Invest and Trade Profitably with Jon Johnson

Weekend Newsletter for April 18, 2004

Investmenthouse Newsletter

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Weekend Newsletter for April 18, 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
Stocks finish a tough week with a rebound, but can only finish mixed.

– Economic data softens a bit, stocks, at least some, rebound a bit.
– Economic data slows its pace a bit but the trend is still solid.
– Market still building its base, setting up for the next leg higher.

Read Full Weekend SummaryLearn more about The Daily – 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


BKST
(Brookstone–$27.41; +0.43; no options): Specialty retail. Splits 3:2 on 4-27-04.
Company Profile
STATUS: Flying plateau. Moving laterally the past two weeks over the 10 day MVA (26.85) after a strong surge from 21 in mid-March. Two strong above average volume spikes in the past week on upside sessions are telling us to get ready for a potential break higher. These are solid patterns because the stock refuses to give up its gains. Strong money flow is leading higher and we are looking for the stock to follow on continued good volume as seen on Friday.
Volume: 149.65K Avg Volume: 96.509K
BUY POINT: $27.78 Volume=145K Target=$31.95 Stop=$26.68
POSITION: – Stock (no option chain).
Learn more about our Stock Split Report – Issued 5 Times Per Week


Chart by StockCharts.com

3) Technical Play
ANDW
(Andrew Corp.–$20.20; +0.30; optionable): Telecom equipment.
Company Profile
STATUS: Breakout test. This is one of the leaders we have been talking about. It shot out of an 11 week flat base to start the month and has moved laterally during the recent selling, holding onto its gains as the market sold off. The 10 day MVA (19.67) has moved up to kiss it, and that is often the catalyst to send this type of breakout higher. Excellent 4 to 0 accumulation in the base (4 up price weeks on rising volume to 0 down price weeks on rising volume). Money flow is outstanding and turning up already ahead of the price. Excellent action and strength in the face of the market selling.
Volume: 3.812M Avg Volume: 2.966M
BUY POINT: $20.48 Volume=4M Target=$24.58 Stop=$19.05
POSITION: AQN JD – Oct. $20c (57 delta) &/or Stock.

Learn more about our Technical Traders Report – Issued 5 Times Per Week Chart by StockCharts.com

4) Covered Call Play
ADTN
– Adtran, Inc. is currently trading at $28.13. The May $27.5 Calls (RQAEY) are trading at $1.90. That provides a return of about 5% if ADTN is above $27.5 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.

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