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1) MARKET SUMMARY
Stocks take best case scenario from so-so news, rally to the close.
- Stocks ignore disappointing jobs report, latch onto Greenspan comments and rally for second consecutive up week.
- Non-farm jobs limp along as unemployment rate falls, earnings rise.
- Greenspan backs off trade gap/interest rate threat, stocks love it.
- Bonds rally as Greenspan softens stance, but they were rallying (and yields were falling) before Greenspan spoke.
- NASDAQ breaks through the 50 day EMA but it is SP600, SP500 and that stronger NYSE volume that does the heavy lifting as market shakes off January selling
- Now we see how much staying power investors have.
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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.
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Company Profile
After Hours: $40.66
STATUS: Test 50 day EMA. No change from Thursday. To recap: AMMD is engaged in a long uptrend that has made a series of bounces up off the 50 day EMA since breaking out in January 2004. It surged well in December and then started the current correction, a 6 week pullback to test the 50 day (39.16), basically forming a small cup in the process. Volume jumped back above average Wednesday as AMMD jumped off the 50 day. The stock was flat to finish the week. Strong money flow and a good move off of important support at the 50 day. Looking for the volume to return as it moves back up and through the buy point to enter on this run.
Volume: 178.372K Avg Volume: 292.409K
BUY POINT: $41.44 Volume=325K Target=$46.55 Stop=$39.37
POSITION: FGU EH - May $40c (61 delta) &/or Stock.
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