world stock market, us stock market

- Nice rebound to end the week with low overall volume, but strong volume in key sectors.
- Core PPI is in the sweet spot and looking for the CPI to get earnest about following it.
- Retail sales weaker just as everyone expected but no one cares to mention.
- The market is still extended in many respects with some iffy price/volume action of late, but the prior leaders are starting to move up again and with solid volume.

Here's a trade from "The Daily" and insights into our trading strategy:

Chart by StockCharts.com

Company Profile
With all of the liquidity flowing around the world and into world markets you see stocks of all different stripes moving. Metals, energy, industrials and the like get a lot of press, but you can find high quality, lower priced stocks that can make you great money without having to run 25 points. We are always screening for those stocks, and in April IPAR was on our screens again.

IPAR formed a nice 5 month base, setting up a strong break higher. It moved higher, then worked laterally in a nice, tight range, the quiet before the storm. It made the break higher with an explosive move on its earnings report. We wanted to see how the earnings came out, so we held off until IPAR made the test of its move. Many quality stocks are breaking higher on earnings, but many are not as well. If a stock does make the upside break it will come back and give us a buy point when it tests. Often after that initial test a stock will then start a serious run higher, posting much larger gains than on the breakout. Further, when a stock starts to move back up on rising volume after that test it shows us that the big money still wants to own the stock and is willing to pay more for it. Very bullish.

That is what we were looking for from IPAR, and sure enough, it came back to near support at the 10 day EMA. On 5-2-07 it showed a nice tight doji on the candlestick chart right at the 10 day EMA. We put it on the report that night. The next session it surged off of that level on rising volume, and that was our signal to move in. We bought the stock at $23.68 as it ran higher. It did not hold all of the move that session, but the volume was strong and the post-test run was starting. The next session it paused on low, below average volume, then jumped back up on volume the next session, rising $0.42. The following session it took another rest, and on 5-10 it showed us the next move we were looking for. It gapped higher and surged to $29 on the high. Knowing this stock is a bit volatile intraday, and since it hit our initial target on the move, when it started coming back off of that intraday high we sold part of our position for $28.50, banking a solid 20.3% on the sixth day of the trade. We are letting part of the position continue to work higher for us; a quick 20% move is often a precursor to an even bigger run ahead.

IPAR? Who would have thought? As is often the case in the market, you have to put aside preconceived notions about what is a good stock and what is not and look at what the action of the stock is showing you. There are much too many times that we have ignored a good solid pattern because we just did not think it could move only to see it blast higher. Put your emotions and notions aside and go with what the market is showing and suddenly investing takes on a whole new light.

Learn more about "The Daily" with Stock Picks! - Issued 5 Times Per Week

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 and our current analysis.

Chart by StockCharts.com

Company Profile
EARNINGS: Announced 4-24-07
STATUS: Test 18 day EMA. EPIQ broke higher from a 13 month cup with handle in late April, but it did not get very far before it started to test. It worked laterally the past two weeks, holding the 18 day EMA (22.90) on the lows. Friday volume blasted higher as EPIQ cleared the highs in the lateral breakout consolidation. Now it looks ready to make the run higher.
Volume: 319.718K Avg Volume: 165.192K
BUY POINT: $24.15 Volume=175K Target=$27.95 Stop=$22.87
POSITION: FQU GX - July $22.50c (75 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.