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us stock market, trend trading stock
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INVESTMENT HOUSE.COMTM |
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Informing Investors Around The World |
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Weekend Newsletter for
October 8, 2006
Table Of Contents 1) MARKET SUMMARY 2) STOCK 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
Market closes the week once more with a loss, but also after another good upside move.
- Jobs report gives market reason for a low volume pause ahead of weekend.
- Employment report starting to move in different directions, indicating some change afoot.
- Leading inflation indicators, as opposed to the Fed's, hit a 14 month low.
- Bonds may have overshot on economic weakness, but inversion not going quietly.
- SOX finally ready to join NASDAQ breakout.
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Market Summary (continued)
The jobs report almost gave the Fed a reason to start thinking about
cutting rates. Almost. Non-farm jobs came in at the lowest read since
the 2005 Gulf storms (51K versus 120K expected). This lagging indicator
started showing some cracks, but when dealing with an institution steeped
in tradition such as the Fed (and unfortunately the tradition is to
overkill on economic slowing), it takes overwhelming evidence to overcome
bad habits. Thus the upward revision in August jobs, the continuing rise
in hourly earnings (another lagging indicator), and the drop in the
unemployment rate more than offset slowdown fears engendered by a
one-month drop in non-farm payrolls.
With that mix the market was weaker from the start, viewing the report as
one of the least savory of potential outcomes as it indicated there could
be slowing brewing even in this lagging indicator but still not enough to
get the Fed off the notion that inflation remains the biggest threat, a
position reiterated by Bernanke's minions this past week. Thus a weak
start in stocks and plenty of early weakness as the leaders in the recent
move higher gave back some of the further gains logged on the big
Wednesday break higher.
It was not hard selling. We noted in the pre-market alert that Europe was
lower but not tanking, and that was likely the result in the US markets.
Though down at the open stocks rebounded midmorning, failed, but then
rebounded over lunch to the last hour, just about turning positive. They
could not complete the move, however, fading in the last hour to close
with some modest losses. They still managed to post solid gains for the
week even with the Friday fade, very similar to the action the prior week.
Read "The Daily" Entire Weekend Summary
Here's a trade from "The Daily" and insights into our trading strategy:
Company Profile
STATUS: Flying plateau. AMT broke higher in early September but could not extend the move out of its four month cup with handle base. It worked laterally the past 4 weeks in a flying plateau over the 18 day EMA (36.19). It tried to continue the breakout on Friday, gapping higher on above average volume, but it could only close flat. Nicely positioned to continue the break this week to a new 6 year high.
Volume: 3.246M Avg Volume: 2.276M
BUY POINT: $37.18 Volume=3.4M Target=$42.95 Stop=$35.97
POSITION: AMT AG - Jan. $35c (64 delta) &/or Stock
Learn more about "The Daily" with Stock Picks! - Issued 5 Times Per Week
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* * * SCOTTRADE * * *
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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 and our current analysis.
Company Profile
STATUS: Breakout test. VSEA broke out from a 7 month double bottom with
handle base in early September, then has worked laterally in a 4 week
trading range from 36 to 38. Last week it bounced up to the top of the
range and stalled, but Friday it tested the 10 day EMA (37.13) on the low
and recovered. Might make a higher low here, and that typically presages
the next break higher in these trading ranges. Ready for a move through
the top of the range on a good shot of volume.
Volume: 815.222K Avg Volume: 1.003M
BUY POINT: $38.11 Volume=1.5M Target=$43.95 Stop=$36.48
POSITION: UES BG - Feb. $35c (65 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
We love playing exchanges, and there are some exciting new ones that are offering great opportunities. One that we like to play is ICE, the energy exchange that IPO'd in November 2005. It set up a nice base starting in May following a good run to that point. It formed a 19 week cup with handle pattern and when it started to move off the bottom of the handle that held near support at the 18 day EMA, we put it on the report (9-30-06).
That following Monday ICE opened lower, testing the prior move but then started back up intraday. We moved into some December $75 call options at $7.50 as ICE rebounded. It closed that session lower, but jumped $2.76 the next day (10-3). Wednesday it added another $4.04. Thursday another $2.81. Our initial target was $86.50, but we had three good moves under the belt with the weekend and the jobs report coming up Friday. With that in mind we took some interim gain, selling some of our option position for $13.20, a nice 76% gain in four sessions. We really like taking interim gains when we get good surges, particularly with options. They are limited in time so when you get a strong move, bank some gain, raise your stop to your buy point, and then let the play work for you without any pressure. With a stock such as ICE that is active and makes strong moves, this is a great strategy. We look for stocks across the market that give us this same kind of action, and with the new issues in coming to market, there are many to use to make some great profits.
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 |
PREMIUM SERVICES
IH Alerts: InvestmentHouse.com's Best of The Best Plays!
Stock Split Report: Forbes.com Best of the Web
Covered Calls: 8 Tables with nightly updates - energize your portfolio!
Tech Traders: Breakouts, wedges, etc...focusing on stocks ready to move now!
The Daily: "The Daily" is a must read for all investors!
MARKETPLACE Investor's Business Daily: Complimentary subscription delivered to your doorstep!
Block All Pop-Ups! Complimentary tool from Amazon.com.
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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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