|
|
us stock market, trend trading stock
Begin Part 2 of 3
THE PLAYS: We are seeing a lot of Pre-Announcements make great moves, running up to split range. We all know that one of the greatest benefits of playing Pre-Announcements is the great gain you get as the stock makes its run toward the announcement. However, whether they announce a split or not, many of the stocks that we followed up their charts are out of gas after the run. While many of these stocks are in split range, the potential for these stocks to move is limited, even with an announcement. Consequently, we have dropped many of the stocks, preferring to bring in new stocks that are moving toward their split range and that can give us great moves - and when a stock is 'tired' we will close the play and not wait around for it to announce. Naturally, we will continue to monitor the stocks we remove, ready to add them back when they look good again.
We are looking ahead to sectors that will lead and will be adding exciting pre-announcements in the coming days! Today we added a couple from the insurance sector.
BONUS PLAYS: Looking at some new ones and following some strong ones. ACF and MIL still looking good as puts.
STMP (Stamps.com--$4.29; +0.14): Internet software.
http://biz.yahoo.com/p/s/stmp.html
STATUS: Four 14 months the stock has made triple bottoms as it made three consecutive cups deep in its base. It battled the 4 level, hitting it four times and retreating but finally making the breakout last week. On a very strong move it broke out, hitting up to 4.60 before coming back to test the move. The stock has been solid as the stock held over the 4 level and the 10 day MVA (4.12), and managed to push back up a bit today on solid volume (598,300; average 569,400). Looking for the stock to hold the 10 day through some market weakness, as internet stocks might not be out of favor with other techs. If it can make it over the breakout high, targeting 5.50. Good money flow and buying.
BUY POINT: Bounce: Over 4.39 on increased volume. Stop: 4.08 (7%). Over breakout high: 4.72 on increased volume. Stop: 4.39 (7%).
POSITION: Stock only.
ASL (Ashanti Goldfields--$4.03; +0.04): Gold mining.
http://biz.yahoo.com/p/a/asl.html
STATUS: Made a breakout from its 5-month cup with handle pattern in late December, but promptly pulled back off of that strong move. It held support, however, maintaining above its prior handle highs and its 10 day MVA (3.96), which it tested again today at its low. The stock hit the buy point Monday on good volume, but pulled back intraday. With today's low volume test of the 10 day, ASL still looks good and we are looking for it to make another move on its breakout high (4.30, over the left side high at 4.18). Excellent money flow. Target: If it can take out the breakout high, 4.70.
BUY POINT: Over 4.10 on volume of 100,000 or better (average 72,000; today 57,500). Stop: 3.81.
POSITION: Stock only.
QMDC (Quadramed--$10.35; +0.18): Software.
http://biz.yahoo.com/p/q/qmdc.html
STATUS: Still in the good-looking handle. QMDC has formed a 22-month cup within a much larger base. It broke out of a handle in mid-December (after one failure), and after consolidating a bit made a very strong run up at the beginning of this month. It has approached the left side highs in the pattern (11), hitting 10.75 before pulling laterally the last week in another handle-type consolidation. It is behaving well, showing lower volume and holding support, today with another doji over the 10 day MVA (10.05) as volume continued to decline (what we like in a handle) to 289,000 (average 468,400). Looking for the breakout. Very strong money flow and buying. Target: 13.
BUY POINT: Breakout: 10.87 on volume of 700,000. Stop: 10.11 (7%).
POSITION: Stock only.
NITE (Knight Trading Group--$11.98; +0.11; optionable): Investment brokerage.
http://biz.yahoo.com/p/n/nite.html
STATUS: Still primed for a bounce. NITE came back to test its 50 day MVA (11.73), and today showed a doji after tapping below the 50 day but also hitting up to the 200 day (12.17) before retreating. Volume was up at 1.09 million (average 1.25 million). NITE has made some impressive bounces from the 50 day, and we like the price/volume action, showing very big volume on the recent bounce up. With some good earnings news and outlook from E-Trade, we could see NITE make a move. Looks good for a jump, and on a move over the 200 day on above average volume we can look at playing the move. The recent high was 13.97, and we are targeting that level initially.
BUY POINT: Over 12.30 on above average volume. Stop: 11.44 (7%).
POSITION: April $10 calls to buy (QTN DB).
PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: Looking at GNSS and DIAN for Thursday, with JCI (which is dying) on Friday.
NEW PRE-ANNOUNCEMENT PLAYS:
TGIC (Triad Guaranty--$38.10; -0.10; no options): Surety & Title Insurance.
http://biz.yahoo.com/p/t/tgic.html
STATUS: TGIC made an excellent move in 2000 and the first half of 2001, but after hitting up again 40 three times the stock pulled back in August to form a cup with handle. It made a nice move to start January, running up toward the 40 level, hitting 39.70 before pulling back. It has dropped on decreasing volume (which we like), and appears to have found support at its 10 day MVA (37.86), showing a 'shooting star' doji on that level today (that is, the open and close are near each other, making a doji, and the 'shooting star' comes from the intraday run up to 38.74 that saw sellers catch up with buyers and drive it back down). This candlestick is bullish and could point to a bounce. Buying is strong. Target on a breakout: 47.
BUY POINT: Bounce: Over 38.74 on above average volume (41,200; today down to 32,000). Stop: 37. Breakout: 40.26 on volume of 62,000. Stop: 37.44 (7%).
POSITION: Stock.
PMI (Pmi Group--$68.80; +1.70; optionable): Surety & Title Insurance. Right in split range.
http://biz.yahoo.com/p/p/pmi.html
STATUS: PMI has formed a cup with handle since June off another cup pattern that failed at the high of 74.94. A good pattern, although price/volume action over the course of the pattern could be better. It has pulled into a handle this month, wedging a bit but holding its 18 day MVA (66.59) at its lows, pushing back up today on increased volume (248,200; average 323,000). It could settle back a bit more here, and that would be just fine; however, we are ready for a breakout move with solid breakout volume. Target: 80, watching resistance at the high.
BUY POINT: Breakout: 69.32 on volume of 480,000. Stop: 64.47 (7%).
POSITION: Stock and/or March $65 calls to buy (PMI CM - under 100 open interest).
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) INKT - Nice pattern and the sector could do well
INKT (Intomi--$7.12; -0.11): Internet Software.
http://biz.yahoo.com/p/i/inkt.html
STATUS: Deep in its base INKT has formed a cup with handle. It showed a lot of strength in December when it charged back over its 200 day MVA (then 6.50, now 6.13), and after testing that level it has tried its breakout high (7.97) again, but pulled back to this time find support at the short-term MVA's (18 day at 6.89). The higher low is good action and shows something of an ascending wedge. Volume has been low of late, decreasing to 1.69 million (average 4.45 million) today as the stock showed its third consecutive doji or loose doji. Looking for it to hold the 18 day and make a move on the pattern highs. Strong money flow and buying. Target on a breakout: 10.
BUY POINT: Over 7.58 (recent spikes) on above average volume. Stop: 7.16 (7%). Breakout: 8.10 on volume of 6.7 million. Stop: 7.53 (7%).
POSITION: Stock and/or April $5 calls to buy (KFN DA). Breakout: Stock and/or April $7.50 calls to buy (KFN DU).
PRE-ANNOUNCEMENT BEST PLAYS
1) DRI - Still holding in the pattern
2) DIAN - A good bounce going toward the forecast
3) NDN - Weak bounce sets up another entry point
4) MI - Ditto
A few forecast announcements that are not looking too good:
5) GNSS - Dropped back, but a doji w/long tail
6) ETH - Another scheduled forecast not looking well
7) JCI - Ditto
DRI (Darden Restaurants--$37.43; +0.27; 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: We liked the volume on the breakout last week, and DRI has tested the move and shown several dojis in its lateral pattern. Today it showed another loose doji, holding support over its 10 day MVA (37), which is with its long-term upper channel trendline. 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 is above the upper channel, DRI looks like it could continue with a solid move along the steeper trend established the last month. Volume was up sharply today at 601,300 (average 670,000), and we will see it can show some more strength and make a 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).
DIAN (Dianon Systems--$57.60; +2.14; optionable): The company is keeping quiet and will not confirm the date; originally forecast for 1-17-02, but we could get a February announcement, like last year.
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: Great bounce. DIAN took a big drop on news that torpedoed the sector, but held the 50 day MVA (52.68) last week and has made a great move the last two sessions. It hit the buy point Monday and then again took out a higher buy point today, with the requisite increase in volume (up to 295,700; average 225,800). We are riding our positions on continued good price/volume action (up on up days, down on pullbacks), watching recent highs at 60-62. Again, this has been a nice move, but we will not hang around too long and take profits if we get some stronger selling back down. The short-term MVA's are at 55.16.
BUY POINT: If we get a low-volume dip back to test the short-term MVA's, we can look at new or additional positions on a move back over 57 on volume over 300,000. Stop: 53.25.
POSITION: Stock and/or February $50 calls to buy (UID BJ - very low open interest).
NDN (99 Cents Only Stores--$34.82; +0.52): Researching a date.
http://biz.yahoo.com/p/n/ndn.html
STATUS: Got the move down Monday, triggering put plays on the breach of the up trendline (currently at 36), which it took out after having dropped through the 50 day MVA (36.46). The selling was on strong volume, but today we saw a relief bounce, which we watch for when a stock has experienced sharp selling. On a weak bounce as today's (volume way down to 231,600; average 361,000), we can look at the failed move and take advantage of another chance to take positions on the drop back. The target remains the 200 day MVA, at 31.82.
BUY POINT: A drop back through 34 on above average volume. Remember that we could get some gaps down Wednesday, and on a gap below the buy point we will want to see if the stock comes back and tests the move before entering positions.
POSITION: February $40 puts to buy (NDN NH).
MI (Marshall & Illsley--$60.47; +0.94; optionable): We are researching a forecast date.
http://biz.yahoo.com/p/m/mi.html
STATUS: Gave up the 50 day MVA (61.18) last week, but has not made the hard move down yet. It tested below one of its long-term up trendlines (connecting November 2000 and July 2001 lows, at 60) Monday, but volume was quite weak and today it ran back over that level to close. The move was on increased volume, but still weak at 162,900 (average 247,800), so we are still looking for MI to turn back down on increased selling volume as it goes toward earnings Thursday. We are watching possible support at the center of its former 'flying w' pattern (October) at 58, but we will target the 200 day MVA (56).
BUY POINT: A drop back through 59.50 on above average volume.
POSITION: February $65 puts to buy (MI NM).
GNSS (Genesis Microchip--$68.49; +1.35; optionable): Semiconductor. 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 could not hold up after it broke out from its small pennant last week, dropping back Monday to close just below its 18 day MVA (67.79). Today it continued down to start, but then surged back up to close with a doji just over the 18 day, with volume edging higher (2.75 million; average 2.53 million). The pattern could indicate a bounce, but such a move might not have much strength given the recent action; moreover, we will need to see the reaction in the sector with the major earnings announcements. Aggressive going toward the forecast, and the recent high at 74.90 could be the best it will do.
BUY POINT: Aggressive: After holding through initial market weakness, a move back over 69 on increased volume. Stop: 64.50.
POSITION: Stock and/or March $65 calls to buy (QFE CM).
ETH (Ethan Allen--$40.44; +0.09; 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: Did not get the bounce from the 18 day (40.90), as instead ETH fell through that support Monday. Volume was weak, increasing today to 174,000 (average 222,800) as ETH showed a doji. It is holding its November-December highs at 40, but giving up the 18 day was a troubling move, and we will need to see a lot of strength to get involved. The retail sector is a concern, so we will see.
BUY POINT: Over 42 on volume of 300,000.
POSITION: Stock and/or February $40 calls to buy (ETH BH).
JCI (Johnson Controls--$75.25; -0.14; optionable): Auto parts. Forecast to announce a split on 1-18-02 before the open with earnings.
http://biz.yahoo.com/p/j/jci.html
BACKGROUND: Based upon our research it does not appear that JCI has ever split its stock. The annual shareholder meeting was 0n 1-24-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: Fell hard as auto parts are falling apart. Was looking good closing in on the forecast, but suddenly fell out of its pattern, as the auto parts sector has made a run but is now faltering badly. It gave up the 50 day MVA (78.24), but has shown consecutive dojis above its 200 day (73.82), with big volume today (895,600; average 386,400). It did not cave in, and the high volume doji could signal a bounce, but to prove something it would have to get back over its 50 day.
BUY POINT: Very Aggressive: Going into the forecast, a move back over 78 on continued strong volume. Stop: 75.50
POSITION: Stock and/or April $70 calls to buy (JCI DO).
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 - Looks ready to move
2) HOTT - Still in the handle
3) XRAY - Drifting a bit but still could make the run
SYMC (Symantec--$70.40; +0.02; optionable): Splits 2:1 effective February 1.
http://biz.yahoo.com/p/s/symc.html
STATUS: SYMC pulled back off of last week's strong breakout move, but has held the short-term MVA's (18 day at 68.95) and former highs in its cup with handle. Today it tapped down to 68.05 but recovered nicely as volume shot up again to a heavy 4.24 million (average 2.5 million). With the high volume hold over support, we will see if SYMC is ready to make another jump up as it heads into Wednesday afternoon's earnings announcement. 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.
PLAY: A move over 71.50, with stock and/or February $65 calls to buy (SYQ BM - under 100 open interest). Stop: 67.50.
HOTT (Hot Topic--$34.31; +0.60; 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 last week, and now has pulled into a handle to its double bottom (within the larger cup dating back to May, with a high of 38.20). It has made a couple of nice surges off of its 18 day MVA (32.69) on this run up, but after today's weak push up (volume of 307,300; average 877,800), it could need to settle back again toward the lower reaches of the handle (near the 18 day, although it could use the 10 day for support at 33.33). Looking for the breakout over the handle high at 34.69 (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. Stop: 32.37.
POSITION: Stock and/or February $30 calls to buy (UHO BF).
XRAY (Dentsply--$50.89; +0.36; optionable): Medical instruments. Splits 3:2 effective February 1.
http://biz.yahoo.com/p/x/xray.html
STATUS: Yet another doji today as XRAY continues in a lateral pattern. The stock is edging up very slightly along its 10 day MVA (50.35), and while we would prefer to see a gradual drift back, XRAY could still produce a nice pre-split move out of this consolidation. The stock is trying to make a move on the recent high (52.03, from an intraday spike), but has been unable to hold the intraday highs. While we are looking for the strong move up and out of the pattern, we are treating existing positions with care, looking to ride them toward a target of 57 but wary of a breach of support (18 day is down at 49.81). Strong money flow and buying.
PLAY: Over 52 on increased, above average volume (down to 219,400, average 247,500), with stock and/or January $45 calls to buy (XAQ AI). Stop: 48.
End Part 2 of 3
|
us stock market
trend trading stock
|
