Weekend Newsletter for June 13, 2004
Investmenthouse Newsletter
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Weekend Newsletter for June 13, 2004
Table Of Contents 1) MARKET SUMMARY 2) PRE-SPLIT PLAY 3) TECHNICAL PLAY 4) COVERED CALL PLAY
Stock Split Notices Investing Q & As Glossary
1) MARKET SUMMARY
Volatile open, close provide bookends to quiet session.
– Modest gains and low volume again mark the end of a shortened week.
– Import prices driven higher by oil, while treasuries experience subtle shifts.
– Indexes poised to continue summer rally as they recover from Wednesday higher volume selling.
Read Full Weekend SummaryLearn 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.
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Chart by StockCharts.com
BLUD (Immucor–$30.63; +0.18; optionable): Diagnostic substances. Splits 3:2 on 7-19-04.
Company Profile
STATUS: Flying plateau. Still in a very easy pullback to test the strong move in May, snugging up to the 10 day EMA (30.50) in a very narrow range and showing a tight doji Thursday. This is classic action from a strong stock, refusing to give up gains and holding over the short term MA. Again, BLUD has moved well for us already, and we are looking to add to positions (or take new ones) as it rebounds on stronger trade.
Volume: 291.942K Avg Volume: 355.181K
BUY POINT: New: $31.62 (orig. $27.49) Volume=500K Target=New positions: $36 (orig. positions $32) Stop=$28.96
POSITION: QMQ IF – Sept. $30c (53 delta) &/or Stock.
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Chart by StockCharts.com
3) Technical Play
ZQK (Quicksilver–$23.06; +0.90; optionable): Apparel.
Company Profile
STATUS: Reverse head and shoulders. ZQK split in May 2003 and then fell into a 9 month flat base, making the breakout in February and running to 23. It needed a rest after that move and this 10 week base sporting 2 to 1 accumulation is setting the foundation for the next move. It tapped the 50 day EMA (21.74) Monday on the low of the right shoulder and bounced on strong volume. Thursday it was rallying again, once more on strong, above average trade, following solid money flow moving up ahead of the price. It looks ready to start the breakout for its next run. Very solid, very good leadership stock.
Volume: 733.4K Avg Volume: 593.454K
BUY POINT: $23.39 Volume=890K Target=$27.39 Stop=$21.98
POSITION: ZQK KX – Nov. $22.50c (61 delta) &/or Stock.
Learn more about our Technical Traders Report – Issued 5 Times Per Week Chart by StockCharts.com
4) Covered Call Play
CAMD – California Micro Devices Corp. is currently trading at $12.6 The July $12.5 Calls (CGQGV) are trading at $1.05. That provides a return of about 8% if CAMD is above $12.5 on expiration Friday in July.
Company Profile
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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.
