Weekend Newsletter for June 6, 2004
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/060604.htm
1) MARKET SUMMARY
Jobs report spurs nice gains, but market unable to hold the important moves.
– Stocks rush higher on jobs report but cannot break resistance on lack of volume.
– Close to 1 million jobs in 3 months but leading indicators softening.
– SP500 fails to hold break over 1125 as summertime market still has reservations about Iraq, oil, and the Fed.
http://www.investmenthouse.com/1weekendmarketsummary.htm?123 “> Click here or on link for our full Weekend Market Summary
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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.
MRVL (Marvell Technology–$46.44; +0.77; optionable): Semiconductor integrated circuits. Splits 2:1 on 6-29-04
STATUS: Double bottom w/handle. Gapped higher Friday on the Intel news but there was no volume. None. After a nice handle formed to its 9 week base, MRVL was unable to deliver volume on the bounce. Still in a very solid pattern with money flow still running higher ahead of price. Just need to see more volume move into the stock. After this gap higher it may come back to test the 10 day EMA (45.35) once more before it is ready to go again.
Volume: 1.696M Avg Volume: 3.186M
BUY POINT: $46.55 Volume=4.5M Target=$51.45 Stop=$44.88
POSITION: UVM HI – Aug. $45c (59 delta).
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3) Technical Play
IART (Integra Lifesciences–$32.83; +0.22; optionable): Biotechnology
STATUS: Ascending triangle. A very nice 7 month base sporting excellent 10 to 2 accumulation (10 up price weeks on rising volume to 2 down price weeks on rising volume), showing money has been moving into the stock during the base. The base formed over the 200 day SMA (30.76), bouncing up off of that level as it makes higher lows. It has moved back up to the top of the pattern, rallying Wednesday with a big volume surge then fading slightly Thursday and Friday, but showing a doji and looks to be making a higher low. That often precedes the breakout move. An ‘A’ rated stock in terms of sales and earnings, and a great pattern to boot.
Volume: 56.826K Avg Volume: 157.565K
BUY POINT: $33.72 Volume=236K Target=$39 Stop=$31.72
POSITION: UJI IF – Sept. $30c (81 delta) &/or Stock.
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Learn more about our Technical Trader Report!
http://www.investmenthouse.com/1tech1.htm
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4) Covered Call Play
SCHN – Schnitzer Steel Industries, Inc. is currently trading at $26.41. The July $25 Calls (SQQGE) are trading at $2.70. That provides a return of about 5% if SCHN is above $25 on expiration Friday in July.
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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 associated 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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