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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).

We play pre-split plays as short-term plays. We get in when the technical indicators show us things look right, grab as much as we can, and get out, always being conscious of resistance and support. These stocks are highly volatile at this time, and can turn on you quickly. Don't let good profits disappear. Watch for turns, especially when a stock trades in a wide range and finishes off its high. That is a sign these stocks often give you that they are running out of steam. We usually get out and ask questions later. We can always get back in. We like to play in the money calls, preferably two strike prices in the money as this usually gives us a greater delta (the percent an option will mover versus the stock's movement). We prefer deltas of 75 or better. This means if the stock moves 1 point, the option should move three-fourths of that point. That means up or down.

Remember, wait to see the stock start to move up. Don't just blindly make a play and don't try to guess tops and bottoms. We can look at indicators to give us a clue as to what will happen, but we need the stock to confirm it for us. Here's a pre-split play to watch and our current analysis.

Chart by StockCharts.com

NYB (New York Community Bancorp--$41.96; +1.46; optionable): Savings & loan. Splits 4:3 on 2-18-04.
Company Profile
STATUS: Testing the breakout. NYB broke from a short 6 week cup base in mid January, its second base on this strong run since the March break higher. It has worked in a choppy pattern the past two weeks, holding the 18 day MVA (40.43) on the lows, managing to rebound and showing generally good price/volume action. Accumulation in the base was a solid 3 to 0 (3 up price weeks on rising volume to 0 down price weeks on rising volume. Friday NYB was surging off the 18 day after a Thursday test, volume remaining strong and moving up as it did. Relative strength broke out on the move, a signal that even with the strong market rally Friday NYB is one of the better performers.
Volume: 1.636M Avg Volume: 966.073K
BUY POINT: $42.15 Volume=1.5M Target=$46.15 Stop=$40.32
POSITION: NYB DH - Apr. $40c (80 delta).

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