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Begin Part 3 of 3

PMI (Pmi Group--$69.10; +0.11; 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: Like TGIC, another insurer in a good 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 (67.29) 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 Friday it tried another move but there was no volume (111,900; average 313,700). It pulled back from its intraday high at 70 (just below Wednesday's high at 70.08), and we could see a test back in the pattern to the 10 day MVA (68.19), 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).

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 - Resting
2) FRED - Running
3) CHS - Looking for a last move
4) HOTT - Waiting for a move
5) SONC - A pop on the announcement news

SYMC (Symantec--$75.82; +0.47; optionable): Splits 2:1 effective February 1.
http://biz.yahoo.com/p/s/symc.html
STATUS: After the remarkable move Thursday, SYMC gapped back with the market and then pushed up again. After such a run (which occurred on favorable earnings that came out after hours Wednesday), it would be natural to see some profit taking, but the gap down held the prior January closing high (73.25) and then managed to push up again. We will see if will continue to run from here, although we could see a test back to 73.25 again; if it holds again, we can look for a move up from there. The initial target is 78, but on a continued move we are adjusting it to 84.
PLAY: From here: A move over 77, with stock and/or February or April $75 calls to buy (SYQ BO or SYQ DO - March available Monday). Stop: 72. Pullback: After another test of 73.25, a move over 75.82, with stock and/or February or April $70 calls to buy (SYQ BN or SYQ DN). Stop: 71.

FRED (Fred's Inc--$39.89; +1.08; no options): Apparel. Splits 3:2 effective February 2.
http://biz.yahoo.com/p/f/fred.html
STATUS: Has made a strong bounce. 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 (36.89), from where this move began. With pre-split moves we get nice runs like this, and with the volatility of pre-splits volume is not always as large a factor as it is with other plays. Volume was down Friday at 193,300 (average 211,000), but we will continue to ride existing positions until the stock gives us a signal that it is coming back (like a doji, a gap up and reversal, etc.). The aggressive can look at a continued move from here, but if we get a pullback that holds the short-term MVA's (38.77), we can also look for a move up from there.
PLAY: Aggressive: A move over 40.20, with stock. Stop: 37.75. Pullback: After a hold of the short-term MVA's, a move back over 39.50. Stop: 36.83.

CHS (Chico's Fashions--$39.21; -0.54; optionable): Splits 3:2 effective 1-22-02.
http://biz.yahoo.com/p/c/chs.html
STATUS: One session left 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 (36.78). It started a move Thursday, but stalled Friday although it held over the short-term MVA's (18 day at 39.16). We will let it work for us after a rest on Friday, and see if we get one more move that could take it up to the recent top (high 42.78).
PLAY: Aggressive: Over 39.50, with stock and/or February $35 calls to buy (CHS BG).

HOTT (Hot Topic--$34.46; +0.48; optionable): Apparel. Splits 3:2 effective February 6.
http://biz.yahoo.com/p/h/hott.html
STATUS: HOTT is edging up along its 10 day MVA (33.70; 18 day at 33.09), Friday pushing up again with volume continuing to be very low (272,400; average 853,500). The stock was looking like it was forming a handle to its double bottom (within the larger cup dating back to May, with a high of 38.20), but the recent upward drift is not the type of action we like in a handle. It is encountering resistance at recent highs from its left-side pattern high at 34.93, so we will see if it sets up better with a test back to the 10 day with continued low volume, setting up a strong run. Target: 40 (watching resistance at the all-time high at 38.20).
BUY POINT: Breakout: From here or after a test of the 10 day, 34.82 on volume of 1.3 million. Stop: 32.38.
POSITION: Stock and/or February or May $30 calls to buy (UHO BF or UHO OF - check deltas, open interest, etc. as not available at the time of writing. March available Monday).

SONC (Sonic--$36.12; -0.18; optionable): Announced a 3:2 split, effective 2-9-02.
http://biz.yahoo.com/p/s/sonc.html
STATUS: Got a pop on the announcement news, but it could not hold in Friday's market. It hit up to 37.19 (all-time high from December at 37.65), pulling back to close with a loose doji as volume was strong at 303,700 (average 244,000). It is sitting just over its short-term MVA's (18 day at 35.57), which is with its upper-channel trendline (May-October highs). The sector is not doing too badly, and SONC has been in a nice uptrend. However, on a pre-split run we will need to exercise caution as it is above its upper channel. If it can hold support here we will look for a move up over the high, targeting 41 initially.
PLAY: Aggressive: After holding support at 35.50, a move over 36.50 on volume of 300,000 or better. Stop: 33.95. Stock and/or March $30 calls to buy (ZXQ CF).

CONTINUING CANDIDATES BEST PLAYS:
1) ETH - Weak relief bounce sets up a put
2) THC - Testing the move

ETH (Ethan Allen--$38.64; +0.23; optionable): Did not get the announcement and it tanked.
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: We were concerned about ETH being retail, and it turned down never giving us the buy point. After the high-volume breach of the 50 day MVA (38.94) Thursday, ETH tried to recover intraday, and Friday we were looking for a test back up to the 50 day. We got it, and on the weaker volume of 226,300 (average 223,000) that can signal another drop back. On a continuation of strong selling through the support at 38 from the May-August high and the December low, we are targeting the 200 day MVA (35.65 on a put.
BUY POINT: A drop through 38 on increased volume.
POSITION: February $45 puts to buy (ETH NI).

THC (Tenet Healthcare--$64.50; +0.17; optionable):
http://biz.yahoo.com/p/t/thc.html
STATUS: THC broke out from its short handle (formed after gapping up in its awkward, 'flying w' shaped cup in early January) this week. It looked like it would pull back after the initial move, but continued to push upward, hitting a high of 66.40 (over a long-term trendline) Wednesday but pulling way back to close. That candlestick signaled a pullback, and it has come back, but without showing a lot of strong selling. Friday THC gapped lower but intraday pushed up to 65.55 before pulling back, and volume was strong on the session at 2.68 million (average 1.86 million). Looking for THC to settle back and hold the 10 day MVA (63.57) or handle highs (and left-side highs) at 63, perhaps over a few sessions, to set up a move.
BUY POINT: After holding 63-63.50 on a lower-volume pullback, a move back over 64.50 on above average volume.
POSITION: Stock and/or May $60 calls to buy (THC EL).

POST SPLITS BEST PLAYS:
1) CHBS - Strong move

CHBS (Christopher & Banks--$33.62; +0.94): Split 3:2 effective 12-13-02.
http://biz.yahoo.com/p/c/chbs.html
STATUS: A retailer showing some strength. CHBS tested its breakout from a cup with handle (May-December), holding nicely on its recent lows at the former handle highs. The stock started back up Thursday, taking out its short-term MVA's (31.89), and continued up Friday on big volume (863,800; average 367,900), triggering the buy point. Looking for more, and from we will consider picking up additional positions on a move over 34, watching for strength of volume to challenge the high at 35.76.
PLAY: On a move over 34 on continued strong volume, with stock and/or March $30 calls to buy).

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WATCHLISTS:
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PRE-ANNOUNCEMENTS WATCHLIST:

AROW ($28.95; +0.09): Working on a date. Has fallen from a promising ascending wedge pattern. Tested back to the 28.50 level Friday but managed to pull back up over the 50 day (28.78) to close with a loose "hanging man" doji as volume fell to 3,100 (average 11,400). As the name implies, this doji typically indicates an upward move has died, so we will see if AROW can hold the 50 day and set up a playable move.

BRL ($78.00; -0.50): Researching a split date. BRL tried to move out of its 2-week consolidation today, but the increased volume of 466,100 was still below average (1 million) and not enough to sustain the move, so the stock dropped back to close. Watching for support to continue to hold here as we watch for above average volume to carry a move out of this little handle to a v-shaped cup pattern (formed after triple tops in July-October). The aggressive position remains a move over 80 on above average volume (1 million), with stock and/or March $75 calls to buy (BRL EO).

DHR ($60.41; +0.84): 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. Was looking good in a handle to its reverse head and shoulders, but fell back very hard through the 50 day (59.73) mid-week. It caught itself at 85.50 (one of its down trendline; 200 day at 57.53), and is trying to move back up, but it was a weak move (753,300; average 1.2 million), and with this price/volume action, we are watching out for a drop back.

DIAN ($57.50; -1.00): Forecast to announce a split with earnings on 2-21-02 before the open. As expected, after the strong move from the 50 day MVA (53.28) DIAN needs a rest. We saw a pullback Friday, but not bad action on a lower volume move that held the first level of support at the 10 day (56.45). Looking for it to hold and set up another move. After showing that it can hold, the aggressive can play a move over 58 on volume over 300,000, with stock and/or May $55 calls to buy (UID EK - very low open interest).

EXPD ($57.80; -0.60): Working on a date. Tested back to the 18 day (57.36) Friday as volume fell slightly to 304,300 (average 417,500). Not terribly surprising considering that the prior gains came on below average volume; but now we want to see support hold. We will see if it can hold and set something up, but it may take some time.

MRBK ($44.69; -0.22): 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. Early this month MRBK broke over the center of its large double bottom as it trends up its short-term MVA's (10 & 18 day at 44.28 and 43.88). Tried a move up Thursday but had no volume, and chilled Friday with a doji. Looks like it needs to test the 44 level and perhaps form a handle. The left side high is at 45.13. After the test, looking for a bounce and then a breakout over the left side high.

PII ($55.74; -0.41): Forecast to announce a split on 1-29-02 before the market opens in conjunction with earnings. Volume remained weak Friday as PII tried to push up through the short-term MVA's (56.54), but fell back to close with a loose doji. Still holding over the 50 day (54.36), so we are still looking for a recovery in a stronger market.

RYL ($69.14; -0.36): Forecast to announce a split on 1-24-02 in conjunction with earnings. At this time the company has not confirmed a time for the release.
RYL is held down by the short-term MVAs (70) and is showing poor price/volume action. It could still fall back, and we are wary of the sector. For now the 50 day stands below at 65.71.

WLP ($124.79; +1.59): Working on a date. 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. It dropped back after the move, pushing back up on light volume Friday (414,400; average 636,400). After the weak move, we are looking for WLP to dip back to the 10 day MVA (121.88) and see if it can hold and form another consolidation.

PRE SPLITS WATCHLIST:

MGAM ($36.18; +1.03): Splits 3:2 on or about February 12. Managed to push back through the short-term MVA's Friday (18 day at 36.11), but closed off the intraday high as volume remained steady and light at 116,500 (average 177,000). With this price/volume action we may see another test back and are still looking for the 50 day to hold support and set up a solid pre-split move. From here, on a move over 37.50, stock.

XRAY ($50.97; -0.15): Splits 3:2 effective February 1. Yet another doji over the 10 day (50.67), this one coming after XRAY hit, but could not hold, an intraday high of 51.83. Still treating existing positions with care, looking to ride them toward a target of 57 but wary of a breach of support (18 day at 50.17). The play remains a move over 52 on above average volume (down Friday 239,400, average 254,000), with stock and/or January $45 calls to buy (XAQ AI).

CONTINUING CANDIDATES WATCHLIST: When splits are not announced, we will keep the best split prospects on the report rather than continue to carry all of them in case there is a an unexpected announcement. We will continue to monitor the stocks that are trimmed and add them again when we ascertain a revised split announcement date.

ACS ($108.08; -0.57): Still holding the 10 day (107.16), closing Friday with a doji over support (increase to 479,300, average 486,300). We are still riding positions but are wary of a drop. It has shown remarkable strength and resiliency, but a drop could be abrupt.

APPB ($34.50; +0.42): Volume picked up Friday (451,200, average 418,000) as APPB tried to move on the recent highs (36), but it could not hold the move and fell back in market weakness. Appears to have strong support at the 50 day (33.78), and restaurants are showing a bit of strength, so we will see if it can hold and set something up.

AZO ($64.42; +0.43): Little change Friday, as AZO continues its downward creep just under the 10 day (65.33; 50 day at 66.41). A further drop will take it out of the range of the November consolidation lows, but it will need to show some strong selling for positions. The play remains a move through 63.50 on volume of 2 million (average 1.35 million, down sharply today to 425,300), with February or March $70 puts to buy (AZO NN or AZO ON - check deltas, etc. as unavailable at the time of writing). Still targeting 60.

BBY ($73.18; 0.00): Volume continues to gently fall as BBY holds the short-term MVA's (18 day at 72.95). BBY made a nice bounce up from 65 in December on positive earnings, but after the moves it has made we are not optimistic of much more upside from here in the near term. If it breaks down from here we are taking our money off the table (50 day at 69.40).

BBBY ($31.82; -0.63): Still holding the 50 day (32.04), but barely. Friday BBBY tested up to the 10 day at its high of 32.67 before pulling back to close with a loose doji as volume fell to 2.31 million (average 3.7 million). Still questioning whether it can hold here, and as it has not been able to bounce, we are ready to exit on a continued drop. 200 day MVA is at 29.49. The aggressive can try a move over 33 on volume of 4.5 million, with stock and/or May $30 calls to buy (BHQ EF).

EDS ($66.80; -1.60): More volatility Friday, as EDS gapped way back to open under the 50 day (67.07) and closed with a tight doji under that resistance as volume held fairly steady and strong (down just slightly to 3.66 million, average 3.1 million). Not what we were expecting, but a nice chance to exit any remaining short positions after the gap up Thursday. We need to see EDS settle down a bit before we look for the next play.

GNSS ($66.18; -2.03): Did not get the announcement, and after it was ripped after hours Thursday, we were watching to see where it would open and where it would catch support. It did gap back at the open, but still held well over the the 50 day (60.74), pushing up to close just under the short-term MVA's (67.86). It could take some time, and a test of the 50 day, before GNSS sets up.

JCI ($78.20; +0.71): Did not get the announcement. Fell hard through the 50 day (78.11), and tried a move back up going into the forecast, but it is stymied at that resistance. JCI showed a doji Friday under the 50 day on increased volume (651,100; average 397,000). The pattern indicates a drop back, and it is not promising. The 200 day is at 74.05.

MI ($61.01; -0.17): The move on the 50 day (61.14) is having trouble, as volume dropped off considerably Friday and MI closed with a tight doji right under that resistance. The aggressive can look for above average selling volume (looking for 300,000; Friday 134,200) on a move through 60, with March $65 puts to buy (MI OM).

THQI ($43.03; -0.98): THQI is holding at 42.50, Friday with a doji after reaching up but pulling back short of the 10 day MVA (45.53). Volume was low (1.1 million; average 1.6 million), as it was Thursday on the weak bounce. May be trying to bounce here, so we are closing them down if it does.

POST SPLITS WATCHLIST:

CACI ($33.02; -0.53): After the huge drop Tuesday, CACI has managed to slow the bleeding but has not made the test back up we were looking for to set up a strong drop. Friday it gapped down, but volume was weak (358,600; average 477,500) as the stock tested 32.62 at its low. Off of the doji we could finally see a bit of a test up, but for positions we sill need to see a convincing move through 32.50, with above average volume, and March $42.50 or $45 puts to buy (QHI OA or QHI OI).

CBH ($41.74; -0.04): Another low volume doji Friday and we continue to heed these topping signs and watch for a test. CBH has been edging up the 10 day (40.92) after making a strong breakout earlier this month. A test back will probably have us taking profits and we are especially wary of the breach of the 18 day at 40.31 (former pattern highs at 39.60).

VAR ($36.50; +0.34): Split 2:1 on 1-16-02. After clearing our buy point and hitting an intraday high of 37.25 (tapping the down trendline connecting June and November highs), VAR pulled way back to close - a candlestick that typically presages a drop. We will see if it can hold the December highs at 36 (10 day at 35.67) in low volume pullback and set up a move post-split.

LIZ ($25.41; +0.01): Split 2:1 on 1-17-02. Closed Friday with the second consecutive tight doji under the 50 day (25.07). Holding the 50 day on this good volume (649,800; average 456,300) is solid action, and the aggressive can look for a bounce (although on post-split moves we are careful in protecting profits). The aggressive play remains a move over 26 on continued strong volume with stock and/or April $22.50 calls to buy (LIZ DX - no open interest).

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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