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1) MARKET SUMMARY
Expiration Friday comes and goes without any major pullback, capping a solid week.
- Expiration Friday a sleeper as market pauses in the breakout move.
- Rotation resumes.
- Market on its own with a dearth of economic data and earnings warning season starting this week.
- Next two weeks traditional period for funds to lock in gains.
- Stick to the plan and don’t chase low volume moves as market extends its gains.
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2) Stock Splits Playing stock splits can be very profitable, but it takes know-how. Our stock split service focuses on three main types of plays: 1) pre-announcement (where we forecast an upcoming split prior to the company making the announcement); 2) pre-split (these plays are made in the days leading up to the actual split day); and 3) post-split plays (plays made after the actual stock split where the stock is showing continued or renewed strength). We play pre-split plays as short-term plays. We get in when the technical indicators show us things look right, grab as much as we can, and get out, always being conscious of resistance and support. These stocks are highly volatile at this time, and can turn on you quickly. Don't let good profits disappear. Watch for turns, especially when a stock trades in a wide range and finishes off its high. That is a sign these stocks often give you that they are running out of steam. We usually get out and ask questions later. We can always get back in. We like to play in the money calls, preferably two strike prices in the money as this usually gives us a greater delta (the percent an option will mover versus the stock's movement). We prefer deltas of 75 or better. This means if the stock moves 1 point, the option should move three-fourths of that point. That means up or down. Remember, wait to see the stock start to move up. Don't just blindly make a play and don't try to guess tops and bottoms. We can look at indicators to give us a clue as to what will happen, but we need the stock to confirm it for us. Here's a pre-split play to watch and our current analysis.
CELL (Brightpoint--$32.01; +0.33; optionable): Wholesale electronics. Splits 3:2 on 10-16-03.
Company Profile
STATUS: Flying plateau. CELL is clicking off splits fast and furiously, announcing another 3:2 just 2 weeks after its first split became effective. It surged up to 32.50 and has moved laterally at that level the past three sessions as volume moved back below average. That is the volume you want to see as a strong stock consolidates a gain in this lateral, flat and tight pattern. Strong indicators across the board from this market leader. It may take a few more sessions to complete the lateral consolidation. A market leader and we just need to be patient and let it make the move on volume.
Volume: 452.131K Avg Volume: 358.511K
BUY POINT: $32.88 Volume=538K Target=$39.45 Stop=$30.94
POSITION: ULN AG - Jan. 35c (56 delta) &/or Stock.
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