H&R Block is a holding company whose subsidiaries provide tax-related services, investment services through broker dealers, mortgage services, personal productivity software, accounting, and consulting services to business clients. For the nine months ended 1/31/01, revenues rose 54% to $1.30B. Net loss increased 8% to $95.8M. Results reflect the 12/99 acquisition of OLDE Financial Corp., offset by higher personnel expenses.

April 18, 2001

Shares of tax and investment services provider H & R Block seem to be enjoying a post-tax filing season rally thanks to a reported 10 percent increase in tax preparation revenues. For the day, HRB surged ahead $1.00, hitting our Watch List trigger price of $52.39 on strong volume of 700,000 shares traded. HRB has added over two dollars to its value this week since gapping up Monday from a bullish hammer position formed last week. HRB may also be moving higher in anticipation of a possible split announcement. To that end, HRB has 400 million shares authorized and only 91 million shares outstanding, meaning it has more than enough shares to authorize a 2-for-1 stock split. The last time HRB announced a split it was trading near $60. But even if a split is not in short order, we still like the stock based on its technical indicators. HRB’s MACD has recently turned positive and its On-Balance Volume is trending towards new highs. As it now stands, the stock has strong support at its 40-dma at $49.25 and no immediate resistance until the July 1999 high of $59.50. Traders considering a position in HRB should look for strong volume, 250,000 shares or more traded by noon EST, on a move through Wednesday’s intra-day of $53.49 or a bounce off the 5-dma at $51.70 before placing their trades.

Picked on April 18th@ $52.85
Change since picked 0.00
Stop Loss @ $49.25

April 26, 2001

H & R Block appears to be consolidating around $54.00. In fact, it’s been hanging around this level for the past six trading sessions. After trading higher on Wednesday, we thought that HRB may be regaining its momentum, but after closing the Thursday lower, that turned out not to be the case. Still, we think HRB has potential because the intermediate trend remains up and support looks strong. As we said in Tuesday’s write-up, HRB is supported by its up-trending 10-dma, which has advanced to $52.99. What’s more, its MACD remains positive, which means there is still a good chance that HRB hasn’t lost all momentum. As it now stands, the stock has strong support at its 40-dma at $50.73 and no immediate resistance until the July 1999 high of $59.50. We think this risk/reward trade off favors going long. To that end, traders considering a position in HRB should look for strong volume, 250,000 shares or more traded by noon EDT, on a move through Tuesday’s intra-day high of $53.90 or a bounce off the 10-dma before placing their trades.

Picked on April 18th @ $52.85
Change since picked +0.60
Stop Loss @ $49.25

April 24, 2001

H & R Block appears to be resting after last week’s strong run. For the second-consecutive session, HRB went nowhere fast, though there was decent action in the stock, as 930,000 shares changed hands, 300,000 more than the three-month daily average. Despite today’s ennui, we think that HRB will revive itself because the stock still looks attractive technically. HRB continues to be supported by its up-trending 10-dma, which is currently at $52.41. What’s more, the MACD remains positive while the On-Balance Volume continues to hold its long-term uptrend. As it now stands, HRB has strong support at its 40-dma at $50.40 and no immediate resistance until the July 1999 high of $59.50. In other words, we like this risk/reward scenario. Traders considering a position in HRB should look for strong volume, 250,000 shares or more traded by noon EST, on a move through Tuesday’s intra-day high of $53.90 or a bounce off the 10-dma before placing their trades.

Picked on April 18th @ $52.85
Change since picked +0.60
Stop Loss @ $49.25

April 22, 2001

HRB, as expected, sold off on Friday. Whether this was due to the general market sell off, or due to the relief of a heavily overbought condition in HRB we will never know. What we do know, however, is that the minor sell off did not put even put a scratch in the recent up trend. We say this since the stock failed to even come back far enough to test support at $52.85 and also because the sell off came on volume of 500,000, which barely equals the three month volume average. In addition, the stock made a higher high at $54.25 and also put in a higher low at $53.70 to keep the up trend solidly in tact. Looking at the chart, we can see that resistance has asserted itself again at the $54.25 level. In addition, support still remains at the 5-dma at $52.85, bolstered by HRB’s short-term up trend line. Should this support level fail, however, HRB will likely retrace back to support at $52.30, the peak formed in early March. New entries could be considered on a bounce off of the 5-dma or a on break through resistance at $54.25 on midday volume of at least 250,000 shares. We are keeping our stops at $49.25 to limit downside risk.

Picked on April 18th @ 53.25
Change since picked +0.4
Stop Loss @ $49.25