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- Did not take much to scare the market back down.
- Lawmakers slowly coming around to the idea of business tax credits.
- Dow, SP500 dive out of trading ranges as indexes prepare early for war.
- Subscriber Questions.
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2) Stock Splits

Playing stock splits can be very profitable, but it takes know-how. Our stock split service focuses on three main types of plays:

1) pre-announcement (where we forecast an upcoming split prior to the company making the announcement); 2) pre-split (these plays are made in the days leading up to the actual split day); and 3) post-split plays (plays made after the actual stock split where the stock is showing continued or renewed strength).

For post-splits, we can play them as we would pre-splits (very short term), but we prefer to stretch our horizons, playing the trend. When playing options, we look further out, 2 or more months at least. We let the trend carry us along if there is one, but we will also take profits if the technical pattern degenerates, e.g., breaks a trendline. The main difference between post-splits and pre-splits plays is that we really have to like the pattern. Pre-splits can run right before their splits even with poor technical indicators. For post-splits, we are looking at the stocks from more of a longer term "would I buy this stock at this juncture?" position. Now there are times when a hot stock splits and investors pile in to get in while the stock is 'cheaper.' We play those, but with more of a short-term, pre-splits mentality in that we will be ready to get out fast if the momentum fades.

Remember, everything we do has to pass muster with the market that day ... don't fight the market on these plays. Here's a post-split play to watch and our current analysis.

Chart by StockCharts.com

DRL (Doral Financial--$28.57; -0.17; optionable): Mortgage investment.
Company Profile
STATUS: Cup w/handle. Testing lower in the handle of the 5-month base on very low volume. Accumulation is positive and relative strength is breaking out. Waiting for the breakout.
Volume: 190.1K Avg Volume: 284.59K
BUY POINT: $30.41 Volume=446K Target=$36.52 Stop=$28.28
POSITION: DRL EE - May $25c (84 delta) and/or Stock.

Click here for more information on our Stock Split Report!

Magna International Inc. , one of the world's biggest auto-parts makers, plans to spin off two units later this year, but industry analysts said on Thursday it might find the companies a hard sell.

Frank Stronach, Magna's flamboyant chairman and founder, said earlier this week that his Aurora, Ontario-based company is ready to launch its Magna Styr vehicle assembly division in some kind of spinoff "in a few months" and its recently acquired Donnelly mirrors group within a year.

(This IPO story is continued on our website in the IPO Forum.)