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1/02/07 Stock Split Report Update
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Stock Split Report Subscribers:
MARKET ALERTS
Targets hit alerts: None issued
Buy alerts: BAM; HCP
Trailing stops: AAPL (sold some calls against the stock position); AKAM; CVD; CELG
Stop alerts issued: Cleared some positions ahead of year end as planned. LUK; SINA; DBRN; TRBM
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the SSR alert service you can sign up at the following link:
http://www.investmenthouse.com/alertssr.htm
SUMMARY:
- Market ends 2006 with caution.
After a solid second half, 2006 went out cautiously. A solid run off the summer lows in July just about held to the end of the year. It actually did hold, but as the run gained a bit of age some volatility moved in. It managed to survive that, but in the last two weeks of the year some sellers got the early start on 2007. Not many wanted to lock in gains in 2006 so the indices managed to hold their gains right up to the end. Nonetheless there was some selling of laggard positions as well as some 'beat the Christmas rush' profit taking. Again, not enough to derail the gains, but an indication that the start of 2007 could be a bit bumpy.
Often after a good year or at least a good finish to a year there is a bit of profit taking to start things off. At this stage of the economic expansion (now at roughly 4 years) you have to start wondering just how much is left in the tank for the economy and thus the stock market. After a slowdown in the second half of 2006, however, leading indicators (the good ones such as ECRI) are showing a moderate expansion after 2007 gets underway. With the Fed still on hold and bond yields still relatively low, that typically bodes well for the stock market. The other 'x' factor, inflation, remains under control despite Federal Reserve protestations; the leading inflation indicators actually peaked in late 2005 and the last three inflation readings (CPI, PCE) are finally showing an actual decline in the inflation itself. That third key factor, low inflation, also bodes well for equities.
There is a new Congress to start 2007, and there are several 'bold' measures to be taken up right away. The minimum wage will be addressed and likely hiked; it is a symbolic 'we feel your pain' gesture from the new democratic House, though with a four year economic expansion you have to wonder what pain is being referenced. History shows that the minimum wage hike will only hurt those it is designed to help, but the economy will likely handle it. The more important actions are down the road, i.e. when the Congress gets to the real business of taking on spending reductions and how that impacts the tax cuts. There was a lot of posturing pre-election about no tax hikes unless as a 'last resort,' but you wonder how short a road it is to that last resort. No one on either side of the aisle has the stones to cut any spending, evidenced by the republicans passing Medicare Part D that would never have passed a republican Congress if a democrat was president (it would have been labeled 'tax and spend' politics). The asinine view that $1 in tax cuts equals $1 in revenue reduction still holds sway in Congress (similar to how the Phillips Curve, though completely disproved, still pervades everyday economic attitudes), and thus we face the prospects of the new Congress either expressly trying to raise taxes and undo their beneficial growth effects or punts and will let them start expiring down the road. Social security and Medicare are two huge issues, but if the democrats won't consider fundamental change there won't be any other than in the tax code; a 20% gross tax hike in 10 or 15 years will be the answer, but that will also be the line where the young say 'no mas' and refuse to pay for all us old folks.
As you can see there are economic issues facing Congress in addition to Iraq, oil dependency (we need to get off the pipe dream that ethanol will save us), and even who will represent us at the U.N. Any of those could be a battleground, but you get the feeling that President Bush is throwing in the towel after the last elections. Last time we checked he was still the President, but a lot of strange things happen in the last two years of a 2-term president; they get more interested in legacies than real accomplishments. That can lead to a lot of damage we have to live with for decades. If we would amend the Constitution back to the way it was regarding presidential terms (no limit) or amend it to limit congressional terms as well (to keep it parallel), then we would have more constructive compromise because both sides would know the other could be back yet again. If you know you have to deal with someone to get something done, you go ahead and do it versus waiting out a president you don't like.
Even with all of this (and is it really different from any other years past?), the market starts the year off in good position, still riding an upside rally based on a solid economy. With the economy still looking good overall, there is room for more upside. The transports remain an issue as they break lower, not confirming the latest DJ30 new high. Bond yields remain inverted as well in a combination of world liquidity and concern re the future given the Fed's continued 'tough love' language. Those counter what look to be positives. Indeed, some would say things are viewed too positive as evidenced by the generally positive economic assessments from most of the big think tanks, brokerages, and central banks, not to mention rather high bullishness and low bearishness regarding equity markets.
We will have to see how that pans out. There could be some early bumps on profit taking after the run off the July low. The market could really use a consolidation here that sets up a run into May. By that point we will see the political landscape much better, but outside of major overhauls in Social Security, taxation, and the like (and with a divided White House and Congress that isn't going to happen) the impact will be limited. Thus it is a question of how long the economy can continue throwing off growth. Through the end of the year the market viewed growth prospects favorably. We still see good stocks in good position to move higher. It remains extended an a bit ruffled with the pre-year end shuffling, but overall there is no distribution underway. We will let the new year profit taking run its course, protect what we have, and as always be ready to take what the market gives.
We currently have some positions on the report in good position that we are looking at to move. There are others, upside and downside, we are looking at for the week. Those are listed in the 'Plays' section, and as the week unfolds we will put those on the report as warranted.
THE MARKET
MARKET SENTIMENT
VIX: 11.56; +0.57
VXN: 16.23; -0.09
VXO: 11.25; +0.84
Put/Call Ratio (CBOE): 0.88; -0.03
NASDAQ
Stats: -10.28 points (-0.43%) to close at 2415.29
Volume: 1.426B (+13.21%)
Up Volume: 447M (+299.368M)
Down Volume: 940M (-151.284M)
A/D and Hi/Lo: Decliners led 1.47 to 1
Previous Session: Decliners led 1.48 to 1
New Highs: 120 (-19)
New Lows: 37 (+14)
The Chart: http://www.investmenthouse.com/cd/^ixic.html
SP500/NYSE
Stats: -6.43 points (-0.45%) to close at 1418.3
NYSE Volume: 1.024B (+13.4%)
A/D and Hi/Lo: Decliners led 1.59 to 1
Previous Session: Decliners led 1.3 to 1
New Highs: 166 (-24)
New Lows: 18 (+9)
The Chart: http://investmenthouse.com/cd/^gspc.html
DJ30
Stats: -38.37 points (-0.31%) to close at 12463.15
Volume: 161M shares Friday versus 126M shares Thursday.
The chart: http://www.investmenthouse.com/cd/^dji.html
Support and Resistance
NASDAQ: Closed at 2415.29
Resistance:
The 18 day EMA at 2426
2457 is the July up trendline
2468.42 is the November 2006 high
2471 is the December 2006 high
2477 from January 1999
2493 is an interim peak from February 1999
Support:
2412 from June 1999 low
The 50 day EMA at 2396
2384 is an interim peak from January 1999
2379 is the October high.
2376 is the April high, the former post-2002 high
2368 is the early October handle high.
2333 is the top of the Q1 2006 trading range (the January and mid-March 2006 highs)
2316 from interim tops in January and March 2006 trading range
2300 represents some price support
S&P 500: Closed at 1418.30
Resistance:
1425 is an interim high from November 1999
1432 is the December 2006 high
1444 from February 2000
1475 from peaks in December 1999 and January 2000
Support:
The 18 day EMA at 1416
1408 is the November high
1408 is the July up trendline.
1401 is a low from April 2000
The 50 day EMA at 1396
1390 is the October high.
1389 is a low from November 1999
1378 is a low from May 2000
1371 to 1373 is the December 2000 peak and the January 2001 peak
1358 to 1362 mark a series of peaks from April 1999 to August 1999 high and the February
2002 low at 1360.
Dow: Closed at 12,463.15
Resistance:
Back to 8.6% above the 200 day SMA, about the point where DJ30 started to struggle in late October.
Support:
12,499 is the December intraday high.
The 10 day EMA at 12,436
The 18 day EMA at 12,394
12,361 is the November 2006 high
The 50 day EMA at 12,245
October high is 12,167
11,986 is price support from mid-October and the early November low.
11,865 from the early October consolidation
11,750.28 is the prior all-time high
11,723 is the January 2000 closing high
11,670 is the May intraday high
11,642 is the May 2006 closing high
11,488 is the early September high.
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
January 3
Construction spending, November (10:00): -0.6% expected, -1.0 prior
ISM index, December (10:00): 50.0 expected, 49.5 prior
FOMC minutes, December (2:00)
January 4
Initial jobless claims (8:30): 318K expected, 317K prior
Factory orders, November (10:00): 1.4% expected, -4.7% prior
ISM Services, December (10:00): 57.0 expected, 58.9 prior
January 5
Non-farm payrolls, December (8:30): 110K expected, 132K prior
Unemployment rate (8:30): 4.5% expected, 4.5% prior
Hourly earnings (8:30): 0.3% expected, 0.2% prior
Average workweek (8:30): 33.9 expected, 33.9 prior
THE PLAYS:
Looking at these current plays in good position to move this week:
FRX
GRMN
RATE
SYK
WCN
Looking at these plays as potential new plays this week and will put on the report as warranted:
HOC
MTW
CHL
STLD
SCHN
VIVO
OPTN
COG
CLDN (downside)
EME (downside)
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.
ATVI: Tentatively set 2-5-07.
BCR: Forecast mid-January
BDX: Forecast 1-25-07
BEC: Tentatively forecast first week of January
BPO: Forecast early February
CLE: Looking in early January but pinpointing a date
CRDN: Tentatively forecast early February
CTSH: 2-9-07. Still struggling to hold after falling through the 50 day EMA a week back
DRI: Researching the date
GILD: Tentatively forecast 1-31-07. Tried to move through the 50 day EMA but thus far failing.
GPRO: Researching the date.
JCI: Forecast 1-25-07
JCP: Forecast 1-25-07
PLCE: Forecast mid-February
RNT: Tentatively forecast third week of January
TRMB: Forecast 1-25-07
UNP: Tentatively set for 1-25-07
WCN: Forecast third week of January
WWW: Forecast 1-3-07
XTO: Forecast with board meeting on 1-26-07
CONTINUING PLAYS
* * SPREADSHEET DOWNLOAD * * *
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http://stocksplits.net/ssr/table.php
You will need your password. If you need help click on this link and our automated system will email it to you immediately once you fill in your email address:
http://www.investmenthouse.com/rescue/rescue.php3
LEGEND FOR CONTINUING PLAY TABLE
DATE: date play first appeared on report.
PLAY: Denotes the type of pattern or play.
Upside play types: Asc Tri =Ascending triangle; BO=Breakout; Cup=Cup base; Cup hdl=Cup w/handle; DB hdl=Double bottom w/handle; Dbl btm=Double bottom; Flat=Flat base; FlyPlat=Flying Plateau; Pennant=Pennant; Rv H&S=Reverse head & shoulders; Saucer=Saucer base; Test 18=Testing 18 day MVA; Test 50=Testing 50 day MVA; Test BO=Testing the breakout (could be 10 day MVA test, etc.)
Downside play types: CCall=Covered Call; Dsc Tri=Descending triangle; Dbl Top=Double top; H&S=Head & shoulders; Put (generic downside);
PIVOT=Buy point
Tgt=Target stock price for the play. Applies to stock and options.
Vol=Volume for the most recent session.
TgtV=Target volume to enter the play.
Stop=Stop advisory point. This is advisory and we may or may not exit a play if it hits this level depending upon market conditions.
PLAY STATUS: Buy not hit (stock has not hit buy point); Buy not issued (stock has hit buy point but did not enter due to weak volume, poor intraday action, poor market action); Current (ongoing play already entered); Entered today (entered the play that session); Exited (closed the position); Target hit (play hit initial target; will note if took all or partial gain or let run further); Trailing stop (exited using a trailing stop loss).
Upside Plays
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
AAPL 08/21 Cup hdl 84.84 +3.97 68.12 78.00 38M 40M 88.65
Current. Gapped higher on company release but struggled at 50
day MA. Sold some Jan $85c for $3.90.
AKAM 11/11 DB hdl 53.12 -0.47 50.81 60.95 2.3M 7.5M 53.95
Trailing Stop. Slipped thru the 18 day EMA on the close. As the NASD
leader in 2006 we expect some more weakness to start
2007. Will let it test the 50 day EMA (50.93) & if
it holds & bounces we will look at new positions then.
AKAM 10/21 Test 50 53.12 -0.47 47.20 55.95 2.3M 7M 53.95
Trailing Stop.
AMAG 12/27 Test 18 59.72 -0.01 60.55 71.95 488K 425K 57.97
Current.
ANST 12/26 Cup hdl 27.80 -0.85 28.36 33.95 131K 400K 27.71
Current.
BA 12/16 Asc Tri 88.84 -0.16 91.05 100.00 1.8M 6.5M 89.22
Buy Not Hit.
BAM 12/28 Test 50 48.18 +0.30 48.36 55.75 413K 500K 46.55
Entered today.
BCR 12/07 PreAnn 82.97 -0.46 85.40 99.95 298K 500K 83.58
Current.
BEC 12/26 PreAnn 59.80 -0.65 61.08 70.45 265K 783K 59.48
Buy Not Hit.
BPO 12/16 PreAnn 39.33 +0.12 39.29 46.75 830K 695K 38.08
Current.
CBG 12/28 FlyPlat 33.20 -0.63 34.11 40.95 833K 3.9M 32.72
Buy Not Hit.
CELG 11/27 Test 18 57.53 -0.12 55.57 63.95 2.3M 4.4M 57.65
Trailing Stop. Slid below the 18 day EMA intraday & we decided to take the $ off the table. A 2006 leader, we will see if the profit takers come in early Jan. If they do we will let it test toward 50 day MA (54.50) & see if it can hold & rebound for new buy points.
CLE 12/07 PreAnn 33.14 +0.04 33.57 39.98 654K 2.2M 32.67
Current.
CMTL 11/07 Cup hdl 38.07 -0.66 37.38 44.95 212K 275K 38.05
Current.
COH 09/25 Test BO 42.96 -0.68 35.05 40.48 1.3M 5M 42.54
Current.
CRDN 12/05 DB hdl 56.50 -1.13 57.75 68.95 507K 845K 55.94
Current.
CTRP 12/21 Test BO 62.37 -1.03 63.88 73.48 159K 475K 61.22
Buy Not Issued.
CTRP 12/09 Test BO 62.37 -1.03 58.50 69.95 159K 525K 61.45
Current.
DBRN 12/07 Test BO 23.33 +0.06 23.88 28.95 560K 1.4M 22.65
Exited. Tried to rally but faded back below the 10 & 18 day
MA. Held above the 50 & 200 day MA, but decided to
see how retail responds to the new year.
EZPW 12/18 Test 18 16.25 -0.38 16.65 19.98 502K 2M 15.66
Buy Not Issued.
FMD 11/28 PreSplt 54.65 -0.11 49.75 57.25 617K 1M 52.92
Current.
FRX 12/21 Cup hdl 50.60 -0.24 52.24 59.95 744K 3.5M 50.55
Buy Not Hit.
GPRO 12/13 Cup 52.37 +0.28 53.85 61.55 274K 400K 51.68
Current.
GRMN 12/28 Asc Tri 55.66 -0.59 56.55 66.45 1.8M 4.5M 54.48
Buy Not Issued.
HCP 12/20 Test BO 36.82 +0.52 36.80 4395.0 723K 1.4M 35.74
Entered today.
HRS 12/26 Dbl btm 45.86 -0.82 46.48 54.45 496K 1.6M 44.89
Buy Not Issued.
IBM 12/12 Test 18 97.15 +0.18 95.05 104.95 4.4M 8M 95.45
Current.
IIVI 12/18 Asc Bse 27.94 -0.59 27.64 32.98 130K 270K 27.11
Current.
INAP 12/28 FlyPlat 19.87 -0.05 20.32 24.45 353K 800K 19.31
Buy Not Hit.
INFY 12/19 Test 50 54.56 -0.45 54.37 65.45 549K 2.6M 53.33
Current.
LEH 12/12 DB hdl 78.12 +0.12 78.38 89.95 2.4M 5.5M 76.65
Current.
LH 10/21 Test 50 73.47 -0.43 68.80 78.75 372K 1.5M 72.97
Current.
LUK 12/19 Cup 28.20 -0.36 29.05 33.75 619K 625K 27.99
Exited.
MBT 12/26 Test 18 50.19 -0.19 49.35 58.95 518K 1.5M 48.32
Current.
MER 12/26 PreAnn 93.10 -0.46 93.35 103.95 2.4M 7M 91.11
Current.
MON 11/21 DB hdl 52.53 -0.55 48.44 55.55 1.6M 5.4M 51.28
Current.
MS 12/11 Asc Bse 81.43 -0.16 80.19 91.95 2.4M 5M 79.98
Current.
NVLS 11/18 Test BO 34.42 -0.21 31.80 37.98 2.3M 3.9M 33.57
Current.
PRAA 12/28 Cup hdl 46.69 -0.23 48.08 55.45 168K 225K 45.77
Buy Not Hit.
RATE 12/11 Test BO 37.95 -0.04 39.15 47.45 215K 495K 36.41
Buy Not Hit.
RNT 12/21 PreAnn 28.78 +0.08 28.15 32.95 430K 456K 27.31
Buy Not Issued.
SINA 11/21 Test BO 28.70 +0.18 29.00 33.98 350K 950K 28.45
Exited.
SVVS 12/21 Test BO 35.71 +0.01 36.99 43.98 339K 400K 35.45
Current.
SVVS 12/05 Asc Bse 35.71 +0.01 33.74 39.95 339K 365K 35.45
Current.
SWS 12/12 PreSplt 35.70 -0.72 34.65 39.48 128K 200K 35.95
Current.
SYK 12/18 Test BO 55.11 -0.34 55.55 63.95 796K 1.4M 54.05
Buy Not Hit.
TALX 12/16 Asc Bse 27.45 +0.25 27.38 32.95 252K 325K 26.57
Current.
TRMB 12/19 PreAnn 50.73 -1.25 52.74 60.89 185K 500K 50.95
Exited.
URBN 12/05 Cup hdl 23.03 -0.37 24.75 29.95 1.1M 400K 22.98
Buy Not Issued.
VIP 12/27 Test 18 78.95 -1.30 81.25 96.96 477K 800K 77.15
Current.
VSEA 11/11 Test 50 45.52 -0.49 39.55 44.88 462K 1.2M 44.11
Current.
WCN 12/21 PreAnn 41.55 -0.11 41.75 48.00 170K 344K 40.57
Buy Not Issued.
WWW 12/16 PreAnn 28.52 -0.72 29.55 35.48 213K 438K 28.77
Buy Not Hit.
Downside Plays
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
CVD 12/12 Put 58.91 -0.51 59.84 58.00 150K 550K 59.04
Trailing Stop.
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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