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| PLAY > New Plays |
Sunday, December 10, 2000 |
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New Split Plays
| BRCD - Brocade Comm. $219.75 (+51.87) |
We are all too well aware of the punishment that most technology shares have been through this year. As we enter into what we think will be a tradable rally in select sectors within the NASDAQ, stock picking becomes increasingly important. Two areas of the technology field that have garnered interest from bargain hunters lately have been fiber optics and storage solution companies. BRCD is a leader within the latter group. BRCD provides advanced switching products for Storage Area Networks (SANs). Adding fuel to the potential bonfire is the fact that BRCD announced a 2:1 split at the end of November. The split will be paid to shareholders on December 21st. Clearly, we could have a split run on our hands. This is an extremely volatile stock so, lighter positions are recommended. Nevertheless, we are encouraged by the fact that the stock managed to climb above its 50-DMA of $218.09 on Friday. The potential for increased volatility next week is very real. If the markets are slammed on the open due to Gore's Florida Supreme Court victory, look to pick up BRCD if it can hold support just above $210, which is the low of the day on Friday's trading session. The longer-term technical indicators for the stock look good. The MACD turned positive last week after suffering a severe decline. The OBV and Money Flow are both resuming their upward trends. The RSI is indicating upside potential before the stock becomes overbought. If our stop is not executed, we will exit this position just before the split becomes payable on December 21st.
New Candidate Plays
| CEFT - Concord EFS, Inc. $46.25 (+5.94) |
Concord EFS is a leading provider of the many services required for successful electronic transactions. The height of the holiday retail-spending spree is upon us. Concord EFS could be a solid momentum/seasonal play. On Monday, Lehman Brothers issued some positive comments about the company and pointed out the stock's insularity in the face of market turmoil. We concur that CEFT possesses a very strong chart that reveals an upward sloping trend going all the way back to early August. Some of the chart's luster was tarnished two weeks ago when the stock hit a patch of selling. This pullback was not all bad because it established fantastic support at the 50-DMA and provided the stock with a breather to digest earlier gains. These base patterns are often launching pads to higher prices. Currently, the 50-DMA is at $40.16 and it should provide excellent long-term support. There is good shorter-term support provided by the 10-DMA at $43.50. CEFT notched a new high of $47.13 on Friday and this price should provide slight resistance. The MACD turned positive and issued a buy signal on Friday. Money Flow and OBV are among the strongest in the market, as investment dollars are being put to work in a diminishing pool of stocks that are strong. The fact that the RSI is below overbought levels means that there is room to the upside. CEFT is at a price that historically has resulted in a split announcement.
New Momentum Plays
No New Momentum Plays
New Plays Index
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