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us stock market, trend trading stock
Begin Part 2 of 3
TEAM TRADES
DIAN: On the Stock Split Report, DIAN was trading in a tightening pennant after giving us a stellar run late in 2001. We were ready to jump on it again today, and it wasted little time getting to the buy point (59.60), hitting it about a half hour into the session. It ran so well, it was at 60 on its first run and we were waiting for it to come back. The pattern however was a very tight lateral range after that initial run. Volume was already at 50% of the daily average so we were excited about it. We jumped in at 59.95 and then of course it dipped to 59.45 for a minute. It bounced right back up and then held that tight consolidation for almost two hours. We started to wonder about the prospects; the market was moving up and now DIAN was stalled. At 11:00CT it jumped to 61.50 in 20 minutes. Then another 2.5 hours of lateral movement where it held almost flat. Volume kept building, and with a half hour to go, as the market sold back, DIAN rallied over 63 on massive volume. What a great move from a pennant: they can be very explosive as DIAN showed today.
THE PLAYS: Great moves today by DIAN and WLP, and a post-split surge for MGAM!
BONUS PLAYS:
STM (Stmicroelectronics--$30.02; -0.88; optionable): Semiconductor
http://biz.yahoo.com/p/s/stm.html
STATUS: In an 8-week descending wedge pattern, formed with lows just below the 50 day MVA (30.09). Pattern lows are from January (29.40) and this month at 29.30. Volume in the pattern has been falling off fairly steadily over the last 2 weeks, down Tuesday to 712,000 (avg. 1.46 million) as the stock showed a doji in the range of the lows. The pattern continues to tighten up now below a confluence of MVA's (18 day at 30.67, 200 day at 31.87). Might try to pop up on the AMAT news. Target on the breakdown is 24.
BUY POINT: Breakdown: 29 on above average volume.
POSITION: July $40 puts to buy (STM SH).
JDEC (J.D. Edwards--$16.05; +0.42; optionable): Application Software.
http://biz.yahoo.com/p/j/jdec.html
STATUS: JDEC broke over the center of a year-long double bottom (center just under 15, left side highs 28), and after hitting 17.11 pulled back to test the 50 day MVA (14.71). It has formed a six-week double bottom, the right side last week dropping below the recent left-side low, and after making a move back over the 50 day, today JDEC continued up with strong volume behind it (1.74 million; average 1.54 million). It is just below the center of the pattern at 16.78. Target: 20. Good money flow and relative strength.
BUY POINT: 16.88 on volume of 2.3 million. Stop: 15.70.
POSITION: Stock and/or May $15 calls to buy (QJD EC).
OEX (Standard & Poors--$562.51; -2.57; optionable):
STATUS: After getting the upside move to our initial target of 566 (to within about 80 cents), the index pulled back on lower volume Tuesday (1.09 million; avg. 1.25 million), tapping on the low support at the 10 day MVA (560.98). The index is just under its 18 day MVA, resistance coupled with the short term down trendline (connecting January and February closing highs). We are looking at taking aggressive positions on a move down from here, for a move down to 549.38, a price hit four times since October.
BUY POINT: Aggressive: 562 on rising volume.
POSITION: April $570 or $560 puts t0 buy (XEK PL or PN).
SAH - Doji under the 50 day and the put play is still set up.
SUSQ - Still looking good in the saucer with handle.
ACAS - Rebounded back over the 200 day on lower volume, but faces the 50 day at 27.73, so we will see if we get the drop back.
UFPI - Continues to move erratically upward, and we are protecting positions.
MSM - Holding support.
PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: No announcements today from YUM or INVN (more likely date for INVN later this month).
BEST PLAYS: Also looking good are Continuing Candidates TGIC, APPB, LLL, STJ, and Post-Split XRAY.
MARKET FAVORITES:
1) EXTR - Still set up for a fall
2) JNPR - Continuing downtrend
EXTR (Extreme Networks--$11.75; -0.26; optionable): Internet software.
http://biz.yahoo.com/p/e/extr.html
STATUS: We picked up EXTR as it bounced up last week toward its down trendline (from early January). It has hit against that trendline (and 10 day MVA, at 12.08), showing a doji today as volume continued to decrease (2.46 million; average 5.83 million). This it the typical scenario we look for in a downside play when the stock is trending down - weak moves up to the resistance, and a chance to take positions on a drop back. If there is some market strength in the morning, we will see how EXTR handles the down trendline, but we will continue to look for a drop back. Targeting 9 on a retreat.
BUY POINT: A drop back through 11.50 on increased volume.
POSITION: March $15 puts to buy (EUT OC).
JNPR (Juniper Networks--$13.75; -1.13; optionable): Networking hardware.
http://biz.yahoo.com/p/j/jnpr.html
STATUS: Another tech stock in a continuing downtrend. It has made 5 to 6 point drops off of the trendline recently, hitting a low last week of 12.78 before making a move back on the line Monday. The move up was on the low volume we like when playing the downtrend, and JNPR fell back a bit today from the trendline (with its 10 day MVA, at 14.57). We will see if Wednesday brings a bit of market strength that could prop up JNPR, but we are looking for failure at the trendline and a drop back. Targeting 10.
BUY POINT: Test back to the trendline: A drop back through 13.75 on increased selling volume. From here: Through 13.50 on increased volume.
POSITION: March $17.50 puts to buy (JUX OW).
SNPS - Weak move that stopped short of the 200 day could spell the retreat we are looking for.
PSFT - Still in position to drop, with a doji at its 10 day MVA and down trendline.
XRX - Still in the pattern
PG - Solid move and just under the recent high
BRCM - Still in position to drop back from its down trendline.
PRE-ANNOUNCEMENT BEST PLAYS
1) DIAN - Great move!
2) DHI - Set up well
3) BMS - Tested the nice breakout move
4) GTK - Over support
5) WLP - Solid breakout on the numbers
6) FLIR - Gap up and reversal
DIAN (Dianon Systems--$57.04; -0.63; optionable): Forecast to announce a split with earnings on 2-21-02 before the open.
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: Got the move out of the pennant! After breaking from its lateral range in December, DIAN tested back to its 50 day MVA (then 52.50, now 55.46) and formed a pennant. It started looking very interesting to us again recently as it tested its 50 day at its intraday lows and sharply bounced up, tightening in its pattern. Today DIAN broke over our buy point on huge volume (790,800; average 257,000), closing at it high and just under the all-time high from December (63.44). We can look at new or additional positions on a move over that high, adjusting our target to 72.
BUY POINT: New high: 63.54 on continued strong volume (minimum 350,000). Stop: 59.09 (7%).
POSITION: Stock and/or May $60 calls to buy (UID EL).
DHI (D.R. Horton--$36.49; +0.23; optionable): Residential construction. Forecast to announce a split with a board meeting on 2/26/02.
http://biz.yahoo.com/p/d/dhi.html
BACKGROUND: Last split 7:5 in September 1995 at $15.
STATUS: Still poised over support. DHI broke out from a cup in December, and after testing the move in January it pushed up to a high of 37.99. It has drifted back recently, holding support at its 18 day MVA (35.49), today inching up a bit to take out the aggressive buy point, but volume was not what we wanted, dipping back to 881,800 (average 897,000) as it showed a loose doji. We will see if we get a bounce, looking for it to take out the recent high. Good relative strength, money flow and buying. Target: 43.
BUY POINT: New high: 38.09 on continued strong volume. Stop: 35.42.
POSITION: Stock and/or May $35 calls to buy (DHI EG).
BMS (Bemis--$52.35; -0.80; optionable): Working on a date. Earnings were 1-24-02.
http://biz.yahoo.com/p/b/bms.html
BACKGROUND: Based upon our research it does not appear that BMS has ever split its stock. The company has sufficient shares for a 2:1 split.
STATUS: Broke out Monday, gapping over the former high (52.47) and continuing the move up to an intraday high of 53.37. A solid move out of its shallow saucer pattern (similar in configuration to a reverse head and shoulders), but it could not continue today. However, BMS tested the former high, pulling back slightly on lower volume of 286,800 (average 232,800). Looking for the stock to hold support here and make a continued move up toward the initial target of 60. BMS has been on a steady upward trend from levels below 25 in October 2000, making a strong breakout from a reverse head and shoulders in November. Shows excellent buying and relative strength.
BUY POINT: Breakout test: After holding 52, a move back over 52.75 on continued strong volume. Stop: 49.15 (7%; 50 day at 49.56).
POSITION: Stock and/or July $50 calls to buy (BMS GJ).
GTK (Gtech Holdings--$50.01; +0.16; optionable): Working on a new date.
http://biz.yahoo.com/p/g/gtk.html
BACKGROUND: Based upon our research it does not appear that GTK has ever split its stock. The annual shareholder meeting was on 7-9-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: GTK really made an impressive move from its 50 day MVA (then 42, now 46.19), hitting 51.48 before pulling back on low volume. It has caught support at its 18 day MVA (48.65), moving up slightly on low volume after a high volume doji over that support last Friday. GTK has made a solid trend up from 20 over the past year, and has an upper channel trendline (June, July and December highs) ahead at 50.50, but on a strong move we are looking for the stock to take out that line and continue its steeper trend toward the target. The fact that it tested the 50 day MVA on its last pullback and this is the first test of the 18 day MVA since then makes us comfortable with this play.
BUY POINT: Over 50.50 on above average volume. Stop: 47.50.
POSITION: Stock and/or June $47.50 calls to buy (GTK FW).
WLP (127.29; +1.30): Beat the street with earnings Monday and is due for a split.
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: After the good numbers WLP gapped up and broke to a new high, moving on big volume (1.3 million; average 492,000), pulling back to close from a high of 131.25. Looking for that split announcement, which could come at any time. The stock has been riding along its short-term MVA's (18 day at 125.51), and we have been riding positions on good behavior, targeting 140. We will continue to ride the trend, watching for entry points as the stock tests its 18 day MVA and bounces. WLP could have a few more such bounces in it since almost tapping the 50 day (121.30) recently on an intraday low.
FLIR (Flir Sys--$46.90; -1.55; optionable): No announcement with earnings today.
http://biz.yahoo.com/p/f/flir.html
BACKGROUND: Based upon our research it does not appear that FLIR has ever split its stock. The annual shareholder meeting was on 7-24-01 at which time no additional shares were authorized. The company has sufficient shares for a 2 for 1 split.
STATUS: FLIR announced earnings this morning without a stock split, and it gapped up (high of 50.01) but then reversed intraday on big volume (up to 1.16 million; average 334,200). When we get a gap over resistance (the former high at 49.55), we look to see if the stock tests back and holds, watching to take positions on a hold and move back up. With today's action, it appears that FLIR will continue down before we get a move back up. The 10 day MVA is below at 45.12, with the 50 day down at 42.41. FLIR is sitting right now at the former highs of its handle to a double bottom (center with the 50 day). We will see if it can grab near support and set up again. Target: 56.
BUY POINT: Aggressive: After showing it can hold the 45 level, a run back over 46.50 on continued strong volume. Stop: 46.08.
POSITION: Stock and/or July $45 calls to buy (FFQ GI).
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) BSYS - Resting over support
2) WERN - New play making a 50 day MVA bounce
3) HTLD - Another new play
BSYS (Bisys Group--$62.51; -0.09; optionable): Business software. Splits 2:1 effective 2-25-02.
http://biz.yahoo.com/p/b/bsys.html
STATUS: Has made a decent pre-split move back over the resistance from its 50 day MVA (with its short-term down trendline at 60.76) and its 18 day at 61.52. Not a lot of volume, but with pre-splits we are less concerned with volume as these stocks get rather volatile as they close in on the split dates. BSYS rested today, again showing low volume (283,700; average 571,300) as it formed a doji. Looking for the stock to hold up over the 18 day, and continue its run up toward the recent high of 66.
PLAY: Aggressive: A move over 63, with stock and/or March $60 calls to buy (BQY CL).
WERN (Werner Enterprises--$27.00; +0.86; optionable): Trucking. Splits 4:3 on or about March 15.
http://biz.yahoo.com/p/w/wern.html
STATUS: A typical performance for a stock that announces a split, WERN has made a strong run from below 12 since late 2000. Late January it made a strong move up from its 50 day MVA (currently 25.68), topping at 29.57 before making an abrupt drop back through the 50 day. Catching support at recent lows (25 range), WERN made it back over the 50 day, and on the news of the split today made a run back over its short-term MVA's (26.67). Volume was huge on the news, coming in at 834,600 (average 296,500). Looking for a continuation of the momentum up to the high.
PLAY: Over 27.60 on continued strong volume, with stock and/or May $25 calls to buy (QEH EE - no open interest for March). Stop: 25.76 (7%).
HTLD (Heartland Express--$33.98; +0.60; optionable): Another trucking stock. Splits 3:2 effective 2-20-02.
http://biz.yahoo.com/p/h/htld.html
STATUS: A trucking stock with a similar trend as WERN, HTLD broke from a ragged cup in early January, and after testing the move took off on a big run up to a high of 35.35. It has since pulled back but found support at the 18 day MVA (33.11). HTLD bounced today, but after hitting 34.64 pulled back to close, with volume decreasing to 108,700 (average 180,300). A week to go, and we will look for a strong move that takes out the high. Watching that level as we target 38.
PLAY: Over 34.64, with stock and/or March $30 calls to buy (QHK CF - no open interest). Stop: 32.31 (7%).
CONTINUING CANDIDATES BEST PLAYS:
1) GOSHA - Will it break out?
2) RYL - Trying to move
3) DHR - Also trying to breakout
4) PMI - Could form a better handle or just breakout
GOSHA (Oshkosh--$40.98; -0.47; no options):
http://biz.yahoo.com/p/g/gosha.html
BACKGROUND: Last announced a 2:1 on 8-10-98 at a stock price of $20. The annual shareholder meeting was on 5-4-01 at which time no additional shares were authorized. The company has sufficient shares for a 2 for 1 split.
STATUS: Someday my breakout will come. Continues to extend in its consolidation. GOSHA had formed an ascending wedge pattern, tapping its 50 day MVA at its low while facing resistance at the 42 level. It has now extended for the last couple of weeks in the 40-42 range, with the 50 day MVA coming up from below (currently 39.94), close to intersecting the price. GOSHA dips back and forth around its short-term MVA's (41.50), and at this point it could either decide to breakout with a bang or turn over. We will keep looking for the breakout. Good money flow and relative strength. Target: 50.
BUY POINT: 43.10 on volume of 61,000 (22,000 today; average 44,800). Stop: 40.08 (7%).
POSITION: Stock only.
RYL (Ryland Group--$80.19; +1.59; optionable): Residential construction.
http://biz.yahoo.com/p/r/ryl.html
BACKGROUND: Based upon our research it does not appear that RYL has ever split its stock. The annual shareholder meeting was on 4-25-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: RYL is heading back up after having held support at its 18 day MVA (76.21), hitting the buy point although volume was not that impressive today, comparative to recent levels (up to 400,400; average 383,400). It is just below its high (made last week) at 81.62, but for positions we will need to see a strong move over the high. If we get that we will adjust the target, as we are currently riding positions up to 85. With a strong breakout move, looking at 90.
BUY POINT: New high: 81.72 on volume of 500,000. Stop: 76.
POSITION: Stock and/or July $70 calls to buy (RYL GN).
DHR (Danaher--$63.69; -0.40; optionable): Forecast to announce a split in late January in conjunction with earnings. At this time, the company cannot confirm a date for earnings release.
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: Banging up against resistance at 64, DHR had formed an ascending wedge, making higher lows roughly along its 50 day MVA (60.67). DHR made a nice bounce Monday, closing just below the recent high (64.25), and hit up to 64.71 today, taking out the buy point in the process. However, it could not break free, closing with a tight 'star' doji as volume was in the range we were looking for, 1.5 million (average 1.05 million). The doji could be a signal that DHR will once again test lower, but on that move we will look for it to hold higher support at the short-term MVA's, at 62, and try again. We could still get the move from here, targeting 72.
BUY POINT: Test of 62: Over 64 on continued strong volume. Stop: 59.61 (7%). From here: Over 64.71 on continued strong volume. Stop: 60.27 (7%).
POSITION: Stock and/or June $60 calls to buy (DHR FL).
POST SPLITS BEST PLAYS:
1) VAR - Textbook action
2) CHBS - Looking to drop again
VAR (Varian Medical--$39.39; +0.63; optionable): Split 2:1 on 1-16-02.
http://biz.yahoo.com/p/v/var.html
STATUS: VAR is looking good. It made a breakout from a 'flying w' with handle formed since November, and then pulled back to test the move on low volume, holding the prior pattern highs and the 10 day MVA (38.50). Good action, and today VAR did the expected by surging back up on much higher volume (932,500; average 312,000), taking out our bounce buy point. Looking now for VAR to take out the breakout high of 39.93. Target: We were looking at 43 on the recent move, but on a breakout we will adjust to 46.
PLAY: Breakout: 40.03 on volume of 460,000. Stop: 37.23 (7%). Stock and/or May $35 calls to buy (VAR EG). Stop: 37.11.
CHBS (Christopher & Banks--$29.78; +0.10; optionable): Split 3:2 December 13.
http://biz.yahoo.com/p/c/chbs.html
STATUS: CHBS gave up its 50 day MVA (30.09) last week to find temporary support at 28. It had a wild day last Thursday, gapping down to 26 but rallying all the way back to close at the 50 day. It has not been able to crack back through that resistance (10 & 18 day just above; 18 day at 30.83), showing three consecutive dojis. Volume surged back up today (787,800; average 430,000), and CHBS could be ready to fall back again (continuing the drop that started up at 34). On a put, targeting the 200 day MVA, at 24.27.
PLAY: Aggressive: A drop through 29 on continued strong volume. Through recent lows: Below 28 on continued strong volume. March $35 puts to buy (URH OG).
End Part 2 of 3
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us stock market
trend trading stock
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