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Begin part 3 of 3
THE PLAYS: Quite a few plays but we have to be ready for the upside and the downside.
New Pre-Announcement plays contained in that section.
POST-SPLIT PLAY:
Play Date: 07/18/2008
IXYS (Ixys Corporation--$12.13; +0.09; optionable): Power semiconductors, integrated circuits, etc.
http://biz.yahoo.com/p/i/ixys.html
EARNINGS: Late August
STATUS: Double bottom w/handle. After a roaring surge in late May on its last earnings report IXYS has formed the current 6 week base over a rising 50 day EMA that still has some catching up to get to IXYS. IXYS formed this base on top of the October peak that started the 8 month base IXYS jumped out of in May. A nice consolidation that used the market selling in early July to put in the second bottom to the base and lay the groundwork for the next breakout and run higher toward a 3-year high. Very solid. There are a group of semiconductor stocks moving to the fore similar to a cycling team moving to the front of the peloton to position itself for the ending sprint. Okay, a bit heavy on the Tour de France references of late, but when you have a sprinter such as Mark Cavendish taking four sprint stages you tend to get carried away.
Volume: 208.696K Avg Volume: 246.295K
BUY POINT: $12.66 Volume=350K Target=$15.31 Stop=$11.77
POSITION: UXS JV - Oct. $12.50c (49 delta, low OI) &/or Stock
http://www.investmenthouse.com/cs/ixys.html
LEADER PLAYS:
Play Date: 07/18/2008
SOHU (Sohu.com--$75.70; +1.61; optionable): Chinese internet
http://biz.yahoo.com/p/s/sohu.html
EARNINGS: 7-28-08
STATUS: Double bottom. Very similar to MA, SOHU surged higher starting late April with its earnings, moving out of a 5 month cup with handle base. Rallied to 90 but peaked with a head and shoulders that broke lower mid-June. Held the line well, working laterally more or less to end June and through last week. It used that move to set up a short double bottom at support along the 90 day SMA (67.45) and then jumped higher starting Wednesday and even put in a solid price and volume move Friday when most of the market did nothing. Strong money flow is moving higher ahead of price and SOHU looks very solid here.
Volume: 2.609M Avg Volume: 2.674M
BUY POINT: $76.08 Volume=3M Target=$89.95 Stop=$72.68
POSITION: UZK IO - Sept. $75c (57 delta) or UZK LP - Dec. $80c (46 delta) &/or Stock
http://www.investmenthouse.com/ci/sohu.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. No split but a strong result and a powerful move higher continues.
BHI: Tentatively set for 7-22-08. Bounced at the 200 day SMA but any move up here is likely only to form the right shoulder to a head and shoulders that started in April.
DO: Wildcard that could give us a split mid-July. An offshore driller that is going down with the ship for now
FCN: Early August
GENZ: Forecast 7-23-08
IBM: After the weak after hours on earnings IBM put in a stellar day. No split yet, however.
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.
SII: Forecast 7-24-08. Unlike other oil stocks this service company moved higher last week ahead of its earnings report.
SLB: Forecast 7-18-08. Putting in a double bottom at the 200 day SMA. Beat earnings after hours. Could be a good sign that helps SII and others move higher.
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: 07/18/2008
BMI (Badger Meter--$51.30; -1.14; no options): Flow measurement and control technologies
http://biz.yahoo.com/p/b/bmi.html
EARNINGS: 7-21-08 before the open
STATUS: Double bottom w/handle. Outstanding relative strength and a great pattern as BMI rides out the market weakness by building a foundation for its next run higher. Strong sure in late June to finish the double bottom and in July a laterally move over the 18 day EMA to shake out the last sellers with the handle. May take some more time to finish out the handle but ready to move in as it shows us the strong breakout move. Very strong earnings and sales growth rates show why BMI is performing so well. Earnings are out Monday. Will look for a breakout on the news that we can buy into.
Volume: 171.164K Avg Volume: 120.077K
BUY POINT: $53.77 Volume=185K Target=$61.95 Stop=$50.77
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/bmi.html
Play Date: 07/18/2008
KSU (Kansas City Southern--$46.48; -0.48; optionable): Railroads
http://biz.yahoo.com/p/k/ksu.html
EARNINGS: 7-31-08
STATUS: Cup w/handle. A very neat little 7 week base has formed, consolidating the March to June run that followed the breakout from a much larger 10 month base. That makes this base look a lot like a pause, and the pattern is solid, forming a reverse head and shoulders on the low and bouncing sharply midweek. Nice test to end the week, holding the 50 day SMA Friday. The transports have come back to life and KSU is in great shape here to continue the move higher this week.
Volume: 1.337M Avg Volume: 1.118M
BUY POINT: $47.54 Volume=1.7M Target=$54.95 Stop=$45.69
POSITION: KSU LI - Dec. $45c (61 delta, 95 OI) &/or Stock
http://www.investmenthouse.com/ci/ksu.html
Play Date: 07/18/2008
MA (MasterCard--$280.86; -5.14; optionable): Credit services
http://biz.yahoo.com/p/m/ma.html
EARNINGS: 7-31-08
STATUS: Double bottom. MA is right back in the game. Gapped higher in late April on earnings and rallied nicely, but formed a head and shoulders top and sold off mid-June to early July along with the market. It caught itself at the gap up point, moved laterally, and then bolted higher with the rest of the market midweek. Nice easy test back Friday to the 50 day EMA on the close, pausing after the strong bounce off of the bottom of a 7 week base. May move laterally for another session or two as it consolidates the break higher. Whether it does or just heads right on up again we want to step in with some positions. A little more rest would be best, but we won't miss the move if it doesn't take a bit more rest.
Volume: 4.5M Avg Volume: 3.795M
BUY POINT: $283.11 Volume=5.5M Target=$319.95 Stop=$278.65
POSITION: MAL JY - Oct. $280c (50 delta) or MAL HY - Aug. $280c (52 delta)
http://www.investmenthouse.com/ci/ma.html
CONTINUING PRE-ANNOUNCEMENT PLAYS:
Play Date: 07/08/2008
ACL (Alcon, Inc.--$166.91; +4.37; optionable): Over the counter drugs and medical instruments
http://biz.yahoo.com/p/a/acl.html
EARNINGS: 7-23-08 after the close.
STATUS: Ascending base. After touching down at the 50 day EMA intraday Thursday, ACL is starting to run toward its Wednesday earnings announcement. After breaking higher in June from a 6 week cup base the market selling put a governor on its ability to extend the breakout. Instead it held its gains and formed the current 7 week ascending base. Looks as if it is breaking free now. If it continues higher to start the week we will look to move in and see how it runs into the close on Wednesday. If we get a good run we will bank at least some of the gain. Like the pattern and that makes us want to carry some positions through the earnings announcement and possible split announcement as well.
Volume: 334.834K Avg Volume: 304.231K
BUY POINT: $164.78 Volume=475K Target=$179.95 Stop=$161.31
POSITION: ACL KM - Nov. $165c (48 delta) &/or Stock
http://www.investmenthouse.com/cs/acl.html
Play Date: 07/03/2008
TMX (Telefonos De Mexico--$25.00; +0.39; optionable): Long distance carrier in Mexico
http://biz.yahoo.com/p/t/tmx.html
EARNINGS: 4-22-08
STATUS: Cup w/handle. Still moving higher on low trade, waffling a bit at the end of the week after a strong Tuesday move upside. A bit more volume and it si a buy. 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: 1.992M Avg Volume: 2.334M
BUY POINT: On a continued move higher preferably on some trade (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--$51.98; +0.38; optionable): Medical appliances
http://biz.yahoo.com/p/v/var.html
EARNINGS: 7-23-08 after the close
STATUS: Double bottom with handle. A bit wild to end the week, but after gapping lower Friday, VAR held the 50 day EMA and then surged for a gain on rising, average trade. Getting a bit revved up ahead of earnings. Good. Would like to ride a move up ahead of the earnings and have some gain in the bank ahead of the Wednesday close and then let some ride through the earnings announcement. To recap: 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: 1.03M Avg Volume: 1.067M
BUY POINT: New: 52.18 (orig. $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: 07/15/2008
GIS (General Mills--$63.48; -0.58; optionable): Cereals and other packaged foods
http://biz.yahoo.com/p/g/gis.html
EARNINGS: Announced June 25
STATUS: Reverse head and shoulders. Making the nice test of the 10 day EMA (63.14) we wanted to see, setting it up for the next break higher after testing near support. Very nice. 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: 3.108M Avg Volume: 2.724M
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
Play Date: 07/17/2008
UNP (Union Pacific--$72.54; -0.66; optionable): Railroads
http://biz.yahoo.com/p/u/unp.html
EARNINGS: 7-24-08
STATUS: Test 50 day EMA. Just waiting to see which railroad play pulls out of the station first. UNP certainly looks good, but so does KSU and NSC. Eased back to end the week after a strong Wednesday surge, holding support and bouncing modestly Friday. Nice little double bottom action forming at the 90 day SMA, and the rising money flow is a nice touch. To recap: 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: 2.694M 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
CONTINUING LEADER PLAYS:
Play Date: 07/14/2008
COV (Covidien Ltd.--$49.03; +0.76; optionable): Medical instruments
http://biz.yahoo.com/p/c/cov.html
EARNINGS: 8-5-08
STATUS: Double bottom w/handle. Great action Friday, testing lower toward the 90 day SMA and then surging back up for a nice gain. Knocking at the breakout door. Maybe this time it will, as Bum Phillips once said, kick the son of a bitch in. 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: 4.196M Avg Volume: 2.833M
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: 07/17/2008
LMNX (Luminex--$20.79; -0.31; optionable): Medical instruments
http://biz.yahoo.com/p/l/lmnx.html
EARNINGS: 8-7-08
STATUS: Test 50 day EMA. Did not surge higher last week in all the action, but LMNX instead is going about its own business, setting up its next break higher. Like it when a stock makes its own wake. Just waiting for the break higher. To recap: 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: 361.757K 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
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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