Friday Was A Bore But The Market Action Is Just Right
INVESTMENT HOUSE.COMTM
Informing Investors Around The World
Read In All 50 States And Over 100 Countries
Weekend Newsletter for
June 12, 2005
Table Of Contents 1) MARKET SUMMARY 2) POST-SPLIT PLAY 3) TECHNICAL PLAY 4) COVERED CALL PLAY
http://ichart.yahoo.com/v?s=^ixic”> http://ichart.yahoo.com/v?s=^dji”>
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
Intel update not enough to drive techs further.
– Intel gives a reason to book some gains as stocks continue their consolidation.
– Exports hit a record but so do imports as OPEC oil climbs to a record as well.
– Economy spent the week divining Fed intent. McTeer provides good insight.
– Friday was a bore but the market action is just right.
– Mega week for economic data to provide more fodder for next Fed action.
http://www.talongenmail.com/ihb/banners4/ads.pl?banner=NonSSI;page=388″ target=”_blank”>
http://www.talongenmail.com/ihb/banners4/ads.pl?page=388″ border=”0″>
http://www.talongenmail.com/ihb/banners8/ads.pl?banner=NonSSI;page=389″ target=”_blank”>http://www.investmenthouse.com/cgibin/banners8/ads.pl?page=389″ width=”336″ height=”280″ border=1 alt=””>
Market Summary (continued)
The Intel numbers were not bad at all, but they were expected what with TXN’s update, the upgrade of global chip sales to 6% from flat, NSM’s excellent earnings, and notebook sales surging. When Intel was unable to add any additional spice to the sauce many decided to take some of the money off the table. It didn’t hurt that it was the weekend and a tropical storm was heading through the Gulf. The hedge funds would rather get squared up some and not be at risk for any surprises.
The Intel news set the tone for the session and the lower than expected trade balance figures and declining oil (in the face of the tropical storm) could not bring stocks around. Even with the drag from chips and tech stocks in general, however, it was a solid session. Volume fell way off pace as the major indices tapped at the 18 day EMA once more and bounced slightly to post modest losses (DJ30 managed a 0.1% gain). Another dip to the 18 day EMA and another bounce, this one much more modest than Thursday. Still, it had the desired effect, i.e. shaking out some more sellers and further setting up the next move higher. The lower volume selling Wednesday and Friday following the Tuesday reversal and the Thursday upside on rising volume is good, orderly consolidation. It weeds out the sellers as it dips lower while the low volume shows us that while the sellers were in the majority (the indices other than DJ30 finished lower) there was no heavy selling.
After a good move higher just as on NASDAQ, this is the action that sets up the continuation of the move. The same thing occurred in 2004 after that initial 4 to 5 week move off of the August low: a lower volume more or less lateral and lower 2 week move that gave way to a higher volume burst to the upside to continue the rally. Another 2.5 week rest in the October earnings season and it was then back to the races through the end of the year. You see this type of positive action over and over in winning moves. Outside of the Tuesday intraday reversal this has been great action. The fact that the market was able to recover from that reversal, hold its ground and continue the more orderly pullback is a further sign of strength here.
The added spice is the Fed and oil. Maybe not really added; the Fed was active in 2004 and oil prices were not exactly cooling off. At the time, however, the market was building in expectations the Fed was getting close to the end of hiking and oil might have been peaking. That proved incorrect, the market sold, and stocks had to start building back up once more. The Fed says it is not done and oil moved right back up after a dip to the mid-forties; both are still lurking out there. The current market, action, however, appears to be pricing in just a couple more hikes by the Fed. Certainly the Fed Funds Futures contract is showing just two hikes for certain. The market is good at sniffing out the end of a rate hike campaign, but it is not foolproof. Thus we keep watching the price/volume action and leading stocks. For now they are looking solid, showing constructive action that is setting up the next move.
http://www.investmenthouse.com/1weekendmarketsummary.htm”>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://www.investmenthouse.com/cc/chrssm.gif” width=”360″ height=”208″ border=”1″>
http://investmenthouse.com/quote/stkquote.php3?smbl=
CHRS”>
CHRS (Charming Shoppes–$9.24; -0.01; optionable): Apparel stores.
http://finance.yahoo.com/q/pr?s=chrs”>Company Profile
After Hours: $9.24
STATUS: Double bottom w/handle. CHRS is moving laterally the past three weeks, tapping at the 10 day EMA (9.10) on the lows as volume trails off. Good handle action to the 22 week base is shaking out the last sellers and setting up the breakout move. Strong 6 to 3 accumulation in the base (6 up price weeks on rising volume to 3 down price weeks on rising volume) shows net buyers and has set up the breakout. Want to see the strong volume return as CHRS breaks through the buy point. A breakout takes it to a nine year high; in other words there is no resistance when it makes its breakout and that allows a stock to rally without getting sold into by folks who bought higher looking to get out.
Volume: 235.527K Avg Volume: 758.403K
BUY POINT: $9.52 Volume=1.1M Target=$11.42 Stop=$9.03
POSITION: QSR JJ – Oct. $7.50c (78 delta) &/or Stock.
http://www.investmenthouse.com/1daily1.htm”>Learn more about “The Daily” with Stock Picks! – Issued 5 Times Per Week
Featured Sponsor
48 HOURS FROM NOW…
The CEO of one American company is going to give you the investment tip of a lifetime… And he’s proving it by putting up $3.5 million of his own money.
There’s only one good reason for an insider to buy stock in his own company — because he knows the price is going up very soon.
Let me show you two deals — going down right now — where you can capitalize on inside information, and make a lot of money.
For more info, click here:
http://www.investfn.com/cntdir.asp?name=ihweekend0612″>http://www.agora-inc.com/reports/ISS/WISSF602
http://www.investmenthouse.com/cgibin/banners9/ads.pl?banner=NonSSI;page=9191″ target=”_blank”>http://www.investmenthouse.com/cgibin/banners9/ads.pl?page=9191″ border=”0″>
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.
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 post-split play to watch and our current analysis.
Chart by http://www.stockcharts.com”>StockCharts.com
http://www.investmenthouse.com/cc/cohsm.gif” width=”360″ height=”208″ border=”1″>
http://investmenthouse.com/quote/stkquote.php3?smbl=
COH”>
COH (Coach, Inc.)
http://finance.yahoo.com/q/pr?s=coh”>Company Profile
We love stocks that split because they are typically leaders and they give us so many opportunities to play them: pre-announcement, pre-split and post-split. COH recently split in April, and after a stock splits we often see it form a solid base as it regroups after the run on the split, consolidating the gains to make the next run higher. COH did just that, forming a very nice 12 week base along the 50 day EMA, boasting some solid accumulation. We were watching it on the report when it took off to start June, exploding higher on strong trade. That was the move we were looking for and we issued the buy alert and then moved in with some more stock positions and some November $30 strike call options. They were basically at the money (we bought in when the stock was $29.85) and had a 52 delta; not bad for the $2.90 they cost. The stock kept rallying, closing at 30.67 that day. It added another $1.40 the next session, and then peaked out at 33 on 6-7-05. We saw the move slowing and decided to lock in some gain. We took part of the 10% stock gain off the table as well as part of the 65% option gain (sold them for $4.80). We let the remaining positions ride along with some others we own in this leading stock. It eased back to the 10 day EMA, closing at that level Friday. If it jumps off of here on rising volume we will look at adding some more positions, averaging up into a proven winner that is at it again.
Learn more about our Stock Split Report and how we have made gains of 321% with our powerful stock split plays!
http://www.investmenthouse.com/a/StockSplitReport.html”>Details Here.
http://www.talongenmail.com/ihb/banners6/ads.pl?banner=NonSSI;page=388″ target=”_blank”>
http://www.talongenmail.com/ihb/banners6/ads.pl?page=388″ border=”0″>
Chart by http://www.stockcharts.com”>StockCharts.com
http://www.investmenthouse.com/cc/dstism.gif” width=”360″ height=”208″ border=”1″>
3) TECHNICAL PLAYhttp://investmenthouse.com/quote/stkquote.php3?smbl=
DSTI”>
DSTI (DayStar Technologies, Inc.)
http://finance.yahoo.com/q/pr?s=dsti”>Company Profile
Semiconductors have come to life recently, following the lead of the market leading NASDAQ. A lot of investors look to the old names each time a sector starts to move such as KLAC, INTC, etc., but with semiconductors some of the best moves are coming from the less well known and newer issues. Take DSTI. We did. It was a new issued in March 2004, basically going nowhere that year. In 2005 it started higher and then fell into a 13 week base just above the 50 day EMA. We saw the pattern forming, nice flat base with strong accumulation. It looked just about ready to breakout two weeks back but then faded back to the 50 day EMA on low volume. That was what you call a shakeout. We kept watching it as it made the test and then last Thursday it started higher on strong trade. We saw the volume kick in, issued a buy alert, and then moved in, picking up shares at $8.71. DSTI closed the session at $11.09, a nice 27% gain. With this kind of momentum, however, we were not inclined to take the gain just yet. As it turned out, DSTI surged again Friday. It hit 12.93 and started to struggle. After this huge move in less than two sessions we decided to take some gain. We issued the sell alert and ended up selling some positions at $12.55. Not a bad 44% gain in less than a full session in the stock.
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
http://www.investmenthouse.com/cc/lcavsm.gif” width=”360″ height=”208″ border=”1″>
4) COVERED CALL PLAYhttp://investmenthouse.com/quote/stkquote.php3?smbl=
LCAV”>
LCAV – Lea Vision Inc. is currently trading at $45.62. The July $45 Calls (JVQGI) are trading at $2.70. That provides a return of about 5% if LCAV is above $45 on expiration Friday in July.
http://finance.yahoo.com/q/pr?s=lcav”>Company Profile
http://www.investmenthouse.com/1coveredcalls1.htm”>Learn more about our Covered Call Tables – 8 Tables Updated 5 Times Per Week
* * * SCOTTRADE * * *
http://www.talongenmail.com/ihb/banners3/ads.pl?banner=NonSSI;page=388″ target=”_blank”>
http://www.talongenmail.com/ihb/banners3/ads.pl?page=388″ border=”0″>
PREMIUM SERVICES
http://www.investmenthouse.com/a/IHAlertswknd.htm” target=”_top”>IH Alerts: InvestmentHouse.com’s Best of The Best Plays!
http://www.investmenthouse.com/1stocksplits1.htm” target=”_top”>Stock Split Report: “…seek out The Stock Split Report…” Forbes.com Best of the Web http://www.investmenthouse.com/1coveredcalls1.htm”>Covered Calls: Our covered call service provides nightly updates – energize your portfolio! http://www.investmenthouse.com/1tech1.htm”>Tech Traders: Breakouts, wedges, pennants 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 — learn what is really going on in the market!
MARKETPLACE http://www.investmenthouse.com/1ibd.htm”>Investor’s Business Daily: 2 week complimentary subscription delivered to your doorstep! http://www.investmenthouse.com/bookstoretapes.htm”>Taped Seminars: Investing seminars on audio and video to help you profit. http://www.investmenthouse2.com/cntdir.asp?name=alexa”>Block All Pop-Ups! Download this tool on a complimentary basis from Amazon.com.
http://www.adtrader.com/ads/adlink.asp?SN=1227>http://www.adtrader.com/ads/adserve.asp?SN=1227&PN=10018&Desc=btmpg”>
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.
http://www.adtrader.com/ads/adlink.asp?SN=4032>http://www.adtrader.com/ads/adserve.asp?SN=4032&PN=2&Desc=fwknd”>
This is a Transactional Email. We have sent it to you because you signed up to receive it.http://www.investmenthouse.com/images/copyright3.gif”>
