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 17, 2001

H & R Block set another 52-week high today, hitting $58.50 before closing at $58.21. In Tuesday’s write up, we expressed concerned that this omnipresent tax preparer was running out of steam. Fortunately, that wasn’t that case. In fact, HRB added $0.24 to its share value today after adding $1.89 on Wednesday. Obviously, HRB can’t keep hitting new 52-week highs in perpetuity. What’s more, it’s not every week that the market gets an interest rate cut gift from the Federal Reserve. So, at this point, we’d be conservative about entering new positions and liberal about tightening stops (we’ve tightened our stop to $57.00). Technically, though, HRB still looks strong; its MACD is once again forming an up trend and its On-Balance Volume is trending higher. At this point, HRB has support at its 10-dma at $55.73 followed by the 40-dma at $52.58. As for resistance, we are looking at the July 1999 highs of $59.00. 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 $59.00 or a bounce off the 10-dma before placing their trades.

Picked on April 18th @ $52.85
Change since picked +5.36
Stop Loss @ $57.00

May 15, 2001

H & R Block is turning out to be the little engine that could. Just when we thought that HRB was set to rollover, it ekes out another gain instead. In fact, HRB set another 52-week high today by closing at $56.08. At this point, though, we are concerned that HRB’s engine could be running out of steam. Today’s advance came on below average volume of 299,000 shares traded, which is 200,000 less than the three-month average daily volume. Moreover, On-Balance Volume is flattening, which could portend a lost of momentum. Still, if HRB rolls, we doubt that it will roll far. The stock has support at its 10-dma at $54.78 followed by the 40-dma at $52.09. As for resistance, we don’t see any significant resistance until the July 1999 highs of $59.00. Traders considering a position in HRB should look for strong volume, 250,000 shares or more traded by noon EDT, on a move through today’s intra-day high of $56.45 or a bounce off the 10-dma before placing their trades. To protect our gains, we’ve moved our stop up to $55.00.

Picked on April 18th @ $52.85
Change since picked +3.23
Stop Loss @ $55.00

May 13, 2001

On Friday evening, HRB announced that it would be paying out $21 million to settle a class-action lawsuit filed against Olde Discount brokers, which HRB bought back in 1999. HRB CEO Mark Ernst indicated that the settlement came about to avoid continued expensive litigation. Now whether this settlement has any effect on trading on Monday remains to be seen. It can be looked at as both positive and negative, but bottom line is that the sum of money paid out is not exorbitant. Other than the settlement, shares of HRB have been cooking along just fine. In fact, on Friday, HRB hit a new intraday high of $56.50 before falling back and closing at a new high of $56.05. The MACD has turned positive, OBV is healthy and volume is remaining on the high side. HRB is hitting on all cylinders. New entries could be considered on a breach of $56.50 on good volume of 300,000 traded by midday or a bounce of $55.00 on similar volume. Our stops remain at %54.50 to protect against a reversal.

Picked on April 18th @ $52.85
Change since picked +2.20
Stop Loss @ $54.50