Weekend Newsletter for April 4, 2004
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/040404.htm
1) MARKET SUMMARY
Happy to say jobs were a surprise.
– Jobs burst higher, market does same, but still more work to be done.
– Best job growth in 4 years and upward revisions prove us wrong.
– Stocks post strong follow through as NASDAQ, SOX and small caps soar just like old times.
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.
TLM (Talisman Energy–$59.84; +0.72; optionable): Independent oil & gas. Splits 3:1 on 5-25-04.
STATUS: Flat base. Working laterally the past 4 weeks over the 50 day MVA (57.71), showing solid 2 to 0 accumulation in the pattern (2 up price weeks on rising volume to 0 down price weeks on rising volume). Not bad action given that many oil and gas stocks have been selling off. Friday volume was back up and above average as the stock jumped off the 18 day MVA (58.67). Looking for a breakout move to enter and capture a nice little pre-split move.
Volume: 159.1K Avg Volume: 143.897K
BUY POINT: $60.52 Volume=200K Target=$65.65 Stop=$58.55
POSITION: TLM GL – July $60c (52 delta).
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http://www.investmenthouse.com/1stocksplits1.htm
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3) Technical Play
ANSR (Answerthink–$8.02; +0.36; no options): Information technology software
STATUS: Flat base. Volume shot higher Friday as ANSR started to make the breakout move from a short 5 week base. We call it flat, but it also resembles a double bottom with handle base. Accumulation is strong at 4 to 0 (4 up weeks on rising volume to 0 down weeks on rising volume). That shows money continues to move into the stock even as it moved laterally. It formed over the 50 day MVA (7.15), a further sign of strength. It is also a leader in sales and revenue growth. Excellent money flow and a relative strength breakout as well.
Volume: 1.412M Avg Volume: 283.13K
BUY POINT: $8.12 Volume=425K Target=$9.78 Stop=$7.55
POSITION: – Stock (no option chain).
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Learn more about our Technical Trader Report!
http://www.investmenthouse.com/1tech1.htm
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4) Covered Call Play
DIGE – Digene Corp. is currently trading at $35.08. The April $35 Calls (QDGDG) are trading at $1.45. That provides a return of about 4% if DIGE is above $35 on expiration Friday in April.
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Learn more about our Covered Calls Service!
http://www.investmenthouse.com/1coveredcalls1.htm
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BOOK STORE SPECIAL OFFERS!
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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.
Copyright 1997 – 2004 by Online Investment Services, LP. – All Rights Reserved.
