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Begin Part 2 of 3
SUBSCRIBER QUESTIONS/COMMENTS
More questions about dividends.
Q: The idea of a dividend service you talked about sounds interesting. Wouldn't
this service still be good for IRA accounts even if the tax cut is not passed?
A: Yes it would be good for any non-tax account, and that is just one reason we like the idea of the tax-free investment accounts also proposed by Bush in addition to the elimination of the dividend double tax.
Q: In your discussion of dividends you seem to say that you can buy and sell a stock on the dividend date of record and collect the dividend. Could you clarify the timing of the buy and sell?
A: There is a 3-day float with a stock transaction. Option transactions clear in a day, stock transactions in 3 days. Thus you can use the 'float' to buy a stock that is going to pay a dividend three sessions ahead of the record date, sell it the next session, be locked in for the dividend paydate, and move onto the next stock with a dividend you want to capture.
For example, say the dividend record date falls on a Thursday. It is a good idea to buy the stock as far out as you can so you can avoid price fluctuations around the record date (though the real price fluctuations are around the pay date when the stock price reflects part of the dividend paid). So, you can buy the stock on Monday as day one. You can then sell the stock on Tuesday. As it takes 3 days for the sale to 'clear', when the record day comes on Thursday, you are still in the 3-day window of ownership. You are already out of the stock and no longer subject to price fluctuations and are on to the next stock. Note that holidays and weekends are not counted; it is the actual trading session that counts as a day.
You want to narrow the spread as much as possible. Usually it is quite narrow as these are stable, non-volatile stocks. You also want to limit your exposure to the market as price fluctuations impact the return as you are dealing with smaller amounts. We like to buy right before the close and then sell right on the open the next day.
SEMINARS ON CD
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This is Jon Johnson's own site devoted exclusively to seminars designed to teach you what you need to know about the stock market and stock movement and how to take advantage of those moves without incurring the usual high costs of travel and related expenses usually associated with seminars.
THE PLAYS
We closed out the rest of the downside plays Friday in a pre-emptive move as the the market is trying to piece together anupside. Better to take the money off the table when a change in the wind is sensed than let it get out of hand. We are seeing more less well known names making moves, an indication of a bigger move to come, and we have been positioning for that. There are still stocks that are weak, and if they cannot rise with any market bounce they will be the key focus on the downside.
Good moves: APOL; ASKJ; COH; FIC; MYL; EXPE
In each report we prepare full write-ups for those that look ready to move. If the move has been made already we discuss the play in the summary table. The purpose is to focus on the next good movers.
NEW PLAYS:
Upside: Additional new upside plays in Pre-Announcement, Pre-Split, and Post-Split sections
Play Date: 03/01/2003
IMCL (Imclone--$13.33; +0.1; optionable): Biotechnology
http://biz.yahoo.com/p/i/imcl.html
STATUS: Testing the breakout. IMCL has a doghouse name, but despite all of the insider selling allegations, it is a viable company and its products continue to show promise. It has revived from the brink of history to form the current 13-week cup w/handle base where it is currently moving laterally over 13, forming the handle on lower, below average volume. It is a very orderly and quiet pullback just as it should be. Accumulation is 5 to 0 (5 up weeks on rising volume to 0 down weeks on rising volume) in the base, and money flow is shooting up ahead of the stock price. This is a very good rest or breather after the strong move up the right side of the base, and we are just waiting for the next move to start to jump in.
Volume: 828.683K Avg Volume: 1.72M
BUY POINT: $13.68 Volume=2M Target=$15.75 Stop=$12.72
POSITION: QCI HV - Aug. $12.50c (65 delta) &/or Stock
http://www.investmenthouse.com/cs/imcl.html
Play Date: 03/01/2003
LLTC (Linear Technology--$30.67; +1.02; optionable): Semiconductor
http://biz.yahoo.com/p/l/lltc.html
STATUS: Testing the 200 day MVA (28.76). LLTC is still in its downtrend starting in March 2002, but as with the SOX overall, it looks ready to break that downtrend. It moved over the 200 day MVA two weeks back, came back to test that level, and then started moving higher on volume with Friday volume topping average on the strong move. Looking for it to clear its down trendline and give us a good move. Money flow is excellent and accumulation is solid at 4 up weeks on rising volume to 1 down week on rising volume since November.
Volume: 6.882M Avg Volume: 6.697M
BUY POINT: $31.21 Volume=7M Target=$35.12 Stop=$29.03
POSITION: LLQ HF - Aug. $30c (59 delta) &/or Stock
http://www.investmenthouse.com/cs/lltc.html
Downside:
Play Date: 03/01/2003
HPQ (Hewlett-Packard--$15.85; +0.31; optionable): Computers
http://biz.yahoo.com/p/h/hpq.html
STATUS: Put. PC sales to consumers are expected to rise to highest level in a year, but HPQ is not expecting great things as it missed on revenues and gave a lukewarm forecast. It tanked below the 200 day MVA (16.11) on the news on some huge volume. It spent Thursday and Friday moving back up to test that breakdown, tapping at the 200 day MVA on the Friday high. Volume dropped off on the test, showing less interest on the upside. We are looking for the stock to move up to test the level a bit more on any market pop higher and then roll back over.
Volume: 11.738M Avg Volume: 12.766M
BUY POINT: $15.62 Volume=14M Target=$13 Stop=$16.32
POSITION: HHY QW - May $17.50c (-68 delta)
http://www.investmenthouse.com/cs/hpq.htm
CONTINUING LEADER PLAYS
Upside:
Play Date: 01/18/2003
ALN (Allen Telecom--$13.15; 0; optionable): Scientific & technical instruments
http://biz.yahoo.com/p/a/aln.html
STATUS: Flat. After attempting a breakout two weeks back but immediately reversing to the 10 day MVA. It has since formed a tight, lateral move, regrouping well to hold the line and prepare for another move. Friday volume jumped back up above average as the stock traded in just an 11-cent range. Looking for another strong break higher for this stock that has been a market leader since the July low.
Volume: 697.2K Avg Volume: 526.508K
BUY POINT: $13.41 Volume=450K Target=$16.85 Stop=$12.25
POSITION: ALN FV - June $12.50c (87 delta) and/or Stock
http://www.investmenthouse.com/cs/aln.html
Play Date: 02/04/2003
CGNX (Cognex--$22.7; +0.14; optionable): Scientific & Technical instruments
http://biz.yahoo.com/p/c/cgnx.html
STATUS: Ascending triangle. We continue to look for a breakout from CGNX that continues its strong triangle pattern. Thursday volume surged, and then backed off again on Friday. Excellent accumulation and money flow are setting the stage for the breakout, and we just have to be patient at this point.
Volume: 274.11K Avg Volume: 375.492K
BUY POINT: $23.09 Volume=525K Target=$26.88 Stop=$21.47
POSITION: QCG ED - May $20c (65 delta, low OI) and/or Stock
http://www.investmenthouse.com/cs/cgnx.html
Play Date: 01/28/2003
CKFR (Checkfree--$20.98; +0.51; optionable): Internet software
http://biz.yahoo.com/p/c/ckfr.html
STATUS: Ascending triangle. After a pause internet stocks are looking stronger again, and CKFR never really did sell back, just continued working on its pattern. Friday it tried to make the breakout move off of 20, and though volume rose to average it did not really give us a breakout move. Great accumulation in the 3-month base at 4 up weeks on rising volume to 1 down week with money flow starting to move higher. Looking for a stronger volume move to continue the breakout.
Volume: 1.294M Avg Volume: 1.362M
BUY POINT: New: $21.07 (orig. $20.85). Volume=2M Target=$25 Stop=$18.94
POSITION: FCQ EW - May $17.50c (70 delta) and/or Stock
http://www.investmenthouse.com/cs/ckfr.html
Play Date: 02/27/2003
RNBO (Rainbow Technologies--$8.23; +0.04; optionable): Security software
http://biz.yahoo.com/p/r/rnbo.html
STATUS: Double bottom w/handle. Still working in the handle of the 3-month base that forms the handle to a much larger cup that began in January of 2002. Accumulation in the current short base is 3 up weeks on rising volume to 1 down week on rising volume. Money flow is solid and moving up ahead of the price while relative strength is ready to breakout. Very nice pattern has developed during the market selling.
Volume: 122K Avg Volume: 131.536K
BUY POINT: $8.45 Volume=161K Target=$10.25 Stop=$7.86
POSITION: BQO GU - July $7.50c (67 delta, low OI) and/or Stock
http://www.investmenthouse.com/cs/rnbo.html
Play Date: 02/26/2003
SBL (Symbol Technologies--$10.58; +0.35; optionable): Computer peripherals
http://biz.yahoo.com/p/s/sbl.html
STATUS: Testing the breakout. SBL is starting its move higher of the breakout test, moving on rising volume. That is exactly what you want to see in a successful breakout. Volume has been excellent on the breakout week, something you want to see. Money flow is excellent and relative strength is breaking out as well to go along with the solid accumulation at 3 up weeks on rising volume to 1 down week on rising volume.
Volume: 2.416M Avg Volume: 1.515M
BUY POINT: New: $10.65 (orig. $10.45). Volume=2M Target=$12.25 Stop=$9.72
POSITION: SBL GB - July $10c (59 delta, low OI) and/or Stock
http://www.investmenthouse.com/cs/sbl.html
Play Date: 02/22/2003
WFR (Memc Electronic--$9.23; +0.21; no options): Integrated semiconductor circuits
http://biz.yahoo.com/p/w/wfr.html
STATUS: Cup w/handle. Tried to start the breakout from its pattern Friday, but volume backed off to average on the move, depriving it of some of its power. Still a very good 3-month pattern that has formed after a 7-month, deep base immediately ahead of the current base. Great price/volume action with accumulation in the 3-month base is solid at 11 accumulation weeks to 3 distribution weeks. The integrated circuit sub-sector of the semiconductor sector has some of the best patterns.
Volume: 145.6K Avg Volume: 154.788K
BUY POINT: $9.35 Volume=217K Target=$11.25 Stop=$8.59
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cs/wfr.html
Downside
Play Date: 02/20/2003
AIG (American Intl. Group--$49.29; -1.17; optionable): P&C insurance
http://biz.yahoo.com/p/a/aig.html
STATUS: Put. After struggling below the 18 day MVA (50.65) for the last two weeks, AIG started nose down Friday on rising, above average volume. Looks ready to make the move lower regardless of what the rest of the market does.
Volume: 9.574M Avg Volume: 6.478M
BUY POINT: $49.15 Volume=6M Target=$46 Stop=$51.25
POSITION: AIG QJ - May $50p (-47 delta)
http://www.investmenthouse.com/cs/aig.html
Play Date: 02/13/2003
EXC (Exelon--$49.15; -0.54; optionable): Utilities
http://biz.yahoo.com/p/e/exc.html
STATUS: Put. EXC tried one more run at the 50 day MVA (50.52) after failing at that level back in early February. It failed this move as it did the last one. After a couple of below average volume sessions at the 200 day MVA it broke lower Friday on rising, average volume. Looks ready for the plunge lower as the downtrend continues even as the market looks ready to put up a fight.
Volume: 1.325M Avg Volume: 1.343M
BUY POINT: New: $48.97 (orig $49.65) Volume=1.5M Target=$45.55 Stop=$50.85
POSITION: EXC PJ - April $50p (-56 delta)
http://www.investmenthouse.com/cs/exc.html
Play Date: 02/24/2003
FE (Firstenergy--$29.50; +0.18; optionable): Electric utilities
http://biz.yahoo.com/p/f/fe.html
STATUS: Put. Utilties continue to struggle. FE tested the 18 day MVA on the Friday high (29.78) and then fell back to close, showing a doji as volume rose higher on the session. This looks like a failure at the down trendline.
Volume: 985K Avg Volume: 996.729K
BUY POINT: $29.44 Volume=1.4M Target=$27.03 Stop=$30.46
POSITION: FE PF - Apr. $30p (-51 delta)
http://www.investmenthouse.com/cs/fe.html
Play Date: 02/22/2003
WCN (Waste Connections--$33.28; +0.58; optionable): Waste management
http://biz.yahoo.com/p/w/wcn.html
STATUS: Put. Still in the downtrend that started in January, rallying off 32 last week to test the 10 day MVA on the Friday close. This was the bounce we were looking for, and volume was very, very light on the bounce up. It may still move higher to test the 18 day MVA (33.67) before falling back over, and that would be in line with a market move higher. If WCN was unable to make serious headway in a market bounce, that would show its underlying weakness and really give us a great play when it started lower.
Volume: 104.5K Avg Volume: 297.717K
BUY POINT: After a test toward 33.70, $33.20 on the way back down. Volume=425K Target=$30 Stop=$34.35
POSITION: WCN PG - Apr. $35 put (-64 delta)
http://www.investmenthouse.com/cs/wcn.html
PRE-ANNOUNCEMENT PLAYS
New:
Play Date: 03/01/2003
HAR (Harman Intl.--$63.53; +1.83; optionable): Consumer electronic equipment. Working into this one early as we do not expect a split announcement until the summer, but we are hearing something about a possible earlier announcement. Great pattern so looking at it now.
BACKGROUND: Last announced a 2:1 stock split on August 16, 2000 when the stock price was $64. It ran like a wild animal on that announcement.
http://biz.yahoo.com/p/h/har.html
STATUS: Saucer. HAR is in the process of breaking out of a 3-month base, showing a great volume surge as it moved higher Thursday and Friday. The stock shows excellent accumulation at 6 up weeks on rising volume to 0 down weeks on rising volume; that provides a very solid foundation of institutional support to power the breakout and then hold it up on any subsequent test. This saucer follows a 7-month base that failed to deliver the breakout. A nice base on base pattern that is making its move, accompanied by excellent money flow and a relative strength breakout.
Volume: 570.4K Avg Volume: 289.844K
BUY POINT: $63.74 Volume=435K Target=$72 Stop=$59.28
POSITION: HAR GL - July $60c (67 delta, low OI) &/or Stock
http://www.investmenthouse.com/cs/har.html
Continuing:
Play Date: 02/15/2003
CECO (Career Education--$46.5; +0.64; optionable): Education and training. Forecast to announce a split on 4-8-03 in conjunction with earnings. The company has not confirmed this date, but based upon our research this is the date for the announcement.
BACKGROUND: Last announced a 2 for 1 split on 4-31-01 in conjunction with earnings. The stock price was $61. The annual shareholder meeting was on 5-11-02 at which time authorized shares were increased. The company has sufficient shares for a 2 for 1 split.
http://biz.yahoo.com/p/c/ceco.html
STATUS: Cup w/handle. Education stocks are improving, and CECO is still working through the handle of its 4-month base. Friday it moved up off the 18 day MVA (45.58) on rising though still below average volume. This one requires patience. If it gives us the breakout, we will move in.
Volume: 420.913K Avg Volume: 828.24K
BUY POINT: $48.07 Volume=1.4M Target=$54 Stop=$45.74
POSITION: CUY TI - July $45c (58 delta, low OI) and/or Stock
http://www.investmenthouse.com/cs/ceco.html
Play Date: 02/20/2003
FCN (FTI Consulting--$43; -0.57; optionable): Management services. Looking for a split announcement in early May.
http://biz.yahoo.com/p/f/fcn.html
STATUS: Ascending triangle. FCN broke higher Tuesday on solid volume, but then fell back to hold the 10 day MVA (42.85) Friday, a point that holds the breakout. Good test still holding up, and we need to see another strong volume surge on a another push higher off this level. Strong 6 to 0 accumulation.
Volume: 233.3K Avg Volume: 263.152K
BUY POINT: $44.05 (orig. $42.96) Volume=400K Target=$48.38 Stop=$40.15
POSITION: FCN FH - June $40c (66 delta, low OI) &/or Stock
http://www.investmenthouse.com/cs/fcn.html
Play Date: 02/25/2003
TTC (Toro--$68.79; +0.48; optionable): Motorized farm and home tools. Just announced earnings and looking trying to pinpoint a date. Announcements sometimes come after successful earnings reports, and TTC had a good one.
http://biz.yahoo.com/p/t/ttc.html
STATUS: Testing the breakout. Still working laterally in an attempt to consolidate the strong move higher off the February low. It roared up from that level in almost an $8 move. It needs this consolidation to soak up that move and prepare for the next one. Solid 5 to 1 accumulation in this current 15-week base with continued strong money flow.
Volume: 85.5K Avg Volume: 97.995K
BUY POINT: $68.85 Volume=137K Target=$76.55 Stop=$65.35
POSITION: TTC FM - June $65c (72 delta, low OI) &/or Stock
http://www.investmenthouse.com/cs/ttc.html
End Part 2 of 3
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