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| PLAY > New Plays |
Thursday, January 04, 2001 |
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New Split Plays
None
New Candidate Plays
| CERS - Cerus Corporation $72.13 +2.13 (-3.13) |
Cerus is in the business of developing medical products based on a platform technology that prevents nucleic acid (DNA and RNA) replication. Cerus' initial application of this technology is the development of systems to inactivate viruses, bacteria and other pathogens in blood components used for transfusion. We are adding this company to our list of stock split candidates based on several factors. First, in December the stock achieved a new 52-week high of $81.88 on better than twice its normal volume. Next, to date the company has not split its stock and we feel that at these levels company officials may choose to do so. Finally, with 50 million shares authorized and only 14.4 million currently outstanding, we again think that board members may elect to split the stock to make it more affordable to the average investor and more attractive to mutual funds. Recent news events worth noting include a deal with Baxter Healthcare. The two companies have announced that they have submitted a CE Mark application for approval to market the Intercept Platelet System in Europe. The system, which is being jointly developed by Cerus and Baxter Healthcare Corporation, is designed to inactivate viruses, bacteria, other pathogens and white blood cells in platelets intended for transfusion. If approved, the Intercept Platelet System will be the only system commercially available to enhance the safety of platelet transfusions through pathogen inactivation. On Thursday, the stock tacked on $2.13 on volume of 111,000 shares. This volume represents a 58% increase above the 3-month average of 70,000. At the close of trading on Thursday, CERS has support at the 20-dma at $68.78. Resistance will likely pose a challenge at the 10-dma at $73.01 and the 5-dma at $73.53. When considering a play on CERS, possible entry points might be a bounce off one of these support levels if immediately followed by good volume and positive momentum in the stock. Look for leadership in the NASDAQ Composite Index (COMPX) to accompany any new plays. We will post our protective stop at $68.00.
| TBL - The Timberland Company $73.25 +2.63 (+6.38) |
Retail stocks have enjoyed a stellar two-day rally following the reversal in the interest rate trend. Historically, it takes rate cuts a couple of quarters to inspire an increase in consumer confidence and cause more vigorous retail spending. It is important to remember that current stock prices typically reflect an opinion about the future prospects for a company. Timberland's explosion into new high territory has made the stock a viable split candidate. Timberland's last 2:1 split was announced in the middle of May last year when the stock was trading at $69.88. Today's move occurred on volume that was more than 30% greater than the average daily volume of 311,000. This is a good sign that momentum traders are jumping on this stock and the rally could continue. The new high of $74.00 should provide mild resistance tomorrow. The MACD reflects the current surge in the share price. Money Flow is also very strong while the OBV is poised to make a new high. There is always some risk trying to jump on a stock that is making new highs. The RSI is telling us that the stock is currently overbought. However, current market enthusiasm could keep the stock in "overbought" territory for a while. $70.00 should provide initial support.
New Momentum Plays
| RYL - Ryland Group $42.81 +0.94 (+2.06) |
The Ryland Group (RYL) specializes in on-site construction of single-family homes and condominiums. The company also provides mortgage related products and services to retail customers through its subsidiary, Ryland Mortgage Company. Most recently, the company has been repurchasing stock in an effort to improve its long-term prospects and to enhance shareholder value. Even more appealing, though, is the stock's recent breakout. Today's advance broke into new territory and set a new all-time high of $44, which is why we're picking up RYL as a momentum play. A closer look at the chart will show that the stock has a tendency to advance sharply higher when shares break into new territory. Furthermore, strong volume of 495,900 shares traded confirms the breakout pattern. With this in mind, we believe that RYL could be on route to test the $45 mark. However, to reach this level the stock will initially need to break above near-term resistance at $44. Should this occur, we'll look for stiffer opposition to come at the $50 mark. We'll look for entry points when RYL can advance through resistance on good volume of 245,000 shares. As for support, look for RYL to have an initial base near $42. Secondary support should come at the 5-dma of $40.87, with additional support at the $40 mark. Look for entries when mid-day volume of 120,000 shares can accompany a bounce from any of these support levels.
| WHR - Whirlpool Corporation $50.31 +0.81 (+2.63) |
Whirlpool is a global provider of major home appliances such as washer & dryers, refrigerator and dishwashers. Shares of WHR traded to a nine-year low of $31.50 on August 30th. However, over the past four months, the stock has backed and filled its way up to $51.13, representing a 62% gain. We believe that WHR could move even higher as we move towards its earnings release on January 24th. From a technical standpoint, support is the 5-dma at $48.69 with additional support at the 10-dma, currently at $46.81. Resistance is Thursday's intra-day high of $51.13 and then $52.06, the July 17th intra-day low. Traders may consider entry points on a bounce off of $48.69 or a move above $51.13 on volume greater than 250,000 shares by midday. We are setting stops at $46.50 as downside protection.
New Plays Index
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