Weekend Newsletter for July 18, 2004
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Weekend Newsletter for July 18, 2004
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
Market squanders last rally attempt of the week as stocks turn and dive lower.
– Market cannot make use of good news yet again, starts yet lower.
– Consumer prices rise more slowly, capping a week indicating the economy is already starting back up.
– SP500 cracks through 200 day MA, NASDAQ dives lower.
– Techs in full retreat, following SOX lower, pulling large cap indexes with it.
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 ]
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http://investmenthouse.com/quote/stkquote.php3?smbl=
QCOM”>
QCOM (Qualcom–$68.28; -0.60; optionable): Splits 2:1 on 8-16-04.
http://biz.yahoo.com/p/q/qcom.html”>Company Profile
STATUS: Test 50 day EMA. QCOM announced its split before earnings (earnings released 7-21-04 after the close). It either wanted to get the news out before the earnings hit as a bracer, or it felt earnings were good enough on their own. Frankly, in this market, if earnings were not there, a split would not help the stock, so that leads us to believe earnings will be solid. Looking for more positions on a move over the 10 day EMA (69.69).
Volume: 8.151M Avg Volume: 8.676M
BUY POINT: $69.82 Volume=10M Target=$78 Stop=$67.55
POSITION: AAO JN – Oct. $70c (52 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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3) Technical Playhttp://investmenthouse.com/quote/stkquote.php3?smbl=
COL”>
COL (Rockwell-Collins–$34.19; -0.07; optionable): Aerospace/defense.
http://biz.yahoo.com/p/c/col.html”>Company Profile
STATUS: Breakout test. One of the stronger sectors in the market. COL definitively broke out of a 23 week double bottom with handle last week, blasting off Tuesday on strong volume. It then closed out the week easing back toward the 10 day EMA (33.91) as the rest of the market sold. Volume was much, much lighter on the pullback, just what you want to see. Strong 9 to 4 accumulation (9 up price weeks on rising volume to 4 down price weeks on rising volume) in the base prior to the breakout shows us money moved into the stock during that time and set up this move. May spend another session testing the 10 day EMA, but with money flow way out ahead of price we look for the stock to continue the move in relatively short order.
Volume: 267.9K Avg Volume: 578.889K
BUY POINT: $34.77 Volume=600K Target=$39 Stop=$33.22
POSITION: COL JG – Oct. $35c (43 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=
MOT”>
MOT – Motorola Inc. is currently trading at $15.8 The August $15 Calls (MOTHC) are trading at $1.55. That provides a return of about 5% if MOT is above $15 on expiration Friday in August.
http://biz.yahoo.com/p/m/mot.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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