Market Gets Bernanke Boost
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INVESTMENT HOUSE.COMTM
Informing Investors Around The World
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Weekend Newsletter for
April 30, 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 sputters all week even with gift from Bernanke.
– Just when market gets a Bernanke boost, the ‘other’ issues knock it right back.
– 2006 rally remains choppy, now featuring some distribution and breakdowns.
– Friday economic reports come in weaker but still solid. Too much economic hype?
– The forgotten story: Wages rising but benefits cost drop keeps overall costs trending lower.
– Someone needs to step up and lead.
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Market Summary (continued)
Up to Thursday, earnings and the anticipation of the Fed ending its rate hiking was enough to offset continually rising oil and gasoline prices, rising interest rates, and geopolitical worries (Iran, Nigeria, Venezuela). On Thursday earnings let the market down as XOM and MRO, two big energy names, missed their results. China raised interest rates as well. After those hits it took Bernanke saying the Fed might very well pause even with strong economic data for the market to recover.
Friday earnings failed the market again as MSFT missed expectations and its guidance was well below expectations. Seems that game market is just not as lucrative as a so-so operating system back in the 1990’s. Tech stocks were under pressure from the open as good earnings in technology had turned to a big name miss. The economic reports were lighter than expected, but still at levels that could keep the Fed active if it wants to be. Then the UN report on Iran was released, and though it was as expected, the fact was hard on the market, adding to the overall weight on stocks. As a final blow, Treasury Secretary Snow was not that adamant in his support of the dollar on a CNBC interview. The dollar tanked, something that has become an issue of late, particularly after the Bernanke ‘pause’ comments.
Energy and metals managed to rebound from the Thursday selling; they reversed breakout attempts and fell hard through Thursday. The Friday rebound in these stocks kept SP500 and SP600 positive for the session. That was about the only thing that kept the indices at support and still in position to move higher. As it was, NASDAQ and SOX faded to the 50 day EMA, while SP500 and SP600 held near support once more. Despite the up and down action, that still keeps them in position to rebound for the week ahead.
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/btuism.gif” width=”360″ height=”208″ border=”1″>
http://investmenthouse.com/indexq.php?smbl=
BTUI”>
BTUI (BTU International–$20.21; +0.94; no options): Semiconductor equipment.
http://finance.yahoo.com/q/pr?s=btui”>Company Profile
After Hours: $21.00
STATUS: Test 18 day EMA. BTUI made us some good money on its last breakout, and after testing that move it looks ready to go again and make us some more. It sold off sharply last week, tapping at 18 on the Thursday intraday low. It rebounded from there Friday on light trade. That move tests the breakout from its 5 month base on base pattern and sets up BTUI to make us some more money.
Volume: 192.772K Avg Volume: 285.257K
BUY POINT: $20.72 Volume=325K Target=$25.00 Stop=$19.27
POSITION: – Stock (no option chain).
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.
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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/cmcsm.gif” width=”360″ height=”208″ border=”1″>
http://investmenthouse.com/indexq.php?smbl=
CMC”>
CMC (Commercial Metals–$54.40; +2.36; optionable): Steel and iron. Splits 2:1 on 5-23-06.
http://finance.yahoo.com/q/pr?s=cmc”>Company Profile
STATUS: Ascending base. CMC is working on a short four week base along the 18 day EMA (52.66) that is consolidating the mid-March breakout from another ascending base formed February and March. Some strong volume last week as CMC set up for the next leg higher in the breakout. Very solid stock that sets up some nice, compact bases that yield strong upside moves.
Volume: 940.1K Avg Volume: 788.843K
BUY POINT: $55.55 Volume=1.2M Target=$66.66 Stop=$52.44
POSITION: CMC IK – Sept. $55c (51 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/abxsm.gif” width=”360″ height=”208″ border=”1″>
3) TECHNICAL PLAYhttp://investmenthouse.com/indexq.php?smbl=
ABX”>
ABX (Barrick Gold–$30.48; +0.90; optionable): Gold.
http://finance.yahoo.com/q/pr?s=abx”>Company Profile
After Hours: $30.68
STATUS: Double bottom w/handle. Solid in pattern and fundamentals, something rather uncommon for a gold stock. ABX has set up a nice 12 week base, forming the handle the past two weeks over the 18 day EMA (29.50) as the market struggled with some selling. Excellent 4 to 1 accumulation in the base (4 up price weeks on rising volume to 1 down price week on rising volume) shows plenty of buying, setting up the next breakout and run. Very nice set up.
Volume: 4.432M Avg Volume: 4.744M
BUY POINT: $31.25 Volume=7.1M Target=$37.50 Stop=$29.45
POSITION: ABX JF – Oct. $30c (57 delta) &/or 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
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4) COVERED CALL PLAYhttp://investmenthouse.com/indexq.php?smbl=
JOYG”>
JOYG – Joy Global Inc. is currently trading at $65.69. The May $65 Calls (JQYEM) are trading at $3.30. That provides a return of about 4% if JOYG is above $65 on expiration Friday in May.
http://finance.yahoo.com/q/pr?s=joyg”>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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