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us stock market, trade stock
Begin part 3 of 3
THE PLAYS:
New Plays:
New Post-Split Play:
Play Date: 10/25/2008
RRC (Range Resources--$34.53; +1.90; optionable): Independent oil and gas
http://biz.yahoo.com/p/r/rrc.html
EARNINGS: Announced 10-22-08
STATUS: Trend reversal. RRC is one of the energy stocks preparing for a bounce higher, making a higher low on the intraday lows to end last week and picking up strong, above average volume as it reversed off the lows each session. Money flow has picked up, leading the stock. Looking for a bounce up toward the 50 day EMA (40.18) as our initial target, but it could punch on through if the market really bounces here to set up the base better.
Volume: 5.622M Avg Volume: 4.696M
BUY POINT: $35.08 Volume=6.5M Target=$40.00 Stop=$33.55
POSITION: RRC AG - Jan. $35c (54 delta) &/or Stock
http://www.investmenthouse.com/ci/rrc.html
Leader Plays:
Play Date: 10/25/2008
DMND (Diamond Foods--$27.02; -1.49; no options): Processed and packaged foods
http://biz.yahoo.com/p/d/dmnd.html
EARNINGS: 12-3-08
STATUS: Test 50 day EMA. DNMD broke out from a 9 month base the last day of June and has been rallying up the short term 10 and 18 day EMA with an occasional test of the 50 day EMA (27.04). Got a bit ahead of itself mid-month, and spent the past couple of weeks resting at the 18 day EMA (28.18). Then Friday DMND gapped lower but held the 50 day EMA on the close. This looks like a routine 50 day EMA test and we are looking for a move higher to give us a buy as DMND continues its upside move.
Volume: 299.144K Avg Volume: 198.315K
BUY POINT: $28.42 Volume=300K Target=$33.95 Stop=$26.82
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ci/dmnd.html
Play Date: 10/25/2008
EBS (Emergent BioSolutions--$15.65; +0.44; optionable): Biotechnology
http://biz.yahoo.com/p/e/ebs.html
EARNINGS: 11-6-08
STATUS: Breakout test/50 day EMA test. A new issue in November 2006, EBS just this month broke out of a large 20 month base, the stock's only real base since coming public. Big surge starting two weeks back on some huge volume broke it out of the base. In last week's selling it sold as well, but on Fridays gap lower it held the 50 day EMA (14.04) and then reversed, holding the breakout over the late September high at 15. Like its snap at the key 50 day EMA and holding the breakout. Ready to move in as it continues higher after this breakout test, one of the best times to enter, particularly in a weak market.
Volume: 534.382K Avg Volume: 361.935K
BUY POINT: $15.95 Volume=550K Target=$19.45 Stop=$14.83
POSITION: EBS CC - Mar. $15c (57 delta, 116 OI) &/or Stock
http://www.investmenthouse.com/ci/ebs.html
Index Plays:
Play Date: 10/25/2008
DDM (DJ30 Ultra ETF--$30.50; -3.43; optionable)
STATUS: Double bottom. This is a 2:1 upside ETF on the DJ30. It gives you 2:1 leverage on Dow moves. With the Dow holding over the early October intraday low the DDM is showing a double bottom, setting it up for a bounce as the high gloom could not push the Dow lower. Thus we are looking to play the coming bounce to the upside using DDM as the vehicle. Our initial target is modest; if this market bounces with the strength it should for a meaningful rise before another test to set the base DDM could go to 40 or higher. A move to the initial target with our options lands a 45%ish gain.
Volume: 22.944M Avg Volume: 6.575M
BUY POINT: $30.65 Volume=10M Target=$35.00 Stop=$28.50
POSITION: HXD LI - Dec. $30c (60 delta) &/or Stock
http://www.investmenthouse.com/ci/ddm.html
Play Date: 10/25/2008
EEM (Emerging Markets ETF--$19.82; -2.28; optionable)
STATUS: Bounce. The emerging markets have been slaughtered. We have played the ultra short EEV to the upside, but the options have become so expensive with the exploding volatility component that they have become too expensive too buy and brokers require too much margin to sell them naked. So we are looking at playing a bounce play to the upside with the EEM. EEM sold hard the past week after failing at the 10 day EMA (23.88). Looking for EEM to rebound with the rest of the market after this slaughter in a rebound move. On the last bounce it made it to the 18 day EMA (26.08) and thus we are looking for a move on through the 10 day EMA a bit. A move to the target lands us a 50%ish gain on the options, 20% on the stock. This is a bounce only; once it shows signs of slowing we bank the gain and are gone.
Volume: 170.2M Avg Volume: 80.705M
BUY POINT: $20.04 Volume=150M Target=$24.20 Stop=$19.04
POSITION: MBY LS - Dec. $19c (50 delta) &/or Stock
http://www.investmenthouse.com/ci/eem.html
Play Date: 10/25/2008
SSO (ProShares SP500 Ultra ETF--$26.50; -2.06; optionable)
STATUS: Double bottom. This is the SP500 2:1 leverage ETF, and we are looking to use SSO to play the bounce higher in SP500 that set up last week as it tested the early October intraday low and held. As we expect a bounce higher to form a better base for a potential market bottom this play can give us a fast and nice gain. A move to the initial target lands a 52%ish gain, but it could go on up to 34.50 or even near 40, a very nice gain indeed.
Volume: 100.723M Avg Volume: 31.762M
BUY POINT: $26.65 Volume=60M Target=$32.74 Stop=$24.95
POSITION: SOJ LZ - Dec. $26c (48 delta) &/or Stock
http://www.investmenthouse.com/ci/sso.html
CONTINUING PRE-ANNOUNCEMENT PLAYS
We consider many stocks for pre-announcement plays every week. We get information regarding upcoming announcements and other data that leads us to conclude a split announcement is coming. Even then, however, we have to be discriminating. We have to see a strong technical pattern as well, and thus we reject many potential candidates based on a weak technical position.
The key today is to find stocks in strong patterns or that are ready to rebound off support. A split announcement will amplify the move higher in these cases as we enjoy moves from strong leaders in position to run higher. We won't chase a stock in a poor technical position even if we know it is going to split; it simply won't do us any good, i.e. it typically won't make us any money to the upside. We could list all stocks we think are going to split, but again, that won't make us any money unless we are in an office pool as to what stocks will or won't announce a stock split.
Current Pre-Announcement Plays:
This is a list of stocks we are looking to announce splits. We are not in all of the potential splits plays but are letting them set up for the next move. In each report we look at the candidates that are in the best patterns ahead of their potential announcements. This focus on leaders in good patterns allows us to make good money even if companies do not announce the split. The key with splits is the pattern and of course the strong earnings growth that put it in the pattern in the first place.
AAPL: Gapped lower but recovered. Used this to enter some positions
AFAM: Researching date.
AMED: Researching date
CELG: Forecast January 2009. Good earnings report
USNA: Nothing announced with earnings, but like this pattern it is showing.
CONTINUING PRE-ANNOUNCEMENT PLAYS:
Play Date: 10/23/2008
AFAM (Almost Family, Inc.--$37.33; -2.21; optionable): Home health care
http://biz.yahoo.com/p/a/afam.html
EARNINGS: No confirmed date
STATUS: Cup w/handle. Gapped lower Friday but after a pretty sharp selloff AFAM came back to close over the 90 day SMA and just under the 50 day EMA (37.69). Not a bad move all and all though it does need to recover a bit. Volume was still below average so this is just more work on its base. To recap: Nice handle forming the past two sessions on lower, below average volume as AFAM puts the finishing touches on a new 8 week base. This base formed after AFAM moved to a new high in late August. Nice run from May to August and this leader needed a base to rest and set up again. Volatile base but the selling this fall was volatile and still AFAM formed up a new solid base. Nice break higher last week and on through Tuesday, now testing. On the next break higher with rising volume AFAM is a new buy.
Volume: 254.244K Avg Volume: 325.005K
BUY POINT: $40.65 Volume=475K Target=$48.85 Stop=$37.98
POSITION: KQA BH - Feb. $40c (49 delta, wide sprd low OI) &/or Stock
http://www.investmenthouse.com/ci/afam.html
Play Date: 10/23/2008
CELG (Celgene--$57.47; -0.58; optionable): Biotechnology
http://biz.yahoo.com/p/c/celg.html
EARNINGS: Announced 10-23-08 before the open
STATUS: Trend reversal. Gapped lower Friday but a nice solid recovery to gain back most of the lost territory. Still a nice solid little bottom forming here and looking for CELG to make a move up with the market bounce this week. To recap: Strong volume and price move Thursday as CELG enjoyed a ride higher on strong earnings, pushing through the 18 day EMA (57.80) on the close. Has not closed over the 18 day EMA for some time and with the volume we are looking for CELG to make a bounce here for us. The 200 day SMA is at 62.76 and that will cause some resistance; when it hits that we will look at banking some of the option gain at least then see what new staying power it has after the initial earnings move.
Volume: 6.456M Avg Volume: 5.432M
BUY POINT: $58.32 Volume=7M Target=$66.95 Stop=$55.88
POSITION: LQH AK - Jan. $55c (65 delta) &/or Stock
http://www.investmenthouse.com/ci/celg.html
CONTINUING LEADER PLAY:
Play Date: 10/18/2008
ALK (Alaska Air--$21.92; -0.71; optionable): Regional airline
http://biz.yahoo.com/p/a/alk.html
EARNINGS: 10-23-08 before the open
STATUS: Reverse head and shoulders. Gapped lower Friday but tapped the 90 day SMA on the low and then rebounded to flat on stronger volume. Just being patient and waiting for it to show the breakout. To recap: ALK has formed a short but deep reverse head and shoulders pattern the past 6 weeks. As oil prices are falling, ALK is setting up to break higher with some very strong above average volume sessions on the upside the past two weeks. This base has formed at the tail end of a larger 8 month base that is part of a larger base . . . suffice it to say airline stocks have suffered as oil rose. Plenty of basing under ALK's belt, and this strong upside volume and surging money flow tell us that ALK is ready to make the break higher. Earnings are Thursday and it looks as if it is going to make the breakout before then.
Volume: 1.347M Avg Volume: 1.087M
BUY POINT: New: Needs to clear 24 on continued solid volume (orig. $23.11) Volume=1.6M Target=$27.85 Stop=$21.49
POSITION: ALK AX - Jan. $22.50c (49 delta) &/or Stock
http://www.investmenthouse.com/ci/alk.html
Trend Reversal/Leader Plays:
Play Date: 10/23/2008
DO (Diamond Offshore--$72.58; -1.15; optionable): Offshore drilling
http://biz.yahoo.com/p/d/do.html
EARNINGS: Announced 10-23-08 before the open
STATUS: Double bottom. Holding up well, coming back after a Friday gap lower, hanging in its pattern and still set to make the bounce. To recap: Strong volume Thursday as DO reported some solid earnings and gapped higher, running up to the 10 day EMA (74.77) on the close. It is threatening to reverse the downtrend that steepened in October, stifling DO at the 10 day EMA when it tried to bounce. Looking for a break over the 10 day EMA on some more solid trade to show us the buyers are still in the game and ready to send it higher.
Volume: 3.038M Avg Volume: 2.353M
BUY POINT: $74.88 Volume=3.2M Target=$88.75 Stop=$71.68
POSITION: DO LO - Dec. $75c (55 delta, 62 OI) &/or Stock
http://www.investmenthouse.com/cs/do.html
CONTINUING INDEX PLAY:
Play Date: 10/23/2008
DIG (Oil & Gas Ultra ETF--$27.56; -2.44; optionable)
STATUS: Rolling. Gapped lower Friday as well but recovered most of the loss to hold the rolling range. Still looking for DIG to dig in and roll back up in its range. To recap: DIG is rolling up and down in a range from 25 to 37-38 on the closes at the top of the range. Reached lower and reversed Thursday on very strong volume. Looking to step in and play DIG on the roll to the top of the range. If it continues higher from there say on up to 40, great. We will be digging it even more in that case and will let some of the positions move higher for us.
Volume: 21.675M Avg Volume: 6.529M
BUY POINT: New: $28.11 (orig. $30.32) Volume=15M Target=$36.00 Stop=$28.24
POSITION: DPB LD - Dec. $30c (51 delta, 101 OI) &/or Stock
http://www.investmenthouse.com/ci/dig.html
Good Investing!
Jon L. Johnson and the Stock Split Report Staff.
All of the foregoing is commentary for informational purposes only. All statements and expressions are the opinion of Online Investment Services, LP or its paid consultants and are not meant to be a solicitation or recommendation to buy, sell, or hold securities. We are not licensed or registered in the securities industry. The information presented herein and on our related web site has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. The security portfolio of Partners of Online Investment Services, LP or its paid consultants may, in some instances, include securities mentioned herein and on our web site. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future developments may differ materially due to many factors.
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