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- A good day of rest as the market starts a breather holding its own.
- Consumer prices show no inflation, no deflation, just the same old nothing.
- Indexes close the week above the 50 day MVA for the first time since August.
- 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

HCBK (Hudson City Bancorp--$18.44; +0.12; optionable): Savings and loans.
Company Profile
STATUS: See a pattern here? HCBK split in June and then corrected into a base. It has come off a short double bottom in September and October and is now forming a handle at prior resistance in the range of 18 to 19. Friday it showed a doji after testing 18 on the low as volume spiked sharply. A breakout over 19 is a buy point and the stock can basically give us our gain by rallying up to and slightly over the prior highs. That is something we like a lot in a play.
Volume: 657.4K Avg Volume: 250K
BUY POINT: $19.05 Volume=475K Target=$22.85 Stop=$17.55
POSITION: KHQ DC - April $15c (no OI) and/or Stock.

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Insurance broker U.S.I. Holdings Corp. pushed its planned initial public offering back a second time this week after sharply reducing its size and shifting from the New York Stock Exchange to the Nasdaq stock market.

The San Francisco-based company now expects to offer shares of the revised IPO on Monday, a delay of three trading days from Wednesday, when it was initially expected, according to an official at Merrill Lynch & Co (MER.N), the investment bank that is managing the sale.

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