Weekend Newsletter for August 8, 2004
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Weekend Newsletter for August 8, 2004
Table Of Contents 1) MARKET SUMMARY 2) POST-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
The problem with expectations . . ..
– Jobs report kicks the market when it was down.
– Jobs are understated in the July report; economy starting to expand already.
– Selective memories, faulty comparisons regarding economics.
– Despite the drama, summer still shaping up rather typically, and the timing is not that bad.
http://www.investmenthouse.com/1weekendmarketsummary.htm”>Read Full Weekend Summaryhttp://www.investmenthouse.com/1daily1.htm”>Learn more about our Daily Newsletter 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). For post-splits, we can play them as we would pre-splits (very short term), but we prefer to stretch our horizons, playing the trend. When playing options, we look further out, 2 or more months at least. We let the trend carry us along if there is one, but we will also take profits if the technical pattern degenerates, e.g., breaks a trendline. The main difference between post-splits and pre-splits plays is that we really have to like the pattern. Pre-splits can run right before their splits even with poor technical indicators. For post-splits, we are looking at the stocks from more of a longer term “would I buy this stock at this juncture?” position. Now there are times when a hot stock splits and investors pile in to get in while the stock is ‘cheaper.’ We play those, but with more of a short-term, pre-splits mentality in that we will be ready to get out fast if the momentum fades. Remember, everything we do has to pass muster with the market that day … don’t fight the market on these plays. Here’s a post-split play to watch and our current analysis.http://www.investmenthouse.com/1stocksplits1.htm” target=”_top”>http://www.investmenthouse.com/images2/cnbc.gif” width=”39″ height=”31″ border=”0″ alt=”CNBC Interview”>
Listen to Stock Split Report Editor Jon Johnson’s stock split interview on CNBC-TV![ http://www.investmenthouse2.com/cntdir.asp?name=JonJohnson-B” target=”_new”>Broadband | http://www.investmenthouse2.com/cntdir.asp?name=JonJohnson-D” target=”_new”>Dial-up ]
Chart by http://www.stockcharts.com”>StockCharts.com
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http://investmenthouse.com/quote/stkquote.php3?smbl=
MSA”>
MSA (Mine Safety Appliance–$36.75; -0.35; optionable): Respiratory protection equipment.
http://biz.yahoo.com/p/m/msa.html”>Company Profile
STATUS: Breakout test. We are already in this stock, but it is a leader with strong earnings and sales, and in the market selling it has basically gone about its business. A nice volume move higher to end July, MSA is making a modest pullback to the 10 day EMA (36.39) to test the move. This gives us another entry point on a strong stock. This pullback is testing that breakout from an ascending base where the stock moves higher along support with some tests lower that act as the shakeout of the weak holders.
Volume: 222.2K Avg Volume: 188.681K
BUY POINT: $37.38 Volume=283K Target=$43.42 Stop=$35.44
POSITION: MSA LG – Dec. $35c (64 delta) &/or Stock.
http://www.investmenthouse.com/1stocksplits1.htm”>Learn more about our Stock Split Report – Issued 5 Times Per Week
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Chart by http://www.stockcharts.com”>StockCharts.com
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3) Technical Playhttp://investmenthouse.com/quote/stkquote.php3?smbl=
RAI”>
RAI (Reynolds American–$71.64; -1.12; optionable): Tobacco.
http://biz.yahoo.com/p/r/rai.html”>Company Profile
STATUS: Test breakout. RAI exploded out of a 16 week flat base in May, formed another quick cup base, broke out, and is now testing that breakout move. Solid 4 to 2 accumulation in the short cup, and we really like the price action of late: very low, below average trade as the stock moved laterally in late June to the last week in July before exploding higher. It is making a nice orderly and low volume pullback to the 10 day EMA (71.32), holding that level Friday as the market sold off. Looking for it to resume the breakout move on a shot of solid volume. This one can run well, and we are looking at a nice, relatively quick move higher, using options to leverage our gain.
Volume: 907.2K Avg Volume: 1.772M
BUY POINT: $72.22 Volume=2M Target=$79 Stop=$70.89
POSITION: RAI KN – Nov. $70c (62 delta).
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/quote/stkquote.php3?smbl=
AKAM”>
AKAM – Akamai Technologies, Inc. is currently trading at $12.63 The August $12.5 Calls (UMUHV) are trading at $0.70. That provides a return of about 5% if AKAM is above $12.5 on expiration Friday in August.
http://biz.yahoo.com/p/a/akam.html”>Company Profile
http://www.investmenthouse.com/1coveredcalls1.htm”>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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