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PLAY >New Updates Thursday, March 08, 2001
New Split Updates   New Candidate Updates   New Momentum Updates
(We update our stop losses daily at the CURRENT PLAYS page.)

New Split Updates

BAX – Baxter International $92.72 +2.38 (-0.61)

Baxter revealed plans yesterday to build a new $170 million facility for making vaccines and said earnings will grow in the mid-teens in 2001. The company expects earnings growth to reach high-single digits in the first half of 2001, while an increase to the mid to high-teens should unfold in the second half of the year. Despite the positive comments from the company, BAX shares unexpectedly ran into some post-announcement selling on Wednesday. A pullback in the AMEX Biotechnology Index (BTK) didn’t help matter either, as the stock lost 4.09 points or 4% to close at $90.34. BAX logged volume of 2,639,100, which handily surpassed the three-month average. With that said, we were looking for BAX to rebound in today’s session. Luckily, this scenario unfolded. After bouncing off an intraday low of $89.35, the stock recovered to a close of $$92.72, up 2.63% on the day. Should this recovery continue, we’ll look for resistance to occur at the 5-dma of $93.20, followed by a tougher challenge at $95. Support will come at $90, with additional support at the 30-dma of $89.49. Look to time entries when BAX shares bounce off of support or break above $95 on volume of at least 900,000 by midday.


Picked on March 1st @ $92.61
Change since picked +0.11
Stop Loss @ $89.00
 
Interactive Chart Quote News First Call on BAX
 


GVA - Granite Construction Inc. $35.00 +$0.05 (-$0.20)

Thursday marked the forth day of limited price movement for shares of GVA. Since achieving a new 52-week high on Friday of last week, GVA has seen intra-day price movement of less than fifty cents. On Thursday 115,000 shares changed hands, this represents a 50% increase over the three-month average of 75,000. The current tug-of-war between buyers and sellers is evident by the three successive Dojis that have appeared on GVA's chart. A Doji is a charting symbol used in Japanese Candlestick Charting. Basically, when the pattern appears, it denotes indecision in direction. Going forward, a bullish pattern to watch for would be an engulfing pattern in which the previous day's bar is totally engulfed by an "open" candle. GVA is a little over a month away from its 3:2 stock split scheduled for April 13th. Prior to that date, we are watching for another split run to begin. Considering opening a new position if GVA bounced off support at $35.00, the 5-dma, or moves up and through resistance at $35.50 on strong volume of 60,000 shares traded by midday. We will maintain our stop loss at $33.50 on this play.


Picked on February 25th @ $33.07
Change since picked +1.93
Stop Loss at $33.50
 
Interactive Chart Quote News First Call on GVA
 


LTR – Loews Corporation $114.40 +1.58 (+5.29)

Diversified holding company Loews Corporation is on a winning streak, having posted gains in each of the last five sessions. On Thursday, shares of LTR traded to a three-year high of $114.80 on volume of 598,000 shares. LTR continues to benefit from the sector rotation out of NASDAQ issues and into the safer NYSE names. The stock has solid momentum as we move closer to the 2:1 split, payable on March 20th. However, a weak payroll number on Friday could lead to some profit taking. Going forward, LTR has support at Wednesday’s intra-day high of $112.90 with additional support at $111.67, the 5-dma. Resistance has moved up to Thursday’s intra-day high of $114.80 and then the all-time high of $115.62. Traders should be looking for a bounce off of $112.90 or a breakout above $114.80 on midday volume of at least 225,000 shares before starting new plays. We are bumping our stops up to $111.50 to protect in the recent gains.


Picked on February 27th @ $106.40
Change since picked +8.00
Stop Loss @ $111.50
 
Interactive Chart Quote News First Call on LTR
 

New Candidate Updates

AYE – Allegheny Energy Incorporated $47.50 +0.38 (+0.50)

The state-by-state restructuring of the electric utility industry is offering companies a rare opportunity to build major independent power producing businesses. Just a handful of companies are poised to benefit from this transformation, of which Allegheny is certainly one. To take advantage of the rollout, AYE is seeking to achieve critical mass through a combination of new energy plants and the transfer of existing generating operations to unregulated status. We’re hoping that positive news from this build-out continues to propel AYE shares. Looking at the chart, AYE appears to be gaining momentum off its recent low, adding $0.38 in today’s trading. The short-term technical indicators also point to higher levels, with the MACD flattening out after the recent decline and the stochastic showing a bullish crossover. What is of some concern to us, however, is the volume. The stock normally logs around 653,000 shares based on a three-month average, but Thursday’s run came on volume of just 206,200 shares. This could indicate a lack of buyers in the stock. Bearing this in mind, we’ll look for initial resistance to come at the $49 mark (all time high), followed by a more difficult test at $50. Support will come at the 20-dma of $47.06, with an additional base at the March 6 intra-day low of $46.43. Look for entries on bounces off of support or break above $49 on volume of at least 300,000 shares traded by noon.


Picked on February 22nd @ $48.22
Change since picked –0.72
Stop Loss @ $45.94
 
Interactive Chart Quote News First Call on AYE
 


IGT - International Game Technology $56.45 -0.30 (+2.61)

IGT established a new high of $57.25 yesterday, as the stock continues to offer momentum investors one of their limited options in this market. IGT did loose a little bit of its impetus today. That said, the stock's impressive uptrend is still intact. However, the RSI is indicating that the stock is a bit overbought in the short term. Granted, IGT does have a habit of becoming extremely overbought, according to the RSI indicator, before pulling back. A good buying opportunity may present itself if IGT pulls back to the 10-DMA, which is just slightly above $55.00, and bounces. If today's mild pullback turns out to be a one day aberration and IGT establishes a new high tomorrow above $57.25, accompanied by volume over 600,000 shares, the stock could easily be off to the races again next week. The MACD, OBV and Money Flow continue to look impressive and point towards more gains for IGT.


Picked on February 20th @ $53.52
Change since picked +2.93
Stop Loss @ $54.75
 
Interactive Chart Quote News First Call on IGT
 


KRI - Knight-Ridder, Inc. $58.79 -0.16 (-1.96))

Knight-Ridder, one of the premier newspaper publishers in the country, announced yesterday that at least two of its properties, the Philadelphia Inquirer and the San Jose Mercury News, are suffering from diminishing advertising revenues. Although the news was hardly surprising considering the overall economy, the stock did suffer a decline of just over a point yesterday. In light of what the market usually does to uptrending stocks when they announce negative news, the relatively mild decline is quite encouraging. KRI does offer investors a good value for their money and they appear to be unwilling to part with their holdings in KRI. The 50-DMA continues to offer excellent support just above $58.00. There may be a good entry opportunity if KRI can bounce off this support. A move above today's high of $59.50 may foreshadow a retest of the 52-week high of $61.25. The MACD is somewhat trendless. However, a good pop up in the share price tomorrow could easily trigger a buy signal, according to this indicator.


Picked on March 4th @ $60.75
Change since picked -1.96
Stop Loss @ $57.00
 
Interactive Chart Quote News First Call on KRI
 


PFGC – Performance Food Group Company $48.56 –1.94 (-5.13)

Performance Food Group, a leading food product supplier, sold off on Thursday after the company announced that it plans to acquire privately owned Empire Seafood Holding Corp. for approximately $70 million in cash, common stock, and the assumption of certain liabilities. On Thursday, shares of PFGF traded to an intra-day low of $48.50 on light volume of 74,700 shares. The stock closed below its 20-dma and it has hit 4 consecutive lower highs on weak volume. The MACD is turning negative so the stock may continue to slide unless we get some decent volume on an upward move. Until then, PFGC has support at Thursday’s intra-day low of $48.50 with stronger support at the February 21st intra-day low of $47.13. Resistance has come in at Thursday’s intra-day high of $50.50 and then Monday’s intra-day high of $53.38. Traders may consider entry points on a bounce off of $48.50 or a move above $50.50 on volume greater than 100,000 shares by noon. We are keeping our stops at $47 to limit potential losses.


Picked on February 25th @ $50.13
Change since picked –1.56
Stop Loss @ $47.00
 
Interactive Chart Quote News First Call on PFGC
 


PII - Polaris Industries Inc. $50.90 +2.90 (+3.70)

Polaris jumped 6-percent for the day and came within $0.76 of a new 52-week high. The bullish advancement in the Dow Jones Industrial Average (INDU) seems to have had a positive effect on PII. If you are considering opening a new play on PII, look for the stock to conquer resistance at $51.65 on heavy volume of at least 100,000 shares traded by midday. Thursday advance was accompanied by volume of 177,000 shares, which is 88% greater than the average three-month trading volume of 94,000 shares. We are going to tighten our stop loss on this play to $48.00.


Picked on February 13th at $48.70
Change since picked +2.20
Stop Loss at $48.00
 
Interactive Chart Quote News First Call on PII
 


WFT - Weatherford International $58.33 +0.08 (+4.33)

Oil and natural gas drilling equipment manufacturer Weatherford International, Inc. hit an all-time high on Thursday. Shares of WFT traded as high as $58.82 before pulling back to a close of $58.33 on volume of 1.4 million shares. The stock, as well as the majority of the oil drilling sector, has strong momentum so WFT could continue to hit new highs. However, Thursday’s pullback shows that WFT may see a round of profit taking in the near future. From a technical standpoint, WFT has light support at Thursday’s intra-day low of $57.75 with additional support at the 5-dma, now up to $56.59. Resistance is Thursday’s intra-day high of $58.82 and then possibly the $60 mark. Consider entry points on a bounce off of $57.75 or a breakout above $58.82 on volume of at least 750,000 shares by midday. We have moved our stops up to $55 to protect additional capital.


Picked on March 6th @ $56.80
Change since picked +1.53
Stop Loss @ $55.00
 
Interactive Chart Quote News First Call on WFT
 

New Momentum Updates

BDX - Becton, Dickinson and Co. $36.06 +0.08 (+0.86)

It has been an interesting week so far for most medical equipment stocks. Generally speaking, these stocks were under some profit taking pressure in the beginning of the week due to investors focusing on the purchase of downtrodden technology stocks. Today, we saw some profit taking in technology stocks, which was good news for BDX shareholders. BDX was bolstered yesterday by the initiation of coverage of its stock by Banc of America Securities. The research firm placed a "Buy" rating on BDX. We suggested in Tuesday's update that BDX might be a compelling buy because the stock has found support at the 50-DMA, which closed today at $34.94. BDX has started to bounce off this support. Although the MACD is still negative, the OBV and Money Flow remain quite strong. BDX closed right at the resistance offered by the 10-DMA of $35.63. A positive move tomorrow, accompanied by first hour trading volume over 300,000, could signal the resumption of BDX's uptrend and may provide a good buying opportunity.


Picked on February 11th @ $37.03
Change since picked -1.38
Stop Loss @ $34.50
 
Interactive Chart Quote News First Call on BDX
 


ELY – Callaway Golf Corporation $26.44 –0.57 (+1.44)

Having staged a remarkable recovery from the 1998 El Nino lows, which kept golfers off the courses, Callaway has found new venues to drive sales growth. The key to this turnaround has come mostly through international growth, where last year’s annual sales jumped 29%, compared to only a 10% increase stateside. Moreover, overseas momentum continues to build, as witnessed by the company’s 54% increase in revenues abroad last quarter. These strong sales numbers have generated a steady flow of buyers to the stock, which has kept ELY shares on the upswing. On the day, shares did give back some ground from yesterday’s sharp rally and closed the session at $26.44, down $0.57. Volume came in strong at 656,600, which surpassed the three-month average. Still, upside volume has nearly doubled the three-month average on breakouts. We’ll look for resistance to come at the 52-week high of $27.18 and then at the $30. Support comes in at the $26 mark, bolstered by the 5-dma of $25.96. Traders might want to consider a position if the stock can bounce off support at the 5-dma at or move through resistance at $27.18 on 250,000 shares traded by noon. We’ll limit our downside risk with a raised stop of $25.50.


Picked on February 25th @ $23.99
Change since picked +2.45
Stop Loss @ $25.50
 
Interactive Chart Quote News First Call on ELY
 


LMT – Lockheed Martin Corp. $38.60 –0.45 (+0.30)

Lockheed Martin Corporation remains in a firm upward trend despite the day-to day fluctuations. On Thursday, shares of LMT hit a new 52-week high of $39.50 before running into some profit taking. The stock closed at $38.60 on volume of 2.1 million shares. LMT has made 5 consecutive higher highs and 3 consecutive higher lows. The stock constantly tests support and volume remains heavy so it could continue to move higher. For now, support is Thursday’s intra-day low of $38.15 with stronger support at the 10-dma, currently at $37.89. Resistance has moved up to Thursday’s intra-day high of $39.50 and then the 6/8/99 intra-day high of $41.56. A bounce off of $38.15 or a breakout above $39.50 on midday volume greater than 800,000 shares may be possible entry points. We are keeping our stops at $35 to limit potential losses.


Picked on February 4th @ $36.40
Change since picked +2.20
Stop Loss @ $35.00
 
Interactive Chart Quote News First Call on LMT
 


PHCC - Priority Healthcare Corporation $42.63 -0.63 (+$0.13)

Priority Healthcare made fractional gains on Thursday on very low trading volume. PHCC has been forming a wedge pattern on its chart since last week. As the trading has become tighter, the pinnacle of the "wedge" is forming and the stock looks poised to breakout. If this does occur, consider opening a new position on PHCC if the stock advances through resistance at $44.00 on strong volume of 400,000 shares traded by midday. But be cautious of advances toward resistance on shrinking volume; this historically is not considered a bullish sign. The Dow Jones Industrial Average (INDU) showed us how to close an index on a strong note today. Traders consider it bullish when a stock or an index closes at the high of the day provided that ample volume accompanied the move. Look for similar activity in the NASDAQ Composite Index (COMPX) or the CBOE Health Care Index (HCX.X) when considering starting a new play. We will post a stop loss at $39.00 on this play.


Picked on March 4th @ $42.50
Change since picked +$0.13
Stop Loss at $39.00
 
Interactive Chart Quote News First Call on PHCC
 


TX - Texaco, Inc. $70.05 +1.00 (+3.21)

Texaco scored another 52-week high on Thursday. The increased trading volume that accompanied today's move legitimized the advance. TX normally trades about 1.7 million shares based on a three-month trading average, but today's record was achieved on volume of 2.4 million, a 41% increase. If you are considering opening a new play on TX look for a bounce off support at $68.33, the 5-dma, or a move higher on strong volume of 1.2 million shares traded by midday. The INDU was very helpful today; we'd look for similar cooperation going forward along with the help of a positive movement in the Oil Service Index (OSX.X). In order to secure a profit on this play, we are going to tighten our stop loss to $68.00.


Picked on February 18th at $64.90
Change since picked +5.15
Stop Loss at $68.00
 
Interactive Chart Quote News First Call on TX
 

Play Updates Index

 


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