Weekend Newsletter for March 7, 2004
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/030704.htm
1) MARKET SUMMARY
Market gets its feathers ruffled but fights off the bad news.
– Intel, jobs report jar market, but stocks shake it off, continue consolidation.
– Anemic non-farm payrolls disappoint, but signs of upturn starting to show up.
– Refusing to sell, not quite ready to rise.
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–$43.85; -0.70; optionable): Semiconductor integrated circuits. Splits 2:1 on a date to be announced.
STATUS: Test 18 day MVA. MRVL is moving in a 17 week base that is somewhat of a cup. It has been quite volatile the past three weeks with the rest of the semiconductors, but has managed to continue to trend higher, holding the 50 day MVA (42.33) on the low. In the last pullback it has held the 18 day MVA (43.57), Friday showing a doji at that point. Looking for a solid volume start to the move.
Volume: 2.361M Avg Volume: 2.803M
BUY POINT: $44.85 Volume=4.2M Target=$50.85 Stop=$43.38
POSITION: UVM HI – Aug. $45c (49 delta) &/or Stock.
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3) Technical Play
NVTL (Novatel Wireless–$19.80; +1.30; no options): Telecom wireless communication
STATUS: Flying plateau. NVTL is making its second plateau after breaking from a flat base in early January. Stocks typically make 4 to 5 runs off the short term MVA (10 and 18 day MVA) after breaking out. Volume shot higher Friday as NVTL moved up off the bottom of the base. Money flow is shooting higher ahead of the stock, and we are looking for NVTL to make another break higher from here to continue the breakout run.
Volume: 940.152K Avg Volume: 594.235K
BUY POINT: $20.06 Volume=891K Target=$24.12 Stop=$18.66
POSITION: – Stock (no option chain).
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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
INTL – Inter-Tel Inc. is currently trading at $30.50. The April $30 Calls (TPQDF) are trading at $2.00. That provides a return of about 5% if INTL is above $30 on expiration Friday in April.
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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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