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| PLAY > New Plays |
Thursday, April 12, 2001 |
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New Split Plays
None
New Candidate Plays
| OMC
- Omnicom Group $86.50 +2.30 +5.35
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Omnicom, which is a major operator of advertising agencies as well as a provider of a slew of services that include market research, sales promotion and public relations, enjoyed a solid rally last week. OMC is expected to post good profits of $0.51 a share on Tuesday, April 24th before the market opens. If OMC meets these estimates, it will have increased its profits by 13% over the same quarter a year ago. Some of last week's rally can be attributed to the fact that Lehman Brothers recently initiated coverage of OMC with a Buy rating. OMC is also a strong split candidate. The company's last split was over three-and-a-half years ago and was announced when the stock was trading at a price $16.00 below Thursday's close. Thursday's rally saw OMC close only six cents below its 50-DMA of $86.56. A follow through above this important resistance on Monday may provide a good entry signal. However, one should be cautious if OMC gaps up two or more points on the open. This scenario would likely result in a pullback that may offer traders a better entry price later in the session. A sustained rally should eventually find resistance at February's high of $95.44. The MACD did issue a buy signal last week. The RSI has plenty of upside room before this indicator would signal an overbought condition. Money Flow has been outstanding and is indicating the likelihood for continued gains.
| SPW
- SPX Corporation $96.31 +1.51 (+5.61)
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SPX produces automotive specialty service tools and equipment for franchised and independent vehicle dealers. After a complete makeover in 1996, the company revamped its business intent from being merely a supplier of automotive products to providing integrated vehicle service solutions. From this period, annual earnings for the company grew sharply, gaining 24% for each of the past five years. Although SPX has fallen significantly from its all time highs, the company has never declared a stock split, though we expect one could be forthcoming given its high stock price. We also like the fact that the stock is coming off a sharp "V" bottom formation, which managed to take out the intermediate high of $95.70 in today's session. The technical indicators also paint a bullish picture, with a extended crossover in the stochastic and the MACD issuing a mid-week buy signal. So, bearing all this in mind, should shares continue to show upside strength in the week ahead, we'll look for resistance to occur at the 50-dma of $98.06, followed by a stiffer challenge at the century mark. Support will come at the $95 mark. Look to time entries when SPW bounces off support or breaks above the 50-dma on volume of at least 240,000 shares traded by midday. We'll set our initial stop at $90 to minimize our downside risk.
New Momentum Plays
None
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