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us stock market, trend trading stock
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INVESTMENT HOUSE.COMTM |
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Weekend Newsletter for
July 22, 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
It was a wild session for stocks with a lot of crosscurrents.
- Market gets CAT-scratch fever in addition to expiration.
- Despite the 1+% losses, indices hold near support.
- Leaders were still leading or making nice easy pullbacks.
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Market Summary (continued)
It was a wild session for stocks with a lot of crosscurrents. The primary driver was again earnings as stocks again reversed direction as a result of some key reports. First it was Intel's disappointment that caused some Wednesday selling. Then IBM brought them back with another strong quarter. GOOG rattled NASDAQ, the recent leader, and CAT's miss gave the industrials cat scratch fever on Friday as the indices fell, with all but NASDAQ 100 sporting 1+% losses.
CAT's earnings raised issues about the continued expansion, but most of its issues were in the US where the construction sector is still trying to find itself again after that long boom. The financials reported some very solid earnings (e.g. C, WB, COF), a relief given the worries over sub-prime, but those stocks had a pretty horrid session nonetheless. Interestingly, although it is early, earnings are running +9% and remember the very low warnings rate.
Earnings were not the only issue, however. Expiration Friday raised the volume and exacerbated the move. China's central bank raised interest rates. US interest rates tumbled (4.77% on the 2 year, 4.95% for the 10 year) as the 10 year bond tumbled out of its range. Oil held tough at 75.57, -0.35. With the earnings picture up and down and creating some uncertainty, these other factors were enough to cause some to sell first and ask questions later.
Read "The Daily" Entire Weekend Summary
Here's a trade from "The Daily" and insights into our trading strategy:
Company Profile
EARNINGS: 8-8-07
STATUS: Test breakout. AVT jumped sharply higher Thursday after news it was acquiring another company. The move broke it out of an 11 week flat base consolidating the strong January to April run from the breakout of a long, long base. Big 5 to 1 accumulation in this last base (5 up price weeks on rising volume to 1 down price weeks on rising volume) shows nearly all buying, setting AVT up for the breakout and next run higher. It may consolidate another session or two before continuing the run, but we will be patient and let it resume the move and then we make our move. AVT has some of the best earnings growth rates in the market and its strength shows it.
Volume: 2.281M Avg Volume: 1.93M
BUY POINT: $44.22 Volume=2.9M Target=$51.95 Stop=$41.78
POSITION: AVT KI - Nov. $45c (46 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).
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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
EARNINGS: 8-1-07
STATUS: Double bottom w/handle. DRQ broke higher Thursday after a test of the 90 day SMA intraday Wednesday and then the rebound to the close with the market. Friday it tested; good action forming the handle to its 11 week base. This base formed after the March breakout and run up to a new high at 52. DRQ is consolidating that move and with the strength in the sector the earnings are showing, it is ready to make the next breakout to another new high. Very solid and yet another stock on the report that sports some of the top earnings growth rates in the market.
Volume: 277.2K Avg Volume: 530.322K
BUY POINT: $49.75 Volume=795K Target=$58.95 Stop=$47.55
POSITION: DRQ LJ - Dec. $50c (50 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
EARNINGS: Announced 6-18-07
STATUS: Test breakout. CMED exploded higher in mid-June on its earnings result, gapping it out of a big 17 month base. We were watching it at the time and the gap didn't give us anything to buy into. It has come back to test, however, holding above the 10 day EMA (33.55) on last week's lows. Volume was very low on the fade, showing no sellers, just a few profit takers after the break higher. We are looking for the next break higher on rising trade to enter this strong stock. Another play with some of the best earnings growth rates in the market right now.
Volume: 469.075K Avg Volume: 597.23K
BUY POINT: $35.15 Volume=896K Target=$41.95 Stop=$33.38
POSITION: QCY LG - Dec. $35c (47 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!
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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.
This email was sent to ~~EMAIL~~.
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