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- Investors see through employment numbers as early rally fails.
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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

XRAY (Dentsply--$41.51; -0.02; optionable): Dental supplies.
Company Profile
STATUS: cup. An old friend that made us excellent money before and after its split in February, XRAY is now trying to complete a 7-week cup base. Accumulation in the base is solid at 2 up weeks on rising volume to 0 down weeks on rising volume. This is a base sitting right on top of the base it broke out of in August after the trend lower from April that culminated in the July sell off. We expect that XRAY may try to form a short handle here near 42 as it closed off the high Thursday and moved laterally Friday. Holding up very well in the market selling, a breakout from XRAY puts the stock at an all-time high.
Volume: 867.106K Avg Volume: 631.728K.
BUY POINT: $42.28 Volume=900K Target=$48.75 Stop=$39.32.
POSITION: XEQ DH - April $40c (64 delta) and/or Stock.

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Plains Exploration and Production Co., an independent oil and gas company, on Friday said it plans to float 5 million shares to the public in a proposed initial stock offering.

The Houston-based company did not provide an estimated price range for the IPO but said assuming $13 per share, the company could raise $58.9 million in net proceeds.

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