Weekend Newsletter for January 23, 2005
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Weekend Newsletter for January 23, 2005
Table Of Contents 1) MARKET SUMMARY 2) PRE-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
Stocks bounce on some better earnings, but earnings were not enough.
– Morning relief bounce sold under.
– What has changed from late 2004 to early 2005?
– Volume lightens Friday on expiration, but SP500 joins the NASDAQ breakdown.
– Indices still have more to give back but will likely try to test this breakdown before heading much lower.
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). 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.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=
WWW”>
WWW (Wolverine World Wide–$31.44; +0.43; optionable): Footwear. Splits 3:2 on 2-2-05.
http://finance.yahoo.com/q/pr?s=www”>Company Profile
STATUS: Ascending triangle. Volume was up Friday as WWW moved higher while the rest of the market moved lower. Very nice 11 week triangle, a pattern that can yield explosive moves. Thus, it is a very good one for a pre-split stock as that often gives a stock additional upside as it heads into the actual split. The base is solid, using the 50 day EMA (30.59) as support as it makes higher and higher lows below the constant top at 32. When these patterns yield a breakout, it is typically a strong move.
Volume: 344.5K Avg Volume: 286.863K
BUY POINT: $32.14 Volume=400K Target=$36 Stop=$30.97
POSITION: WWW CF – Mar. $30c (73 delta).
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=
VMSI”>
VMSI (Ventana Medical Sys.–$65.27; -0.92; optionable): Medical instruments.
http://finance.yahoo.com/q/pr?s=vmsi”>Company Profile
STATUS: Breakout test. Nice early November breakout from a solid 5 month reverse head and shoulders base of sorts, rallying a good 10 points 65 before coming back to take a breather and test the 50 day EMA (61.03). Excellent bounce off of that support on very strong volume. Last week when the market turned sour VMSI eased back to tap the 10 day EMA (64.78) on much lower volume. This is simply setting up for the next move higher from this strong market leader. Excellent money flow and a relative strength breakout shows its power. Looking for a higher volume bounce off here to enter.
Volume: 133.003K Avg Volume: 123.09K
BUY POINT: $65.89 Volume=172K Target=$74.95 Stop=$64.57
POSITION: UMI FM – June $65c (57 delta) &/or Stock.
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=
GRMN”>
GRMN – Garmin Ltd. is currently trading at $50.33. The February $50 Calls (GQRBJ) are trading at $3.30. That provides a return of about 6% if GRMN is above $50 on expiration Friday in February.
http://finance.yahoo.com/q/pr?s=grmn”>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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