Weekend Issue
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http://www.investmenthouse.com/weekend/082403.htm
1) MARKET SUMMARY
Intel increases guidance. It’s a breakout, it’s a rally, no its another false start.
– Large caps fail their breakout attempt, end the week back on the range once again.
– Treasuries, dollar and Intel.
– Big financials lagging as the breakout attempt has to wait another day.
– Subscriber Questions.
http://www.investmenthouse.com/1weekendmarketsummary.htm?123 “> Click here or on link for our full Weekend Market Summary
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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.
JCOM (J2 Global Communications–$57.98; -3.62; optionable): Splits 2:1 on 9-2.
STATUS: Testing the breakout. Believe it or not, we got into our first shares of JCOM back in 2001. It has been a great run, and now we are going to have twice as many shares. A great way to build wealth because now we can use those shares to write calls against each time the stock tops and starts down. Right now, however, we are looking at the stock as a pre-split, and the way it can run, we don’t want to risk selling calls against our positions right now. We have already taken some gain from our option position on this play already, and Friday JCOM was falling sharply though on low volume. It looks as if it is going to test the 10 day MVA (56.74) or down to price support at 65. From there it will be primed for the next move and that is when we jump in when it starts back up.
Volume: 423.853K Avg Volume: 825.88K
BUY POINT: New: Test 57, then 57.45 on the way back up (orig. $51.95) Volume=1.4M
Target=$58 Stop=$56.68
POSITION: JQF IJ – Sept. $50c (53 delta) or JQF LK – Dec. $55c (45 delta) &/or Stock.
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Learn more about our Stock Split Report – Forbes.com Best of the Web Online Edition says: “. . . seek out the Stock Split Report . . .”
http://www.investmenthouse.com/1stocksplits1.htm
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3) Technical Play
RFMI (RF Monolithics–$7.56; +0.6; no options): Telecom equipment
STATUS: Testing the 50 day MVA. RFMI broke out of a 14 month base in June and raced up the short term MVA (10 and 18 day MVA) up to 9 in late July. That is typical action: a breakout and then a strong run up the 10 and 18 day MVA. Now it is coming back and taking a breather, tapping the 50 day MVA (6.23) last week to digest the nice gain. Strong stocks then continue their move, starting up off the 50 day MVA on stronger volume. After moving laterally for almost two weeks, RFMI started that move Friday, rallying up off the 18 day MVA (7.04) on a good shot of rising volume. In the base, accumulation was a solid 13 to 7 (13 up weeks on rising volume to 7 down weeks on rising volume). That shows there were net buyers of the stock, and the strong move on the breakout shows it. It now looks ready to make the next move with strong money flow continuing to lead higher ahead of price.
Volume: 168.249K Avg Volume: 178.982K
BUY POINT: $7.78 Volume=200K Target=$9.38 Stop=$7.24
POSITION: – Stock (no option chain).
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Learn more about our Technical Trader Report!
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4) Covered Call Play
CTX – Centex Corp. is currently trading at $77.65. The October $75 Calls (CTXJO) are trading at $5.80. That provides a return of about 4% if CTX is above $75 on expiration Friday in October.
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http://www.investmenthouse.com/1coveredcalls1.htm
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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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