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stock trading information, stock trading
Begin Part 2 of 3
TEAM TRADES
Continuing to play the downside when it presents itself, we had our eyes on PMCS as it was ready to breakdown in a descending triangle pattern. Our buy point was 19.90, and PMCS gapped lower to 20.21. It fell down below the buy point at 19.75 and then rallied up to 20.10, testing the breakdown. We saw it look as if it was peaking out, and we waited another several minutes to confirm this as it sidestepped a bit. Then it started to fall and we made the move in as it crossed over 19.90 again. The options were trading at 6.50 by 6.70, and as the stock had already tested the breakdown and the spread was narrow (notice how the lower volatility has compressed spreads on options?) we entered a limit order at the ask. That was taken care of and the stock tumbled to 19.40 and held there for a few hours, gradually moving lower the entire session until it fell hard in the last hour. It made a modest rebound, however, taking some of the good move away. The options finished at 7.10 by 7.30.
THE PLAYS: Great moves on put plays, including PMCS, BRCM, EXTR and IBM, as well as APPB and THC!
BONUS PLAYS:
MYGN (Myriad Genetics--$38.82; -5.51; optionable): Biotechnology.
http://biz.yahoo.com/p/m/mygn.html
STATUS: MYGN has pulled back from its December high near 65, finding a bit of support in the 38-40 range the last few weeks. It made a move up last week, making it over its 50 day MVA (45.81), but falling back, and today MYGN sold down hard, taking out its recent closing low as volume spiked up to 1.98 million (average 942,500). The strong selling points to more weakness, and the recent intraday low in the stocks 2002 range is at 37.65. The stock could be headed down to its March-April 2001 lows at 30, although it took out those levels in the September drop, hitting 24.75.
BUY POINT: Below 38.50 on continued strong volume.
POSITION: April $50 puts to buy (GSQ PJ - no open interest as of yet).
SVU (Supervalu--$24.50; +0.30; optionable):
http://biz.yahoo.com/p/s/svu.html
STATUS: SVU broke out from a large cup in October, but took two steep drops after that move, forming a double bottom. It made a steady climb from mid-December, breaking out from the new pattern at the end of January. After that move it needed a breather, and SVU pulled laterally into a pennant over the short-term MVA's (18 day 23.96). Today SVU again moved up from the 18 day, but volume, though higher, continued to be below the average at 461,100 (average 583,600). The high in the pattern is 24.96, and we are looking for a breakout. Target: 29.
BUY POINT: 25.96 on volume of 785,000. Stop: 24.14 (7%).
POSITION: Stock and/or July $22.50 calls to buy (SVU GX - under 50 open interest).
ONE - Made a strong move down.
ROAD - Continued down, but on lighter volume.
SAM - Still looking good
ANSI - Tanked!
JILL - Continued the strong move.
DRIV - Big move down on the put play.
GS - Made a very strong drop, continuing down after the failed test of the 200 day.
WBST - Holding up well.
PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: Looking at RARE on Tuesday and DIAN on Thursday.
BEST PLAYS:
MARKET FAVORITES:
1) YHOO - Breakdown
2) PWAV - Broke through support
YHOO (Yahoo--$14.44; -1.23; optionable): Internet Information Provider.
http://biz.yahoo.com/p/y/yhoo.html
STATUS: YHOO gapped down and continued to drop today, breaking down from a head and shoulders pattern. The pattern set up after hitting December and January peaks, and after YHOO dipped below the 200 day MVA (16.07) early this month and recovered (forming the right shoulder), it fell back through Friday on light volume. The selling really took off today, as volume kicked up to 12.4 million (average 11.64 million). Looking for a continued drop, although we could see a bit of a test back up toward 15 before a continued fall. Target: 11.
BUY POINT: A drop through 14.20 on increased volume.
POSITION: April $20 puts to buy (YHZ PD).
PWAV (Powerwave--$14.97; -1.19; optionable): Telecommunications.
http://biz.yahoo.com/p/p/pwav.html
STATUS: PWAV has been making lower highs as it uses the 200 day MVA (currently 16.07) for support. It had made three bounces in the last two months, smartly rebounding each time it visited support. However, the lower highs are a recipe for failure, as the making a descending wedge will builds pressure to the downside. Today PWAV gapped through the 200 day, reaching back over intraday but then falling down to close, moving on higher volume at 2.24 million (average 1.56 million). Looking for a continued drop now, and we will target 12 initially, but we could see a drop all the way down to 10, where it has lots of support from prior levels.
BUY POINT: A drop through 14.50 on continued strong volume.
POSITION: April $20 puts to buy (VFQ PD).
PMCS - Continued the breakdown out of the pennant.
SNPS - Continues down, but volume is low.
JNPR - Upgrade did not help, and still weak.
BRCM - Down again on increased volume.
EXTR - Big drop!
IBM - Punished again on accounting concerns.
PRE-ANNOUNCEMENT BEST PLAYS
1) DIAN - Nice test of the breakout
2) SLM - Also holding up well on a test
3) AZO - Setting up an ascending wedge
4) STU - Nice flat consolidation
5) DHI - Narrow pennant
DIAN (Dianon Systems--$61.56; -0.59; 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: Made the big move out of its pennant pattern last week, and now has pulled back a bit to test the move. Today it reached toward its 10 day MVA (60.58) for the second consecutive session, pulling back up to close as volume increased to 284,500 (average 262,500). The breakout and test has formed a little (almost seven week, typically the minimum length) cup with handle. Looking for a continued hold of the 10 day (which is also in the range of the December highs) and make another breakout move, and an announcement Thursday could help. The high on an intraday spike is 65; we will use the other high in the handle as the breakout point. Our target is now 72.
BUY POINT: 63.88 on volume of 400,000. Stop: 59.61. Aggressive: After holding the 10 day, a move back over 62.25 on increased volume.
POSITION: Stock and/or May $60 calls to buy (UID EL).
SLM (USA Education--$91.43; -1.08; optionable): Researching a new date, and we are looking now at a board meeting that our research shows will be in early April.
http://biz.yahoo.com/p/s/slm.html
BACKGROUND: Last announced a 7:2 split on 11-21-97 at $38. There are enough shares for a 3:2 split.
STATUS: Still holding up nicely after its strong breakout move. The last two years SLM has made its steady way up from the $30 range, and is due for a split. In early January it reached down to test its 200 day MVA (then 78, now 80), and made a good recovery, forming and breaking out of a small cup. After testing that breakout it made another strong move up last week, and since then has rested, forming a nice, lateral consolidation on lower volume. Today it dropping back off of two consecutive dojis, but held the 10 day MVA (91.14), and volume remained tame at 578,200 (average 721,400). Shaping up for a continuation of the run. Target: 105.
BUY POINT: 93.95 on volume of 970,000. Stop: 89 (18 day MVA at 89.80).
POSITION: Stock and/or July $90 calls to buy (SLM GR).
AZO (Autozone--$64.49; -0.96; optionable): Auto Parts. Forecast to announce a split with earnings. Our research indicates that the release will be 2-26-02 before the open.
http://biz.yahoo.com/p/a/azo.html
BACKGROUND: Last announced a 2:1 split in March of 1994 at a price of $58. The annual shareholder meeting was on 12-14-00 at which time no additional shares were authorized.
STATUS: AZO gave us some great moves in early December, but after pulling back the stock has held the November consolidation range, and has been battling the 50 day MVA (66.12). AZO moved over that level at the end of January, but ducked back again without taking out its prior consolidation lows. It moved back over the 50 day again last week, moving on low volume, but is setting up pretty well here. It dropped Friday and gapped down again today, but held the 50 day (which is with the short-term MVA's) with a doji. Volume continues to be very low (393,900; average 1.2 million), and if AZO holds support this time it would set up an ascending wedge going toward the forecast. Looking for a breakout, and targeting the high at 80.
BUY POINT: 68.40 on volume of 1.6 million. Stop: 63.61 (7%).
POSITION: Stock and/or June $60 (AZO FM).
STU (Student Loan--$88.12; +0.13; no options): Continuing to research a possible date.
http://biz.yahoo.com/p/s/stu.html
BACKGROUND: Based upon our research it does not appear that STU has ever split its stock. The annual shareholder meeting was on 5-16-01 at which time no additional shares were authorized. The company has sufficient shares for a 2 for 1 split.
STATUS: STU has done very well, making solid bounces for us along the short-term MVA's. It broke over its April and August highs with a December breakout move, broke out of a pennant in January, and now it has formed another lateral consolidation. We have been cautious in protecting positions, but STU made a gradual move laterally to intersect with its 10 day MVA (87.54), where it has rested the last four sessions with loose dojis. It could visit the 18 day (86.66), which it has done several times over the last few months. Looking for a run to 100 on a breakout.
BUY POINT: Over 89 on volume of 19,000 (average 14,000; today 7500). Stop: 82.86.
POSITION: Stock.
DHI (D.R. Horton--$36.97; +0.27; 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: Approaching the board meeting, and DHI continues to holding up and look good. DHI made a nice breakout and test in December-January, and the high on the test hit 37.99. DHI has remained strong since hitting that mark, testing its 18 day (36) and now looking like a narrow pennant pattern. After pulling back on strong volume Friday but holding the 10 day MVA (36.59), DHI showed a doji today on lower volume (926,200; average 933,900). Set up well, and just looking for the breakout. Target on a new breakout: 45.
BUY POINT: 38.09 on volume of 1 million or better. Stop: 35.42.
POSITION: Stock and/or May $35 calls to buy (DHI EG).
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 - Testing the 50 day
BSYS (Bisys Group--$61.59; -0.61; optionable): Business software. Splits 2:1 effective 2-25-02.
http://biz.yahoo.com/p/b/bsys.html
STATUS: Has now pulled back from its pre-split move, tapping its 50 day MVA (61.06) today but pulling back up a bit to close. Not bad action, as volume increased on the rebound (547,800; average 557,800), and we are now looking for a bounce to trigger another pre-split move as we go toward the split date next Monday. Could be a quick move, targeting the high at 66.
PLAY: Bounce - A move over 62.75, with stock and/or March $60 calls to buy (BQY CL - April available Monday). Stop: 59.
CONTINUING CANDIDATES BEST PLAYS:
1) TGIC - Still doing well in its pattern
2) BBY - Strong drop through support
3) TGH - Forming a nice handle over support
4) RARE - Trying to bounce
5) RYL - Hanging in
6) HB - Could be forming a pennant on low volume pullback
7) FLIR - Has formed a pennant handle
8) DHR - Holding on after breaking out
TGIC (Triad Guaranty--$41.50; -0.30; optionable): Surety & Title Insurance.
http://biz.yahoo.com/p/t/tgic.html
BACKGROUND: Last announced a 2:1 split on 9-18-97 at a stock price of $28.25. 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: Like the insurance sector, and TGIC has formed up nicely. After its unspectacular breakout from a cup with handle, TGIC has held on well, pulling back into a nice-looking consolidation. We like it because the action is a gradual pullback holding support (closing over the 10 day at 41.30, today tapping near the 18 day at is low of 40.63). Volume started low as the consolidation formed, but we have had an infusion over the last few sessions, down sharply today at 51,200 (average 44,400). ooking for another breakout. Target: 49.
BUY POINT: Over 42.39 on minimum volume of 58,000. Stock: 39.52.
POSITION: Stock.
BBY ($68.91; -3.12; optionable):
http://biz.yahoo.com/p/b/bby.html
BACKGROUND: Last announced a 2:1 split on 2-22-99 with a board meeting. The stock price was $95. Prior to that announced a 2:1 split on 4-24-98 with a board meeting. The stock price was $71. The annual shareholder meeting was 6-26-01 at which time no additional shares were authorized. The company has sufficient shares for a 2:1 split.
STATUS: Pressure from news out of Circuit City helped BBY have a rough session, gapping down and then giving up its 50 day MVA (70.71) as volume spiked way up to 5.08 million (average 2.78 million). Strong selling, and we can look at riding the momentum down. We will see if it continues from here, or if it will test the former support of the 50 day, and 'kiss it goodbye' on a drop back. The most recent low is 67.70, with the December low at 65, but we are targeting the 200 day, at 62.39.
BUY POINT: Test: After a test of the 50 day, a drop back through 69 on continued strong volume. From here: Through 68.25 on continued strong volume.
POSITION: April $75 puts to buy (BBY PO).
TGH (Trigon Healthcare--$74.96; +0.08; optionable):
http://biz.yahoo.com/p/t/tgh.html
BACKGROUND: Based upon our research it does not appear that TGH 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: Looking good. TGH made a nice breakout from a 3-month cup with handle in January, and after a good run has pulled back into another handle to its larger, 13-month cup with handle base (left-side high 81.50). TGH saw some high volume on it most recent move up and reversal, but settled down nicely over its 18 day MVA (74.32). Today TGH showed its second consecutive doji over that level, and volume shot up to 278,200 (average 193,400). Shaping up nicely for the next move. Our original target for positions taken last month was 84, although we looked at taking some money off the table when the stock was topping recently. If it can make a new breakout move, targeting 92.
BUY POINT: From here: Over 76 on above average volume. Stop: 70.77 (7%; 50 day at 71.42). Breakout is over the recent high at 79, with volume of 300,000. Stop: 73.56.
POSITION: Stock and/or July $70 calls to buy (TGH GO - under 100 open interest).
RARE (Rare Hospitality--$25.46; +0.01; optionable): Restaurants.
http://biz.yahoo.com/p/r/rare.html
BACKGROUND: Last announced a 3:2 split on 7-26-00 in conjunction with earnings. The stock price was 29.50. The annual shareholder meeting was on 5-14-01 at which time authorized shares were increased. The company has sufficient shares for a 2:1 split.
STATUS: RARE is in a cup with handle dating back to May (high 28.43; all-time high at from February at 32). It has pulled steadily back in the handle over the last two weeks, finding support at its 50 day MVA (24.38). We were looking for a bounce, and it hit 26.22 at its high Friday after earnings, but pulled back. Today RARE again tapped its 50 day, but managed to push up on sharply higher volume (398,900; average 265,600), closing at its short-term MVA's (18 day at 25.48). Looking for a continuation of the move and breakout over the handle high at 27.05 (there is an intraday spike at 27.50 made just before the handle formation). Target: 32.
BUY POINT: Breakout: 27.15 on minimum volume of 380,000. Stop: 25.25. Aggressive: Over 26.22 on continued strong volume. Stop: 24.38 (7%).
POSITION: Stock and/or May $25 calls to buy (QRH EE - low open interest).
RYL (Ryland Group--$79.64; -0.76; 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: Continues in a tight lateral range. RYL has been impressive as it makes its way up after breaking out of a reverse head and shoulders in December. RYL took a strong bounce from its 50 day MVA (currently 72.39, then 65) in January, and on its most recent pullback held support at the 18 day (77.61). RYL moved up from that level to challenge its high (81.62), but has moved laterally with several dojis on low volume until today when it reached up to 81.99 but could not hold on, pulling back on volume that was up to 436,200 (we were looking for 500,000; average 382,300). Still comfortably over the 10 day (78.98), and we will see if RYL can hold here or the 18 day on a pullback, which would make a higher low and ascending wedge to set up a breakout. We have been riding position toward a target of 85, but on a strong move over the high (81.62), we will adjust the target to 90.
BUY POINT: New high: 82.09 on volume of 500,000. Stop: 7634 (7%).
POSITION: Stock and/or July $75 calls to buy (RYL GO).
HB (Hillenbrand--$59.39; -0.57; optionable):
http://biz.yahoo.com/p/h/hb.html
BACKGROUND: Based upon our research it does not appear that HB has ever split its stock. The company has sufficient shares for a 2:1 split.
STATUS: Is pulling back gradually, today closing at its 10 day MVA (59.38), but volume is tapering off as well, today down to 66,900 (average 138,000). HB made a big breakout move at the beginning of this month, moving from a jagged cup with handle. The test back moved below the former breakout point, but it did catch the 18 day (currently 58.74) for another attempt at a move. That move died with a doji last Thursday before getting to the breakout high of 61.75, and the failure to make it back up to the high is a concern. However, HB is showing decent action on this pullback, and we could see a pennant form if HB holds the 18 day.
BUY POINT: From here: Over 60.95 on volume of 185,000. Stop: 56.78 (7%). If a pullback on continued low volume holds the 18 day, a bounce back over 59.30 on above average volume. Stop: 55.24.
POSITION: Stock and/or June $55 calls to buy (HB FK - under 100 open interest).
End part 2 of 3
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stock trading information
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