Weekend Newsletter for July 25, 2004
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Weekend Newsletter for July 25, 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
Thursday rebound dies off as short covering wanes, buyers refuse to step in ahead of weekend and political convention.
– Sellers back off but with no buyers stepping in market falls further.
– Market ponders economic future and thus far it is not showing a lot of faith in what lies ahead in terms of growth rates.
– NASDAQ hits 2004 new closing low, smaller caps break 200 day MA as large caps set up for a showdown.
– Gloom is high, but not as measured by the sentiment indicators.
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=
CFC”>
CFC (Countrywide Financial–$71.63; -1.40; optionable): Mortgage investment. Splits 2:1 on 8-31-04.
http://biz.yahoo.com/p/c/cfc.html”>Company Profile
STATUS: Test 50 day EMA. Took a breather Friday on lower, slightly above average volume. Given the selling, not bad at all as it held the 18 day EMA (71.33) after a wild Thursday that saw CFC tap the 50 day EMA (68.18) on the low and then furiously rebound to post a gain. Again this is not bad action, and just watching for CFC to make the break higher on continued strong trade.
Volume: 2.972M Avg Volume: 2.68M
BUY POINT: $73.82 Volume=3.5M Target=$82 Stop=$71.05
POSITION: CFU JY – Oct. $73.375c (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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Chart by http://www.stockcharts.com”>StockCharts.com
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3) Technical Playhttp://investmenthouse.com/quote/stkquote.php3?smbl=
ESL”>
ESL (Esterline Technology–$30.41; +1.36; optionable): Aerospace/defense.
http://biz.yahoo.com/p/e/esl.html”>Company Profile
STATUS: Cup w/handle. Ready for an all-time high, ESL has formed a very nice 22 week base that is setting the stage for the move that takes it there with style. The pattern shows all of the attributes you want. It held key support on the lows at the 200 day SMA (25.62), volume dried up to below average on the lows, volume rallied as it formed the right side of the base. It has come back to test the 18 day EMA (29.20) on the handle lows as it prepared for the breakout move. Friday it announced it was buying Leach Holding and the stock surged on tremendous volume. Looking to pick it up as it continues the move and provides the breakout.
Volume: 507.6K Avg Volume: 97.409K
BUY POINT: $30.68 Volume=150K Target=$35 Stop=$28.96
POSITION: ESL KF – Nov. $30c (59 delta) &/or Stock.
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4) Covered Call Playhttp://investmenthouse.com/quote/stkquote.php3?smbl=
SSNC”>
SSNC – SS&C Technologies, Inc. is currently trading at $20.44 The August $20 Calls (QUNHD) are trading at $1.30. That provides a return of about 4% if SSNC is above $20 on expiration Friday in August.
http://biz.yahoo.com/p/s/ssnc.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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