Weekend Newsletter for March 13, 2005

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Weekend Newsletter for

March 13, 2005

Table Of Contents 1) MARKET SUMMARY 2) PRE-ANNOUNCEMENT PLAY 3) TECHNICAL PLAY 4) COVERED CALL PLAY

http://ichart.yahoo.com/v?s=^ixic”> http://ichart.yahoo.com/v?s=^dji”>

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 > >From “The Daily” at InvestmentHouse.com
Stocks run out of gas again.

– Friday rally fails to materialize as techs and chips struggle.
– Trade gap grows even as exports hit a record.
– Money supply creeps up but still trending lower overall recently.
– No surge of sellers, just a lack of buyers send indices to 50 day EMA.
– Expiration week to add volatility as stocks try to hold the 50 day EMA.
– Subscriber Questions.

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The Friday rally lasted about 15 minutes. Less than one-half hour into the session stocks peaked and started lower. An intraday lateral move lasted 3 hours and then failed mid-afternoon. Very similar action to that in January when the market was trending lower: tried to set up an intraday consolidation and then failing in the last hour. The action summed up the week, finishing on the lows.

After a breakout the prior week in the face of rising oil prices, last week saw oil and rising interest rates take back what was just gained. Ironic as well since the oil hype hit a peak last week just as the oil stocks started to sell. Energy futures indicate a price around $43/bbl, big money started leaving oil stocks, and the Exxon CEO said supply was no problem. But of course the market, despite the minute by minute ticker on oil on the financial stations (it now has its own bug in the corner of the screen), does not care about where oil is this minute but what impact it will have on earnings and thus stock prices down the road. Thus even as oil stocks fell purportedly in anticipation of some lower near term prices, the market fell as well in part on the problems associated with longer term high prices.

Of course part of the problem with the market was the fact that oil stocks fell. Oil, metals, and basic materials had led the market higher, and last week they were all falling. SP600 and SP400 were hard hit as many of the smaller oil and gas companies reside there. At the same time NASDAQ and SOX were relatively unscathed, at least until Friday. After selling all week the NYSE indices held up fairly well Friday while NASDAQ and SOX were under fire. The switch coincided with a bit of renewed strength in steel stocks (good earnings update from Nucor) and oil stocks bouncing back a bit. Overall, however, the market was hit because three of the leading sectors, steel, materials, and energy, sold off pretty hard.

http://www.investmenthouse.com/1weekendmarketsummary.htm”>Read “The Daily” Entire Weekend Summary

Here’s a trade from “The Daily” and insights into our trading strategy:

Chart by http://www.stockcharts.com”>StockCharts.com
http://www.investmenthouse.com/cc/urbnsm.gif” width=”360″ height=”208″ border=”1″>
http://investmenthouse.com/quote/stkquote.php3?smbl=
URBN”>
URBN (Urban Outfitters, Inc.)
http://finance.yahoo.com/q/pr?s=urbn”>Company Profile
A market leader and building its first base coming off its split in July. URBN has the attributes we love: growing earnings and sales as well as the backing of the big money. It set up a nice 14 week reverse head and shoulders base on the 50 day EMA, an important institutional support level. URBN started the month with a high volume move off the 50 day EMA, and that was the move we were looking for as it showed the big money buyers crowding into the stock. We moved in with some June $45 strike call options though with this leader stock positions would work nicely as well. It was good timing as the stock jumped higher the first week of March, rallying to near 48; that strong volume off the 50 day EMA was the key. It reached our initial target in 5 sessions and we took a nice 90% gain. Because the move was strong and because URBN was showing excellent strength, we let half the position ride. After a test of the move Thursday, URBN was right back up Friday and looks ready for more gains ahead.

http://www.investmenthouse.com/1daily1.htm”>Learn more about “The Daily” with Stock Picks! – Issued 5 Times Per Week

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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.
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’sstock 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 ]
Here’s a pre-announcement play to watch and our current analysis.

Chart by http://www.stockcharts.com”>StockCharts.com
http://www.investmenthouse.com/cc/mwsm.gif” width=”360″ height=”208″ border=”1″>
http://investmenthouse.com/quote/stkquote.php3?smbl=
MW”>
MW (Men’s Wearhouse Inc.)
http://finance.yahoo.com/q/pr?s=mw”>Company Profile
We were looking for a split announcement from MW as it was at the prior split price and we had heard the board had a split as one of the items on its agenda. It did not hurt at all that MW is a leader and was in a nice pullback ahead of its forecast announcement date. That set up was a perfect entry for us. We saw a nice doji on the candlestick pattern at the 10 day EMA right before the close, after which we were looking for an announcement. As it turns out the announcement did not come; apparently MW’s board decided to wait on the split announcement. That did not keep the stock from shooting higher the next session, showing the power of strong leaders in good patterns as those are the stocks that post the good earnings and breakout moves. We moved in right before the close with some August $35 call options at a cost of $4.50. We were looking for a quick move so options were the way to leverage our gain on a relatively smaller move. The next session MW shot higher on huge trade. Our options jumped $1 in price and we sold for a 22% gain for about 30 minutes exposure to the market. Not the usual gain we take home, but we were very pleased with the gain even when things did not work out exactly the way we wanted.
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

http://www.investmenthouse.com/cc/windsm.gif” width=”360″ height=”208″ border=”1″>
3) Technical Playhttp://investmenthouse.com/quote/stkquote.php3?smbl=
WIND”>
WIND (Wind River Systems–$14.98; -0.17; optionable): Business software integration
http://finance.yahoo.com/q/pr?s=wind”>Company Profile
STATUS: Breakout test. WIND surged to start March, blasting out of a 14 week double bottom with handle base, showing some tremendous volume as it made the move. It rallied from 14 to 16 in short order on continued solid trade. Last week in the market selling it started testing that move, coming back to tap intraday at the 18 day EMA (14.68) on the Friday low and snapping back. Volume was very low on the test, indicating very little selling of positions taken on the breakout move. The first test of a breakout is one of our favorite entry points, and we are ready to move in on an above average volume rebound through the buy point. Accumulation in the base is a solid 4 to 2, and money flow is surging ahead of price. Relative strength broke out on the breakout move, a good corroboration. Looks nice.
Volume: 648.693K Avg Volume: 724.318K
BUY POINT: $15.32 Volume=900K Target=$18 Stop=$14.55
POSITION: QWV HC – Aug. $15c (57 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

http://www.investmenthouse.com/cc/sinasm.gif” width=”360″ height=”208″ border=”1″>
4) Covered Call Playhttp://investmenthouse.com/quote/stkquote.php3?smbl=
SINA”>
SINA – Sina Corp. is currently trading at $31.51. The April $30 Calls (NOQDF) are trading at $3.00. That provides a return of about 5% if SINA is above $30 on expiration Friday in April.
http://finance.yahoo.com/q/pr?s=sina”>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 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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