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INVESTMENT HOUSE.COMTM |
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Weekend Newsletter for
July 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
Stocks try a weak rebound, get dumped late ahead of an uncertain weekend.
- No one wanted to hold stocks ahead of the weekend.
- Some serious issues: Volatility, Frequency of the corrections, and key sector struggles (Financials, cyclicals, and transports struggling together).
- Rising volatility at market peaks is never a good sign.
- GDP solid, inflation low, consumer confident, but credit squeezes the financial markets.
- The key test for this correction is after the relief bounce to come runs its course.
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Market Summary (continued)
Futures were lower but the strong GDP coupled with low core inflation gave the pre-market a bracer, turning stocks higher on the open. Almost immediately, however, the market was sold as sellers used the bounce to move in. That rebound enjoyed a half-life of about 30 minutes. Michigan sentiment was released and it blew past the June reading, but it did not help the market. Another bounce over lunch into the last hour, another run by sellers sent the indices negative as NASDAQ peeled off 45 points from its early high, SP500 reversed 30 points, DJ30 260 points into the close.
Credit crunch fear piled on top of mortgage fears on the week, and that ignited the selling. The market held the sellers at bay even with the mortgage worries as it waited for earnings to come out better than expected. When that did not happen there was nothing to hold back the other problems from bubbling up. When the credit issues hit Wednesday and Thursday it was too much to hold back. Earnings finally came around (AMZN, AAPL, WFR, BIDU, CVX, etc.) but it was too late. The contagion fever infected the market and when that emotion laden virus hits, as with its human infecting cousins, it simply has to run its course.
Read "The Daily" Entire Weekend Summary
Here's a trade from "The Daily" and insights into our trading strategy:
Company Profile
EARNINGS: 8/19/2007
STATUS: Test 50 day EMA. Nice winner for us on its last run as it broke out in late May from a nice 9 week cup with handle base. Solid run through mid-July and then another break higher as the market broke out. As we all saw last week, that market breakout failed, and BCSI came back with the market, testing its 50 day EMA (47.89) on the Thursday low before rebounding. Friday it faded some, but on low volume so it was just drifting with the market trend that day. Bigger picture: nice base, nice breakout and run up the 10 day EMA (52.20), and then a typical deeper test to the 50 day EMA, using the overall market selling to make the pullback. Looking for BCSI to be a leader in the next rebound as it breaks higher. Looking to move in after it clears the 10 day EMA, but if the market sells lower, it tests the 50 day again, and then the market reverses, we will pick it up before then on the rebound.
Volume: 434.649K Avg Volume: 454.981K
BUY POINT: $52.32 Volume=600K Target=$62.95 Stop=$49.89
POSITION: IYU JJ - Oct. $50c (55 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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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.
Listen to Stock Split Report Editor Jon Johnson's
stock split interview on CNBC-TV [ Broadband | Dial-up ]
Here's a pre-split play and our current analysis.
Company Profile
EARNINGS: Announced 7-18-07
STATUS: Test 18 day EMA. NE used the market selling to test back to near support at the 18 day EMA (101.91), making a nice orderly test after the gap higher on its earnings and split announcement. It has been a heck of a run for NE, but we like how it showed strength during the selling and how it has set up at the 18 day EMA with a split in the future. That puts NE in good position to continue higher at least part of the way toward the split and give us a sweet if not noble gain.
Volume: 3.636M Avg Volume: 2.946M
BUY POINT: $103.48 Volume=4M Target=$118.95 Stop=$100.89
POSITION: NE LB - Dec. $100c (70 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 7-26-07
STATUS: Reverse head and shoulders. Another stock that was a nice winner for us in 2006 and then again in early 2007, CELG had become extended and needed a rest. Over the past 10 weeks as the market advanced CELG faded, forming its current cup base with a reverse head and shoulders pattern formed at the bottom. You often see that pattern form at the bottom of a cup; back when the bear market was ending we saw TSCO doing the same thing as everyone said the market was heading back down. We jumped on TSCO and caught a great gain on an early bull market leader. But I digress. After selling down to the 200 day SMA two weeks back, CELG bounced, then got a nice break higher Thursday on a strong earnings report. It continued higher Friday, gapping again, but after peaking at 62.35 it faded to post a smaller gain. As the market faded late, no wonder. We are looking for a bit more fade to start the week, say down to support near 60ish. Then on a bounce back up to continue the breakout we move in and look for CELG to provide the drug for some of those sell off blues from last week.
Volume: 6.852M Avg Volume: 4.257M
BUY POINT: $60.88 Volume=5.5M Target=$69.95 Stop=$58.78
POSITION: LQH JL - Oct. $60c (53 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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