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- Three positive weeks off the lows.
- Economic numbers tell us what we know: housing strong but showing wear, manufacturing still in the tank.
- Another session of low volume gains inside the range.
- 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

ALLY (Alliance Gaming--$17.7; +0.44; optionable): Not just another gaming stock.
Company Profile
STATUS: Testing the breakout. ALLY blasted out of its base 5 sessions back and as the market has consolidated it has moved back to test 17 on lower and lower volume. This breakout comes on the heels of a 9-month base and is testing the old high. Looks ready for another move up off of this test.
Volume: 611.512K Avg Volume: 617.395K
BUY POINT: $18.12 Volume=845K Target=$21.75 Stop=$16.85
POSITION: AQL DC - April $15c (76 delta, low OI) and/or Stock.

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Casino mogul Steve Wynn's Wynn Resorts Ltd. raised $450 million in a troubled initial public offering, receiving final approval on Friday morning from the U.S. Securities and Exchange Commission to trade publicly.

To complete the sale, Wynn and his Japanese business partner, Kazuo Okada, were forced to slash the offering price for shares by about 40 percent over the course of the week and commit to buying close to one-third of the sale themselves.

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