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

May 3, 2001

H & R Block continues to move in the wrong direction. After peaking at $55 on Monday, this tax preparer to the masses has accumulated three-consecutive losing sessions to close below support at the 10-dma at $53.86 and below its April upward trendline. Moreover, the sell-off has caused HRB’s MACD to go negative, which means it may have lost momentum. Fortunately, though, the three-day exodus has been accompanied by weak volume, so it doesn’t appear traders are sprinting for the exits. As it now stands, HRB has strong support at its 40-dma at $51.12 and immediate resistance at $55.00, so the risk/reward tradeoff is probably even. Traders considering a position in HRB should look for strong volume, 250,000 shares or more traded by noon EDT, on a move through resistance at $55.00 or a bounce off the 20-dma at $52.61 before placing their trades.

Picked on April 18th @ $52.85
Change since picked +0.15
Stop Loss @ $49.25

May 1, 2001

Last week we went on ad nauseam about HRB consolidating around $54. Unfortunately, this week we find ourselves doing more of the same. The omnipresent tax preparer closed the day down $1.09 to $53.91 on light volume of 379,900 shares traded, which means, thankfully, there wasn’t a mad rush to the exit. The $55 level appears to be presenting HRB with tough resistance. Yesterday, it hit this level and was stopped in its tracks. Today, it hit $54.75 before being turned backed. The good news is HRB caught support at its 10-dma at $53.87, so it could be consolidating before attempting another move north. As it now stands, HRB has strong support at its 40-dma at $51.03 and immediate resistance at $55.00. Traders considering a position in HRB should look for strong volume, 250,000 shares or more traded by noon EDT, on a move through resistance at $55.00 or a bounce off the 10-dma before placing their trades.

Picked on April 18th @ $52.85
Change since picked +1.06
Stop Loss @ $49.25

April 29, 2001

H & R Block made a nice technical move higher on Friday. The stock had been basing around the $54.00 level but with Friday’s burst higher, HRB cleared its base pattern and looks poised to challenge its all-time high of $59.50 established back in August of 1999. The stock has been setting up perfectly, having first gapped higher in February and then subsequently forming a base on base pattern on lower volume. Momentum traders love this kind of price action since it allows for stronger moves once the stock finally breaks to new highs. The only thing lacking on Friday’s breakout move was volume. HRB traded 444,000 shares on Friday compared with its three-month average of 530,000. We shall soon see if this is going to hold the stock back, because the stock will sink right back into its base on Monday if traders don’t think the breakout had enough conviction. In addition, the OBV needs to turn up, as it diverged lower last week as HRB continued sideways. This is not a great sign, but can be remedied with a few solid up days on heavy volume. If you are in the stock with a profit, you might think about raising your stop just in case. As far as initiating new plays is concerned, volume is the key. Lower risk entries will present themselves on a break above Friday’s high on increased daily volume of at least 600,000 shares traded. Our stops remain at $49.25, but if volume continues to dry up, we will be raising them soon.

Picked on April 18th @ $52.85
Change since picked +0.75
Stop Loss @ $49.25