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us stock market, trend trading stock
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INVESTMENT HOUSE.COMTM |
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Weekend Newsletter for
April 29, 2007
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
Fireworks mostly over by Friday as market coasts into the weekend.
- GDP a downer but market hangs onto gains to close an important week.
- 2007 output starts softer as housing, trade deficit shave growth rate, offsetting solid consumer & business spending.
- Michigan sentiment tops expectations but continues trend lower.
- Earnings trend is solidly higher through the busiest week.
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Market Summary (continued)
Once more there was some adversity, some intrigue to try and upset the market. MSFT beat on earnings and was up, but there were a number of other techs (mainly chips) that missed, acting as a counterbalance. As for the economic side of the coin, GDP was rather crappy at 1.3%, the lowest growth rate since Q1 2003. After four years of solid growth the economy is taking a breather, thanks in part to the Fed, thanks in part to its own success.
After the solid surge midweek that continued the nice April advance this kind of news was enough to put most investors on the sidelines. It simply was not the kind of news to get investors running after stocks with their checkbooks out again. Quite frankly it would have been hard to top the excitement from earnings. Perhaps if the inflation component was weaker instead of stronger . . . but that is a moot point as inflation continued to skulk around in the shadows.
With that backdrop stocks still managed to open positive, and added some gain on the stronger than expected Michigan sentiment report (though still steadily lower the past several months). Once more, however, the midmorning dips hit, and the indices were negative as the first hour ended. Once more, stocks bottomed and started a steady, albeit somewhat shakier, recovery well into the afternoon. A last hour round of selling pushed the indices negative, and a late bounce could only turn NASDAQ and DJ30 modestly positive.
Read "The Daily" Entire Weekend Summary
Here's a trade from "The Daily" and insights into our trading strategy:
Company Profile
We have made a lot of money off the energy plays. They have been steady performers of late after going through a basing process to consolidate some of the prior gains. Refiners such as VLO and WNR made for a lot of college tuitions. The sector pulled back two weeks ago in a routine test of the strong March and early April run. We rode many up on that move, took some gain, and waited for the rebound to move back in.
OIH is the oil and gas services ETF. We like to play options on it as well as some individual stocks within the sector. WE saw it test back to near support at the 18 day EMA on 4-19-07, then show a doji at that level on 4-20. We put it on the report that weekend. Monday volume surged as OIH moved higher. We moved in with some July $155 strike call options at $7.40. The volume along with the doji told us OIH was going to make its move. It was flat the next session and then gapped higher Wednesday, rallying $4.92. It added another point the next session, then $1.95 on Friday. With that strong move for the week our options had risen to $11.50. Given the run we took part of the 55% gain or $410 per contract. Not bad for a week's work.
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).
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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
ROCM has made us a lot of money since we bought into it on 3-12-07 at $17.45. We moved in as it broke out of a short double bottom with handle that telegraphed a move was coming. It certainly did, rallying straight up the 10 day EMA to $29.76 on Thursday. With earnings out the following week, we noted in our Thursday report that ROCM was likely going to try to sell soon and moved up the stop to be ready. It struggled to start Friday and we sold out the rest of our position at $27.10, banking a 55% gain. The stock plunged almost 7 points on the session. We are not saying we expected that kind of blood letting, but it pays to know how stocks move through their lifecycles, both short and longer term. Our experience told us ROCM was at the end of its run and we were ready to lock in the gains. In this market driven by hedge funds, the old buy and hold methodology does not work well. You have to know your stocks and know the signposts that indicate there could be trouble or big gains ahead.
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
EARNINGS: 5-16-07
STATUS: Double bottom w/handle. CTRP got some volume Thursday and Friday on the BIDU earnings results, and started to make the breakout Friday from its 12 week base. This base formed after the November breakout that took CTRP out of its prior 18 week base. CTRP grew about 20 points on that breakout run. We are looking for CTRP to take another trip, building a new mountain of gains.
Volume: 460.504K Avg Volume: 424.108K
BUY POINT: $71.22 Volume=550K Target=$85.45 Stop=$68.11
POSITION: QCT IN - Sept. $70c (60 delta) &/or Stock
Learn more about our Technical Traders Report - Issued 5 Times Per Week |
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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
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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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