Weekend Newsletter for February 15, 2004
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/021504.htm
1) MARKET SUMMARY
Low volume slog to close the week.
– Market finishes weakly, losing momentum after one big session.
– Market worries over Michigan sentiment, but that report has been glaringly wrong of late.
– NASDAQ and SOX are struggling. If they lead, the market is in for a longer consolidation.
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.
NATI (National Instruments–$48.55; -0.07; optionable): Computer peripherals. Splits 3:2 on 2-23-04.
STATUS: Test 18 day MVA. Strong moves off the 50 day MVA (46.96) have been a hallmark of this stock. It recently broke out from a 10 week cup base, surging over 50. It has made another 50 day MVA since, starting back up last week on some better volume. It tested the 18 day MVA (48.29) to end the week, showing a hammer doji at the 18 day. Looking for volume to kick in as it continues the move higher.
Volume: 121.475K Avg Volume: 179.409K
BUY POINT: $49.25 Volume=300K Target=$57 Stop=$48.12
POSITION: SJQ FJ – June $50c (54 delta) &/or Stock.
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http://www.investmenthouse.com/1stocksplits1.htm
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3) Technical Play
APLX (Applix–$4.85; +0.05; no options): Application software
STATUS: Breakout test. After a super breakout from its 13 week cup base, APLX has made the test lower the past week to test the breakout, partially filling the gap as it tapped the 18 day MVA on the Friday low (4.50). It raced back up on rising, average volume, closing with a modest gain. Excellent 5 to 1 accumulation (5 up price weeks on rising volume to 1 down price week on rising volume) in the base shows there is good support as money moved in even as the stock based out. Super money flow is still up ahead of the stock, and we are looking for the stock to rebound on continued rising volume.
Volume: 100.239K Avg Volume: 78.863K
BUY POINT: $5.06 Volume=118K Target=$6.32 Stop=$4.68
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
INTC – Intel Corp. is currently trading at $30.14. The March $30 Calls (INQCF) are trading at $1.30. That provides a return of about 4% if INTC is above $30 on expiration Friday in March.
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Learn more about our Covered Calls Service!
http://www.investmenthouse.com/1coveredcalls1.htm
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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.
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