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Begin part 3 of 3
THE PLAYS: Way too many good patterns to ignore. All of these stocks are at the top of the market in terms of earnings growth rates.
New Post-Split Play:
Play Date: 12/15/2007
FMCN (Focus Media Holding--$57.80; +1.30; optionable): Chinese advertising
http://biz.yahoo.com/p/f/fmcn.html
EARNINGS: Announced 11-20-07
STATUS: Test 50 day EMA. FMCN is working laterally along the 50 day EMA (55.10) the past week, setting up for a run at the trendline spanning the early October peak and the mid-November peak. Showing some strong upside volume spikes last week, and looking for another one to send it higher and give us the buy. Big gap higher in late September out of a 3 month cup with handle and during the November selling it was a target. It filled the gap, however, and started back up. Now that it has this test behind it and the upside volume kicking in, we are looking for a further break higher to move in.
Volume: 3.899M Avg Volume: 3.585M
BUY POINT: $58.65 Volume=5M Target=$69.95 Stop=$54.94
POSITION: QOH DK - Apr. $55c (64 delta) &/or Stock
http://www.investmenthouse.com/cs/fmcn.html
Play Date: 12/15/2007
MDR (McDermott Intl.--$57.54; -0.63; optionable): Heavy construction services
http://biz.yahoo.com/p/m/mdr.html
EARNINGS: Early February 2008
STATUS: Cup w/handle. MDR split in early September but kept on moving higher to 62.50 in mid and late October. It needed to base after that and then turned lower, forming the current 7 week cup with handle. Nice surge to start December, then it formed the handle last week as the market sold. Instead of selling back much, however, MDR worked laterally above the 10 day EMA (55.95) and the 50 day SMA (55.76). Like how it did not sell off, just moved sideways, refusing to give up any ground. That is a sign of strength. Good volume spikes on the upside sessions last week, showing the buyers are in the majority. Looking to move in when volume spikes again and MDR makes the break higher, moving toward a new all-time high where there is no resistance.
Volume: 1.267M Avg Volume: 2.281M
BUY POINT: $59.24 Volume=3.4M Target=$69.32 Stop=$55.69
POSITION: MDR BY - Feb. $57.50c (54 delta) &/or Stock
http://www.investmenthouse.com/cs/mdr.html
New Leader Plays:
Play Date: 12/15/2007
GTI (Graftech Intl.--$18.09; -0.36; optionable): Industrial electrical equipment
http://biz.yahoo.com/p/g/gti.html
EARNINGS: Early January 2008
STATUS: Cup w/handle. Classic action as GTI formed a 6 week cup starting in late October, surging on strong volume in early December to form the right side of the base. Then the Fed-related market selling hit, but as with most of the strong stocks GIT turned it to use, testing back on low volume to the 10 day EMA (17.88), forming the handle to the pattern, the dip after approaching the old high where the sellers who bought at that peak sell out, glad to get out even. After they are gone, however, the sellers are out of the stock and then demand takes over. That is when you see the high volume breakout. May take a few more sessions, but looks ripe to make the move.
Volume: 1.329M Avg Volume: 1.455M
BUY POINT: $19.04 Volume=2M Target=$22.95 Stop=$17.71
POSITION: GTI CW - Mar. $17.50c (58 delta) &/or Stock
http://www.investmenthouse.com/cs/gti.html
Play Date: 12/15/2007
ISRG (Intuitive Surgical--$324.89; -3.71; optionable): da Vinci surgical systems
http://biz.yahoo.com/p/i/isrg.html
EARNINGS: 1-31-08
STATUS: Test breakout. ISRG made is some great money in November in its run off the 50 day EMA that month. It broke out from a 6 week cup with handle base just over a week back, then got caught in the post-FOMC selling. It used that selling to its advantage, however, testing back to the 18 day EMA (323) on low volume, showing a pair of dojis at that level to end last week. Looking for this strong leader to surge back up off of this test, give us another buy point, and give us another strong gain.
Volume: 870.6K Avg Volume: 1.349M
BUY POINT: $330.45 Volume=1.8M Target=$385.00 Stop=$320.89
POSITION: AXV DC - Apr. $330c (56 delta)
http://www.investmenthouse.com/ci/isrg.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: Looking for an announcement third week of January.
AMX: Potential in late January
ATK: Looking for a February announcement.
ATW: Forecast late February or first week of March
BUCY: Still testing the 10 day EMA, trying to make the next move.
COST: Forecast mid-December. No announcement and got slammed back on the earnings. Trying to make the recovery to end last week.
EOG: Anticipating an announcement in late January or first week of February.
GD: Forecast first week of March
HRS: Forecast in February. Will pinpoint the date when we get a bit closer.
HUM: Forecast first week of February
IRM: Forecast tentatively late January but working on a better date.
ISRG: Tentatively set for last week of January.
LFC: Researching date
MA: Forecast late January
MICC: Tentatively forecast for mid-December. Nothing thus far.
MON: Potential to announce early January with earnings (1-3-08).
OII: Early February
OTEX: Forecast early 2008
RIG: On the rebound after that gap lower.
SGR: Forecast late January.
SID: Doji Friday after the surge. May be time to test some.
STLD: Tentatively forecast mid-January
STT: Forecast mid-January
UPL: Forecast second week of February
NEW PRE-ANNOUNCMENT PLAYS
Play Date: 12/15/2007
GME (Gamestop--$58.21; +0.66; optionable): Electronic game stores. Forecast second week of February 2008
http://biz.yahoo.com/p/g/gme.html
EARNINGS: Announced 11-20-07
STATUS: Test breakout. GME gave us some great gains this year on a couple of prior runs. After it peaked in September we have patiently waited for it to consolidate and set up again. It dipped in the November selling, but formed a double bottom at the 90 day SMA and shot higher to start December. It has come back to test that move last week, holding at the 50 day SMA on Thursday and Friday. Good upside volume as it held and posted a gain Friday. Looking for continued solid trade as it resumes the move higher into the Christmas season.
Volume: 3.551M Avg Volume: 3.108M
BUY POINT: $59.32 Volume=4M Target=$70.95 Stop=$56.77
POSITION: GME DL - Apr. $60c (49 delta) &/or Stock
http://www.investmenthouse.com/cs/gme.html
Play Date: 12/15/2007
HOLX (Hologic--$65.20; +0.66; optionable): Medical appliances (Mammogram machines)
http://biz.yahoo.com/p/h/holx.html
EARNINGS: 1-30-08
STATUS: Flat/Pennant. HOLX is moving laterally along the 50 day EMA (63.46) the past 5 weeks, trading in a narrowing range above that key level. It gapped lower in early November after a strong September to October run, but it caught itself and this leader is setting up for the next move higher. Going to be patient, let it finish its lateral move, and then step in as it shows us the next break higher on strong volume and heads toward a new all-time high.
Volume: 1.981M Avg Volume: 2.888M
BUY POINT: $66.04 Volume=3.6M Target=$75.95 Stop=$64.22
POSITION: QHX CM - Mar. $65c (57 delta) &/or Stock
http://www.investmenthouse.com/cs/holx.html
Play Date: 12/15/2007
SID (Companhia Siderurgical Nacional--$81.06; -3.64; optionable): Steel and iron
http://biz.yahoo.com/p/s/sid.html
EARNINGS: Mid-February 2008
STATUS: Breakout test. Strong run in 2007, but it does not look as if it is over moving into 2008. After a good run into late October, SID formed the current 7 week double bottom with handle pattern, breaking out in early December. It rallied into Tuesday, and then of course was sold back after the Fed's decision. As with other strong leaders, it used the market selling constructively, testing back in an orderly manner, holding the October high and the 18 day EMA (80.19) that are coincident. Like the action as it tests this level as it tapped it Thursday and bounced, then showed a nice tight doji with tail over that level Friday. Just going to let it show us the bounce higher and that is when we move in.
Volume: 1.286M Avg Volume: 1.114M
BUY POINT: $82.32 Volume=1.4M Target=$98.88 Stop=$79.08
POSITION: SID CP - Mar. $80c (57 delta) &/or Stock
http://www.investmenthouse.com/cs/sid.html
CONTINUING PRE-ANNOUNCEMENT PLAYS
Play Date: 12/12/2007
HUM (Humana--$75.50; -1.29; optionable): Health care plans
http://biz.yahoo.com/p/h/hum.html
EARNINGS: 2-4-08
STATUS: Cup w/handle. Still working on the nice handle to its base, testing the 18 day EMA on the Friday close. Solid action and waiting for the breakout move to enter. To recap: A nice pattern has formed the past 7 weeks as HUM sets up for the next breakout to a new all-time high. Just about right on all fronts with the pattern: used the 50 day EMA as the bottom of the cup, volume swelled to average or better as it moved up in late November to form the right side of the base and then faded this month as HUM tested and formed the handle, the shakeout to get rid of the last undecided holders. Volume jumped up above average Wednesday as HUM posted a gain, closing just over the 10 day EMA (75.93) and showing a tight doji on the candlestick chart. That can indicate the pullback is over, and looking for more volume as it makes the break higher. Doesn't hurt that it is in the healthcare sector in this market.
Volume: 1.728M Avg Volume: 1.613M
BUY POINT: $77.88 Volume=2.4M Target=$88.95 Stop=$75.15
POSITION: HUM BO - Feb. $75c (68 delta) &/or Stock
http://www.investmenthouse.com/cs/hum.html
Play Date: 12/05/2007
WFT (Weatherford International--$65.12; -1.53; optionable): Oil and gas equipment services
http://biz.yahoo.com/p/w/wft.html
EARNINGS: Third week of January 2008
STATUS: Breakout test. Sold off on rising volume Friday, but held near the 10 day EMA (65.22) on the close as it continues to test the early December break of the down trendline. Waiting for the bounce higher on stronger trade to move in. to recap: Nice lateral consolidation the past week as WFT consolidates its early December break above the September to November downtrend. Volume is starting to spike up on the upside sessions, and that is a sign it is ready to move. Just waiting for the break on some volume.
Volume: 6.539M Avg Volume: 4.009M
BUY POINT: $66.95 Volume=6.1M Target=$77.95 Stop=$64.97
POSITION: WFTBM - Feb. $65c (57 delta) &/or Stock
http://www.investmenthouse.com/cs/wft.html
CONTINUING PRE-SPLIT PLAYS:
Play Date: 12/13/2007
CMI (Cummins--$121.92; -2.22; optionable): Engines, etc. Splits 2:1 on 1-3-08
http://biz.yahoo.com/p/c/cmi.html
EARNINGS: 2-1-07
STATUS: Double bottom w/handle. Weathered the week of selling well, using it to form the handle. The only strong volume session the week was when it posted a gain; positive. Closed the week at the 90 day SMA, still in the handle, still looking for the break higher. To recap: CMI is working laterally the past week, holding above the 50 day EMA (120.32) and the 90 day SMA (121.70) the past week, working on mostly below average volume. Got a bit rocky on Tuesday, but volume remained low. A solid volume surge Wednesday as CMI tested upside. Looking for it to finish this lateral move over the next couple of sessions and then make the break higher in a pre-split move.
Volume: 1.359M Avg Volume: 1.795M
BUY POINT: $125.88 Volume=2.5M Target=$144.95 Stop=$120.89
POSITION: CDM CE - Mar. $125c (54 delta) &/or Stock
http://www.investmenthouse.com/cs/cmi.html
CONTINUING LEADER PLAYS:
Play Date: 12/10/2007
CMED (China Medical Technologies--$42.37; -0.31; optionable): Chinese medical instruments
http://biz.yahoo.com/p/c/cmed.html
EARNINGS: Announced 11-20-07
STATUS: Double bottom w/handle. Tested back to the 50 day EMA (41.26) to end the week, moving on low volume as it continues the shakeout in its handle. Patiently waiting for the break back to the upside on strong trade. To recap: A volatile but consistent market leader, CMED has made us a lot of money over the past six months. It is setting up to break higher once, more, forming a 6 week double bottom with handle, working on the handle right now with a low volume, lateral move the past two sessions, testing lower then rebounding to close flat. That is the shaking out of the sellers as they give up as the stock appears to stall just below the prior highs. Getting close, and we are just going to be ready to move in as CMED makes its breakout move.
Volume: 211.979K Avg Volume: 738.354K
BUY POINT: Aggressive: 43.95; Breakout: $45.68 Volume=1M Target=$54.95 Stop=$42.94
POSITION: QCY CI - Mar. $45c (55 delta) &/or Stock
http://www.investmenthouse.com/cs/cmed.html
Play Date: 12/13/2007
CMG (Chipotle Mexican Grill--$141.39; -3.01; optionable): Mexican fast food
http://biz.yahoo.com/p/c/cmg.html
EARNINGS: Lat January 2008
STATUS: Breakout test. Used the week of selling to test that strong breakout just over a week ago. It tested back to the 18 day EMA (138.66) to end the week, setting up nicely for the continuation of the breakout move. To recap: CMG just continues to rally. It broke out in early December from a 5 week cup with handle formed over the 50 day EMA. Solid move higher through Monday and then tested back on the Fed news. Volume was low, so no selling. Then a further test lower Thursday and a rebound after tapping at near support at the 18 day EMA. Looking to move in as CMG continues higher on solid volume once more (Thursday trade rose to average) to move into the play.
Volume: 419.425K Avg Volume: 631.823K
BUY POINT: $145.38 Volume=7.5M Target=$167.45 Stop=$141.89
POSITION: CMG CV - Mar. $145c (57 delta) &/or Stock
http://www.investmenthouse.com/cs/cmg.html
Play Date: 12/13/2007
NDAQ (Nasdaq Stock Market--$46.75; +0.06; optionable)
http://biz.yahoo.com/p/n/ndaq.html
EARNINGS: Third week of January 2008
STATUS: Cup w/handle. Sold back Tuesday and Wednesday after the FOMC actions, but held the 10 day EMA (45.52) on the lows and started to bounce Thursday and Friday. Not much volume yet, but looking for more to come in as it makes the breakout move. Very nice pattern that ignored the selling, instead using it for its advantage. To recap: Excellent volume Monday as NDAQ started to surge higher, but it could not hold the move in the FOMC aftermath, selling back to the 10 day EMA on lower volume. It held that level Thursday and started to bounce, but no volume. Looking for volume to rally as NDAQ continues this move higher toward a new all-time high. Very nice.
Volume: 1.558M Avg Volume: 2.914M
BUY POINT: $47.05 Volume=4M Target=$55.00 Stop=$44.55
POSITION: NQD CI - Mar. $45c (64 delta) &/or Stock
http://www.investmenthouse.com/cs/ndaq.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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