Weekend Newsletter for January 30, 2005
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Weekend Newsletter for January 30, 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
Lackluster session holds up just enough to give market its first up week for the year.
– Indices post first positive week of 2005 but still struggling below key resistance.
– Export decline drops initial Q4 GDP reading well below expectations.
– Employment cost index declines in Q4 as wages fall, benefit costs rise.
– Stocks sluggish and still show negative bias, but again refuse to sell off significantly.
– Many look to the Iraqi election, but the market looks to basics.
– Earnings past high point as economic data takes center stage along with Fed.
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=
COH”>
COH (Coach–$54.92; +0.87; optionable): Handbags, etc. Splits 2:1 on 4-5.
http://finance.yahoo.com/q/pr?s=coh”>Company Profile
STATUS: Test 50 day EMA. COH moved off the 50 day EMA (53.10) on rising volume Friday, a decent move given the tenor of the overall market. Classic action with the breakout from a four month double bottom base and then a run up the 18 day EMA (54.67). Great move. Now it is making the 50 day EMA test that sets the next move up the short term MA, at least for a strong stock. COH has run a long way, but that base helped set the stage for the run. Looking for a continued move on continued solid trade to enter the position ahead of its split.
Volume: 1.694M Avg Volume: 1.538M
BUY POINT: New: $55.06 (orig. $54.89) Volume=2.3M Target=$61.45 Stop=$52.88
POSITION: COH EK – May $55c (48 delta) &/or Stock.
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3) Technical Playhttp://investmenthouse.com/quote/stkquote.php3?smbl=
WAG”>
WAG (Walgreens–$42.87; +0.73; optionable): Drug stores.
http://finance.yahoo.com/q/pr?s=wag”>Company Profile
After Hours: $43.34
STATUS: Breakout test. Strong break higher to start the year on strong earnings and December sales. It peaked at 43 on the move and came back to test that move, holding the 18 day EMA (41.70), the near support that strong stocks tend to hold after a breakout. It worked laterally along that support last week and then blasted higher Friday on stronger, above average volume. Looking to move in as it clears the recent highs. Using options to leverage our gains.
Volume: 3.567M Avg Volume: 2.74M
BUY POINT: $43.22 Volume=4M Target=$47.38 Stop=$42.05
POSITION: WAG DV – Apr. $42.50c (63 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=
NLS”>
NLS – Nautilus Group, Inc. is currently trading at $20.73. The February $20 Calls (NLSBD) are trading at $1.65. That provides a return of about 5% if NLS is above $20 on expiration Friday in February.
http://finance.yahoo.com/q/pr?s=nls”>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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