Weekend Newsletter for September 26, 2004
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Weekend Newsletter for September 26, 2004
Table Of Contents 1) MARKET SUMMARY 2) POST-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
Stocks challenged again, fight to hold on, but losing ground.
– Stocks close out the week mostly quiet, but SOX is trouble.
– Durable goods post strong rise sans transportation.
– The ‘costs’ of tax cuts.
– SOX rolls over after leading last leg of rally, following largest caps lower.
– Protecting upside positions as market continues to weaken.
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). For post-splits, we can play them as we would pre-splits (very short term), but we prefer to stretch our horizons, playing the trend. When playing options, we look further out, 2 or more months at least. We let the trend carry us along if there is one, but we will also take profits if the technical pattern degenerates, e.g., breaks a trendline. The main difference between post-splits and pre-splits plays is that we really have to like the pattern. Pre-splits can run right before their splits even with poor technical indicators. For post-splits, we are looking at the stocks from more of a longer term “would I buy this stock at this juncture?” position. Now there are times when a hot stock splits and investors pile in to get in while the stock is ‘cheaper.’ We play those, but with more of a short-term, pre-splits mentality in that we will be ready to get out fast if the momentum fades. Remember, everything we do has to pass muster with the market that day … don’t fight the market on these plays. Here’s a post-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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CTSH”>
CTSH (Cognizant Technology-$28.6; +0.02; optionable): Business software
http://biz.yahoo.com/p/c/ctsh.html”>Company Profile
After Hours: $28.52
STATUS: Breakout test. CTSH continues to ignore the rest of the market, as it continues its breakout test, fading to the 18 day EMA (28.31). As noted last week, market pullbacks are where the leaders show their leadership mettle. As it pulls back it is holding over the February high, the high on the left side of the base as the stock corrected and started the base. Very nice test; just looking for volume to jump on the move.
Volume: 949.757K Avg Volume: 1.169M
BUY POINT: New: 29.55 Volume=1.6M Target=$39.25 Stop=$28.54
POSITION: UPU AY – Jan. $27.50c (55 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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3) Technical Playhttp://investmenthouse.com/quote/stkquote.php3?smbl=
ECL”>
ECL (Ecolab-$31.17; +0.42; optionable): Cleaning products.
http://biz.yahoo.com/p/e/ecl.html”>Company Profile
STATUS: Cup w/handle. Volume surged Friday as ECL jumped off of a 50 day EMA (30.95) test in the handle itself that is working to shakeout the last sellers. The current 14 week base formed around the 50 day EMA (30.95) and is showing solid 4 to 2 accumulation and money flow is surging ahead of price. Looks as if ECL is ready to follow that money higher.
Volume: 1.16M Avg Volume: 634.416K
BUY POINT: $31.68 Volume=952K Target=$36.55 Stop=$30.55
POSITION: ECL AF – Jan. $30c (78 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
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4) Covered Call Playhttp://investmenthouse.com/quote/stkquote.php3?smbl=
STLD”>
STLD – Steel Dynamics, Inc. is currently trading at $35.12 The November $35 Calls (RQLKG) are trading at $2.20. That provides a return of about 6% if STLD is above $35 on expiration Friday in November.
http://biz.yahoo.com/p/s/stld.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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