Fed Likely To Hike

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INVESTMENT HOUSE.COMTM

Informing Investors Around The World
Read In All 50 States And Over 100 Countries

Weekend Newsletter for

August 6, 2006

Table Of Contents 1) MARKET SUMMARY 2) PRE-SPLIT PLAY 3) TECHNICAL PLAY 4) COVERED CALL PLAY

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http://www.investmenthouse.com/1splitnotification.htm”>Stock Split Notices http://www.investmenthouse.com/1questions.htm”>Investing Q & As http://www.investmenthouse.com/1glossary.htm”>Glossary

1) MARKET SUMMARY > >From “The Daily” at InvestmentHouse.com
Market surges then struggles on a weaker jobs report.

– Market surges higher on jobs data, gives it back again, but shift to larger cap industrials remains intact.
– Fed likely to hike and say it is done given the continued rise in commodities.
– Market advance remains tenuous even after pre-FOMC rally.

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Market Summary (continued)
Thursday’s reversal from low to high set the market up for a rally on the jobs report, and when jobs came in at 113K (145K expected) and the unemployment rate jumped to 4.8% from 4.6%, it did not matter that hourly earnings rose more than expected, at least not right away.
Stocks were down pre-market on word that AAPL would delay its earnings report as it was further investigating the options scandal involving Jobs and others at the company. As we wrote in April and May, that options scandal is getting to be a problem for NASDAQ, kind of a back up negative for the threat of a slowing economy that impacts NASDAQ’s growth stocks and the small cap growth stocks. Then the employment data hit and bang . . . immediate reversal. Futures not only turned back from negative, they shot higher by 90 at the high point (versus FV) on DJ30.
The open was rip-roaring, but we said in the morning alert it had to be watched even with the solid low to high Thursday reversal. Within minutes it started to come off the early high; nothing necessarily bad about a quick test of the opening gap, but the market did something it is known for in this downtrend, i.e. it just languished the rest of the session in a steady, day-long slide.

http://investmenthouse1.com/cntdirplus.asp?name=IHDaily&zid=~~EMAILID~~”>Read “The Daily” Entire Weekend Summary

Here’s a trade from “The Daily” and insights into our trading strategy:

Chart by http://www.stockcharts.com”>StockCharts.com
http://investmenthouse1.com/cntdirplus.asp?name=IHWeekend&zid=~~EMAILID~~”>
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http://investmenthouse.com/indexq.php?smbl=
MDRX”>
MDRX (Allscripts Healthcare Solutions)
http://finance.yahoo.com/q/pr?s=mdrx”>Company Profile
The market is more defensive and when you are taking what the market is giving you have to look in defensive places. That does not mean, however, that you have to give up strong gains. MDRX is in the software end of the healthcare business, providing solutions for physicians. It also set up a strong base starting in March and running through July. We were monitoring it and in mid-July saw it starting to bump higher with some volume moving up. That put us on alert that it might breakout, and we put it on the report. On July 25 MDRX broke higher off the 50 day EMA with a strong price move and we entered stock positions at $18.38 and some December $17.50 strike call options at $2.50. We like trading options as well because they really leverage our return.
After the strong move MDRX took a couple sessions off on low volume, never threatening a break of near support at the 10 day EMA. Then it started the climb to the 5 month base set up. Up 0.31, then 0.61, 0.24, then 2.96. That pushed MDRX to our initial target and we took some of the gain off the table, selling some stock at $22.35 for a 21% gain and some options at $5.90 for a 136% gain. Talk about leverage. Strong action in an iffy market, but when you look to where the leadership is and then look for strong patterns coupled with strong fundamentals growth rates you give yourself the edge you need to make money even in trying markets.

http://www.investmenthouse.com/1daily1.htm”>Learn more about “The Daily” with Stock Picks! – Issued 5 Times Per Week

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.
http://www.investmenthouse.com/1stocksplits1.htm” target=”_top”>http://www.investmenthouse.com/images2/cnbc.gif” width=”39″ height=”31″ border=”0″ alt=”CNBC Interview”>
Listen to Stock Split Report Editor Jon Johnson’sstock split interview on CNBC-TV [ http://www.investmenthouse2.com/cntdir.asp?name=JonJohnson-B” target=”_new”>Broadband | http://www.investmenthouse2.com/cntdir.asp?name=JonJohnson-D” target=”_new”>Dial-up ]
Here’s a pre-split play to watch and our current analysis.

Chart by http://www.stockcharts.com”>StockCharts.com
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CHAP”>
CHAP (Chaparral Steel Company–$70.34; -0.46; optionable): Structural steel and steel bar products. Splits 2:1 on 9-5-06
http://finance.yahoo.com/q/pr?s=chap”>Company Profile
After Hours: $70.84
STATUS: Double bottom w/handle. Surged Friday on rising, average volume but turned over and closed modestly lower, holding above the 18 day EMA (69.13) once more. Very nice work on its handle, setting up the breakout to a new all-time high. Friday made it hard to hold the move. Still looks solid and ready to make the breakout move. To recap: CHAP is working on an extended handle this week, moving above the 50 day EMA (66.60) after breaking higher the first week of July. At the start of the hostilities it tanked to the 50 day EMA and continued working laterally from there. Excellent pattern that is setting CHAP up for a breakout to a new all-time high. Steel has been rocky of late, but CHAP has held up well, making its own base and setting up the pre-split run.
Volume: 524.842K Avg Volume: 494.052K
BUY POINT: $71.75 Volume=737K Target=$82.50 Stop=$68.25
POSITION: ZHQ JN – Oct. $70c (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!
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http://www.investmenthouse.com/1tech1.htm”>Learn more about our Technical Traders Report – Issued 5 Times Per Week Chart by http://www.stockcharts.com”>StockCharts.com
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4) COVERED CALL PLAYhttp://investmenthouse.com/indexq.php?smbl=
ZEUS”>
ZEUS – Olympic Steel, Inc. is currently trading at $30.90. The September $30 Calls (SBQIF) are trading at $2.65. That provides a return of about 6% if ZEUS is above $30 on expiration Friday in September.

http://finance.yahoo.com/q/pr?s=zeus”>Company Profile
http://www.investmenthouse.com/1coveredcalls1.htm”>Learn more about our Covered Call Tables – 8 Tables Updated 5 Times Per Week

* * * SCOTTRADE * * *
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http://www.investmenthouse.com/1stocksplits1.htm” target=”_top”>Stock Split Report: Forbes.com Best of the Web http://www.investmenthouse.com/1coveredcalls1.htm”>Covered Calls: 8 Tables with nightly updates – energize your portfolio! http://www.investmenthouse.com/1tech1.htm”>Tech Traders: Breakouts, wedges, etc…focusing on stocks ready to move now! http://www.investmenthouse.com/1daily1.htm”>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.

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Fed Likely To Hike