us stock market, stock split

Begin Part 2 of 3

THE PLAYS: SONC announced a split today!

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.

BONUS PLAYS: QMDC broke out! GMST gave us a good drop for the put play!

HDI (Harley-Davidson--$54.30; +0.90; optionable):
http://biz.yahoo.com/p/h/hdi.html
STATUS: Made a very strong earnings report after hours. HDI fell off of a breakout from a double bottom with handle in August, but has climbed back to take out its former highs, forming a ragged cup with handle (with the familiar v-bottom in September). It hit 55.99 before pulling back to test its 50 day MVA (51.96) in the handle, ad today made a move back over its short-term MVA's (53.63) on strong volume (1.84 million; average 1.5 million). Looking for a breakout, but if we see a gap over the handle high we will see if it tests the move, taking positions on a move back up from that point. Target: 68.
BUY POINT: Breakout: 56.11 on volume of 2.25 million. Stop: 52.18 (7%).
POSITION: Stock and/or May $50 calls to buy (HDI EJ).

NTK (Nortek--$27.90; +0.36; no options): Conglomerates.
http://biz.yahoo.com/p/n/ntk.html
STATUS: NTK has formed a cup pattern since last August (high 34.20), coming up from its lows at 20 and recently taking out its 200 day MVA (20.21). In early January it tested back to that level, bouncing and hitting 29 before pulling back into a handle. Volume has been nice and low as the stock pulled back gradually, holding its 10 day MVA (27.69). It moved up a bit today, showing stronger volume at 22,700 (average 25,000). Looking for a breakout, and targeting 34.
BUY POINT: Aggressive: Over 28.35 on volume of 30,000. Stop: 26.37. Breakout: 29.12 on volume of 37,5000. Stop: 27.08 (7%).
POSITION: Stock only.

OEX (Standard & Poors--$581.63; +6.64; optionable):
STATUS: Closed just under its 50 day MVA (582.93) on lower volume of 1.35 million (avg. 1.25 million). We expect the index to rise up to test the resistance again, but fall, looking at aggressive positions on a move down from there, less aggressive on a break below the 575 range, near Wednesday's closing price and today's intraday low. Look for rising volume for the selling. Target: 565
BUY POINT: Aggressive from 50 day MVA: 582 on 1.3 million+ volume. Below support: 574 on rising volume.
POSITION: Aggressive: February $590 puts to buy (OEB NR). Below support: February $590 or $580 puts to buy (OEB NR or NP)

DJX I1/100 Dj Indu--$98.50; +1.38; optionable):
STATUS: The index rallied but closed beneath its 50 day MVA (98.98) with volume decreasing to 1.36 million (avg. 1.2 million). We are looking for the index to fall from that resistance. It will be pressured by IBM and MSFT, so there is a chance that put options will be held early as market makers try to price in the unopened stocks that are delayed on the open. May be able to buy them at the open, but if not we will wait for them to open and give a bit of a bounce. Target: 95
BUY POINT: After a gap lower, let it rally and when that rally stalls, then jump in.
POSITION: February $100 puts to buy (DJV NV).

PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: No announcements yet, although still looking at JCI Friday.

BEST PLAYS: Besides the plays set forth below as best plays, there are some other stocks that also look good. These include Pre-Announcements MRBK and STU; Pre-Split XRAY; Continuing Candidate EDS; and Post-Split CHBS.

MARKET FAVORITES BEST PLAYS:
1) XLNX - Good earnings and holding up well

XLNX (XLNX--$43.06; +1.78): Semiconductor.
http://biz.yahoo.com/p/x/xlnx.html
STATUS: XLNX has been making its way up with steady bounces along the 50 day MVA (39.50). It got a bounce today with the market, moving back over its short-term MVA's (18 day at 42.11) and closing at the December highs. Volume was very strong going into the earnings report (11.9 million; average 8.28 million), and the numbers appear to be pretty solid; it was holding its own after hours, something many stocks could not do. We will see if the momentum can continue, looking to ride XLNX up to its recent highs (47.16), but if we get some weakness in the market we will see if it can hold the 18 day in a show of strength and mount a move from there. Target is initially the high.
BUY POINT: Over 43.75 on continued strong volume. Stop: 40.69 (7%).
POSITION: Stock and/or March $40 calls to buy (XLQ CH).

EXTR (Extreme Networks--$14.17; -0.44; optionable): Internet software.
http://biz.yahoo.com/p/e/extr.html
STATUS: Its early January move up could not reach as high as the December highs at 18, and the stock pulled steadily back, taking out its 50 day MVA (14.97). EXTR announced earnings Wednesday evening, but on the numbers the stock gapped up with the market but sold back down, tapping 13.75 at its low. Volume was sharply up at 7.97 million (average 6.9 million). Looking for continued weakness, although we could see a test back up toward the 50 day first. Targeting the recent low at 12.50.
BUY POINT: From here or after a test toward the 50 day, a drop through 14 on continued strong volume.
POSITION: February $17.50 puts to buy (EUT NS).

PRE-ANNOUNCEMENT BEST PLAYS
1) SONC - Announced a split!
2) DRI - Good move up!
3) NDN - Still set up for a put
4) TGIC - Could pull back to set up the handle
5) PMI - Ditto
6) WLP - Pulling back and could set up from there
7) JCI - Moved up going toward the forecast
8) MRBK - Almost a breakout move, but needs volume

SONC (Sonic--$36.30; +1.23; optionable): Restaurants. Announced a 3:2 split, effective 2-9-02.
http://biz.yahoo.com/p/s/sonc.html
STATUS: SONC gave us a nice run (although in November it earned our wrath when it ruined a good breakout and immediately released negative news), which is of the things we expect as we follow a stock toward a forecast announcement. We recently removed it from the report as it had run hard (coming back from that November dip) and peaking at 37.65 before steadily pulling back toward its 50 day MVA (34.43). Today it bounced on weak volume (down to 118,100; average 243,800), taking out its short-term MVA's (18 day at 35.51) and upper channel trendline (May-October highs), and is looking ahead to the high at 37.65. On the news we could see some action, but it would be aggressive and we need to see volume. A test back is possible, but if it can hold the short-term MVA's it could set up for a stronger bounce. If it can build strength and move past the high, we can target 40.
BUY POINT: Aggressive: A move over 36.50 on volume of 300,000 or better; with market weakness we might not see a gap up, but if we see a gap over the buy point, we will look for it to come back and test today's close and see if it holds and moves up before taking any positions. Stop: 33.95.
POSITION: Stock and/or March $30 calls to buy (ZXQ CF).

DRI (Darden Restaurants--$38.14; +1.00; 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: Nice move up today! After a nice breakout move in early January (from a nice handle-type consolidation formed following nice cup with handle breakout), DRI had pulled into a nice, lateral consolidation over the 10 day MVA (37.23, with its upper channel trendline). We were looking for strong volume to push it up, and today DRI started the move, moving up to close and tapping the recent high at 38.39. Volume spiked up to a strong 889,700 (average 663,000). Looking for more strength to push the breakout. 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. We will carefully protect profits, targeting 43.
BUY POINT: 38.60 on increased volume. Stop: 35.90 (7%).
POSITION: Stock and/or April $35 calls to buy (DRI DG).

NDN (99 Cents Only Stores--$35.01; +0.47): 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 (36.33). The selling was on strong volume, but NDN is trying to hold at 34, today creeping up slightly as volume after the initial selling continued to be low (223,100; average 345,700). Not really looking like it wants to bounce, and we are watching for the stock to sell hard again through the support at 34 (in the range of a November consolidation), and down to the target at the 200 day MVA (31.92).
BUY POINT: A drop back through 34 on above average volume.
POSITION: February $40 puts to buy (NDN NH).

TGIC (Triad Guaranty--$39.03; +0.17; no options): Surety & Title Insurance. Forecast to announce a split on 1-23-02 before the market opens in conjunction with earnings.
http://biz.yahoo.com/p/t/tgic.html
BACKGROUND: Last announced a 2:1 split on 9-18-97 at a stock price of $28. The annual shareholder meeting was on 5-10-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
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 to the 10 day MVA (38.22). It bounced from that level this week, making a decent gain but in stops and starts, showing consecutive gaps up to dojis as volume remains below the average (36,600; average 41,000). Off of these candlesticks we could see a re-test of the 10 day, but the overall pattern looks good (we like the nice run up going into the cup with handle - we like at least 30%, and the move was a bit more than that), and a test back would not be bad for the handle shape. Target on a breakout: 47.
BUY POINT: Breakout: 40.26 on volume of 62,000. Stop: 37.44 (7%).
POSITION: Stock.

PMI (Pmi Group--$68.99; -0.08; optionable): Surety & Title Insurance. Forecast to announce a split on 1-23-01 before the market opens in conjunction with earnings. Right in split range.
http://biz.yahoo.com/p/p/pmi.html
BACKGROUND: Based upon our research it does not appear that PMI has ever split its stock. The annual shareholder meeting was on 5-17-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: Another strong pattern forecast for a split next week. 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 (67.08) at its lows, pushing back from there this week. It hit the breakout buy point Wednesday although volume was not up to breakout levels, and today it held pat with a loose doji on much lower volume (121,000; average 317,200). Like TGIC, we could get a test back to the 10 day (68) before we get the breakout move, but that would be fine as it looks like it would hold and try to break out again. Target: 80, watching resistance at the high.
BUY POINT: Breakout: 70.20 on volume of 480,000. Stop: 65.29 (7%).
POSITION: Stock and/or March $65 calls to buy (PMI CM - under 100 open interest).

WLP (Wellpoint Health Networks--$123.20; -1.96; optionable): Working on a date.
http://biz.yahoo.com/p/w/wlp.html
BACKGROUND: Based upon our research it does not appear that WLP has ever split its stock. The annual shareholder meeting was on 5-8-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: WLP broke out Wednesday, but even with the good volume we were skeptical after the low volume drift up in its handle that preceded the move. However, there was good Broke out today! WLP looked like it was ready to test back after a low-volume move back up to form a saucer-shaped handle, but took off with decent volume, but not the 1 million we were looking for (735,700; average 632,600). Still precarious as this was not a good move up before today, and with the volume we would be very cautious with any existing positions. Moved up near the breakout point, but volume has dropped as the stock has drifted up, signaling a weak move. Looking for WLP to dip back to test the 10 day MVA (120), and from there we are looking for a breakout move, with the buy point 123.02 on volume of 1 million. Stock and/or April $115 calls to buy (WLP DC).

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).

MRBK (Mercantile Bankshares--$44.91; +0.53; no options): Forecast to announce a split on 3-12-02 in conjunction with a board meeting. The company will not confirm this date, but our research determines this is the date for the next board meeting.
http://biz.yahoo.com/p/m/mrbk.html
BACKGROUND: Last split 3:2 at $40 in June 1997. The annual shareholder meeting was on 4-25-01 at which time no additional shares were authorized. The company has sufficient shares for a 3:2 split.
STATUS: MRBK made a solid trend up in 2000, then last year showed a large double bottom pattern. Early this month the stock broke over the pattern center at 44, making a strong move up to 44.89 before testing back to its short-term MVA's. MRBK pushed up from the 18 day (43.79) this week, and today reached over the pattern high (to 44.91, over the high of 44.89), but volume was not there, way down from recent levels at 105,400 (average 186,000). We could see it pull back a bit and form more of a handle here, and look for more volume on a breakout. The left side high is at 45.13. Target: 52.
BUY POINT: From here: On volume of 276,000, a buy point of 45.25. Stop: 42.08.
POSITION: Stock only.

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 - Wow
2) CHS - Moving again
3) FRED - A new play!
4) HOTT - Still looks good

SYMC (Symantec--$75.35; +8.40; optionable): Splits 2:1 effective February 1.
http://biz.yahoo.com/p/s/symc.html
STATUS: What a move! SYMC tested its 50 day MVA (65.14) going into earnings, but the numbers were very well received and the stock blasted up today. We knew we would get the gap, as we indicated in last night's report that after hours the stock took off on the news. It continued up after the gap, taking out its recent high (74.70) on big volume (9.41 million; average 2.57 million). After such a big move we will see if it pulls back a bit, looking at its recent high and the left-side high of its cup with handle (73.50) to provide support for another surge. Too bad we were stopped out; following your rules that happens.
PLAY: After pulling back to hold 73.50-74.50 on lower volume, a move back up on strong volume with stock and/or February $70 calls to buy (SYQ BN). Stop: 69-70.

CHS (Chico's Fashions--$39.75; +2.00; optionable): Splits 3:2 effective 1-22-02.
http://biz.yahoo.com/p/c/chs.html
STATUS: Looking for a move going into the split. CHS made double tops after its breakout from a double bottom with handle, and then drifted back toward its 50 day MVA (36.68). It has been stymied under its short-term MVA's (10 day at 39.30), but today pushed back over those levels and had a bit of volume behind it (way up to 642,500; average 605,000). Looks like a last pre-split run, and we will look for a move up to the recent highs, watching carefully at that point.
PLAY: Over 40, with stock and/or February $35 calls to buy (CHS BG).

FRED (Fred's Inc --$38.81; +1.40; no options): Apparel. Splits 3:2 effective February 2.
http://biz.yahoo.com/p/f/fred.html
STATUS: A steady climb up since its last stock split in June, hitting 43.86 early this month before pulling back to test below its 50 day MVA (36.77). It has started a bounce, moving back over its 50 day and today taking out its short-term MVA's (38.51) with a volume surge (up to 407,700; average 207,600). We will see if it can weather some market weakness and hold onto the short-term MVA's, and we can look at another surge to continue a run up toward the highs.
BUY POINT: After holding the 38.50 range, a move over 39. Stop: 36.38.
POSITION: Stock only.

HOTT (Hot Topic--$33.98; +0.12; optionable): Apparel. Splits 3:2 effective February 6.
http://biz.yahoo.com/p/h/hott.html
STATUS: Still in the handle to its double bottom (within the larger cup dating back to May, with a high of 38.20). It is drifting up a bit overall, which is a concern as we want handles to pull back slightly as volume drops. Volume has been low (up today to 476,000; average 853,000), and the stock has been holding up over its 10 day MVA (33.53). Today it showed a doji after testing the 10 day; we could see another test of that level or the 18 day, but are still looking for the breakout over the handle high at 34.69 (left-side high of double bottom is at 34.93) for positions. 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).

End Part 2 of 3

us stock market
stock split