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us stock market, stock strategy
Begin part 2 of 2
SUBSCRIBER QUESTIONS
Q: Under new tax rules, is it still profitable to buy a dividend in assets held in an IRA?
A: It is still profitable, but the relative adantage over buying in a non-tax exempt account has diminished. The new tax rules create an advantage, but then take away one of the best advantages of capturing dividends in a taxable account.
The tax rate has been reduced from the taxpayer's bracket to 15%. Depending upon your tax bracket that makes buying dividend paying stocks in a taxable account more advantageous than before. When a dividend is 4% and you have to pay 35% tax on it, and also factor in the transaction costs of buying and selling the stock in order to capture the dividend, the resulting gain is not worht the effort.. In short, you can make better money elsewhere with the same or less effort.
By lowering the tax rate to 15% that made dividend capturing much more advantageous. Or did it? As part of the new tax rules, in order to get the special 15% rate, you have to hold the stock for 61 days. That means if you want to capture dividends as a primary income source, you can only do it every 61 days if you have just one block of money to work with, or you have to throw a whole lot of money at it if you want to capture more dividends and actually use it as a strategy to make any real money at it.
What you want to do when dividend capturing is make a play a week, buying the stock at the close the day before the record date and selling it the next session so you are not subject to ups and downs in the stock that can wipe out your dividend gain. You can then use the float to move into another dividend play using the same block of money. You can do this over and over with the same block of money and roll the dividends in consistently and thus make some decent money. With the new tax rule, however, you cannot use the same block of money over and over but have to hold the stock for 61 days. Effectively that limits you to at best 6 captures per year using the same block of money IF you want the 15% tax rate. To make it worthwhile in a taxable account, however, you need the 15% rate. So the taxk law gave but it also took away WITH THE INTENT to keep people from doing this. That is why it was written the way it was.
You can still capture dividends in a tax free account just as we did in the old days because you are not worried about the 15% versus 28%, 35%, etc. tax rates. Thus for serious dividend capturers, the tax law offered no change.
THE PLAYS
Good movers Tuesday: ASKJ; CYTC; FSH; HMP; NVDA; QLTI; SKIL; SWIR; TASR; VOXX; WAT; WEBX; WSTM; TXT
NEW PLAYS:
Sticking with the stocks in solid patterns and looking for breakouts as they are the leaders and could really move when the rest of the market is ready.
Downside:
Play Date: 03/30/2004
^DJX (1/100 DJ-30--$103.82; +0.52; optionable)
http://biz.yahoo.com/p/d/^djx.html
STATUS: Put. After a lower and lower volume rise up to the exponential 50 day MVA (103.59) DJX is getting setting up to fall. It may make it up to the simple 50 day MVA (104.73), but we are going to be ready for it if it stalls out here and starts lower.
Volume: 1.3M Avg Volume: 1.5M
BUY POINT: $103.55 Volume=1.5M Target=$100 Stop=$104.12
POSITION: DJV QA - May $105p (-65 delta)
http://www.investmenthouse.com/ct/^djx.html
Play Date: 03/30/2004
^OEX (OEX Options--$552.53; +2.07; optionable)
http://biz.yahoo.com/p/^/^oex.html
STATUS: Put. Similar to DJX, OEX has made a low volume rally up to the exponential 50 day MVA (552.74). We are anticipating another test lower before this correction is over. May try a bit higher, but we are going to be ready if it fails here and starts back down.
Volume: 1.3M Avg Volume: 1.5M
BUY POINT: $548.62 Volume=1.5M Target=$530.45 Stop=$553
POSITION: OEB QJ - May $550p (-41 delta)
http://www.investmenthouse.com/ct/^oex.html
Upside:
Play Date: 03/30/2004
R (Ryder Systems--$38.46; +1.17; optionable): Ryder rents trucks
http://biz.yahoo.com/p/r/r.html
STATUS: Flat base. R is making the breakout move from a 10 week base that formed over the 50 day MVA (36.41); that is a sign of solid support when a stock takes a breather from a nice 10 point run but does not sell below this key support. Accumulation in the pattern is a solid 3 to 1. Relative strength is making the breakout move as well. The economy looks pretty good. People moving use these trucks, and businesses needing extra shipping capacity use them as well.
Volume: 584.4K Avg Volume: 433.727K
BUY POINT: $38.58 Volume=600K Target=$44.35 Stop=$36.97
POSITION: R HU - Aug. $37.50c (62 delta) &/or Stock
http://www.investmenthouse.com/ct/r.html
Play Date: 03/30/2004
ACR (American Retirement Corp.--$5.40; +0.40; no options): Long-term care
http://biz.yahoo.com/p/a/acr.html
STATUS: Flat base. Volume is surging as ACR jumped off of the 50 day MVA (4.82) in its 8 week base. Accumulation is a strong 3 to 0, showing us money moved into the stock as it as it moved laterally and held over key support. Relative strength is ready for the breakout.
Volume: 325K Avg Volume: 193.363K
BUY POINT: $5.62 Volume=290K Target=$6.78 Stop=$5.23
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/ct/acr.html
Downside:
Play Date: 03/29/2004
PPP (Pogo Producing--$44; +0.42; optionable): Oil and gas
http://biz.yahoo.com/p/p/ppp.html
STATUS: Put. PPP crashed the 200 day MVA (44.49) last Wednesday on strong trade, and it has rebounded back up to test that important level on lower volume. It tapped the 200 day on the Monday high and fell back as volume was even lower. Looks ripe to roll over again.
Volume: 230.2K Avg Volume: 455.545K
BUY POINT: $43.75 Volume=500K Target=$41 Stop=$44.68
POSITION: PPP QZ - May $45p (-60 delta)
http://www.investmenthouse.com/ct/ppp.html
CONTINUING PLAY TABLE:
* * SPREADSHEET DOWNLOAD * * *
The following link is to a spreadsheet download of the continuing play table. It will allow subscribers to sort the data for your personal investment use. This is a service to our subscribers only, and no other use of the information is authorized. Simply click on the link, enter your username and password, and download the spreadsheet!
http://www.technicaltraders.com/ttr/table.php
You will need your password. If you need help click on this link and our automated system will email it to you immediately once you fill in your email address:
http://www.investmenthouse.com/rescue/rescue.php3
LEGEND
DATE: date play first appeared on report.
PLAY: Denotes the type of pattern or play.
Upside play types: A Wedge=Ascending triangle/wedge; BO=Breakout; Cup=Cup base; Cup hdl=Cup w/handle; DB hdl=Double bottom w/handle; Dbl btm=Double bottom; Flat=Flat base; FlyPlat=Flying Plateau; Pennant=Pennant; Rv H&S=Reverse head & shoulders; Saucer=Saucer base; Test 18=Testing 18 day MVA; Test 50=Testing 50 day MVA; Test BO=Testing the breakout (could be 10 day MVA test, etc.)
Downside play types: CCall=Covered Call; DWedge=Descending triangle/wedge; Dbl Top=Double top; H&S=Head & shoulders; Put (generic downside);
PIVOT=Buy point
Tgt=Target stock price for the play. Applies to stock and options.
Vol=Volume for the most recent session.
TgtV=Target volume to enter the play.
Stop=Stop advisory point. This is advisory and we may or may not exit a play if it hits this level depending upon market conditions.
Upside Plays
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
ACCL 02/21 Test 50 20.55 +0.35 20.59 24.75 88K 246K 19.54
Current.
ARRY 02/25 Test 50 8.93 -0.05 7.9 9.48 53K 300K 8.48
Current.
ASKJ 03/18 BO 36.68 +3.27 31.44 37.95 6.7M 3.7M 31.22
Current.
BEBE 03/13 Cup hdl 32.68 -0.72 31.88 36.55 183K 200K 30.64
Current.
CBR 03/17 Cup hdl 11.12 -0.18 10.65 12.78 322K 750K 10.44
Current.
CERN 03/25 Test 50 45.78 -0.02 45.12 51.88 346K 986K 43.12
Buy Not Issued.
CHT 01/22 Cup hdl 17.55 +0.03 15.75 18.92 118K 1.1M 17.06
Current.
CHTT 02/14 Cup hdl 25.9 -0.08 22.25 26.48 100K 282K 25.42
Current.
CRXL 03/24 Cup hdl 8.3 +0.16 8.35 10.06 184K 350K 7.77
Buy Not Issued.
CYTC 03/17 Test 18 21.88 +1.13 21.84 26.22 4.1M 2.2M 20.31
Entered today.
CYTC 03/01 Cup hdl 21.88 +1.13 20.24 24 4.1M 1.7M 20.25
Current.
FSH 03/29 Flat 55.06 +1.5 54.52 62.75 2.5M 1.6M 53.22
Entered today.
GTI 03/20 A Wedge 14.89 +0.07 15.03 17.62 1.8M 1.8M 14.12
Current.
HMP 03/08 A Wedge 2.16 +0.16 2.16 2.84 106K 150K 2.08
Current.
HYSL 03/01 A Wedge 41.23 +1.14 38.72 44.38 660K 1.1M 36.68
Buy Not Issued.
LTD 03/22 Test 50 19.8 +0.05 19.68 23.62 2.1M 3.9M 18.88
Buy Not Issued.
MAMA 03/16 Test BO 10.7 -0.08 10.04 13.12 1.8M 6M 10.21
Current.
MER 03/04 A Wedge 59.44 +0.25 63.79 72 3.5M 6.5M 58.95
Current.
MER 02/14 A Wedge 59.44 +0.25 61.96 70.55 3.5M 6.5M 60.32
Current.
MIL 02/07 Test BO 52.17 +0.73 50.44 58 140K 500K 50.98
Current.
MPS 03/29 A Wedge 11.21 +0.07 11.28 13.55 376K 550K 10.49
Buy Not Issued.
MXT 03/22 Cup hdl 7.96 +0.07 7.77 9.32 2M 1.7M 7.23
Current.
NMGC 03/03 Flat 4.74 +0.11 5.1 6.18 228K 488K 4.88
Current.
NPRO 03/22 Cup hdl 2.8 +0.03 3.11 3.88 232K 402K 2.87
Current.
NPRO 02/03 Cup hdl 2.8 +0.03 2.87 3.58 232K 402K 2.87
Current.
NSTK 03/20 Test 18 12.81 +0.48 13.42 16.12 74K 135K 12.48
Buy Not Issued.
NVDA 03/24 Test 50 26.16 +0.76 23.94 28.75 6M 6M 23.88
Current.
NVTL 03/27 Flat 20.69 +0.18 21.95 26.22 997K 1.1M 19.97
Current.
ODP 03/27 Cup hdl 18.84 -0.02 18.65 22.25 1.6M 2.4M 17.55
Current.
PCR 03/27 Test 18 16.5 -1.45 17.48 20.55 378K 150K 16.26
Current.
PLXT 03/03 A Wedge 10.72 +0.35 11.26 13.42 128K 218K 10.47
Current.
QLTI 02/17 FlyPlat 26.6 +1.99 26.48 31 4M 2M 24.35
Entered today.
RECN 03/22 Rv H&S 43.24 +0.44 36.16 43.38 178K 225K 41.28
Current.
RHAT 03/24 Flat 23.93 +0.23 20.66 24.85 7.6M 7.3M 21.25
Current.
ROV 03/27 Flat 28.33 +0.03 28.12 33.65 528K 705K 26.15
Current.
SGMS 03/01 Dbl btm 19.04 +0.36 18.85 22.62 322K 1.1M 17.68
Current.
SKIL 01/03 Cup hdl 12.71 +0.61 9.32 11.24 2M 518K 11.08
Current.
SLTC 03/09 Cup hdl 5.55 +0.01 5.37 6.48 260K 242K 4.96
Buy Not Hit.
SOFO 02/21 Cup hdl 2.24 +0.02 2.56 3.21 76K 189K 2.38
Buy Not Issued.
STG 03/13 Test 18 3.88 +0.03 4.04 5 273K 563K 3.76
Buy Not Hit.
STSI 03/13 Cup hdl 3.79 -0.3 4.46 5.44 1.1M 285K 4.15
SWIR 03/18 Test BO 35.85 +1.41 32.22 37.25 1.5M 1.3M 30.48
Current.
SWIR 03/06 BO 35.85 +1.41 31.88 36.85 1.5M 1.1M 30.48
Current.
TASR 03/25 Cup hdl 80.82 +6.53 66.29 76.25 10M 6.8M 69
Target Hit. Took half of the option gain and let the rest run.
TELK 03/29 A Wedge 27.62 +0.31 28.78 33.12 386K 880K 26.77
Buy Not Hit.
TEO 02/23 Test 50 10.86 +0.11 10.61 12.72 69K 520K 10.48
Current.
TLCV 03/11 Test 18 11.62 -0.13 11.08 13.12 439K 1.2M 10.32
Buy Not Issued.
TOM 02/28 Cup hdl 17.02 +0.02 16.84 20.12 454K 850K 16.22
Current.
VOXX 02/21 A Wedge 19.76 +0.93 16.29 19.62 178K 160K 17.92
Current.
VRNT 03/15 Cup hdl 30 -0.14 27.88 33.45 127K 200K 27.72
Current.
WAT 03/20 Cup hdl 40.69 +1.19 40 46.12 818K 850K 39.08
Entered today.
WEBX 02/25 Test 18 30.04 +1.26 27.27 31.35 1.3M 1M 27.38
Current.
WIND 03/13 Test BO 11.01 +0.31 10.72 12.88 971K 850K 9.97
Buy Not Issued.
WMAR 03/23 Test 50 31.31 +0.32 30.45 35 227K 295K 30.12
Buy Not Issued.
WSTM 03/08 Cup hdl 2.87 +0.23 2.78 3.65 1.2M 234K 2.59
Entered today.
Downside Plays
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
AZO 03/10 Put 85.87 +0.42 84 81.28 849K 1.1M 83.66
Current.
CAT 02/28 Put 80 +0.52 75.54 72.48 3M 3M 74.25
MOLX 03/20 Put 30.52 +0.2 29.48 27.38 410K 750K 30.38
Current.
PPP 03/29 Put 44.88 +0.88 43.75 41 206K 500K 44.68
Buy Not Hit.
TECD 03/22 Put 41.08 -0.05 38.45 36.05 415K 550K 39.25
Current.
TXT 03/15 Put 53.26 -0.4 51.7 48.65 817K 800K 53.36
Current.
UTX 03/16 Put 85.75 -0.1 87.84 84 2.7M 3M 86.72
Good Investing!
Jon L. Johnson and your Technical Traders Report Team
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 in 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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us stock market
stock strategy
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