Weekend Newsletter for April 11, 2004
Investmenthouse Newsletter
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Weekend Newsletter for April 11, 2004
Table Of Contents 1) MARKET SUMMARY 2) PRE-SPLIT PLAY 3) TECHNICAL PLAY 4) COVERED CALL PLAY
Stock Split Notices Investing Q & As Glossary
1) MARKET SUMMARY
Market tries to rally on good news but is not ready just yet.
– Stocks try a breakout but find no commitment ahead of a long weekend.
– Jobless claims tank, inventories surge but sales surge more.
– Raise taxes on the ‘rich’ and the ‘poor’ pay more.
– Action may have disappointed many, but we view it as good.
Read Full Weekend SummaryLearn more about our Stock Split Report – 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. Here’s a pre-split play to watch and our current analysis. Chart by StockCharts.com
MRVL (Marvell Technology–$48.09; +0.99; optionable): Semiconductor integrated circuits. Splits 2:1 on a date to be announced.
Company Profile
STATUS: Ascending triangle. Wednesday and Thursday MRVL was moving on good volume, making the test of 46 that we wanted and then bouncing. It is still in the early stages of the breakout and still a buy at this point on a further volume move.
Volume: 2.404M Avg Volume: 2.859M
BUY POINT: New: $48.63 Volume=4M Target=$54 Stop=$44.88
POSITION: UVM HS – Aug. $47.50c (53 delta).
Learn more about our Stock Split Report – Issued 5 Times Per Week
Chart by StockCharts.com
3) Technical Play
NMSS (Natural Microsystems–$7.60; +0.42; no options): Telecom processing systems.
Company Profile
STATUS: Cup w/handle. NMSS is moving in a 11 week base over the 50 day MVA (6.99), coming up off the lows the past few weeks. It has eased back last week and then was starting back up Thursday on stronger, almost average volume. It is giving the indication that it is ready to make the breakout. Excellent 5 to 0 accumulation in the base showing money moving into the stock as it rests. Money flow is starting to surge higher ahead of the stock price. It looks ready to make the move.
Volume: 315.97K Avg Volume: 394.59K
BUY POINT: $7.84 Volume=592K Target=$9.42 Stop=$7.25
POSITION: – Stock (no option chain).
Learn more about our Technical Traders Report – Issued 5 Times Per Week Chart by StockCharts.com
4) Covered Call Play
MOT – Motorola Inc. is currently trading at $18.15. The May $18 Calls (MOTES) are trading at $0.95. That provides a return of about 5% if MOT is above $18 on expiration Friday in May.
Company Profile
Learn more about our Covered Call Tables – 8 Tables Updated 5 Times Per Week
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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 asscociated herewith receives compensation in any manner from any of the companies that are discussed in this newsletter or on the related websites.
