Email Version, Section 2, Sunday 03/18/2001
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In This Candidate Newsletter:
Plays - New - Updates - Drops
Monday's Candidate Play-of-the-Day - UHS
Weekly Play Results (03/11 - 03/17)
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The following stocks are on our radar screen. We are watching them
for further developments before we add them to our Current Play
- SPLIT RUN CANDIDATES TO WATCH -
JP - Jefferson Pilot $65.68 -0.92
WHY WE LIKE IT: This insurance and radio/television company is due
to split its shares 3:2 on 4/10. We are anticipating a split run
into the ex-date. JP has been forming a wide base pattern since
January of this year. Currently, the stock has found support at
its 200-dma and is challenging its 50-dma again. Its MACD has been
toying with going positive since late February and the RSI and
stochastic are indicating that JP is long overdue for a bounce.
POTENTIAL TRIGGER EVENT: JP needs to close above $70 on volume of
at least 375,000 shares before we will make room for the stock on
our Current Play list.
SUNDAY'S UPDATE: JP closed just below its 200-dma on Friday, which
hopefully will not prove to be resistance going into next week.
With the MACD also rolling negative, we will need to see strength
in the overall market and good volume in the stock in order for it
to lift back over its 200-dma, now at $65.61. We will continue to
watch JP as long as it can continue closing over $63.75, the bottom
of its base formation.
- SPLIT CANDIDATES TO WATCH -
EPG - El Paso Corporation $68.99 +0.07
WHY WE LIKE IT: In this tough market, one of the few things
working to the upside are the energy stocks. EPG fits into this
category and has held its own through the big downdrafts. In
addition, we like the fact that EPG has traced a cup and handle
formation over the past two months. Volume lately has been tailing
off to the downside, which may be an indication that sellers are
moving on to other sectors. Lastly, another bullish sign was just
signaled when the 10-dma and the 40-dma crossed up through the 50-
POTENTIAL TRIGGER EVENT: We need to see EPG close above the top of
its handle at $74.50 on volume of at least 2.7 million shares
before we will energize our Current Play list with this stock.
SUNDAY'S UPDATE: EPG sold off on Friday but managed a late day
bounce that kept our Watch List stock above its 40-dma and lifted
our energy play by a few pennies to close out the week. Going
forward, we will watch to see if EPG can find more support before
triggering our downside exit point at the 50-dma of $67.38.
PPDI - Pharmaceutical Product Development $42.44 -3.81
WHY WE LIKE IT: Pharmaceutical research firm PPDI has tested the
$40 level four times now and each time it has held. We are
anticipating that with any rally in the broader market, buyers will
step up their bids in PPDI, taking the stock above its 50-dma.
Should this occur, the MACD would be close to going positive. In
addition, we are encouraged by the fact that PPDI's stochastic is
currently bouncing off oversold levels.
POTENTIAL TRIGGER EVENT: We need PPDI to close above its 50-dma,
currently at $49 on strong volume of at least 450,000 shares before
we will move the stock over to our Current Play list.
SUNDAY'S UPDATE: PPDI tripped and fell on Friday and unfortunately
for our Watch List play, the sell-off came on above average volume.
The MACD is now well into negative territory. PPDI is only $1.50
away from our exit point, but with any help from the broader market
and the Fed on Tuesday, we will see some strength come back to take
us closer to our trigger point at $49.
- MOMENTUM STOCKS TO WATCH-
ACS - Affiliated Computer Services $60.00 -3.70
WHY WE LIKE IT: ACS has recently pulled back from its highs
recently but it found good support at its previous two-month long
base. It now appears as if ACS is set to challenge its old highs
as it has just popped through its 50, 40, 20 and 10-dmas. The OBV
is also rebounding from the recent sell off, indicating to us that
buyers are again taking the driver's seat.
POTENTIAL TRIGGER EVENT: We would like to see ACS close above its
previous high of $68.60 on volume of at least 500,000 shares traded
before we roll the IT provider over to our Current Play list.
SUNDAY'S UPDATE: Go figure. ACS came out Friday and reiterated that it
was comfortable with its current quarterly earnings estimates and its
estimates for the full year. Rather than being encouraged by the
company's confidence in its operations, investors fled and therefore,
so will we. ACS will be dropped from the Watch List on Monday.
JHF - John Hancock Financial $35.87 (+0.64)
WHY WE LIKE IT: JHF has bucked the downtrend of its Insurance Sector
Index (IUX.X) by holding steady over the past two months. It has
formed a six-point wide base since December and is looking like it
wants to challenge resistance at $38 again. It also just broke to the
upside of a symmetrical triangle formation on good volume, which is
usually a very bullish sign.
POTENTIAL TRIGGER EVENT: We need to see Johnny H. close above $38.25
on volume of 1 million shares traded before it will be moved over to
our Current Play list.
SUNDAY'S UPDATE: On Friday JHF attempted to rally over slight
resistance at $36.75 but was turned back. However, we are encouraged
by the fact that our new Watch List stock now resides firmly above its
10, 20, 40 and 50-dmas. In addition, JHF's MACD just turned positive,
which may well mean another leg up is on the way. On the downside, we
are keeping JHF on a relatively tight leash. We will monitor the
insurance play as long as it can keep closing above lower support at
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The PLAY LEGEND:
SplitTrader.com Candidate Play Recommendations.
Candidate Play-of-the-Day is our number one candidate
recommendation for the following trading day.
Updates are just that - updates on continuing plays
New plays are brand new for the newsletter.
Drops are closing plays that we feel have lost the advantage.
You will see:
Stock Symbol, Company Name, Closing Price, (change for the week)
Picked at date and Change since picked
BoD = Board of Directors meeting
ADV = Average Daily Volume
dma = daily moving average
At the SplitTrader.com website, we have comprehensive profiles
for each stock that we are playing or have played in the past, as
well as hundreds of others. Please take the time to visit the site
to view the profile of the stock(s) you wish to learn more about.
NEW SPLIT RUN PLAYS 03/18/01
NEW SPLIT CANDIDATE PLAYS 03/18/01
RDN - Radian Group Incorporated $61.00 (-2.97)
The Radian Group (RDN) provides private mortgage insurance and risk
management services to residential mortgage lenders, commercial
banks and savings institutions. The company's niche market in
private mortgage insurance protects lenders from default on home
buyers who make down payments of less than 20% of a home's purchase
price. Focusing on this niche market has paid off tremendously for
the company. RDN grew annual EPS by a staggering 68% last year.
Wall Street has also taken notice of the company's performance, as
all nine firms covering RDN presently hold a "Buy" rating on
shares. Currently, RDN has 80.0 million shares authorized and 46.25
million shares issued, with the last recorded split having taken
place on December 2nd, 1996 at $76. Although the BoD will need to
authorize more shares before a 2:1 stock split can take place, we
certainly feel this is a possibility. As for the stock, we feel RDN
may be forming a bottom. The technical indicators certainly suggest
this, with both the MACD and stochastic on the verge of bullish
crossovers. In addition, the $60 level has held as support a
staggering eight times over just the past month and a half. With
that said, should shares trend higher in the upcoming week, we'll
look for resistance to occur at the 50-dma of $61.78, followed by a
stiffer challenge at $65. Support will come at the $60 mark. Look
to time entries when RDN shares bounce off support or break above
the 50-dma on volume of at least 225,000 shares traded by midday.
We'll set our initial stop at $59, to limit our downside risk.
Picked on March 18th @ $61.00
Change since picked 0.00
Stop Loss @ $59.00
NEW MOMENTUM PLAYS 03/18/01
JKHY - Jack Henry and Associates Inc. $24.31 (-0.12)
Jack Henry & Associates, Inc. provides integrated computer systems
to banks, credit unions, and other financial institutions. The
stock hit an all-time high of $33.13 on December 28th. JKHY then
sold off, falling to an intra-day low of $19.81 on January 23rd,
one week after the January 17th earnings release. More recently,
shares of JKHY have traded in the $23-$26 range following the
execution of a 2:1 split on March 5th. The stock has also traced a
double bottom formation with the 200-dma at $24.75 acting as the
neckline. e believe that the post-split depression is wearing off
and we are now looking for the stock to break out of its trading
range. From a technical standpoint, JKHY has support at Friday's
intra-day low of $24 with stronger support at $23.73, the 20-dma.
Resistance is Friday's intra-day high of $25.38 and then the 100-
dma at $26.27. Look for entry points on a bounce off of $24 or a
move above $25.38 on volume greater than 250,000 shares by noon. We
plan to set tight stops at $22.75 as downside protection.
Picked on March 18th @ $24.31
Change since picked +0.00
Stop Loss @ $22.75
SPLIT RUN PLAY UPDATES 03/18/01
SBL - Symbol Technologies $45.59 (-0.82)
SBL's technology has revolutionized the inventory process. SBL's
product line has become nearly indispensable for customers who wish
to maintain a competitive edge. When SBL closes its books on fiscal
2001, the company is expected to realize profits of $1.32/share.
If these estimates are realized, SBL will have increased their
profits by $0.40, or 43%, over fiscal year 2000's profits.
Needless to say, SBL is one of the few technology companies that
has both a solid profit forecast and earnings visibility. SBL
announced a 3:2 split on February 27th that becomes payable on
April 16th. We believe that SBL will outperform the market and
could enjoy a nice split run when the market stabilizes and begins
its inevitable bounce higher. Last week's trading range
established support for SBL at $45.50 and resistance at $50.25.
Potentially profitable trades could be entered if SBL stays above
support at $45.50. Momentum traders may want to pick up SBL if it
trades above $50.25 accompanied by midday volume of more than
250,000 shares. One technical indicator that portends a positive
move is the RSI. This indicator is telling us that there is plenty
of upside potential before the stock would be considered overbought.
Picked on March 13th @ $49.65
Change since picked -4.06
Stop Loss @ $45.25
UCBH - UCBH Holdings Incorporated $53.13 (-2.63)
The high probability of further cuts coming with Tuesday's FOMC
announcement certainly bode well for our play for the week ahead.
We're also anticipating an influx of buying to arise as shares
approach the March 31st record date for the upcoming stock split.
With these two events in mind, it's no surprise that the stock is
already starting to gather momentum on the upside. What's more,
UCBH has trended higher for the past three days, which confirms its
short-term uptrend. Looking at the chart, UCBH shares rallied
higher on Friday, adding $0.50 or 0.95% by the closing bell. The
stock did flirt with higher levels on an intraday basis, but found
a stiff barrier at the 30-dma of $53.77. A look at the technical
indicators show the MACD is still negative, but could be in process
of rounding out. On Balance Volume continues to make higher highs
and indicates that there is solid buying of the stock on positive
days. Traders considering an initial entry point should wait for a
sharp break through the converging 10 and 20-dma's of $54.37 and
$54.54, respectively. Support will come at the 50-dma of $50.46.
We'll continue to hold stops at the $49 mark to protect on the
Picked on March 15th @ $52.63
Change since picked +0.50
Stop Loss @ $49.00
SPLIT CANDIDATE PLAY UPDATES 03/18/01
CEC - CEC Entertainment Inc. $40.40 (-1.60)
CEC Entertainment started Friday's session in positive territory
after Banc of America initiated coverage of the restaurant
industry. CEC was assigned a "buy" rating with a $50 price target.
Shares of CEC traded to an intra-day high of $40.81 early in the
day. Unfortunately, the stock drifted lower as the market sold off.
CEC closed at its intra-day low of $40.40 on volume of 149,900
shares. The stock has made three consecutive lower highs, creating
a short-term downward trend. However, CEC still remains within its
$40-$43 trading range, so it could bounce after a test of the $40
mark. The stock is currently trading around its previous split
range. In addition, the company has 100 million shares authorized
and 34.2 million shares issued; plenty for a 3:2. We are looking
for a split announcement with the May earnings release or out of
its next BoD meeting. Until then, support is holding at Thursday's
intra-day low of $40.23 with additional support at $40, the
February 21st intra-day high. Resistance remains at Thursday's
intra-day high of $40.95 and then Wednesday's intra-day high of
$41.60. Traders may consider starting new plays on a bounce off of
$40.23 or a move above $40.95 on midday volume of at least 80,000
shares. We are leaving our stops at $39.50 as downside protection.
Picked on March 13th @ $41.81
Change since picked - 1.41
Stop Loss @ $39.50
UHS - Universal Health Services $84.37 (+0.63)
UHS, an owner and operator of 47 hospitals, attracted a fair amount
of value investors last week. At first glance, a positive move of
less than a point for the whole week may be unimpressive. However,
when one considers the huge declines seen by a multitude of stocks
over the last week, UHS' positive move tells us that the stock is
developing some nice relative strength. It is technically
significant that UHS bounced off its 200-DMA, which closed the week
at $80.09. A sustained bounce off the 200-DMA is a good sign that
a stock has found a bottom and will likely trend higher. Addition,
it appears as if UHS is headed towards putting in a triple bottom
formation. UHS is also tempting because it is a split candidate.
The company's last split was made payable in May of 1996 when the
stock was trading almost 30 points below Friday's close. In the
event of a pullback on Monday, we are comfortable adding positions
if UHS stays above our suggested stop at $80.00. A good entry
point for momentum investors will present itself if UHS moves above
its 50-DMA of $85.81. This trade becomes more enticing if the move
above the 50-DMA is accompanied by midday volume of at least
150,000 shares. We are additionally encouraged by the fact that
the OBV is getting stronger.
Picked on March 15th @ $83.50
Change since picked +0.87
Stop Loss @ $80.00
MOMENTUM PLAY UPDATES 03/18/01
LMT - Lockheed Martin Corp. $37.00 (-1.56)
Lockheed Martin Corporation has lost ground in each of the last 4
sessions. On Friday, LMT sold off following news that Congressional
auditors gave a negative report on the status of the $61.9 billion
F-22 fighter program with Lockheed. Shares of LMT fell to an intra-
day low of $36.32 before bouncing back to a close of $37 on volume
of 2.28 million shares. The stock is starting to show signs of a
bottom after hitting a higher low and a higher high on Friday.
However, LMT has formed a short-term downward trend, so the stock
may need to test support before it moves higher. For now, support
is Friday's intra-day low of $36.32 with stronger support at
$35.76, the 50-dma. Resistance has fallen to Friday's intra-day
high of $37.60 and then Tuesday's intra-day high of $38.90. Look
for entry points on a bounce off of $36.32 or a move above $37.60
on volume greater than 800,000 shares by noon. We are keeping our
stops at $35 to limit potential losses.
Picked on February 4th @ $36.40
Change since picked +0.60
Stop Loss @ $35.00
MAT - Mattel, Inc. $17.70 (-0.76)
On Friday global toy manufacturer Mattel Inc. closed below the 10-
dma for the first time since March 5th. Shares of MAT traded to an
intra-day low of $17.51 before making a small recovery to close at
$17.70 on volume of 3.8 million shares. The stock continues to
consolidate after hitting a 52-week high on March 9th. On the
positive side, MAT's upward trend remains in tact so the stock
should be able rebound if U.S. market conditions improve. In the
meantime, MAT has support at Friday's intra-day low of $17.51 with
additional support at $17.39, the 20-dma. Resistance has come in at
Friday's intra-day high of $18.50 and then $18.84, the 52-week
high. A bounce off of $17.51 or a move above $18.50 on midday
volume of at least 1.3 million shares may be possible entry points.
Our stops are holding steady at $17.
Picked on March 15th @ $18.55
Change since picked -0.85
Stop Loss @ $17.00
SPLIT RUN PLAY DROPS 03/18/01
SPLIT CANDIDATE PLAY DROPS 03/18/01
MOMENTUM PLAY DROPS 03/18/01
UVV - Universal Corporation $36.06 (-2.93)
UVV simply could not avoid the early selling pressure that gripped
the market on Friday. We thought that a bounce off the $37.00
support level would afford us a good buying opportunity.
Nevertheless, UVV slipped below our $37.00 stop. If we see renewed
market interest in low P/E stocks this week, we may be tempted to
try and pick up UVV again if it can hold up at current levels.
Picked on March 11th @ $38.99
Profit/Loss -1.99 (5%) (Stopped on Friday @ $37.00)
Best Profit +0.21 (1%)
Sunday, March 18, 2001
UHS - Universal Health Services $84.37 (+0.63)
UHS, an owner and operator of 47 hospitals, attracted a fair
amount of buying interest last week. At first glance, a
positive move of less than a point for the whole week may be
unimpressive. However, when one considers the huge declines
seen by a multitude of stocks over the last week, UHS'
positive move tells us that the stock is developing some nice
relative strength. It is technically significant that UHS
bounced off its 200-DMA, which closed the week at $80.09. A
sustained bounce off the 200-DMA is a good sign that a stock
has found a bottom and will likely trend higher. Addition, it
appears as if UHS is headed towards putting in a triple bottom
formation. UHS is also tempting because it is a split
candidate. The company's last split was made payable in May of
1996 when the stock was trading almost 30 points below
Friday's close. In the event of a pullback on Monday, we are
comfortable adding positions if UHS stays above our suggested
stop at $80.00. A good entry point for momentum investors
will present itself if UHS moves above its 50-DMA of $85.81.
This trade becomes more enticing if the move above the 50-DMA
is accompanied by midday volume of at least 150,000 shares.
We are additionally encouraged by the fact that the OBV is
Picked on March 15th @ $83.50
Change since picked +0.87
Stop Loss @ $80.00
Weekly Play Results (03/11 - 03/17)
Plays Beginning Price Ending Price Gain/Loss % Change
----- --------------- ------------ --------- --------
LMT $38.56 $37.00 -$1.56 -4.05%
BAX $92.90 $89.00 -$3.90 -4.20%
PII $50.14 $48.00 -$2.14 -4.27%
TX $69.94 $68.00 -$1.94 -2.77%
IGT $55.65 $54.75 -$0.90 -1.62%
AYE $47.52 $45.80 -$1.72 -3.62%
PFGC $48.88 $47.00 -$1.88 -3.85%
ELY $26.51 $25.50 -$1.01 -3.81%
GVA $34.55 $33.50 -$1.05 -3.04%
LTR $116.77 $113.00 -$3.77 -3.23%
BDX $36.00 $34.50 -$1.50 -4.17%
PHCC $39.63 $39.00 -$0.63 -1.59%
WFT $58.01 $55.00 -$3.01 -5.19%
OAT $98.80 $96.00 -$2.80 -2.83%
UVV $38.99 $37.00 -$1.99 -5.10%
SBL $49.65 $45.59 -$4.06 -8.18%
CEC $39.50 $40.40 $0.90 2.28%
MAT $18.55 $17.70 -$0.85 -4.58%
UCBH $52.63 $53.13 $0.50 0.95%
UHS $83.50 $84.37 $0.87 1.04%
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