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- Stocks shake off several negatives to close mostly higher.
- Same old story in the manufacturing sector as prices show some punch.
- The week’s close did not look impressive, but stocks overcome some lousy news to do it.
- Leaders continue to perform all week, running ahead of the market. Hence the name.
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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

EXPD (Expeditors Intl.--$32.20; +0.83; optionable): Air delivery.
Company Profile
STATUS: Cup w/handle. Blasted off Friday on some huge volume, rallying to 33 on the high but then giving back 80 cents to the close. It held over the October high on the close, a good sign of support. This still puts it well within striking range on the breakout move, and new buys can be taken on a further move up. Excellent accumulation.
Volume: 1.216M Avg Volume: 544.909K
BUY POINT: New positions: 32.35 (orig. $32.08) Volume=750K Target=$38 Stop=$29.83
POSITION: URP BF - Feb. $30c (62 delta) or URP EF - May $30c (62 delta, low OI) and/or Stock.

Click here for more information on our Stock Split Report!

Merrill Lynch (MER.N) and Morgan Stanley (MWD.N) earned bad press and downsized pay cheques when client China Telecom slashed its share sale, but the Wall Street firms need not worry China will freeze them out of future deals.

"The fact is these China deals are very difficult," said Stephen Brown, head of research at Kim Eng Securities in Hong Kong. "There are four or five players in the world who are prepared to run around and chase after them, and you can't keep striking everybody off the list."

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