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Begin Part 3 of 4

PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: Looking at GNSS and DIAN for Thursday, with JCI (which is dying) on Friday.

NEW PRE-ANNOUNCEMENT PLAYS: We have some good ones on the radar, but not at good buy points at the moment.

ETH (Ethan Allen--$41.11; -0.15; optionable): Forecast to announce a split on 1-17-02 before the market opens with earnings.
http://biz.yahoo.com/p/e/eth.html
BACKGROUND: Last announced a 3:2 split on 4-28-99, approximately 2 weeks after earnings release. The stock price was $34.64. The annual shareholder meeting was on 11-15-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: ETH broke over the highs of its February-August range in December, and has made a nice series of bounces up along its 18 day MVA (41.02). It has pulled back to that support this week, showing a doji Friday as volume continued to decrease (100,300; average 230,900). We could get one more solid bounce going toward the forecast with earnings this week, and we would play that move with a mind to catch the bounce, take some profits, and then catch any run on the announcement, ready to take profits when the move stalls. The reason is that ETH has made three bounces since the breakout, and we rarely see more than four. Also, we are somewhat wary of the retail sector at this point. The high on the last bounce was 43.45, and we are targeting 46.
BUY POINT: A bounce over 42 on above average volume. Stop: 40.
POSITION: Stock and/or February $40 calls to buy (ETH BH).

BEST PLAYS: Besides the plays set forth below as best plays, there are some other stocks that also look good. These include Pre-Announcements NDN; Pre -Splits XRAY and VAR; and Post-Split CBH.

MARKET FAVORITES BEST PLAYS:
1) INTC - Testing the breakout
2) ERTS - Looks good for a put
3) KLAC - A test of its break over the down trendline

INTC (Intel--$34.55; -0.10; optionable): Semiconductor
http://biz.yahoo.com/p/i/intc.html
STATUS: Broke out and cleared the left side highs of a 2-month cup in mid-November, and after forming a short handle over 30 level, made another terrific breakout at the start of this month. INTC is currently testing that move and holding support at the 10 day (34.46) as volume is dropping (down Friday to 39.59 million, average 48.92 million). A decent test, and we will look for it to hold the 10 day and make a strong move back up if we get some tech strength. The recent high is 36.78. Targeting 42.
BUY POINT: Aggressive: A move over the recent closing high of 35.79 on above average volume. Stop: 33.75. Over the breakout high: 36.90 on above average volume. Stop: 34.32.
POSITION: Stock and/or April $30 calls to buy (INQ DZ).

ERTS (Electronic Arts--$54.50; -3.09, optionable): Computer Software & Services.
http://biz.yahoo.com/p/e/erts.html
STATUS: After making a solid breakout in late November (of a 7-week handle to the familiar v-shaped cup), ERTS hit a high of 66.92 in early December and began pulling back to test the move. This is another of the video group (e.g., NVDA, THQI) that is under stress. It looked as though it had found support at the 50 day MVA (58.31), but finally gave up that support Thursday and then tanked through the 200 day (56.13) Friday as volume shot up 6.08 million (average 2.97 million). On this breakdown we are looking at a put play, but may see a failed test of the 200 day before we get another big drop. The initial target is the October-November lows at 50, but we could see a drop down to 45.
BUY POINT: From here: A move down through 53.13 on continued strong volume. Test: After a push up to the 200 day fails, a stronger move down through 54.50 on continued strong volume.
POSITION: February $60 puts to buy (EZQ NL).

KLAC (Kla-Tencor--$56.84; -1.22; optionable): Semiconductor.
http://biz.yahoo.com/p/k/klac.html
STATUS: KLAC made a very nice bounce up from a the late December test of the 50 day MVA (51.26), making a run over its down trendline (from September 2000 and mid 2001 highs) and December high (57.60, the high in KLAC's former handle to its cup dating back to August). After a mid-week intraday spike hit up toward those mid-2001 highs at 61, KLAC has pulled back to test the trendline. Friday it tapped the trendline at its low of 55.98 (with its 10 day MVA, at 55.66), moving up to close as volume was down but not weak at 8.37 million (average 8.66 million). We want to see support continue to hold for a strong bounce up from here. Target: 66.
BUY POINT: Aggressive: A move back over the recent closing high of 58.46 on increased above average volume. Stop: 54.37 (7%). Over the breakout high: 60.42 on volume over 10 million. Stop: 56.19 (7%).
POSTION: Stock and/or March $55 calls to buy (KCQ CK).

PRE-ANNOUNCEMENT BEST PLAYS
1) DHR - Making a move
2) DRI - Still setting up
3) GNSS - Holding up going into the forecast

DHR (Danaher--$63.69; +1.52; optionable): Forecast to announce a split on 1-24-02 before the open with earnings; however, the company has declared a quarterly dividend which could make a split announcement less likely.
http://biz.yahoo.com/p/d/dhr.html
BACKGROUND: Last announced a 2:1 split on 3-6-98 with a board meeting. The stock price was $70. The annual shareholder meeting was on 5-1-01 at which time authorized shares were increased. The company has enough shares for a 2:1 split.
STATUS: Made the move back up today. DHR had been testing its break over its long-term down trendline (from November 2000), showing several dojis over that level (and the 10 day MVA, at 61.92). On the move DHR reached up to 64.25, which is just over its December high of 64.10, but pulled back as volume was not very strong (though up at 970,900; average 1.24 million). The December highs were made on a break from its reverse head-and-shoulders pattern, but that breakout failed on a downgrade. Looking for more volume (a must here!) here to sustain a move, looking at possible resistance at the May-June highs at 65, but targeting the high at 69.81.
BUY POINT: 64.37 on volume of 1.7 million. Stop: 60.
POSITION: Stock and/or March $60 calls to buy (DHR CL).

DRI (Darden Restaurants--$37.51; +0.11; optionable): We are working on a date.
http://biz.yahoo.com/p/d/dri.html
BACKGROUND: Based upon our research it does not appear that DRI has ever split its stock. The annual shareholder meeting was on 9-20-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: A very nice breakout last week, and DRI is testing the move, showing its fourth consecutive doji over its 10 day MVA (36.86). The breakout (from a nice handle-type consolidation) was the second solid move for DRI since it broke out of a cup with handle in early December, and although it took out a long-term upper channel trendline (which is just below the 10 day), DRI looks like it could continue with a solid move along the steeper trend established the last month. DRI has drifted slightly up over the last several sessions on low volume (424,100 Friday; average 671,500), not the greatest action, but we are still looking for a strong move up and out of this pattern, using care to protect profits. Target: 43.
BUY POINT: Over recent high: 38.51 on increased volume. Stop: 35.81 (7%).
POSITION: Stock and/or April $35 calls to buy (DRI DG).

GNSS (Genesis Microchip--$72.11; +0.57; optionable): Semiconductor. NEW INFORMATION Forecast to announce a split with earnings, on January 17 after the close.
http://biz.yahoo.com/p/g/gnss.html
BACKGROUND: Based upon our research it does not appear that GNSS has ever split its stock. The annual shareholder meeting was on 9-20-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: GNSS broke out from its small pennant Wednesday on good volume, but the move stalled at the intraday high of 74.90 and it pulled back with the market to close. However, the stock has not given up much ground, holding up very well over the prior pattern highs (70.91) as volume has decreased on Friday's doji (1.7 million; average 2.53 million). Looking for GNSS to hold those highs and then continue the breakout move. On that move, a target of 80 initially.
BUY POINT: After holding 71, a move back over 73.20 on volume of 3 million. Stop: 68.08 (7%).
POSITION: Stock and/or March $70 calls to buy (QFE CN).

PRE-SPLITS BEST PLAYS: Remember, we try to grab these as they break out of good patterns or as they start a run right before the split. Not looking for home runs, but looking for those $3 to $4 moves running into the split, watching for topping signs and potential resistance. Not huge money, but it can be very steady. We set our initial stops at the 7-8% range below the purchase price (or just below obvious support), and move them up on a move to preserve our profits.
1) SYMC - Testing the move
2) LIZ - Still in the lateral pattern going toward the split
3) HOTT - Nice pattern

SYMC (Symantec--$70.75; -1.25; optionable): Splits 2:1 effective February 1.
http://biz.yahoo.com/p/s/symc.html
STATUS: Nice breakout move Wednesday, but it could not keep it going, dipping back the last two sessions. The pullback has been orderly, however, holding the prior pattern (cup with handle) highs (71), with decreasing volume (2.04 million Friday; average 2.5 million). Still looking good, and are watching for SYMC to hold the prior pattern highs and make a move back up. The breakout high was 74.70, and with a continuation of the strong breakout we could get another good run going into the split, targeting 80. Earnings are out Wednesday.
PLAY: After holding 71, a move back over 72, with stock and/or February $70 calls to buy (SYQ BN). Stop: 67.07.

LIZ (Liz Claiborne--$52.60; -0.37; optionable): Splits 2:1 effective 1-17-02.
http://biz.yahoo.com/p/l/liz.html
STATUS: After an excellent move last Friday over its November-December highs at 52, LIZ has held steady, showing four consecutive dojis before a slightly more active day Friday. The stock hit over its recent high (and buy point) Friday (53.45), but turned back to close, although still holding comfortably over its 10 day MVA (52). We have anticipated the possibility of a test of 52, but the split is effective Thursday, so we are watching for it to hold here and start a quick run, watching carefully the stock's high of 54.95.
PLAY: A move over 53.50, with stock and/or April $50 calls to buy (LIZ DJ).

HOTT (Hot Topic--$33.48; +0.03; optionable): Apparel. Splits 3:2 effective February 6.
http://biz.yahoo.com/p/h/hott.html
STATUS: Made a nice move on its split announcement this week, but has now settled into its pattern. HOTT is in a double bottom that is within the larger cup dating back to May (high 38.20), and has made a couple of nice surges off of its 18 day MVA (32.35) on this run up. Watching for the stock to settle into a handle here, perhaps holding the 10 day (32.98) rather than the 18 day this time, and then breakout over the recent high (left-side high of double bottom is at 34.93). Target: 40 (watching resistance at the all-time high).
BUY POINT: Breakout: 34.81 on volume of 1.3 million (484,800 Friday; average 879,000). Stop: 32.37.
POSITION: Stock and/or February $30 calls to buy (UHO BF).

CONTINUING CANDIDATES BEST PLAYS:
1) THQI - Sinking and a put play
2) EDS - Weak

THQI (Thq Inc--$48.07; -1.28; optionable): Software.
http://biz.yahoo.com/p/h/hott.html
STATUS: Continuing down. THQI took out its 200 day MVA (49.32) Thursday, and then continued down toward its recent low Friday as volume surged on the selling (2.3 million; average 1.56 million). This increase in downward momentum makes a move through the recent low likely, although we could get a quick relief bounce first. We would look for such a bounce to fail in the 46-47 range, and on a drop through 45.50, we are targeting 40, but are carefully watching potential support at 42.50 at the August low.
BUY POINT: From here or after a relief bounce fails at 46-47, a drop through 45.50 on continued strong volume.
POSITION: February $50 puts to buy (QHI NJ).

EDS (Electronic Data Systems--$66.55; -1.65; optionable): Software.
http://biz.yahoo.com/p/e/eds.html
STATUS: After the rather weak move back over the 50 day, EDS dumped back through it Friday, although on continued weak volume of 2.32 million (average 3.1 million). The pattern is very weak, with EDS having made double tops at 72 and then making steadily lower highs as it has battled with the 50 day MVA (67.17). With this failed attempt to move back over the 50 day, we are looking for the momentum to pick up and drive EDS down to the 200 day MVA (62.56), which is near the recent low of 63.50. For a buy point we are looking for EDS to take out its March-July highs at 66-67.
BUY POINT: A drop through 66 on above average volume.
POSITION: February $70 or $75 puts to buy (EDS NN or EDS NO).

****
REMAINING PLAYS:
****
PRE-ANNOUNCEMENTS REMAINING PLAYS:

Watchlist:

EXPD ($57.40; -1.70): Working on a date. The nice pullback turned nastier Friday, although volume remained light (319,500; average 424,000). The drop took out its former ascending wedge highs at 59, but closed at the 18 day MVA. We will see if it can hold, but will bail out with any remaining positions if it does not. If it can hold, the play over the pattern high is 60.92 on above average volume, with stock and/or February $55 calls to buy (URP BK - under 100 open interest. Next month out is May, with very low open interest).

AROW ($29.00; +0.48): Working on a date. Moved back over the 50 day (28.83), but still looking weak (volume 7,500; average 12,000). It is just above its December lows, trying to preserve its large ascending wedge pattern.

BRL ($77.87; -0.17): Researching a split date. Has pulled back to test the 50 day MVA (76.63). Volume continues to be very light, and for aggressive positions we are looking at a move over 80 on above average volume (1 million; Friday up to 544,000), with stock and/or February $75 calls to buy (BRL BO).

STU ($82.25; -0.30): Researching a date. Broke out in a big way in late December (over its April and August tops), and tested the move and its 10 day MVA (81.68; 18 day at 80.86). We will see if it can continue to trend up, with the breakout high ahead at 83.68. On a move over 85.80 on volume of 15,000 (average 12,500), stock.

Plays:

DIAN (Dianon Systems--$53.40; +0.55; optionable): Forecast to announce a split in 1-17-02 with earnings. At this time the company cannot confirm this date.
http://biz.yahoo.com/p/d/dian.html
BACKGROUND: Based upon our research it does not appear that DIAN has ever split its stock. The annual shareholder meeting was on 10-25-00 at which no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: DIAN took a big drop on news that torpedoed the sector, but is holding the 50 day MVA (52.36). Going toward the forecast this week, we will see if it can hold on and give us an aggressive entry point on the bounce. Good stocks should jump up off of the 50 day MVA, and if it gets the volume surge on the move, it could give us a nice run back up to 60, but we would likely not hang around too long, taking profits on topping signs.
BUY POINT: Aggressive: Over the 18 day MVA (currently 54.80) on above average volume (227,000; Friday 102,700). Stop: 51.15.
POSITION: Stock and/or February $50 calls to buy (UID BJ - very low open interest).

NDN (99 Cents Only Stores--$35.80; -1.20): Researching a date.
http://biz.yahoo.com/p/n/ndn.html
STATUS: We were looking for a bounce from the 50 day (36.61), but after all attempts failed NDN dropped through that support Friday, closing at its long-term up trendline from October 2000. Another retailer selling down. Volume was up on the drop at 362,600 (average), but this breach of support could be the beginning of hard selling. We will see if NDN tests the 50 day, but watch for a drop back and selling down toward the 200 day MVA (31.71) for a put play.
BUY POINT: From here or after a test of the 50 day, a drop through 35 on increased volume.
POSITION: February $40 puts to buy (NDN NH).

End Part 3 of 4

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