|
|
us stock market, trend trading stock
|
INVESTMENT HOUSE.COMTM |
|
Informing Investors Around The World |
| Read In All 50 States And Over 100 Countries
|
|
Weekend Newsletter for
October 22, 2006
Table Of Contents 1) MARKET SUMMARY 2) STOCK SPLIT PLAY 3) TECHNICAL PLAY 4) COVERED CALL PLAY |
|
| | Stock Split Notices Investing Q & As Glossary |
|
1) MARKET SUMMARY
> >From "The Daily" at InvestmentHouse.com
Some big individual moves Friday, but the market closes flat to end the week.
- Stocks close mixed on a rather quiet expiration, still trying to consolidate gains in place.
- Bonds are still not convinced the economy will continue its rise.
- Market weathering earnings as NASDAQ & SP600 test and try to set up for next move higher.
- Subscriber Questions.
|
|
 |
Market Summary (continued)
GOOG posted some impressive earnings while CAT missed and provided disappointing guidance regarding the housing market and thus CAT's 2007. GOOG up; way up. CAT down; way down. There were some other similar earnings stories, but for the most part earnings impacted the specific stock reporting (though CAT's miss was so impressive it bled to other stocks in its sector) while the rest of the market pretty much sat still to close out the week. Indeed, the indices closed mixed and basically on the flat line outside of the small and mid-caps. Even those losses in the smaller caps were well under 1%.
Oil was sharply lower despite OPEC officially voting to reduce production by 1.2M bbl/day. It closed at an 11-month low at $56.82 (-1.68), but that was the November contract that expired Friday. The December contract was trading over $59/bbl and thus we could see oil at $59 to $60 early this week, and the market seemed to see through the drop in the November contract as it did not derive much momentum from the sharp decline.
The result was a market that was overall stuck in time and in place, waiting on the next week to come after spending this week consolidating some of the prior gains. NASDAQ and SP600 put in some nice work, fading modestly after the good breaks higher two weeks back. DJ30 just continued to work higher, and SP500 closed higher for the week as well, though it moved laterally on the week, consolidating somewhat itself. Indeed, the action was not bad at all given earnings season kicked into high gear and the market had run higher ahead of the season. Many times when the market moves up before earnings it falls as the reports hit. This time, despite the pre-earnings run, stocks are resisting the urge to sell off. Bulls are running pretty high, but so are bears. The combination of skepticism and continued money rotation helped hold the market gains.
Read "The Daily" Entire Weekend Summary
Here's a trade from "The Daily" and insights into our trading strategy:
Company Profile
We are always looking for opportunity to move into leaders. It is never a one-time buy with strong stocks as they give you many entry points through the life of their moves. NVEC made us some great money back in August as it broke out and ran higher, and when the stock came back to test the 50 day EMA to start October we were watching and waiting for a chance to move in as it rebounded off of this key support level. On 10-13-04 it jumped off the 50 day on strong volume and we put the play on the report.
The next Monday NVEC was off again, and we moved in at $31.55. It surged up to $34.84 that session but closed at $32.99. A solid start to the play. The next session NVEC took a breather, but volume was well off the Monday pace, falling below average. Wednesday it recovered some on better, above average volume, showing the move was still alive. It reported earnings that evening, and they tripled. The next session NVEC didn't triple, but it did gap up and ran to $40 on the high before fading some. We watched the action and sold some shares at $39.85 when we saw the stock start to show some signs it was tiring intraday. That put some nice 26% gain in our pocket in just four sessions, and it still is ready to move higher and make us more money.
You might say it was luck that it made that move, but we like to play leading stocks that are growing their sales and earnings and are also in good patterns. They tend to give us several opportunities to make money, and NVEC has done that for us twice in the past three months, and it is likely to do it again. We will be looking for that next opportunity to buy into this strong stock. You just have to be patient and let the play come to you, and when you see it move in.
Learn more about "The Daily" with Stock Picks! - Issued 5 Times Per Week
|
* * * SCOTTRADE * * *
| |
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
EARNINGS: 11-6-06
STATUS: Test 18 day EMA. Reached way down Friday, tapping the September range on the low and then rebounding to a positive close on strong volume. It is ready to make the move. To recap: CXW has made us money before, and it was the subject of a lot of hype the past month. Now, however, it has set up for the next move higher after gapping up two weeks back, coming back to fill the gap while holding the 18 day EMA. Lower volume on the test shows few sellers. Just waiting for the stock to resume the move back up on a strong shot of volume.
Volume: 1.013M Avg Volume: 556.723K
BUY POINT: $46.48 Volume=600K Target=$54.85 Stop=$44.78
POSITION: CGY CX - Mar. $43.375c (67 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. |
|
|
3) TECHNICAL PLAY Company Profile
EARNINGS: 10-26-06
STATUS: Test 50 day EMA. Made us some great money on its last move, and when it started to struggle at the 18 day EMA we closed it to let it test. It looks to have done that with a plunge to the 50 day EMA (45.16) Wednesday, and then a nice hold at that level, tapping the 50 day SMA on the Friday low and rebounding to close flat as volume jumped above average. A strong breakout and run in September that needed a rest, and we are looking for a strong price and volume rebound from here to move into new positions and catch AKAM as it makes its next run.
Volume: 6.429M Avg Volume: 4.926M
BUY POINT: $46.72 Volume=7M Target=$55.95 Stop=$44.58
POSITION: UMU BI - Feb. $45c (62 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 |
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.
|
|
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.
|
|
|
| |
