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Begin part 3 of 3
NOTE: This corrects the option ticker in the DIA play and the option strike price in the IP play.
THE PLAYS:
Upside:
New Post-Split Play:
Play Date: 11/17/2007
DRQ (Dril-Quip--$57.78; -0.06; optionable): Oil and gas service company
http://biz.yahoo.com/p/d/drq.html
EARNINGS: Announced 11-1-07
STATUS: Breakout test. Showing outstanding strength in the energy market. DRQ exploded higher to start November, propelled by some strong earnings. The move blasted it out of a 6 month base. It made a nice 10 point surge on the breakout run, and then spent the past two weeks testing that move during the market selling. It held near support at the 18 day EMA (57.27) the past week, holding the 18 day with a doji. Excellent action and looking for DRQ to hold this near support this week and then resume the breakout move once more. We are looking to buy into that move.
Volume: 776.3K Avg Volume: 531.547K
BUY POINT: $58.91 Volume=795K Target=$67.95 Stop=$56.94
POSITION: DRQ CK - Mar. $55c (63 delta, 163 OI) &/or Stock
http://www.investmenthouse.com/cs/drq.html
Play Date: 11/17/2007
VIVO (Meridian Biosciences--$30.91; +0.51; optionable): Diagnostic substances
http://biz.yahoo.com/p/v/vivo.html
EARNINGS: Announced 11-14-07
STATUS: Test 50 day EMA. Taking another run at VIVO as it tests the 50 day EMA (29.99) the past week, undercutting it Wednesday, but then rallying to recover. It is making a higher low at this key level, setting up for a run to the hit at 34 hit in October and November. You can view that as a potential double top, but a strong volume move off of the 50 day EMA (volume was up Friday, but that was expiration) will show us the buyers are back in and we can make that run to 34 and then see how it handles that prior high. Strong volume on the surge higher would say the stocks has a good chance of making the break.
Volume: 460.113K Avg Volume: 362.63K
BUY POINT: $31.22 Volume=540K Target=$37.45 Stop=$29.78
POSITION: ZUG AF - Jan. $30c (62 delta) or ZUG DF - Jan. $30c (57 delta, 139 OI) &/or Stock
http://www.investmenthouse.com/cs/vivo.html
New Leader Plays:
Play Date: 11/17/2007
GOOG (Google--$633.63; +3.98; optionable): Internet search, etc.
http://biz.yahoo.com/p/g/goog.html
EARNINGS: Announced 10-18-07
STATUS: Test 50 day EMA. Another one of the high fliers that broke its strong, strong uptrend along the 10 day EMA a couple of weeks back and flopped to the 50 day EMA. This comes after the September break higher from a 10 week cup base. The breakout and run higher up the 10 day EMA is normal action. The test of the 50 day EMA after 5 rotations up the 10 day EMA following the breakout is normal action. A strong stock will regroup at the 50 day EMA and then continue higher. Friday GOOG tested the 50 day SMA on the intraday low and then rebounded for a gain on the best volume since Monday. Now the expiration trade skewed the volume so we have to basically exclude that. We like, however, the hold at this key level, and if the market was in better shape this would be a no brainer. As it is, we want to see GOOG hold the line here and then post a strong volume break higher to show us the buyers are moving back in. We will move in as well and see if it can click off another run to 700 or the prior high near 735. We are using options given the price, though the options are not what you would call cheap. Nonetheless we can make some big money on them with the kind of moves GOOG can make.
Volume: 9.044M Avg Volume: 5.704M
BUY POINT: $639.11 Volume=8.6M Target=$699.75 Stop=$627.55
POSITION: GOO AH - Jan. $640c (53 delta)
http://www.investmenthouse.com/ci/goog.html
Play Date: 11/17/2007
WFR (Memc Electronic--$71.42; +0.61; optionable): Semiconductors for solar panels, etc.
http://biz.yahoo.com/p/w/wfr.html
EARNINGS: Announced 10-25-07
STATUS: Test breakout. Taking another run at WFR. It broke out of a nicely formed 8 month base in late October on its strong earnings and rallied over 80. It reversed the past week in the market selling, undercutting the 18 day EMA (70.02) one session, but then rebounding Tuesday to recover that level and work laterally the rest of the week, closing out the move with some low volume Tuesday through Friday. Nice recovery and hold at near support at the 10 day EMA on the Friday close. Looking for the break higher from here on strong volume to show us the buyers are back in and we are going to be ready to be one of them when we see the big boys back in there.
Volume: 3.546M Avg Volume: 4.4M
BUY POINT: $72.92 Volume=6.6M Target=$83.95 Stop=$69.89
POSITION: WFR DN - Apr. $70c (61 delta) &/or Stock
http://www.investmenthouse.com/cs/wfr.html
New Downside:
Play Date: 11/17/2007
AMR (AMR Corp.--$22.47; -0.68; optionable): Airlines
http://biz.yahoo.com/p/a/amr.html
EARNINGS: Announced 10-17-07
STATUS: Put. AMR made us a nice 46% gain to the downside in early November as it sold off from a 50 day EMA (23.47) test. It bounced back up over the past week to test that key level again as oil prices dipped back from the near $100 level that was pushing jet fuel prices higher. Even as prices backed off last week, however, AMR could not hold that key level despite a couple of intraday attempts to do so. It fell back and faded below the 10 day EMA on the Friday close. Money flow has turned down once more. Looking to ride AMR on its next leg lower and pick up another 45% to 50% if it will give it to us.
Volume: 7.508M Avg Volume: 7.462M
BUY POINT: $22.32 Volume=9M Target=$20.21 Stop=$23.05
POSITION: AMR MX - Dec. $22.50p (-61 delta)
http://www.investmenthouse.com/cs/amr.html
Play Date: 11/17/2007
DIA (Diamonds Trust (DJ30)--$131.44; +0.35; optionable)
http://biz.yahoo.com/p/d/dia.html
STATUS: Put. Struggling below the 200 day SMA (132.30) as the Dow trades above and below that level this past week. It recovered it on Tuesday only to give it back on Thursday. The inability to hold above this key level tells of big money selling out of some Dow stocks. Looking for more weakness in the Dow, and if it comes we are looking to play it on the next leg lower. A move to the target lands a 39%ish gain.
Volume: 22.489M Avg Volume: 14.74M
BUY POINT: $131.28 Volume=20M Target=$128.05 Stop=$132.38
POSITION: DAW XB- Dec. $132p (-46 delta)
http://www.investmenthouse.com/cs/dia.html
Play Date: 11/17/2007
IP (International Paper--$34.11; +0.56; optionable): Paper products
http://biz.yahoo.com/p/i/ip.html
EARNINGS: Announced 11-2-07
STATUS: Put. IP failed to impress with its earnings, and that killed off a late October attempt to move up past the 200 day SMA. It rolled lower, then tried to bounce early last week, making it back up to the 18 day EMA (34.84) intraday before stumbling and falling back, Thursday as well. Friday it managed a rebound move but on very low, below average volume; pure relief move with no substance. Looking for it to roll over and start the selling again though it may try to bounce up to the 10 day EMA (34.47) before it does. If so we will move up the buy point and move in as it rolls back over. A move to the target lands a 40%ish gain.
Volume: 2.935M Avg Volume: 3.273M
BUY POINT: $33.95 Volume=3.4M Target=$32.15 Stop=$34.55
POSITION: IP MG - Jan. $35p (-48 delta)
http://www.investmenthouse.com/cs/ip.html
PRE-ANNOUNCEMENT PLAYS
We consider many stocks for pre-announcement plays every week. We get information regarding upcoming announcements and other data that leads us to conclude a split announcement is coming. Even then, however, we have to be discriminating. We have to see a strong technical pattern as well, and thus we reject many potential candidates based on a weak technical position.
The key today is to find stocks in strong patterns or that are ready to rebound off support. A split announcement will amplify the move higher in these cases as we enjoy moves from strong leaders in position to run higher. We won't chase a stock in a poor technical position even if we know it is going to split; it simply won't do us any good, i.e. it typically won't make us any money to the upside. We could list all stocks we think are going to split, but again, that won't make us any money unless we are in an office pool as to what stocks will or won't announce a stock split.
Current Pre-Announcement Plays:
This is a list of stocks we are looking to announce splits. We are not in all of the potential splits plays but are letting them set up for the next move. In each report we look at the candidates that are in the best patterns ahead of their potential announcements. This focus on leaders in good patterns allows us to make good money even if companies do not announce the split. The key with splits is the pattern and of course the strong earnings growth that put it in the pattern in the first place.
AAPL: Still setting up for a break higher off the 50 day EMA. Looking for an announcement IN January.
ATK: Looking for a February announcement.
ATW: Likely to announce in January. Still trying to recover.
BUCY: Holding the 50 day EMA on the Friday low as it continues its attempt to hold the line and put in a bounce.
COST: Forecast mid-December
EDU: Nice hold at the 50 day EMA.
EOG: Anticipating an announcement in late January
HRS: Looking to January for an announcement.
ISRG: Looking to pinpoint a date. Still holding above the 50 day EMA, looking for a recovery.
MA: Researching date.
MICC: Tentatively forecast for mid-December
RIG: Held at the 50 day EMA Friday and bounced after some pretty heavy selling midweek.
SID: Tentatively set for mid-November
STLD: Researching date. Making a stand at the 50 day EMA
SU: Researching date. Major struggle at the 50 day EMA and just waiting to see if it can set back up.
NEW PRE-ANNOUNCMENT PLAYS
Play Date: 11/17/2007
MO (Altria Group--$73.18; +0.91; optionable): Tobacco
http://biz.yahoo.com/p/m/mo.html
EARNINGS: Announced 10-17-07
STATUS: Flying plateau. It has been 10 years since MO announced a split, and we may be just a bit early, but there are forces at work that make MO a pretty solid play right now. First is its pattern, a nice three week lateral range over the 18 day EMA (72.27) that is consolidating the October move higher that took MO over the May to July peaks and to a new all-time high. It showed some very nice price/volume action in this lateral range, i.e. moving higher on rising trade and lower on lower trade. Second, it is a more defensive play in a market that warrants a bit more caution. The accumulation is rising and MO bounced higher Friday, knocking at a breakout once more.
Volume: 13.106M Avg Volume: 10.623M
BUY POINT: $73.74 Volume=16M Target=$82.95 Stop=$72.11
POSITION: MO CN - Mar. $70c (72 delta) &/or Stock
http://www.investmenthouse.com/cs/mo.html
New buy point:
Play Date: 11/17/2007
EDU (New Oriental Education & Tech--$75.54; +3.14; optionable): Education & training services, China
http://biz.yahoo.com/p/e/edu.html
EARNINGS: Announced 10-15-07
STATUS: Test 50 day EMA. One of the high fliers that surged in October, making us some money and then tanking and hurting one of our positions. It broke out in late September from a 12 week cup with handle base, surged over 90, and then was hit in the November selling. It came back to the 50 day MA this past week, selling hard to that level Monday, but then rebounding sharply only to slide back in the late week downside action. All the while it held the 50 day on the low and that is a key support point. Friday it tapped that level and then rallied for a nice gain on rising volume. Want to see it continue that rally and break through the 18 day EMA (76.95) on stronger trade to show us the buyers are back and it is going to try and run toward that prior high.
Volume: 544.25K Avg Volume: 480.588K
BUY POINT: $77.11 Volume=721K Target=$91.95 Stop=$74.88
POSITION: EDU AO - Jan. $75c (57 delta, 461 OI) &/or Stock
http://www.investmenthouse.com/cs/edu.html
CONTINUING PRE-ANNOUNCEMENT PLAYS
Play Date: 11/13/2007
COST (Costco--$66.80; +0.46; optionable): Discount warehouse stores
http://biz.yahoo.com/p/c/cost.html
EARNINGS: 12-13-07
STATUS: Flying plateau. The same lateral action continues, but COST still looks good, ready to make the break higher. Impressive strength. To recap: Retail is getting hit, but COST is ignoring them because it is one of the retailers that thrives in a weaker economy because of its discount status and great following, much more so than WMT and its Sam's stores. Just being patient and looking for the break higher to move in. To recap: COST broke higher in early October, gapping to the upside on very strong volume as it broke out from a 9 week double bottom base. This last move broke COST out from a long 7 year base where it struggled to move higher. Money flow is still moving higher ahead of price and on Tuesday COST was up on stronger, above average volume. One of the best looking retailers out there, and with the issues relating to the economy ahead, it is showing very nice technical strength. Looking for a continued move higher on volume to move into some positions.
Volume: 4.404M Avg Volume: 4.836M
BUY POINT: $68.11 Volume=7.2M Target=$77.95 Stop=$64.77
POSITION: PRQ DU - Apr. $67.50c (58 delta) &/or Stock
http://www.investmenthouse.com/cs/cost.html
Play Date: 11/13/2007
HRS (Harris Corp.--$62.47; -0.43; optionable): Telecom equipment
http://biz.yahoo.com/p/h/hrs.html
EARNINGS: Announced 11-1-07
STATUS: Test 50 day EMA. Gapped higher Friday but gave back some ground on weaker volume following that strong Thursday bounce. A good test of that move and HRS is set up nicely to resume the break higher this week. To recap: Nice surge on earnings took HRS out of an 8 week ascending base that used the 50 and 90 day SMA as support on the lows. Strong volume on the break higher as it ran to 66 on the breakout move. In the market selling it faded back and gave up the breakout, but it held at the 50 day EMA on the low and then broke higher Tuesday. Looking to move into HRS as it continues its move higher. Unlike many stocks it did not collapse in the selling, but held a key level and can move nicely off of that point.
Volume: 908K Avg Volume: 789.952K
BUY POINT: New: $63.04 (orig. $62.21) Volume=1.2M Target=$69.95 Stop=$59.95
POSITION: HRS BL - Feb. $60c (59 delta) &/or Stock
http://www.investmenthouse.com/cs/hrs.html
Play Date: 11/10/2007
MA (MasterCard--$184.87; -0.01; optionable): Credit services
http://biz.yahoo.com/p/m/ma.html
EARNINGS: Announced 10-31-07
STATUS: Breakout test. Excellent action, tapping the 18 day EMA (180.50) on the low and then rebounding to close flat on lower volume for the session. Strong money flow is leading and MA looks ready to follow. To recap: When most of the credit service companies are struggling, MA is taking bags of money to the bank. It announced strong earnings to end October and gapped sharply higher, clearing an excellent 18 week cup with handle base. Big surge that took it to a psychological level at 200 on the move. It stalled there and came back to test the 10 day EMA on the session lows each session.
Volume: 2.589M Avg Volume: 3.637M
BUY POINT: $191.68 Volume=5M Target=$219.95 Stop=$186.22
POSITION: MAL AS - Jan. $195c (54 delta) &/or Stock
http://www.investmenthouse.com/cs/ma.html
CONTINUING PRE-SPLIT PLAYS:
Play Date: 11/15/2007
D (Dominion Resources--$91.30; +0.62; optionable): Electric utilities. Splits 2:1 on 11-20-07
http://biz.yahoo.com/p/d/d.html
EARNINGS: Announced 11-1-07
STATUS: Ascending base. More work in the lateral test on Friday, tapping the 18 day EMA on the lwo and rebounding for a gain. Ready to make the next break higher. To recap: Nice lateral move the past two weeks as D bangs up and down between 90 and 92. It is consolidating the late October spurt higher, resting right below the April and May high that mark the top of the base. Gapped lower to the 18 day EMA on the Thursday open then rebounded on rising volume to post a modest gain. Nice set up to move higher, and this stock is in the right sector for a market turning more defensive. Looking for a bounce and run into the split.
Volume: 1.473M Avg Volume: 1.84M
BUY POINT: $92.24 Volume=2M Target=$99.95 Stop=$80.05
POSITION: D AR - Jan. $90c (54 delta)
http://www.investmenthouse.com/cs/d.html
CONTINUING POST-SPLIT PLAYS:
Play Date: 11/13/2007
GILD (Gilead Sciences--$44.64; +0.99; optionable): Biotechnology
http://biz.yahoo.com/p/g/gild.html
EARNINGS: Announced 10-17-07
STATUS: Test 50 day EMA. Volume was up Friday as GILD broke higher and through resistance at 44. May have just been expiration trade, but it was a great move and we are looking to move in as it continues the move higher. Excellent bounce back from the 50 day EMA (42.73) and a resumption of the October breakout from its 6 month base. Very nice.
Volume: 9.532M Avg Volume: 7.345M
BUY POINT: $43.62 Volume=10M Target=$49.00 Stop=$41.88
POSITION: GDQ BV - Feb. $42.50c (59 delta) &/or Stock
http://www.investmenthouse.com/cs/gild.html
Play Date: 11/08/2007
VIP (Vimple Communication--$30.74; +1.01; optionable): Russian wireless
http://biz.yahoo.com/p/v/vip.html
EARNINGS: 11-29-07
STATUS: Test 50 day EMA. Sold back last week with most stocks, but as with many leaders, VIP managed to hold key support at the 50 day EMA (29.16) and bounce for a gain. Looking for some more volume as VIP continues higher to show us the big buyers are back in. We are looking to take some positions on a high volume move through the buy point and then again as it clears some additional resistance at 32.
Volume: 2.794M Avg Volume: 3.313M
BUY POINT: $31.48 Volume=3.2M Target=$39.85 Stop=$29.97
POSITION: VIQ DF - Apr. $30c (68 delta) &/or Stock
http://www.investmenthouse.com/cs/vip.html
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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