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Weekend Newsletter for
June 1, 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
market still seeking a more definitive move.
- NASDAQ leads market to weekly gains, but still no new breakout.
- Economic data in line to better, and while no great endorsement of economic activity, things are not as bad as made out.
- Market advance since March forecast modest economic improvement, but is there more to come?
- Some money comes out of commodities stocks on NYSE, but has yet to move elsewhere.
- New month, some new money, but also the dog days cometh.
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Market Summary (continued)
The shortened week was one of gains, and Friday was no exception, though the gains once again were not felt throughout the market. Spending and income were in line with modest gains (0.2%) though if you adjust for inflation both were big goose eggs. With PCE inflation at 0.1% on the core and 2.1% annually, however, investors found some reason to push stocks higher at the open. When the Chicago PMI and the Michigan sentiment reported better than expected results, the market added to its early gains with all indices in positive territory.
The market survived a midmorning test of the early move, and then went into a slow, steady climb into the afternoon. It was the end of the month, however, and that meant money was going to get moved around. It was. In the last hour the indices dropped sharply in the first half of the hour, then recovered just about up to session highs. A literal last minute decline shaved 6 points off NASDAQ and 40 points off DJ30, leaving the Dow negative on the day. With the overall narrow range for the session and the end of month shuffle, it is somewhat pointless to play 'pin the tail on the meaning of the session.' Best to look at the entire week to get the flavor.
The week showed gains on all of the indices as they rebounded from the sharper selling in the week before the Memorial Day of honor. Those gains, however, were modest and left the indices, overall, shy of significant moves that reverse that downside move. Of all the indices only SP600 and Russell 2000 broke new closing high ground for the rally off the March lows. That the small caps led to new high ground in the rally is significant given their close ties to a stronger domestic economy (hurray!), but the fact that the majority of the other indices did not really even scare new highs leaves the continuation of the rally somewhat problematical.
Read "The Daily" Entire Weekend Summary
Here's a trade from "The Daily" and insights into our trading strategy:
Company Profile
EARNINGS: Announced 4-22-08
STATUS: Trend reversal. Looking at BRCM again as it has set up again after its late April gap higher on earnings, moving back over the 200 day SMA (27.44) Friday. The catalyst was MRVL in the same sector with its outlook for the future. Strong volume, solid move over a key level. BRCM has a nice range to run higher without resistance, and there is that gap lower from October that it will eventually fill. Cool. Ready to move in as BRCM clears the early May high.
Volume: 17.687M Avg Volume: 16.5M
BUY POINT: $28.88 Volume=20M Target=$37.22 Stop=$27.31
POSITION: RCQ HY - Aug. $27.50c (64 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).
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: Announced 4-30-08
STATUS: Test 18 day EMA. Still a nice test of near support, showing increased volume Friday as it bounced up off an undercut of the 18 day EMA. Very solid and ready to move in as HES continues higher. To recap: Broke out from a 4 month ascending base in late April, tested back to the 50 day EMA to start the month, then used that as the foundation for a continuation of the breakout move. It is now making the second test of the breakout, tapping the 18 day EMA (121.32) on the Wednesday low and then rebounding on strong volume; the buyers moved in. Nice money flow is running higher ahead of price. Ready to move in as HES continues its breakout run. Has two or more good runs on this move ahead of it.
Volume: 5.105M Avg Volume: 4.16M
BUY POINT: New: 124.11 (orig. $126.11) Volume=5.5M Target=$144.95 Stop=$121.22
POSITION: IGG HE - Aug. $125c (55 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
STATUS: Breakout test. BZP made us money on its early May run, and now it has come back to test the breakout from its 5 week cup with handle base. Tapped toward the 50 day EMA on the Friday low (21.70) and then rebounded for a gain. Volume surged back above average for the first time in over a week. Showing excellent strength in a sector under a bit of fire; this is something you see in all energy sectors: some leaders in excellent shape, others struggling. Brazilian companies are getting big dollars and BZP is no exception.
Volume: 1.22M Avg Volume: 966.873K
BUY POINT: $23.11 Volume=1.4M Target=$27.95 Stop=$21.55
POSITION: BZP IX - Sept. $22.50c (65 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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