STOCK SPLITS AND ROSS STORES

I wanted to update my thoughts on the projected moves of the next week or so. Ross Stores (Ticker Symbol: ROST) is doing their 2:1 stock split next week, Dec. 15th. That may change because not many stock splits are on a Thursday. But Friday is option expiration and maybe they wanted to avoid the same date.

Anyway, I felt that the stock could go to $100. That is still a possibility. However, when I looked at a chart of the past few months, I noticed it had a tough time with $90. Twice it peaked slightly above that price and then backed off.

I encouraged others to buy the $90 calls, and that proved to be a good trade. Ironically, that is still the price that I feel most comfortable with---and the $92.50s. The past few days it's stayed above $90, and punch up over $93. I would have loved to have seen it over $95, and even $100 before now. Yes, it looks like it's in a rolling pattern, but not much of one.

It still has the other great news: a) great earnings; b) the stock split; c) Christmas and the Santa Clause Rally; and d) the Dividend on the 29th. All this is good. However, there is the weak economy as a backdrop and the Euro Crisis looming (there is supposed to be some big announcement [after a multi-country powwow] this Friday), so who knows?

My feelings are that it will move up slightly and then hold or back off slightly. Kind of like a bird taking off into flight, going in stages. So, let me make a projection. It will move to about $94.50 or $95 in the next day or so. Hold, and back off to about the high $93s or low $94s. Then the next up move will be to $96 and then maybe higher following the same hold and back off scenario.

So, I'm changing the option buy and hold to buy and sell quickly. I now think it best to sell the option and then buy back in at the next dip. For example: If the stock moves up to $94 or $95 quickly, then sell the $92.50s, the $95s and/or any other that you hold. Discuss this with your broker. Maybe he/she can set an alert to notify you if it hits those prices. Then if it backs off for a day or so, get back in---depending on the level, let's assume $94, then consider jumping back in.

One thing this type of trading will do, is get some of your money off the table. This takes more time, but it can be worth it. Also, wait and watch next week as we explain Stock Split Strategy 4B, which is the rally into the split. That should be a good time. Look at the charts again, and see what they tell you. It's about ranges and timing.
Wade