Weekend Newsletter for February 1, 2004
Investmenthouse Newsletter
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Weekend Newsletter for February 1, 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
GDP gives no reason to continue Thursday reversal.
– Thursday reversal stalls out as stocks close the month quietly.
– GDP surprises, but the wrong way.
– NASDAQ looks ready to move, but it is the only one.
– Subscriber Questions.
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
ETN (Eaton Corp.–$116.15; -0.95; optionable): Auto parts. Splits 2:1 on 2-24-04.
Company Profile
STATUS: Test 18 day MVA. ETN has enjoyed a strong move the past year. To start the year it accelerated its climb, running up the 10 day MVA (118.10). Last week it was hit by the sellers that jumped the market on the FOMC decision, fading back to the 18 day MVA (116.52). Friday it held tight at that level, showing a very tight doji. That often indicates it is ready to make the turn back up. Looking for a solid volume bounce up off of this level.
Volume: 816.2K Avg Volume: 530.59K
BUY POINT: $116.88 Volume=900K Target=$123.5 Stop=$116.32
POSITION: ETN DA – Apr. $115c (59 delta).
Learn more about our Stock Split Report – Issued 5 Times Per Week
Chart by StockCharts.com
3) Technical Play
TPTH (Tripath Imaging–$10.45; +0.75; no options): Scientific & technical instruments.
Company Profile
STATUS: Breakout. TPTH is exploding out of a short 12 week reverse head and shoulders base, running higher Friday on a very high volume spike. Accumulation in the base is positive at 4 to 3 and money flow continues to surge, leading the stock price higher. Relative strength is making the breakout as well, indicating that the stock is performing better than the rest of the market. Ready to move in on a further run higher. Earnings out February 5.
Volume: 908.22K Avg Volume: 197.818K
BUY POINT: $10.55 Volume=300K Target=$12.66 Stop=$9.96
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
BBY – Best Buy Co., Inc. is currently trading at $50.39. The March $50 Calls (BBYCJ) are trading at $2.60. That provides a return of about 5% if BBY is above $50 on expiration Friday in March.
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.
