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Weekend Newsletter for
August 12, 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
Fed does some carpentry work, helps build a floor in stocks for the week.
- Market was heading for another plunge before the Fed provides a floor for the week. Stocks end mixed.
- Fed officially comes to the rescue, doing what it does everyday but on a bigger scale.
- Fed action versus dollar survival: another view.
- Lots of stocks in good position to bounce, but is it just a siren song?
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Market Summary (continued)
Stocks were melting again early Friday morning on more credit worries something we noted in the morning alert that was not necessarily a bad thing as the market needs to get this out of its system, and one way to do that is to get rid of all the sellers such as the hedge funds liquidating positions to prepare for August 15 redemption demands. Futures were a long way down when the Federal Reserve announced it was purchasing $19B of mortgage backed securities. Now there was only $3.9B offered, the usual amount on any given Friday, but the Fed wanted $19B to buy. And it only wanted mortgage backed securities as opposed to Treasuries. It also said it was going to stand at the ready to make sure there was sufficient liquidity for the financial markets to function in an orderly manner.
That stopped the bleeding, or at least it slowed the flow. Stocks started very weak and headed lower, reaching toward the prior August lows, and in the case of DJ30, undercutting it. Still trouble in the financial markets because banks were still not lending back and forth, unable to value each others' portfolios and therefore hesitant to lend. So the Fed came in with another $16B, again wanting mortgage backed, triple A securities. The Fed was buying because it wanted to loosen the market and drop the rate banks were charging each other down to the Fed Funds rate (5.25%) or lower. The banks had to have incentive to loosen up and help out.
Stocks started to recover. Gold, the dollar, stocks, foreign markets, basically everything, was down in the morning and that was troubling. You would expect gold to rise as other assets fell in fear. There was some real nervousness early on and thus the Fed's second step. Stocks rebounded into lunch with the Dow actually turning positive. The sellers returned and sent stocks lower once more. The Fed stepped in a third time with $3B. Finally that seemed to do the trick. In the last hour of trade the rates between banks fell to the Fed Funds rate and the market loosened. Stocks rebounded, closing off their session highs but also well off their lows, indeed turning mixed around the flat line.
Read "The Daily" Entire Weekend Summary
Here's a trade from "The Daily" and insights into our trading strategy:
Company Profile
EARNINGS: 8/1/07
STATUS: Test 10 day EMA. OII surged higher when a lot of energy stocks struggled, breaking higher from a 2 week lateral consolidation to start August. Surged to 70 intraday Wednesday and then in the subsequent market selling it tested its break higher, using the market weakness to take a breather. Like the strength, like the nice pullback to the 10 day EMA and then the jump off that level Friday. Looking to move in and catch OII as it continues its run higher.
Volume: 1.959M Avg Volume: 930.578K
BUY POINT: $65.65 Volume=15M Target=$78.94 Stop=$62.22
POSITION: OII AM - Jan. $65c (59 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 8-1-07
STATUS: Test breakout. Good week for SSYS as it broke higher from an 8 week base and continued higher Thursday when much of the market was weak. Friday it finally gave in to some selling, tapping the 10 day EMA on the intraday low and then bouncing back to recoup some lost ground. Nice doji on the pullback, and with the good earnings and the split we are looking for SSYS to rebound and continue its breakout move. Great strength in a weak market and in a good sector for this market as well.
Volume: 261.937K Avg Volume: 179.278K
BUY POINT: $50.32 Volume=280K Target=$58.75 Stop=$48.11
POSITION: QQG LJ - Dec. $50c (56 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 7-24-07
STATUS: Test 50 day EMA. AMZN is enjoying a resurgence though nothing like the $500 price back in the late 1990's. No, this is steady, sustained growth as the earnings demonstrated. AMZN gapped higher on the news, clearing a 10 week ascending base with a big gap higher on the earnings news. It has come back in the selling to test and fill the gap, holding at the 50 day EMA (72.33) as it has done on its other tests. Thus we are looking for a bounce higher from here to give us a buy point as AMZN renews its break higher.
Volume: 9.068M Avg Volume: 12.397M
BUY POINT: $77.18 Volume=15M Target=$88.75 Stop=$72.11
POSITION: ZQN JO - Oct. $75c (55 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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