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- Second day of rallying spreads out a bit more.
- Economic news not any better but market ignores it ala 1974.
- Indexes blow past 18 day MVA resistance on lower volume, but it is too early for claimed ‘follow through.’
- Team Trades.
See full story.

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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

CPBI (CPB Inc.--$46.23; +0.59; no options): Regional bank. Splits 2:1 on 11-12-02.
Company Profile
STATUS: While most regional banks are in the trash heap, CPBI is finishing the handle to a 4-month cup. This is a very low volume stock with no options, but when it moves it can give $6 to $8 runs over a few weeks. It is building pressure in the pattern, and a breakout sends it to a new high with no overhead resistance.
Volume: 4.1K Avg Volume: 26.247K.
BUY POINT: $46.41 Volume=25K Target=$52.45 Stop=$43.16.
POSITION: Stock (no option chain).

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Hornbeck Offshore Services Inc., an owner and operator of deepwater offshore supply vessels serving the oil and gas industry, on Friday canceled its planned initial public offering, citing market conditions.

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