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Play of the Day (For Tuesday)
Interactive Chart
Monday, May 14, 2001

STU - Student Loan Corp. $68.68 +1.03

Sunday's Comment:

Student Loan Corporation held up relatively well on Friday considering that the stock is now reflecting the $0.70 dividend payment. Shares of STU hit an intra-day high of $68.77 before pulling back to close at $67.65 on volume of 12,200 shares. The stock has made three consecutive higher highs on top of higher lows and STU is starting to form a short-term upward trend as we approach the Annual Meeting on May 16th. We are looking for a split announcement out of the meeting. Until then, support is holding steady at Thursday's intra-day low of $67.15 with stronger support at $66.60, Tuesday's intra-day high. Resistance is the 10- dma at $68.97 and then the May 3rd intra-day high of $69.95. A bounce off of $67.15 or a move above $68.97 on midday volume of at least 15,000 shares may be possible entry points. Our stops remain at $65.

Monday's Update:

On April 19th, Student Loan Corp. reported net income of $22.3 million, or $1.11 per share, for the first quarter of 2001, a decrease of $4.5 million, or $0.23 a share, compared to the same quarter in 2000. The decrease was attributed to less favorable spreads between the interest rates earned on the company's student loan assets. When the less-than-stellar earnings results were released, STU shares sold off from a high of $79.60 on April 19th to a low of $64.90 on May 8th. The sell-off appears to have provided traders with a buying opportunity, as STU shares have stabilized and advanced to today's close of $68.93. More importantly, though, we think STU's shares could continue to advance. To that end, the company's stochastic is showing the stock to be oversold. Moreover, On-Balance Volume is beginning to trend higher again, which suggests momentum is again building. At current price levels, STU has support at the $65 level, with additional support provided by the 100-dma at $63.56. Overhead, STU could run into resistance at its 50-dma at $70.55. In the past, though, STU has been able to breach this level with relative ease. Before taking the plunge, traders should be forewarned that STU is thinly traded. In fact, its three-month average daily volume is 30,000 shares, so it may be difficult to get a favorable bid/ask spread. With that said, traders considering a position in STU should look for strong volume, 15,000 shares or more traded by noon EDT, on a move through Monday's intra-day high of $68.99 or a bounce off recent consolidation at $67 before placing their trades.

Picked on May 10th @ $68.20
Change since picked +0.48
Stop Loss @ $65.00


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