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Begin part 3 of 3
THE PLAYS
New Pre-Announcement plays contained in that section.
POST-SPLIT PLAY:
Play Date: 07/17/2008
RCII (Rent A Center--$24.03; +1.40; optionable): Rent to own stores
http://biz.yahoo.com/p/r/rcii.html
EARNINGS: 7-28-08
STATUS: Flat base. It has been a long time since we played RCII. We played it quite a bit in 2000 and 2001 during that recession when it quadrupled; it is one of those stocks that thrives when times get tough due to its type of business, i.e. renting what people cannot afford to buy or giving a rent to own service. After a big meltdown all of 2007 RCII bottomed in January and rallied back. It started the current 10 week base in May, trading in a range between 20 and 23. It made a higher low the past week at the 50 day EMA (21.71) and then volume surged Wednesday and Thursday as RCII blasted higher, clearing the base Thursday. Looking to move in as RCII continues the breakout move and then we will look to add to positions when it makes a successful test of the breakout, hopefully at a much higher point than where we bought it.
Volume: 2.895M Avg Volume: 1.216M
BUY POINT: $24.26 Volume=1.5M Target=$29.31 Stop=$22.56
POSITION: RQG LE - Dec. $25c (50 delta) or RQG ID - Sept. $20c (75 delta) &/or Stock
http://www.investmenthouse.com/ci/rcii.html
Play Date: 07/17/2008
UNP (Union Pacific--$73.20; -0.25; optionable): Railroads
http://biz.yahoo.com/p/u/unp.html
EARNINGS: 7-24-08
STATUS: Test 50 day EMA. Broke out in mid-April from a 9 month ascending base, surging on those strong earnings. That set off a nice run to 85 as the railroads were nice leaders. Then they peaked and alas, so did UNP. As the market sold UNP has come back to test, holding at the 90 day SMA (71.39) in the July market selling. Worked laterally, set up a nice little double bottom, reversing off the second leg on Tuesday with a reach lower and solid rebound. Now we look for UNP to make the break higher from this short pattern, and looking for some volume as it does it. Money flow has turned back up even as the stock sold back to make the double bottom. Not bad, but has to show it.
Volume: 4.269M Avg Volume: 5.987M
BUY POINT: $74.88 Volume=9M Target=$87.95 Stop=$71.08
POSITION: UNP KV - Nov. $72.50c (58 delta) &/or Stock
http://www.investmenthouse.com/cs/unp.html
LEADER PLAYS:
Play Date: 07/17/2008
CVD (Covance--$87.00; +0.94; optionable): Early and late stage drug development services
http://biz.yahoo.com/p/c/cvd.html
EARNINGS: 7-30-08
STATUS: Cup w/handle. Volume was up Thursday, cracking over average for the first time in over a week as CVD started to break higher from its base. After an excellent run up the 50 day EMA in 2007 CVD needed a break and this current 7 month base is working out the excess, setting the foundation for a new run higher. Jumped higher in late June and then used he market selling to move laterally over the 200 day SMA (83.93) on low volume forming the handle to its base and ready to make the break higher. Nice setup and now it is starting its move. Ready to move in as it continues on solid volume.
Volume: 589.479K Avg Volume: 607.809K
BUY POINT: $87.32 Volume=912K Target=$97.65 Stop=$85.11
POSITION: CVQ KQ - Nov. $85c (61 delta) &/or Stock
http://www.investmenthouse.com/cs/cvd.html
Play Date: 07/17/2008
LMNX (Luminex--$21.10; +0.50; optionable): Medical instruments
http://biz.yahoo.com/p/l/lmnx.html
EARNINGS: 8-7-08
STATUS: Test 50 day EMA. After a very nice rally on up from mid-2007 but LMNX still looks great as it continues to rally then take nice breathers, forming 7 to 8 week bases and then breaking upside once more for another surge. It is currently in another one of those bases, coming back to the 90 day SMA to start July in the market selling, holding and then working laterally over the past couple of weeks, setting up over the 50 day EMA (20.50) for a new break higher. Good volume Tuesday off the support, and Thursday cleared the April and May peaks. Very strong money flow is leading the way higher and it looks as if a new breakout looms for Luminex. Want to see some decent trade as it makes the move.
Volume: 313.961K Avg Volume: 403.803K
BUY POINT: $21.39 Volume=600K Target=$25.75 Stop=$20.38
POSITION: UQV JD - Oct. $20c (64 delta, 55 OI) &/or Stock
http://www.investmenthouse.com/ci/lmnx.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: Tentatively set for 7-21-08 with earnings, but AAPL has been holding off on a new split announcement.
ACL: Wildcard that could announce with earnings on 7-23-08
APD: Tentatively set for third week of July. Still trying to recover off a 200 day SMA test.
BAX: Forecast 7-17-08
BHI: Tentatively set for 7-22-08 Fighting to hang on but don't like this pattern that has set up.
BTU: Forecast third week of July. Not doing it as BTU hits the coal chute
CHK: So much for great strength. Managed to reverse off the lows and hold the 90 day SMA on the close. Will see what develops from here.
CLB: A wildcard with no splits. Coring lower on volume, managing to hold near the 200 day SMA
DO: Wildcard that could give us a split mid-July. An offshore driller that is going down with the ship for now
FTI: Tentatively set for first week of August. Will see if it can hold at support at 65
GENZ: Forecast 7-23-08
IBM: Announced strong earnings after the close but after the initial surge, it lost its nerve.
POT: Forecast 7-24-08
RIG: Forecast 8-6-08. Hanging in there but that is about all you can say for it right now.
RS: Earnings 7-17-08. That is a gap lower.
SII: Forecast 7-24-08
SLB: Forecast 7-18-08
TMX: Wildcard as it has been a long time since a split but a nice pattern. Forecast third week of July
VAR: Forecast third week of July
NEW PRE-ANNOUNCEMENT PLAYS:
Play Date: 07/17/2008
FCN (FTI Consulting--$70.14; +0.11; optionable): Consulting on litigation, restructuring, mergers, etc.
http://biz.yahoo.com/p/f/fcn.html
EARNINGS: Early August
STATUS: Cup w/handle. Kind of a skewed pattern, but it is accomplishing its purposes, i.e. giving FCN a breather after a strong 2007 run and setting the foundation for a new breakout and another run higher from that. Rallied in June up to the March peak hit just before the 4 month base started and then backed off during the early July market selling. It used that selling, however, to simply test near support at the 18 day EMA (68.06) on low, below average volume. Surged on Tuesday and has made a soft test of the 10 day EMA the past two sessions as the market roared higher. It is setting up at its own pace and this higher low at the 10 day is setting up the breakout move. Very nice leader doing its own thing.
Volume: 626.839K Avg Volume: 1.033M
BUY POINT: $71.42 Volume=1.5M Target=$82.32 Stop=$68.38
POSITION: FCN LN - Dec. $70c (51 delta) &/or Stock
http://www.investmenthouse.com/ci/fcn.html
CONTINUING PRE-ANNOUNCEMENT PLAYS:
Play Date: 07/03/2008
TMX (Telefonos De Mexico--$24.61; -0.31; optionable): Long distance carrier in Mexico
http://biz.yahoo.com/p/t/tmx.html
EARNINGS: 4-22-08
STATUS: Cup w/handle. Strong shot of volume Tuesday as TMX gapped lower then rebounded for a solid gain, moving toward the breakout from its base. Money flow is starting to rock and roll and TMX looks ready to put in the upside move. To recap: Volume started sharply higher last week as TMX posted some upside sessions, knocking at the breakout from its 14 month base. Nice base consolidating a long, strong run higher, and the handle (the last consolidation and shakeout point) is using the 50 day EMA (22.34) as support. Good point to find buyers and we like how volume pumped up on the upside sessions starting in July as TMX moved up while most of the market sold off hard. Finding money that is leaving other areas; always a good sign. Going to be patient and let TMX show us the breakout move, and then we move in.
Volume: 1.874M Avg Volume: 2.35M
BUY POINT: On a continued move higher (orig. $24.58) Volume=3M Target=$28.65 Stop=$23.06
POSITION: TMX KX - Nov. $22.50c (62 delta, no OI) &/or Stock
http://www.investmenthouse.com/ci/tmx.html
Play Date: 06/24/2008
VAR (Varian Medical Systems--$51.60; +0.60; optionable): Medical appliances
http://biz.yahoo.com/p/v/var.html
EARNINGS: 7-23-08 after the close
STATUS: Double bottom with handle. Getting a little get along in its step this week as VAR bounces off the 200 day SMA (49.08) it used as support in the handle of its 7 month base. Tried to make the surge a week back but it could not hold the move. Gapped higher again Thursday though not enough volume to get us into it. If it gets some more trade to go along with the move higher it is a go.
Volume: 693.162K Avg Volume: 1.072M
BUY POINT: $52.77 Volume=1.5M Target=$59.95 Stop=$50.89
POSITION: VAR HJ - Aug. $50c (56 delta) or VAR KK - Nov. $55c (48 delta) &/or Stock
http://www.investmenthouse.com/cs/var.html
CONTINUING POST-SPLIT PLAYS:
Play Date: 07/16/2008
FLO (Flowers Foods--$29.54; -0.28; optionable): Processed and packaged foods
http://biz.yahoo.com/p/f/flo.html
EARNINGS: 8-14-08
STATUS: Test breakout. After the strong move off the 18 day EMA Wednesday, FLO gapped higher but could not keep the move alive. Nothing wrong with a low volume test here and still looking for FLO to continue the break higher. To recap: FLO broke higher form a 7 week range last week, tested back to the 18 day EMA (28.61) Tuesday, showing a nice candlestick doji with tail on high volume; that often signals a higher low and a break higher coming. Wednesday FLO jumped higher on strong trade, clearing the base. Solid consolidation at the key 50 day EMA (27.69) after a good spring run. Used the market selling to consolidate and form a new support level, and now it is driving higher again. Ready to move in as FLO continues the move higher.
Volume: 592.69K Avg Volume: 771.367K
BUY POINT: $29.97 Volume=900K Target=$33.48 Stop=$28.55
POSITION: FLO JF - Oct. $30c (52 delta) &/or Stock
http://www.investmenthouse.com/cs/flo.html
Play Date: 07/15/2008
GIS (General Mills--$64.06; +0.19; optionable): Cereals and other packaged foods
http://biz.yahoo.com/p/g/gis.html
EARNINGS: Announced June 25
STATUS: Reverse head and shoulders. Tested the Tuesday move higher Thursday, tapping the 10 day EMA (63.07) on the low and then rebounding to post a modest gain. May test back a bit more to the 10 day EMA before it continues the move, but no issues with that. Still looks solid. To recap: Strong, strong volume Tuesday as GIS cleared a 6 week base that consolidated the mid-April move out of a larger 10 month base. Nice short rest stop in the market selling, and now moving up sharply to a new high. A buy as it continues on up.
Volume: 3.011M Avg Volume: 2.717M
BUY POINT: $64.25 Volume=3M Target=$69.95 Stop=$62.12
POSITION: GIS JL - Oct. $60c (73 delta) &/or Stock
http://www.investmenthouse.com/ci/gis.html
CONTINUING LEADER PLAYS:
Play Date: 07/14/2008
COV (Covidien Ltd.--$48.27; -0.22; optionable): Medical instruments
http://biz.yahoo.com/p/c/cov.html
EARNINGS: 8-5-08
STATUS: Double bottom w/handle. Still in the test, tapping the 50 day EMA (47.94) on the Thursday low and then rebounding to close at the 18 day EMA. Big volume on this tests and reversal; indeed big volume is the rule the past two weeks. Nice higher low at the 50 day and we will see if that launches COV on the breakout move. Still looks sweet. To recap: Another stock in the medical instruments with a double bottom base formed using the 90 day SMA (46.80) on the two lows. Excellent volume as COV tested and then moved up off the 90 day last week. Paused Friday then gapped higher Monday only to come back to test near support at the 18 day EMA and then bounce to close flat. Nice 6 week base formed after moving to a new high in May and early June. Excellent money flow moving higher ahead of price and after this test we are looking to pick up COV as it rebounds.
Volume: 6.059M Avg Volume: 2.773M
BUY POINT: $49.31 Volume=4M Target=$55.95 Stop=$47.77
POSITION: COV JJ - Oct. $50c (44 delta) &/or Stock
http://www.investmenthouse.com/ci/cov.html
Play Date: 07/16/2008
NSC (Norfolk Southern--$63.48; -0.24; optionable): Railroads
http://biz.yahoo.com/p/n/nsc.html
EARNINGS: 7-22-08
STATUS: Reverse head and shoulders. Gapped higher Thursday, couldn't hold the move. Volume was low after two sessions of very strong trade, so no issues with this action. It held up well and still looks solid for the continued break higher from this short little rest stop base. To recap: Strong volume Tuesday and Wednesday as NSC showed a doji at the 90 day SMA (60.24) Tuesday then jumped higher Wednesday. Peaked in late May after a solid run from early April, forming the current 6 week accumulation pattern. That shows no heavy selling in the stock and indeed it is under accumulation even in this consolidation. Nice action and buying, and looking to move into positions as NSC continues its move higher.
Volume: 2.715M Avg Volume: 3.765M
BUY POINT: $63.94 Volume=4.2M Target=$71.95 Stop=$61.31
POSITION: NSC IL - Sept. $60c (63 delta) or NSC LM - Dec. $65c (45 delta) &/or Stock
http://www.investmenthouse.com/ci/nsc.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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