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us stock market, stock split
Begin part 2 of 3
Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.
3-19-02
Trade Balance, January (8:30): -$26.9B versus -$25.3B%
FOMC Meeting (2:15): Results announced
3-20-02
Housing Starts, February (8:30): 1.63M versus 1.678M prior.
Building Permits, February (8:30): 1.65M versus 1.706M prior.
Treasury Budget, February (2:00): -61.0B versus -$48.2B prior.
3-21-02
Initial Claims, 3/16 (8:30): 377K versus 377K prior.
CPI, February (8:30): 0.2% versus 0.2% prior.
Core CPI, February (8:30): 0.2% versus 0.2% prior.
Leading Indicators, February (10:00): 0.3% versus 0.6% prior.
Philadelphia Fed, March (12:00): 17.8 versus 16.0 prior.
FOMC Minutes, 1/30 (2:00)
SUBSCRIBER QUESTIONS
Q: When an analyst upgrades or downgrades a stock, does his big money clients get advance notice?
A: This is one of the overlooked conflicts of interest. Surprising in this time of supposedly heightened scrutiny of all transactions. What has developed in recent years is the rise of the big name stock analyst in a particular sector. Each big brokerage house wants a few of them to get the name out there when these big market, stock or sector calls are made. They have made a lot of fuss lately about how tough their analysts have become, some even giving bonuses for downgrades that turn out to be 'the best.' They have been chased around with big salaries much like baseball free agents.
The way things have been set up is that these big name analysts often are given free rein to make whatever calls they want without having to necessarily conform to what the brokers are selling to or telling their clients. The idea is to give them intellectual freedom to make calls as they see them and then avoid the very question you raise: controversial calls being made but the big money clients getting word of it first.
So in theory, they do not get the inside scoop ahead of time and neither does the average investor. Some of my brokers handle accounts that contain millions of dollars. When Jonathon Joseph of SSB made the controversial chip call back in September 2000, the brokers did not get a heads up on this. One broker complained to us that he had just put some big clients into some semiconductor stocks just in time for the call to come out and for them to get whacked. Many brokers complain of not getting the information ahead of time and being able to properly position their clients. Again, these include accounts with millions of dollars in assets in them. Not only do they not get an alert before the big calls are made, but all calls from these 'semi independent' analysts. Seems they carry the brokerage's name but don't have to reveal to the brokers or their clients the calls they are going to make.
To us that sets up a conflict of interest in the other direction. It is not the well to do clients getting the scoop before the street (although that may indeed happen for those in the very inner circle), it is the client getting the shaft. Many of these clients rely on their broker's advice as to where to put their assets to work, particularly in managed accounts. If the brokerage house is taking in fees for this service and then a call from one of their big name analysts runs contrary to that advice and loses the client's money, that appears to breach a duty owed to the client. You pay money for advice and expertise, and then one of the firm's analysts makes a call contrary to that advice given and paid for and you lose money. Seems you bought the shaft with your fees.
THE PLAYS: Some nice bonus play moves!
BONUS PLAYS: Great breakout moves from BAX, SOV and ATM! KCIN started the move with a bounce from the 10 day MVA, and road is still set up.
ACF (Americredit Corp--$37.10; +0.88; optionable): Credit services
http://biz.yahoo.com/p/a/acf.html
STATUS: ACF has made a nice move back through support, and is now looking good on a test. The stock fell from its August 2001 highs near 65, forming something of a large double bottom since, although the February lows just below 20 did not reach the November low near 15. ACF made a solid move up from 20 since late February, taking out its 200 day MVA (35.98) on Tuesday with an upgrade. It hit up to 39.95 Wednesday before pulling back, but has held the 200 day as volume has decreased. Friday ACF pushed up slightly from the 200 day on lighter volume of 2.13 million (average 2.52 million). Looking for a continued hold and strong continuation of its move. Target: 47.
BUY POINT: Bounce: Over 38 on above average volume. Stop: 35.43 (7%). Over the recent high: 40.05 on above average volume. Stop: 37.25. 37.25 (7%).
POSITION: Stock and/or May or August $35 calls to buy (ACF EG or ACF HG).
UVN (Univision Communications--$45.06; +1.54; optionable): Broadcasting
http://biz.yahoo.com/p/u/uvn.html
STATUS: UVN formed a large reverse head & shoulders from early 2001, with the successive highs dropping lower along the stock's downtrend from its early 2000 highs. It formed the right shoulder on a dip back from that long-term down trendline in January, but on the move back up managed to break through in February. It has since tested its 18 day MVA (currently 30.48) as it trends up after the break. Friday UVN blasted up from that support, moving over its recent high 44.82 with big volume (2.38 million; average 1.07 million), but now facing the left high of the 'neckline' at 47 (from May). Looking for UVN to take out that level, and targeting 53.
BUY POINT: A continued buy on a move over 45.50 on continued strong volume. Stop: 42.41 (7%). Also a buy over 47 on continued strong volume. Stop: 43.80 (7%).
POSITION: Stock and/or June $35 calls to buy (UVN FG).
OEX (Standard & Poors--$591.13; +6.80): S&P 100 options
STATUS: Looks ready for more upside after breaking through the upper 200 day MVA (588) on strong volume Friday (1.48 million; avg. 1.35 million). The first play is aggressive, looking for a quick move up to 600 (level of the December and January highs). That is the January resistance, but we think it will take that out. A break over that is the next buy point.
BUY POINT: Aggressive: 592 on continued strong volume for a move up to 600. Breakout: over 600.
POSITION: Aggressive: April $580 or $590 calls to buy (OEB DP or DR).
SOX (Phili Semi--$594.19; +15.35; optionable):
STATUS: Looking for a bounce from the SOX after it has held support at the 18 day MVA the last three days (581.21), after a move down to that support from the March high at 638. The index was up from the 18 day Friday, moving just over the 10 day MVA (591.38) to close. There is resistance at the 600 level (600.91, hit twice since January), but on a move over that, looking for a quick run up to 625, or the March high at 637.94.
BUY POINT: Aggressive: 602
POSITION: April $590 or $600 calls to buy (SJX DR or DT
DJX (1/100 Dj Indu--$106.07; +0.90; optionable):
STATUS: The index tracks the Dow 30. It is in that flat consolidation after breaking out of the cup with handle in early March with support at 105. It was from there Friday that the DJX rose on stronger volume, and is looking ready for a breakout! Pattern closing high is 106.32. Target: 112 (initial).
BUY POINT: 106.42 on volume of 1.8 million or better (Friday's volume was 1.48 million; avg. is 1.34 million).
POSITION: May $100 calls to buy (DJV EV). Can also use May strikes up to 106 with a delta of 0.70 or higher.
Quick updates prior bonus plays:
BAX - Great breakout!
SOV - Another great breakout!
ETM - Yet another breakout!
LECO - Continues to show strength on the move
CRUS - Looking good for a move in this handle
HIB - Needs volume and getting some
INGR - Could be ready for another move
EAT - Still set up for that put
SDS - Still looking good in the pennant
UPS - In a consolidation
NEU - Could test the 10 day again before moving up
DD - Good volume as it continued the bounce
CMX - Topping sign indicates a test back toward 18.50
MER - Bounced up but volume light. Handle wedging; not the best action.
CUM - Strong push off the 10 day MVA
MKSI - Moving back up nicely after the test
SHFL - Good pattern still
MARKET FAVORITES: ZRAN started up but there was not much volume. MERQ gave up more ground, failing to bounce. MSFT rebounded but could not pierce its 50 day MVA.
1) CHKP - Weak software stock looking like a put
2) FISV - Software stock looking ready for a new high
CHKP (Checkpoint--$32.17; -1.11; optionable): Software
http://biz.yahoo.com/p/c/chkp.html
STATUS: After a steady downtrend took CHKP from the high 40's to 27 recently, it rallied back with the market but encountered strong resistance at its 200 day MVA (37.65). It has retreated from that point, falling steadily the last three sessions on below average volume, though similar to what we saw on the recent rebound to the upside (6.39 million Friday; average 7.74 million). It gave up the 50 day MVA (34.25) along the way, and now we are looking for CHKP to continue down to a target of the recent low at 27.
BUY POINT: From here or after a bit of a move back toward 33, through 31.50 on increased volume.
POSITION: July $40 puts to buy (KEQ SH).
FISV (Fiserv--$45.96; +1.14; optionable): Software
http://biz.yahoo.com/p/f/fisv.html
STATUS: FISV has made a nice move up from the 40 level over the past three weeks. The stock had broken out of a July-December cup with handle, but then went into a protracted, gradual pullback before the most recent run. FISV hit a new high at 46.28 this week, and made a nice, lower-volume pullback to the 10 day MVA (44.74). Friday the stock bounced from that support, getting a very nice surge of volume (2.07 million; average 1.4 million). Looking for the surge to continue to a new high, targeting 52.
BUY POINT: 46.38 on continued strong volume. Stop: 43.75
POSITION: Stock and/or June $40 calls to buy (FQV FH).
Updates on recent Market Favorites:
PRGS - Not showing a lot of strength after a gap down and push from the 18 day MVA.
FLEX - Slowed the drop Friday with a doji. Won't let it break 17.75 on a bounce up on the put.
NTAP - Dipped back in the handle
LRCX - Trying to bounce back but not much strength there yet
XLNX - Testing the 50 day MVA
MANU - Holding the 10 day MVA after the drop
BRKS - Holding the range of its prior highs
PRE-ANNOUNCEMENT PLAYS FOR THIS WEEK: None scheduled for this week.
NEW PRE-ANNOUNCEMENT PLAYS:
ATK (Alliant Techsystems--$97.76; -0.48; optionable): Aerospace/Defense. Back on the report and in range. Researching a date.
http://biz.yahoo.com/p/a/atk.html
BACKGROUND: Last announced a 3:2 split on 8-8-01 at a price of $96. Before that, a 3:2 split on 11-2-00 in conjunction with earnings and a price of $89.
STATUS: ATK has looked good, moving rapidly back up into split range over the last seven months. It formed a cup with handle from November through February, breaking out nicely and trending up along its 10 day MVA (currently 96.95). The stock hit a high of 101 earlier this month, and for the last couple of weeks has tightened into a pennant pattern. Price/volume action is solid, with volume dropping as the pattern tightens but holds support over the 10 day. Friday ATK showed a second consecutive tight doji, with volume steady at 174,300 (average 279,500). Looking good for another move, looking for strong volume. Target: 110.
BUY POINT: 98.90 on volume of 375,000. Stop: 94.
POSITION: Stock and/or May or August $95 calls to buy (ATK ES or ATK HS).
KRB (Mbna Corp--$38.55; +0.90; optionable): Regional Bank.
http://biz.yahoo.com/p/k/krb.html
BACKGROUND: Last announced a 3:2 split was on 7-14-98 at a stock price of $40. The company has sufficient shares for a 3:2 split.
STATUS: KRB broke from a small double bottom to start this month, solidly breaking the gentle downtrend of 18 months. A nice move that took out its August-January highs near 38, and hit a high of 39.45 before pulling back to test the move. KRB held its prior highs and 10 day MVA (37.65) on the test, and Friday started a move back up on good volume (3.86 million; average 3.08 million). Looking good, and watching for a continued move over the recent and all-time high (40.13). Target 46.
BUY POINT: 39.10 on increased volume of 4 million. Stop: 36.36.
POSITION: Stock and/or June $35 calls to buy (KRB FG).
FITB (Alliant Techsystems--$69.13; +1.16; optionable): Regional bank. Right back in range, and we are studying a new date.
http://biz.yahoo.com/p/f/fitb.html
BACKGROUND: FITB has split its stock ten times. Last announced a 3:1 split on 6-20-00 at a stock price of $60. Prior to that FITB announced a 3:2 split on 3-17-98 with its annual shareholder meeting and also on 6-15-97. The stock price at the time of the 1998 and 1997 announcements was $80.
STATUS: FITB gradually made its way back up from its September lows, and broke out of a two-month lateral range to start this month. It made a solid move up to 68, then visited its 10 day MVA (currently 67.23), forming a small ascending wedge. Friday it broke out with a very strong move, surging to a new high on much stronger volume (3.53 million; average 1.56 million). With this solid breakout we are looking for a continued move to 81.
BUY POINT: A buy up to 71.48 on this move. Stop: 65-66.50.
POSITION: Stock and/or May or August $65 calls to buy (FTQ EM or FTQ HM).
PRE-ANNOUNCEMENT BEST PLAYS: Watching SLM for a continued run to 100 after its strong move Friday.
1) MMM - Looks like it could spring
2) MRBK - Breakout attempt
3) KRI - More volume and a move
4) IFIN - Strong move on the breakout test
5) MUR - Good pattern
6) DRI - Set up for the drop
7) CPS - Starting to make a move
8) ESI - Near the breakout
MMM (Minnesota Mining & Mfg--$121.40; +0.81; optionable): Conglomerate. Forecast to announce a split on 4-18-02 in conjunction with earnings. At this time the company will not confirm the date.
http://biz.yahoo.com/p/m/mmm.html
BACKGROUND: Last announced a 2:1 split on 3-15-94 in conjunction with a board meeting. The stock price was $100. 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: In a nice little handle consolidation. MMM has pulled gradually back into a handle to its two-month cup, dipping after having battled its highs at 125 (all-time high at 127) following its nice trend up the last two months after having tapped down to 100. MMM broke over the December high of 122, forming the cup in the right side of a huge reverse head and shoulders pattern going back over a year. The handle looks good, moving on below average volume, although on the move up Friday volume spiked back to 2.83 million (average 2.09 million), continuing up from its 18 day MVA (119.44). Looking for a run to a new high. Target: 140.
BUY POINT: Breakout: 123.80 on volume of 3 million (today down to 1.5 million; average 2.1 million). Stop: 118. Aggressive: Over 122 on increased volume. Stop: 118.
POSITION: Stock and/or July $115 calls to buy (MMM GC).
MRBK (Mercantile Bankshares--$45.12; +0.13; no options): Banking. Back in split range; it last split in 1997 at $40.
http://biz.yahoo.com/p/m/mrbk.html
STATUS: Gapped down to the support of the 10 day MVA (44.61) Friday, but then moved back up strong and hit the buy point for its cup with handle breakout. It hit 45.36 at the high, but pulled back to close just below the prior handle high of 45.15. Volume was very solid, spiking much higher to 311,700 (average 188,600). MRBK formed the nice little cup over the past six weeks, dipping back into the handle the last week. It is back up at its all-time highs, actually completing a year-old double bottom in January, when it pulled back to form the present cup. Looking for a continuation of the strong move. Target: 54.
BUY POINT: 45.46 on continued strong volume. Stop: 42.75.
POSITION: Stock only.
KRI (Knight-Ridder--$67.87; +0.67; optionable): Newspapers. Forecast to announce a split on 4-24-02 before the open. There is also the shareholder meeting the next day at 9:30 PT.
http://biz.yahoo.com/p/k/kri.html
BACKGROUND: Last announced a 2:1 split in July 1996 at a stock price of approximately $70. The company has sufficient shares for a 2 for 1 split.
STATUS: Finally a bit of action in the pennant, but not a convincing move. KRI gapped back to the pattern support at the 18 day MVA (66.89), but then made a move up on increased volume of 392,500 (average 389,800), substantially higher than what we have seen as the pattern tightened. The light volume was good action in a tightening pennant, but now on a move up and out we want to see a big volume jump. In the pennant KRI has reached up and over 68 several times, but has never been able to hold the move; in fact, Friday's close represents the closing high since the initial breakout in February took the stock to 68.73 (closing high 68.24). Looks like it could be ready to make the move. Target: 80.
BUY POINT: 68.35 on volume of 540,000. Stop: 63.57. The move to a new high is 68.83.
POSITION: Stock and/or July $65 calls to buy (KRI GM - under 50 open interest).
IFIN (Investor's Financial Service--$77.26; +1.49; optionable): Looking at an announcement on 4-16 with earnings or with the 4-23 shareholder meeting.
http://biz.yahoo.com/p/i/ifin.html
BACKGROUND: Last announced a 2:1 split on 5-15-00 with a board meeting. The stock price was $82. The annual shareholder meeting was on 4-17-01 at which time authorized shares were increased.
STATUS: Started up, but needs more volume. After its nice breakout from a small double bottom, IFIN drifted over and down slightly, testing the move and holding over the prior pattern highs (75-75.50). After four consecutive dojis, Friday IFIN started back up, jumping on higher volume (155,700), but below what we were looking for (above the average of 198,000). Looking for a continued move over the high (77.35), but we want more power behind it. If we get a gap over that level, we will see if it comes back to test it and hold, catching it on the move back up. Target: 87.
BUY POINT: A move over 77.51 on volume of 240,000. Stop: 72.50.
POSITION: Stock and/or July $70 calls to buy (FLQ GN - low open interest).
MUR (Murphy Oil--$88.36; +0.42; optionable): Working on a new date.
http://biz.yahoo.com/p/m/mur.html
BACKGROUND: Based upon our research it does not appear that MUR has ever split its stock. Authorized shares were increased at the last shareholder meeting.
STATUS: MUR broke to a new high last week, moving out of a very short consolidation formed after it had broken over the highs in its recent range. Volume was not the greatest on that move, so MUR has come back to test the former highs, and is holding up nicely over those levels (86-87), with its 10 day MVA (87.30), which it tapped Friday. MUR has developed a little pennant, showing another doji Friday as volume increased slightly to 247,400 (average 225,800). Setting up to make a better move this time. The high is 90.25.
BUY POINT: 89.67 on volume of 300,000. Stop: 84.
POSITION: Stock and/or July $85 calls to buy (MUR GQ).
DRI (Darden Restaurants--$38.99; +0.54; optionable): Restaurants. Earnings are March 21 after the close.
http://biz.yahoo.com/p/d/dri.html
STATUS: DRI got creamed with the restaurants, a sector that is seeing some struggles after a nice run. Monday DRI fell hard through its 50 day MVA (39.38), and has come back to test near that level the last three sessions. Friday volume continued to fall as the stock reached up toward the 50 day, closing with a loose doji. The decreasing gains on lessening volume (1.09 million Friday; average 912,000) are a sign of weakness, especially with the loose doji under resistance. Looking for this test to fail, and for DRI to drop back down toward the initial target of 34, but looking at a possible drop to the 200 day MVA, currently at 32.06. Earnings is the wildcard, and they are out Thursday.
BUY POINT: For new or additional positions, a drop back through 38 on increased volume.
POSITION: July $45 puts to buy (DRI SI - no open interest as yet).
End Part 2 of 3
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us stock market
stock split
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