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1) MARKET SUMMARY
Solid Friday sets stocks up once again for a further rally attempt.
- Another solid Friday as techs move past 50 day EMA, SOX blasts through 200 day SMA.
- Greenspan heads to Congress to discuss monetary policy and, oh yes, deficits, taxes, and entitlements as the parties jockey for political advantage.
- Economic torrent ahead after a quiet week, but oil and rates are still the key.
- SP500 makes the breakout as money is clearly returning to stocks.
- Significant crash or steady gains; pundits at odds over 2005.
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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: $51.16
STATUS: Test 18 day EMA. Nice run to end December and early January, and now testing the move, coming back to the 18 day EMA (51.14) this past week. Nice tight doji Friday at the 18 day, holding easily above the early January high. It has been a long run and it will need a rest at some point, but we like the way it has set up with this very neat and orderly pullback. Want to see it hold and then rebound back over the 10 day EMA (51.98) to move in.
Volume: 2.186M Avg Volume: 1.517M
BUY POINT: $52.02 Volume=2.3M Target=$57 Stop=$51.05
POSITION: AQU EJ - May $50c (66 delta).
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