last announced a 2:1 split on 11/4/03 at $40.21. Several splits before that.
http://biz.yahoo.com/p/c/cle.html
STATUS: Breakout test. CLE is finally testing the strong break higher to start last week, a gap higher on solid sales and an upgrade. It was stubborn with the gains, but then started to fade Friday on low volume, coming back toward near support at the 10 day EMA (33.38). That is what we wanted to see, giving us an opportunity to enter after the stock gapped over our buy point. Looking for that test of the 10 day and then a rebound on a return of rising trade. Good gap, good test, giving us a good entry into Claire.
Volume: 1.652M Avg Volume: 1.677M
BUY POINT: $33.48 Volume=2.2M Target=$39.95 Stop=$31.78
POSITION: CLE EF - May $30c (69 delta) &/or Stock
http://www.investmenthouse.com/cs/cle.html
Play Date: 12/05/2006
CRDN (Ceradyne--$55.02; -0.96; 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. Still holding at the 10 day EMA, setting up the handle for the next break higher to follow that sky high money flow. Just being patient and waiting for the move. To recap: Strong volume surge to start the month 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: 751.261K Avg Volume: 841.238K
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
Play Date: 12/14/2006
NIHD (NII Hldgs--$68.46; -0.49; optionable): Wireless communications
BACKGROUND: Last announced a 2:1 split on 10-27-05 at $80.80. Before that a 3:1 split on 2-26-04 at $99.80
http://biz.yahoo.com/p/n/nihd.html
STATUS: Test breakout. Gapped higher Friday, continuing the move up the 10 day EMA (67.52) on very strong, above average volume. It could not hold the move, fading to close negative on the session. No real issue for us, just looking for it to continue higher and give us an entry point. To recap: A bit low for its usual split price, but you have to like the pattern. A big runner since, well, it came public in 2003. It needed a breather and formed this 7 month cup with handle base. It worked up and down from late October through November, finally getting some volume the past week after cracking higher. Solid upside volume on the gains, including Thursday as NIHD moved to a new all-time high. Solid action and looking to move into positions as it continues the breakout run.
Volume: 3.074M Avg Volume: 1.674M
BUY POINT: $69.35 Volume=1.6M Target=$79.75 Stop=$67.05
POSITION: QHQ CN - Mar. $70c (53 delta) &/or Stock
http://www.investmenthouse.com/cs/nihd.html
CONTINUING POST-SPLIT PLAYS:
Play Date: 12/07/2006
DBRN (Dress Barn--$23.93; +0.03; optionable): Apparel stores
http://biz.yahoo.com/p/d/dbrn.html
STATUS: Test breakout. A very nice hold above the 18 day EMA (23.60) last week as DBRN tested its strong late November break higher on strong sales. That move broke it out from a rather ragged 7 month base, but it was a solid move and the base long enough to clear out the fluff. Tight doji Friday on rising, above average volume indicates DBRN is ready to make the move higher and continue the breakout.
Volume: 1.058M Avg Volume: 1.071M
BUY POINT: New: $24.58 (orig. $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
CONTINUING LEADERS:
Play Date: 12/14/2006
PMTI (Palomar Medical Tech--$52.45; -0.84; optionable): Medical appliances
http://biz.yahoo.com/p/p/pmti.html
STATUS: Test breakout. Gapped higher Friday on the rah-rah following the CPI release but it closed lower on the session, again hugging the 10 day EMA (52) as it continues the test of the gap higher last Monday. It has made the test and is ready to move higher. To recap: PMTI broke to a new 8-year high last week, gapping up Monday on an FDA approval. That move continued the breakout from a 4 month base back in late October. After a good consolidation mid-November to early December PMTI got the good news and continued the move. Now a nice, low volume test back to the 10 day EMA has tested this last break higher and is giving us a good entry point to get in on the move. Started to rebound Thursday and as it continues the rebound we are ready to move in. Top fundamentals to go along with the great pattern.
Volume: 565.992K Avg Volume: 484.635K
BUY POINT: $53.82 Volume=722K Target=$63.95 Stop=$51.72
POSITION: HKQ EG - May $55c (56 delta) &/or Stock
http://www.investmenthouse.com/cs/pmti.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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