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Weekend Newsletter for
March 23, 2008
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
Starts with a 'V', ends with 'E', and describes the stock market last week (and it is not 'vile').
- Stocks rebound on some massive expiration volume, short covering, and the continued strength in the dollar.
- Dollar continues to strengthen as currency market agrees with McTeer that the Fed is finding the right approach.
- Is this the good volatility or the bad volatility?
- Friday was too skewed by externalities to tell the story. That remains for this week, but the market is trying to hold the January lows.
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Market Summary (continued)
The market showed as many swings as a good March Madness basketball game last week, and they were not your modest half percent jobbers but 2% to 4% jaunts. They were not one-way trips either as the upside and the downside both got their licks in.
Monday there was a whiff of implosion in the air. After selling off to end the prior week, they started lower and went screaming down toward the January lows after the BSC 'deal' ended with no more BSC and a measly $2 takeout price and a weekend emergency cut of the Fed's discount rate. This followed the Fed pushing its Taffy level to $200B and opening the window to brokers. Shocking was the word most heard in response to the BSC deal. As for the other measures, well, they were viewed as actually really positive and very creative. Nonetheless NASDAQ undercut the January low for the second time, and SP500 joined it with its own undercut.
Just when the bottom looked ready to fall out, however, a reversal. Tuesday the market continued the reversal momentum, and then when the Fed announced a 75BP cut in addition to the other measures, well, the market just took off. The indices logged 4+% gains. Down big, up big. But that was not the end. Wednesday you expected a bit of backfilling and that was the situation until it accelerated late and looked more like grave digging than backfilling as the indices gave back three-quarters of the Tuesday updraft. Just when it looked as if the market was going back to the drawing board Thursday saw another upside move, basically recapturing what Wednesday gave up. That move was skewed by expiration and short-covering ahead of a 3-day weekend, but sum total the indices finished out the week holding that super Tuesday move.
That put the market up for the week but it was an airsick inducing ride to get there. Thursday by comparison was rather tame. Stocks were lower early after a stronger than expected jobless claims report (378K versus 360K expected and 356K the prior week) saw continuing claims rise to a 2.5 year high, but futures worked their way back as the dollar kept firming, INTC boosted its dividend, and, well, nothing bad was announced. Even a weak Philly Fed at noon (-9.3 versus -10 expected and -22 prior) held a silver lining to the market as it was not as bad as anticipated. Hey, why not rally?
Read "The Daily" Entire Weekend Summary
Here's a trade from "The Daily" and insights into our trading strategy:
Company Profile
EARNINGS: Announced 3-12-08
STATUS: Cup. AIRM surged higher on earnings just over a week back, the move taking it off the bottom of its 18 week base. A small double bottom formed to end February and start March, setting up the bounce. It rallied to the 90 day MA (47.19) Tuesday through Thursday, stalling there to end the week. May take another few sessions to complete the test and rest after that move, then we look for it to resume its move higher up toward that November high at 58. Very strong earnings and sales growth. After a short breather it will be in great position to rip off some chunks of upside real estate.
Volume: 300.653K Avg Volume: 177.277K
BUY POINT: $47.31 Volume=300K Target=$56.95 Stop=$45.05
POSITION: UDU GI - July $45c (65 delta, 59 OI) &/or Stock
Learn more about "The Daily" with Stock Picks! - Issued 5 Times Per Week
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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).
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: 4-2-08
STATUS: Double bottom w/handle. RIMM has formed a 12 week base within a larger 19 week pattern. It gapped higher in February and has since come back to test, now working laterally along the 50 day EMA (100.47) in a narrow trading range as it prepares for the next break higher. Really like how it has set up and we suspect this is going to be one of the leaders if the market is able to hold the break higher and sustain the recent bottoming process.
Volume: 18.429M Avg Volume: 24.921M
BUY POINT: $106.78 Volume=32M Target=$122.95 Stop=$100.32
POSITION: RUL FL - June $105c (54 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: 2-27-08
STATUS: Cup w/handle. Breaking higher out of a 13 week base. Solid run from mid-2007 through December, and this base is the consolidation of that move and the foundation for the next run. Strong volume Friday, but it was expiration; need to see more solid trade as LKQX continues its run higher. Very solid and very strong earnings and sales growth rates.
Volume: 3.383M Avg Volume: 1.273M
BUY POINT: $23.52 Volume=1.9M Target=$28.31 Stop=$21.94
POSITION: AUG EX - May $22.50c (62 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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