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Weekend Newsletter for
August 20, 2006
Table Of Contents 1) MARKET SUMMARY 2) POST-SPLIT PLAY 3) TECHNICAL PLAY 4) COVERED CALL PLAY |
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| | Stock Split Notices Investing Q & As Glossary |
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1) MARKET SUMMARY
> >From "The Daily" at InvestmentHouse.com
Momentum kicks in and drives stocks to a positive close to round out the week.
- Market closes out the week with gains in a tame expiration Friday.
- Sentiment takes a tumble on gas prices, Middle East.
- Another week of mixed economic data while ECRI leading indicators hit a 2 year low.
- A key, 'interesting' week: will the big money return to buy?
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Market Summary (continued)
Stocks were a bit weaker Thursday and Friday they started down. Futures, however, were improving into the open and looked to be ready to turn up once the action started. Not quite. Stocks instead turned back down at the open and thumped lower. NASDAQ lost 20 points as the technology bid dried up. Looked as if the old expiration week volatility was kicking in; strong moves up on some short covering midweek and now some giveback as positions were shuffled some more.
A half hour into the session NASDAQ bottomed. That started a solid, steady rebound that held on into the close. Seems nothing could keep stocks down last week even when the leading stocks for the week (techs) lagged the rest of the market Friday. Indeed, when tech lagged energy stepped in as we thought it might. With the bullish tape last week, whether short covering, long buying, or both, the market had the momentum to finish out an up week with a come from behind gain. The fact that the energy stocks stepped in when tech slowed (semiconductors were even down on the day) a bit is even a sign of some almost bullish rotation.
Technically there was no real change in the market position. Sure the indices closed higher (except SOX), but all they did was push marginally higher with no significant moves; those were made earlier in the week when SP500 broke out and NASDAQ broke its downtrend. Friday SP500 pushed a bit further into the next range of resistance while NASDAQ didn't come close to challenging the July high. Volume fell way off pace as well, not nearly enough to push the indices toward resistance, and certainly not enough to get them through. Of course we did not expect much of a move given the strong gains earlier in the week shot a lot of the ammunition. Seems the market got all of the volume out of its system early on, something much more common over the past year.
Read "The Daily" Entire Weekend Summary
Here's a trade from "The Daily" and insights into our trading strategy:
Company Profile
Earnings: 7-31-06
STATUS: Test breakout. A new issue in June, CTCM broke sharply higher to start August, moving out of a short four-week base. Strong surge on good volume and now testing that move, coming back to the 10 day EMA (22.30) on very low trade, showing few sellers. Nice test and looking for the bounce on rising trade to enter.
Volume: 72.907K Avg Volume: 473.798K
BUY POINT: $22.67 Volume=550K Target=$27.25 Stop=$22.18
POSITION: - Stock (no option chain)
Learn more about "The Daily" with Stock Picks! - Issued 5 Times Per Week
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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).
For post-splits, we can play them as we would pre-splits (very short term), but we prefer to stretch our horizons, playing the trend. When playing options, we look further out, 2 or more months at least. We let the trend carry us along if there is one, but we will also take profits if the technical pattern degenerates, e.g., breaks a trendline. The main difference between post-splits and pre-splits plays is that we really have to like the pattern. Pre-splits can run right before their splits even with poor technical indicators. For post-splits, we are looking at the stocks from more of a longer term "would I buy this stock at this juncture?" position. Now there are times when a hot stock splits and investors pile in to get in while the stock is 'cheaper.' We play those, but with more of a short-term, pre-splits mentality in that we will be ready to get out fast if the momentum fades.
Remember, everything we do has to pass muster with the market that day ... don't fight the market on these plays.
Listen to Stock Split Report Editor Jon Johnson's
stock split interview on CNBC-TV [ Broadband | Dial-up ]
Here's a post-split play to watch and our current analysis.
Company Profile
STATUS: Test 50 day EMA. CAM sold in the first half of August with rest of energy but volume was low overall and it found support at the 50 day EMA (47.81) the past week, bouncing along that level, gapping higher and posting a nice price gain Friday. It is making a higher low here in its 15 week double bottom and set up beautifully to breakout in an energy rebound this week. Cannot think of anything snappy to say about Cameron; just looks great.
Volume: 1.171M Avg Volume: 2.091M
BUY POINT: $49.45 Volume=2.4M Target=$56.50 Stop=$47.65
POSITION: CAM KJ - Nov. $50c (51 delta) &/or Stock
Learn more about our Stock Split Report and how we have made gains of 321% with our powerful stock split plays!
Details Here. |
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3) TECHNICAL PLAY Company Profile
After Hours: $32.76
STATUS: Test 200 day SMA. HYSL formed up a 7.5 month cup with handle, testing back to mid-August and then breaking higher last week, clearing the 200 day SMA (32.17) as it did. Rallied to 33 and then started to stall to end the week as volume remained low. Looking for HYSL to complete the test of the 200 day this week and then give us another break higher to take it toward the high in the pattern from back in January at 38. Money flow is moving higher ahead of the price, and after the test we are looking for HYSL to follow it.
Volume: 445.821K Avg Volume: 956.815K
BUY POINT: $33.31 Volume=1.1M Target=$38.50 Stop=$32.00
POSITION: WQE KF - Nov. $30c (68 delta) &/or Stock
Learn more about our Technical Traders Report - Issued 5 Times Per Week | |
4) COVERED CALL PLAY Company Profile
Learn more about our Covered Call Tables - 8 Tables Updated 5 Times Per Week |
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The foregoing is commentary for informational purposes only. All statements and expressions are the opinions of Online Investment Services, LP., or Split Ventures, Ltd. This information is 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 the related web site has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. The security portfolios of writers for this issue may, in some instances, include securities mentioned herein and on the related 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. No one associated herewith receives compensation in any manner from any of the companies that are discussed in this newsletter or on the related websites.
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