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Play Updates
Thursday, November 2, 1999
New Plays
Splits | Candidates
Play Updates
Splits | Candidates
Dropped Plays
Splits | Candidates

NEW SPLIT RUN PLAYS

FLEX - Flextronics International $88.00 +$4.69 (+$2.88)

Ok, assuming FLEX has really settled on a payable date, or as they put it, "on or about December 22, 1999", FLEX is a new split play. We originally nailed this stock as a split candidate play in our November 21st issue, picking it two days before the announcement and getting a nice pop on the stock. We dropped the play November 23rd, after FLEX announced a merger with the DII group and a split payable date to be completed sometime before the merger, estimated in April 2000. That's too far out for a near term split run, but FLEX surprised the market with a new payable date so we're back on track for a great split run to develop within the coming weeks. Positioned to become the 4th leading contract equipment manufacturer (CEM) in the world after the merger, this will be an exciting stock to watch. CEM's are hot up-and-comers's that contract to produce components for the world's leading manufacturers. Other stocks in this sector include Solectron (SLR) and SCI Systems (SCI), among others. FLEX is trading within a range that offers a good entry point at the current price. Intraday, trading bottomed at trendline support and the 10 dma, providing support at the $84 level. Look for increased volume to verify the split run during the next week. The broader market is currently looking for some direction so traders should consider the impact of tomorrow's labor reports before entering this trade. We will exit this play before share distribution by Tuesday, December 21st.



Picked @ Dec. 2nd = $88.00
Change since picked + 0.00


NEW SPLIT CANDIDATE PLAYS

NOK - Nokia Corporation $144.63 +2.88 (-2.12)

"Tis the season" speaks volumes about Nokia Corporation, the world's leading manufacturer of wireless cellular phones, and a leading maker of PC monitors. Personal handsets are very popular gifts this Christmas season and NOK is producing far more handsets than had been projected. So why do we like them as a candidate to announce a split in the near future? Announcing a split in mid-March 1999 at $147, NOK has quickly doubled in price and is trading at levels once again indicative of a split announcement. Companies often announce a split at the time of a strong earnings announcement. Although NOK is not expected to report again until late Jan 2000, the current price levels, in addition to strong chart support, justify a split play on this stock. Thanksgiving week established $140 as a support level as resistance gave way on Friday's breakout. Two days of gapping higher gave traders an excuse to fill those gaps, giving us an excellent opportunity to enter NOK at current levels. Although today's trade volume was a bit lighter than average, NOK traded to solid footing at an intraday low of $140.81 (the 10dma), but ended the day right at the 5dma of $144.63. Support at $140 was established by last week's breakout and trendline support drawn at the bottom of the trading channel formed since October 18th. Traders entering at current price levels can use a close below $140 as the first stop, support is also firm at the $135 level. Watch tomorrows employment numbers to determine the market direction prior to initiating positions. If the numbers are seen as non-inflationary, this thing could move and test $150 quickly. An announcement prior to the earnings release would not be unexpected considering where the stock is trading. We will keep you informed.



Picked on Dec 2nd @ $144.63
Change since picked  + 0.00



YHOO - Yahoo! Inc. $245.81 +16.94 (+18.94)

Take a stock with a history of incredible momentum runs, announce holiday sales transactions in excess of 400% over last year's levels, add it to the S&P 500 Index, mix in a strong market environment and Yahoo!, you have a stock ripe for a split announcement. Still trading on the November 30th news that YHOO will be added to the bellwether index on Dec 7th, lackluster trading in the early hours today gave way to an expansion breakout during the final two hours of trading. $245 may soon seem cheap. YHOO will become the target of institutional buying as index funds are forced to begin buying up the stock after the close this coming Tuesday. This past Tuesday's $13 fallout suddenly seems less significant and can be attributed to a reaction to broader market fears combined with YHOO's highflying price level. YHOO already split once this year, trading up to $400 on the January 12th announcement. With that kind of potential, we will be watching this stock closely. Look for YHOO to use current momentum to announce a split soon, possibly as early as the January 5th earnings announcement. Traders looking for entry points can use recent highs of $235 as a support level, after that support is at $225 (10dma). This stock trades in wide ranges, so watch chart support to set your stops and allow for wide swings. The employment numbers due out in the morning will determine market direction and enthusiasm, so wait for that direction to form before initiating positions.



Picked in Dec 2nd @ $245.81
Change since picked  + 0.00


SPLIT RUN PLAY UPDATES

QCOM - Qualcomm, Inc. $374 +9.88 (-10.75)

Well, the Nasdaq composite continued in rally mode, adding another 3% to the index. That momentum was shared by QCOM, as the stock moved away from our key support and exited Wednesday's trading range between $360-$365. In addition, the stock broke through and was able to hold a close above $370. Volume for the day was heavy. At this point, we are at the mercy of the employment/wage numbers due out in the morning. If those numbers come in favorably, we would expect today's momentum to continue and to propel this thing up nicely. Support is now sitting at $370, and again at $365. Resistance will come into play at $380.



Picked on Nov 30th @ $362.31
Change since picked +11.69



CMRC - Commerce One $345.00 +17.75 (+27.13)

So who thinks that a $37 price range affords opportunity? We do. Today gave us hope that a new trend may be developing in this stock. The stock broke through key resistance at $340, actually hitting $361 early in the day. The question now is whether this can be sustained? After the mid morning peak to that new high, CMRC's trend flattened through the day, then sold off toward the close. This was despite the fact that just about everything else in the market was heading north at that time. The sell off can probably be explained by investor's desire to be flat prior to tomorrow's employment numbers to determine direction. We would suggest the same strategy. If the numbers are good, look to initiate trades at the current level. Our current support is down at $324, the 10-dma. Volume has been good, so expect continued momentum if the market rallies. A close above $350 would be a very positive sign that this thing is shooting for QCOM type numbers. Be disciplined and use your stops.



Picked on Nov 18th @ $324.00
Change since picked +  21.00



GMST - Gemstar Intl. Group, Ltd. $113.50 +3.38 (-5.00)

The two conditions for entering this play have developed just as we described. First, a show of renewed market strength has brought the wind back under the sails of this split run. Second, a retracement back to the 10 dma level of $110 has given us a good entry point, although we're concerned that volume was a bit on the anemic side today. The close above the 10dma is encouraging. Traders following the MACD indicator will be watching for convergence indicating a short signal on Friday's close, so a strong move up tomorrow to counter this will be important to us as far as keeping the momentum going north in this play. GMST has recently traded at $120, so plenty of room and time remain to play this stock to even higher levels. Support is still firm at $110. Watch to determine market sentiment tomorrow after the employment numbers are released before initiating or adding positions. Remember that we will be exiting this position by Friday, December 10th. For those of you that find GMST a little to rich to trade, take a look at TVGIA. GMST is buying the company in a deal expected to close next quarter.



Picked on Nov 30 @ $112.75 
Change since picked + 0.75



HD - Home Depot $82.50 +1.19 (+2.00)

If anybody was worried that adding this company to the DOW would cause instability in that index, they were WRONG. This thing appears to be nailed into the current level. The recent chart on this stock looks more like a chalk line - straight. Outside of a dip to $79 on Tuesday, this thing has traded between $80-$81 almost exclusively. That is, until the last 90 mins of trading today, when it broke back through $82 for the first time since we initiated this play. Talk about not building a house overnight. The good news is that we continue to see good volume and this thing has built a solid wall under it between $80-$81, which happens to be the 5 & 10 dma for the stock. At this point, it will probably take momentum in the overall market (particularly the Dow) for this thing to trade and close above the record of $83.50, which we really want to see. If the employment numbers due out in the morning are positive from an inflation standpoint, we might just get that momentum. Otherwise, we will probably be stuck waiting for a Holiday rally and the anticipated split run to develop before this thing goes anywhere. The numbers in the morning could prove crucial, so wait to see which way the market is going before initiating or adding to positions.



Picked on Nov 21st @ $82.25
Change since picked  + 0.25 



JDSU - JDS Uniphase $239.75 +10.19 (-26.25))

You think somebody's interested in this play? The guys over at Dain Rauscher Wessell are. They initiated coverage of JDSU today, recommending a STRONG BUY-YAHOO!, oops, wrong stock. Seriously, the volume was the key Wednesday, as JDSU traded 10M shares against the usual 2.8M. As we said Tuesday, support would be tested at the intraday level of $221. That level was tested twice Wednesday. Each time heavy buying propped up the stock and carried it away from our stops. We now have a consolidation of Tuesday's sell-off, as trading Wednesday and today were inside Tuesday's range. Today's trading was contained by the 5 dma ($243) at the top of the range with the 10dma ($235) forming support. There is room for more, as Thanksgiving week saw a run-up of $75 without a breather and this week's sell-off did not close below the 50% retracement level formed by the low of November 12th. Three weeks remain before the actual ex-date, but we will need continued market strength to re-test Friday's $273 level. Traders who used Tuesday's weakness to initiate new plays can use $221 as support. The next hurdle to clear is the $250 level. Watch to see how the market handles the employment numbers in the morning before initiating or adding new positions.



Picked on Nov 9th @ $184.81
Change since picked + 54.94



SUNW - Sun Microsystems, Inc. $136.00 +5.81 (-0.06)

It seems like not a day goes by without there being some good news to come out about SUNW. Yesterday, they announced an alliance with Lucent (LU) in which they will supply Lucent with $500M worth of servers over the next seven years. In addition, they received a reiterated buy recommendation. The Lucent deal would seem to prove their ongoing dominance in the server market. The news, in addition to today's Nasdaq rally of 99 pts, sent SUNW and other technology stocks soaring in an inspiring rally. The shares closed the day at the highs of the trading range at $136.00, up almost six points. As far as our play, we would suggest that you start to look for exits tomorrow and would not suggest initiating new positions. At the latest, you should be out by Monday's close. As far as support, it looks strong at the $130.25 level. If the employment numbers are good tomorrow, we might see SUNW try to retest the recently set high.



Picked on Nov 9th @ $112.31
Change since picked + 23.69 



TVGIA - TV Guide, Inc. $63.13 +1.38 (-1.00)

The last two days of watching this stock have been as exciting as reading TV Guide. We told you Tuesday to look for a bounce off support at $62.00, and it did. That is the only excitement that occurred yesterday or today. Oh, the stock was able to tack on 1 pt in the later half of trading today as well. There it is in full color folks, as fast as a closing argument on LA Law reruns. The good news is the fact that the stock closed near the 5dma at $63.69. The bad news is that volume indicates no one out there is watching. For now, the key to this play moving forward is to see the volume pick up and for momentum to show itself. To be honest, it will probably take market-wide momentum to jumpstart this thing. This may come starting tomorrow if the employment numbers appear non-inflationary. We would suggest that you watch to see how those numbers are interpreted in the morning. If the mood seems positive, look to initiate or add to positions, especially if the stock trades above the $63.47 level on good volume. Regarding support, it's sitting below you at $62 and again at the 10dma of $61.64. Don't flip the channel on this one just yet folks - it could have a surprise ending. For those that want a heads up on where TVGIA is going, look to GMST.



Picked on Nov 28th @ $64.13
Change since picked  - 1.00


SPLIT CANDIDATE PLAY UPDATES

CMGI - CMGI Inc. $156.13 +6.63 (+9.50)

Looks like this is no longer just our secret, although the stock itself has been somewhat quiet. Since the pop on Monday, the stock has definitely consolidated between $145-$155. This consolidation is fine with us as it builds the support we need for the possibility of a big move up. The stock is currently sitting at the bottom of the channel that formed in mid-Nov when the stock gapped up and started the current trend. Technically, the MACD and our Stochastics indicators both are pointing north, with the MACD indicating positive divergence. In the news, Wit Capital analyst Ryan Alexander raised his price target to $225. To make their presence known in the instant messaging arena, CMGI purchased Tribal Voice. In other news, one of CMGI's holdings, Alta Vista, announced their intent to have a stock sale next March as well as the fact that they might pursue some sort of merger with Lycos, another company that CMGI has an interest in. Regarding our play, the current level offers a good entry. The 5 & 10 dma are both sitting just below us at $155, with strong support at $150 and again at $145. The ceiling starts at $165 and again at $170. Be aware of the employment numbers due tomorrow, as they could rock the market. Wait to see what the market looks like in the morning before initiating new plays.



Picked on Nov 28th @ $146.63
Change since picked  +  9.50



HGSI - Human Genome Sciences $128.25 +7.38 (+12.75)

If you know what genomics are, you're one step ahead of us. The run up in HGSI occurred today due to a report indicating that international scientists have deciphered the genetic code of the 22nd chromosome. The more we follow this company, the less we understand it. What we do understand, and what others seem to be catching on to, is the fact that HGSI looks poised to move up nicely from here. The gain today accelerated the stock to the top of a trading channel dating back to Nov. The stock is sitting right under resistance at $130 and within easy striking distance of its all time high of $132.50, set Monday. The stock actually spent the day testing the resistance, building what appears to be strong support for a move up and through the record. This is confirmed by our MACD, which is indicating positive divergence which doesn't appear to be loosing steam. Volume the last 2 days has been strong, so we know there is interest out there. In terms of our play, we are way over the 5dma sitting back at $120, but we do have the support built over the last several days - $127.50, $125 and the 5 dma. The test will be a close above $132.50. If and when we get that close, watch out! Watch for tomorrow morning's employment numbers to confirm market direction prior to initiating new trades. The 22nd chromosome?



Picked on Nov 28th @ $115.50
Changed since picked + 12.75 
 

SPLIT RUN PLAY DROPS

SCNT - Scient Corp $147.03 +4.41 (+6.53)

We're out of gas and just in time! Despite the fact that Merrill Lynch initiated coverage for SCNT today with a ST accum/LT buy rating, we know that it's time to bail. We told you Tuesday to start looking for exits prior to tomorrow's payable date for SCNT. Hopefully, all ST traders are out of the play at this point. With the overall momentum in the market as well as the coverage initiation, today was actually a good day to get out. After trading flat Tuesday and Wednesday, the stock moved up nicely and gave us one last piece of profit. The employment numbers are due out prior to the market open in the morning, so if your still in this stock, use any strength on the open opportunity to exit.



Picked on Nov 21st @ $127.50
Change since picked  + 19.53



VRSN - Verisign, Inc. $194.81 +11.81 (-3.19)

Well, the time has come. Although it has been a very fun and profitable ride, it is time to say good bye to VRSN. VRSN has a payable date on Monday the 6th, so investors must plan their exits to this play for no later than Friday. The timing is right anyway, as indicated by the chart, which shows fatigue setting in. Yesterday, despite an up day in the market, VRSN consolidated once again to our 10-dma support, now at $186. Today was positive, probably propelled by Johnny come lately's trying to catch a last minute pop. Even the "Individual Investor" publication is listing VRSN in the risky bet column, so pat yourself on the back for trading this play, and look for another trade to invest that money in. For those of you still in VRSN, you may want to use the amateur hour tomorrow morning to look for an exit. The strength or weakness will be determined by the employment report, so watch the S&P futures for direction.



Picked on Nov 14th @ $168.00
Change since picked  + 26.81


SPLIT CANDIDATE PLAY DROPS

None Today.

 


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