Lots Of News, No Action
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INVESTMENT HOUSE.COMTM
Informing Investors Around The World
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Weekend Newsletter for
July 3, 2005
Table Of Contents 1) MARKET SUMMARY 2) PRE-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
End of month brings a lot of news but nothing new for the market.
– Lots of news Friday but little action ahead of holiday weekend.
– National manufacturing index posts a gain, fights off contraction.
– With China syndrome under control for now, oil, the Fed and earnings are front and center.
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Market Summary (continued)
Stocks spent the past week confused, selling and then rebounding after the China trade issues the prior week presented enough uncertainty to cause investors to sell some and ask questions later. Up big on Tuesday, down big on Thursday, modest bounce on Friday. In the end stocks ended basically where they started, at least with respect to NASDAQ, SP500; SP600 posted a nice gain for the week.
Friday had some promise but we were not going to get too excited by the early action given the 3-day weekend ahead. It was the first of the month and some new money was getting pressed into service. That had futures upside and stocks followed them higher early. Stocks were up and then received some more upside help from a stronger than expected Michigan sentiment report and a still expanding ISM manufacturing reading. Volume was decent and stocks were up across the board with the small caps and mid-caps leading the way.
SP500 tested resistance at 1200 at the end of the first hour, however, and that pretty much put the brakes on the upside move. A rebound attempt around 11:30 ET ran out of gas simply because everyone went home. When that happened the bids started to dry up and stocks slipped lower and lower, though modestly, the rest of the session. Volume was of course very light what with only half the normal traders present. Stocks continued to slip on low volume until SP500 hit the 50 day EMA midway through the last hour. That prompted some bargain hunting and short covering ahead of the weekend and bounced the indexes positive for the close.
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
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http://investmenthouse.com/quote/stkquote.php3?smbl=
VTAL”>
VTAL (Vital Images–$18.20; +0.25; optionable): Business software and services.
http://finance.yahoo.com/q/pr?s=vtal”>Company Profile
STATUS: Breakout test. Nice doji with tail Friday as VTAL reached down to the 18 day EMA (17.48) on the low and rebounded to post a modest gain on low volume. VTAL broke out from a 5.5 month cup base in mid-May, rallied, and came back to test that move at the 50 day EMA (16.83). It rallied on strong trade when the market sold off two Thursdays and Fridays back. Excellent 8 to 3 accumulation in the base (8 up price weeks on rising volume to 3 down price weeks on rising volume) shows a lot of buying that set up the breakout. Excellent money flow to boot. After this test VTAL is ready to go once more. A top rated stock in just about all categories.
Volume: 52.761K Avg Volume: 150K
BUY POINT: $18.58 Volume=200K Target=$21.62 Stop=$17.47
POSITION: HXQ JW – Oct. $17.50c (58 delta) &/or Stock.
http://www.investmenthouse.com/1daily1.htm”>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.
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
http://www.investmenthouse.com/cc/uspism.gif” width=”360″ height=”208″ border=”1″>
http://investmenthouse.com/quote/stkquote.php3?smbl=
USPI”>
USPI (United Surgical–$51.93; -0.15; optionable): Specialized health services. Splits 3:2 on 7-18-05
http://finance.yahoo.com/q/pr?s=uspi”>Company Profile
STATUS: Breakout test. Nice doji over the 18 day EMA (51.55) Friday as volume moved up to just about average. Trying to make a higher low that will set up the next move higher. Solid leader getting ready to make its move. To recap: USPI has tested the strong late May and early June move. It was a bit rocky, but held the 18 day EMA on the close on very low, below average volume. Money flow continues moving higher ahead of the stock even as it eases back and tests the move. Held 50 as we wanted and now looks ready to move. Really like that money flow and waiting for the stock to follow it.
Volume: 264.193K Avg Volume: 299.492K
BUY POINT: $52.55 Volume=400K Target=$59.95 Stop=$50.97
POSITION: QPJ KK – Nov. $55c (50 delta) &/or Stock.
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.
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Chart by http://www.stockcharts.com”>StockCharts.com
http://www.investmenthouse.com/cc/gigmsm.gif” width=”360″ height=”208″ border=”1″>
3) TECHNICAL PLAYhttp://investmenthouse.com/quote/stkquote.php3?smbl=
GIGM”>
GIGM (Gigamedia–$2.30; +0.16; no options): Internet Service Providers.
http://finance.yahoo.com/q/pr?s=gigm”>Company Profile
After Hours: $2.30
STATUS: Cup w/handle. Volume surged Friday as GIGM bounced off the 18 day EMA (2.10), the support that acted as the bottom of the handle to the 7 month base. The pattern formed over the 200 day SMA (1.60), a key support level. Accumulation is an outstanding 8 to 2 (8 up price weeks on rising volume to 2 down price weeks on rising volume), setting up the breakout as it shows a lot of buyers moving into and holding onto the stock. Strong volume in June as it surged to form the right side of the base and then below average volume as it tested that move. Strong money flow as well, leading the move higher. Very solid and looks ready to make the breakout move.
Volume: 1.991M Avg Volume: 832.143K
BUY POINT: $2.47 Volume=1M Target=$3.05 Stop=$2.32
POSITION: – Stock (no option chain).
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/xtosm.gif” width=”360″ height=”208″ border=”1″>
4) COVERED CALL PLAYhttp://investmenthouse.com/quote/stkquote.php3?smbl=
XTO”>
XTO – XTO Energy Inc. is currently trading at $35.23. The August $35 Calls (XTOHG) are trading at $1.85. That provides a return of about 5% if XTO is above $35 on expiration Friday in August.
http://finance.yahoo.com/q/pr?s=xto”>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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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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