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Ask The Trader
Wednesday, November 29, 2000

Stocks on our list that may be ready to move?


I'm starting to get a watch list going and would like to include some Split Candidates off of your list. Can you provide me with 2 stocks that look like they are close to breaking out?


We played Concord EFS (CEFT) at the end of October and walked away with a small profit after getting stopped out. The stock has historically split around the $35 level, so we are well into split territory. The Memphis provider of electronic financial services has been able to take advantage of a nationwide increase in financial transactions that has driven its stock price to new highs this year.

The stock has been on a nice up trend since April, with the 50-dma providing nice support during this rally. Recently, the stock has been consolidating within a bullish ascending triangle. We are now looking for CEFT to break out and close above the $44.50 level. The Banking Index (BIX.X) is coming off of a double bottom formation and is confirming strength in this sector.

XL Capital (XL) is a diversified insurance and financial powerhouse that may further benefit from signs of a hard landing. With further weakness in the economy, the Fed may be coerced into cutting interest rates and lower rates would certainly bode well for the likes of CEFT and XL. Although XL has not split recently, it has enough authorized shares to enact a 2:1 split and is now at historically high levels.

XL Capital's chart (XL) is very similar to the above chart of CEFT. The stock has also consolidated into an ascending triangle. Although not shown, volume on up days has been much stronger than on down days, indicating strong demand for the stock. Lastly, the MACD is close to issuing a buy signal, which would indicate that the stock is ready for another run.

Good Luck and Have a Good Trading Day

Craig Seidler
Assistant Editor

 


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