Here Is Why We Are Your Best Stock Split Service Choice
Unlike other newsletters, we address stock splits as a primary way of making a living in the stock market. As such, our strategies are focused on the profitable playing of stock splits. That is very different from playing earnings announcements, breakouts, breakdowns, and other forms of trading. Not that we do not take advantage of those strategies while we are in the period of time ahead of forecast announcement dates; indeed, that proved quite useful when the market was heading down the past few weeks. However, when it comes time to play the split, our technique is very specialized and has been developed through years of anticipating stock split announcements. Many other split services, in fact all that we have seen, trade potential split announcement candidates no differently from any other trade. In fact, they often advise their subscribers to be out of a trade at the very time some of the greatest, fastest gains can be made.
We do it differently, and use a methodology that gives much more opportunity to profit. There is an old adage that you do not carry a stock or option for a short term play over an earnings announcement. The reason is uncertainty about what the earnings will be; indeed, even if earnings are good investors can still beat up a stock if market sentiment is bad. In a general sense, that is true looking at the universe of stocks. At StockSplits.Net, however, we do not treat all stocks equally when it comes to earnings. We look at the leaders when we are forecasting announcements with earnings. CECO is a market leader and was coming up to its earnings date in July 2003, a date we had also marked a split announcement for that date. As with many leaders, it gave us several great entry points. We saw it early and caught a breakout in June. We got another opportunity right ahead of the split announcement as it sold back to the 18 day MVA as nervous traders moved out ahead of earnings. We used that test of the 18 day MVA to move in, particularly as it was showing a doji on the close. After hours it announced the split and powered ahead $9.14 the next session. We logged a nice 185% option gain on that quick play, a 260% option gain from the earlier play, and 28%, 30%, and 36% on our stock positions.
These plays also point out a big difference from other services: we don’t just throw any play up and hope it sticks. Research, research, personal contacts, and more research go into every play. More than that, we look at the cream of the crop, especially with earnings plays. Our split research gives us a big edge in making money, but with earnings, we want even more. We look for the stocks that are the leaders if we are going to step in front of them at earnings time or when the market is less than desirable.
The differences are equally apparent with shareholder meeting plays and board meeting plays. We love to pick up our plays on breakouts of technical patterns. That is why we analyze each pattern every trading day and report to you those that look the best for the upcoming session. That does not mean others are not still solid, just that these are the cream for new or additional entry points. When we get right to the announcement date, however, we shift into ‘split’ mode, looking to take positions right before the meeting when we see the pattern strengthen intraday. These positions could be in addition to ones we already took on a good technical move earlier, or they could be our first position on the play. These are pure ‘split’ positions based on our research and contacts. Other services simply put you in or out of the stock based on their version of technical analysis that has nothing really to do with whether a split will be announced or not.
This ‘one size fits all’ method of investing does not fully take advantage of what playing stock splits can do for you. One of our writers does nothing but trade pre-announcement and pre-split plays in his investing. He determined that if he followed the advice of other services, he would have missed out on the initial moves of such huge trades as ADBE, QCOM, JNPR and many others back in the downtrend days in 2000. Further, he was able to take advantage of a short term earnings play while only being exposed to the market for about 12 minutes while other services said to be out. By acting before the big event, he was able to buy his options on those trades before the announcement was made when prices were much lower due to lower volatility; again, safer entry point when option volatility is lower. Those that buy after the announcement when volatility jacks the option prices higher suffer when the volatility falls and the option price falls as well.
When it comes down to it, we play splits for profit. We have developed strategies that are tailored to this form of trading. That means we know that sometimes companies are not going to announce a split in spite of all of the research and what contacts tell us. Our strategies are designed to give us the opportunity to make money on the news and protect our downside as much as possible, given the nature of the game. Even when we get no announcement from a company such as UOPX, APOL, GDW, ETN, we managed an excellent profit and the stocks, being in great technical patterns, kept running regardless. Playing the cream of the crop gave us some great profits even though no splits were announced. Unless you are in an office pool about what stocks will or will not announce splits, profit is the name of the game.
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