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- Market sags again on Intel, jobs news, but no downside rout.
- Jobs report shows gains, but less than expected as Bush cross-policies hamstring recovery.
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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 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. Here's a pre-split play to watch and our current analysis.

Chart by StockCharts.com

AMHC (American Healthways--$48.16; +0.1; optionable): Specialized health services. Splits 2:1 on 12-22-03.
Company Profile
STATUS: Testing the breakout. AMHC broke out of a 9 week base in late November, rallying to 52.33 on the Tuesday high. It spent the last part of the week easing back to test the breakout, holding the 10 day MVA (46.87) on the low and then rebounding to close, showing a tight doji. After a pullback from a rally and breakout, this often signals a rebound coming. We will look for AMHC to rally on stronger, above average volume to enter the play.
Volume: 184.02K Avg Volume: 322.363K
BUY POINT: $49.05 Volume=450K Target=$56 Stop=$46.72
POSITION: QMH BJ - Feb. $50c (48 delta) &/or Stock.

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