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Weekend Newsletter for
May 11, 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
A down week after indices fail to take out next resistance.
- Market logs its first down week in four so the rally must be over, right?
- Trade deficit shrinks. Trade deficit hawks better watch out for getting what they wish for.
- Oil explodes higher, gasoline follows, but oil stocks don't: oil is too far ahead of itself for now.
- Fedex tries the old 'Friday afternoon' warning, and the market is going to feel its pain on Monday.
- Techs are going to have to hold the line.
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Market Summary (continued)
There was not a lot going for the market heading into Friday. Financials were under pressure thanks to AIG and its earnings miss. C added to the financial worries as it is set to cut $400B in assets over the next 3 or 4 years. That is more long range planning than we have heard from many a financial in the past six months, but it didn't seem to help Citi or the rest of the financials. Oil was out of control once more closing at $125.88 and trading at $126 (+2.40) after hours. The run in oil the past week was a spectacle in itself, and not the kind investors and economists like to see.
On top of all of that there were the continued voiced concerns that the rally had failed given the test of resistance and the inability to break through. Interesting given that DJ30 did in fact break resistance two weeks back and NASDAQ followed on strong volume. SP500 did as well, but its break was a no volume snoozer, and thus the slide back to test is no wonder. Even with the selling on the week, however, there was no breakdown Friday.
Stocks started soft but didn't give in as NASDAQ and SP500 made a run for the roses midmorning, making it to positive. There wasn't any power there as volume was very low. Couldn't hold the rebound and faded back, but as noted, no real selloff on those two. DJ30 was dragged down by its financials. AIG is on the 30 so it was a drag. As was C, BAC and GE. All have a financial component, some more than others. DJ30 looks intent on seeing its 50 day EMA thanks to those boys and a few consumer stocks performing quite weakly, but again, NASDAQ and even SP500 with its financials don't have those issues, at least judging from the action last week.
Read "The Daily" Entire Weekend Summary
Here's a trade from "The Daily" and insights into our trading strategy:
Company Profile
EARNINGS: 5-8-08
STATUS: Double bottom w/handle. Another stock we were monitoring but did not want to get in front of it with earnings. That would have been no issue; reported solid results and surged higher Friday on strong volume. Closed just below the 'hump' in the pattern at 38, but excellent action and ready for the breakout. When it makes the move we will move in.
Volume: 10.859M Avg Volume: 3.555M
BUY POINT: $38.12 Volume=4.5M Target=$47.85 Stop=$36.38
POSITION: QVR IU - Sept. $37.50c (60 delta) &/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).
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 move 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 4-22-08
STATUS: Test breakout. Gapped lower Friday but rebounded for modest gain. No volume, however. Still well positioned, still looking for some more volume when it makes the move. To recap: Blasted out of a 13 week reverse head and shoulders base on its earnings news. It continued the run on up 96 on the move and has tested the past week, coming back to near support at the 10 day EMA on low volume. Holding this support the past four sessions in a tight range. Just waiting for the break higher on stronger volume to give us the entry to the pre-split run.
Volume: 355.338K Avg Volume: 739.541K
BUY POINT: $94.44 Volume=1.1M Target=$105.95 Stop=$92.32
POSITION: IUV HS - Aug. $95c (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: 5-14-08 after the close
STATUS: Test breakout. Big surge to start the month, breaking out from its 5 month base formed by making higher lows off the 200 day SMA. Made us some great money and then gapped lower to the 10 day EMA Wednesday, hugging there until Friday. Looking for CTRP to resume its move and when it does that is when we move in.
Volume: 584.882K Avg Volume: 893.333K
BUY POINT: $66.11 Volume=1.2M Target=$75.95 Stop=$63.89
POSITION: QCT IM - Sept. $65c (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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