Will Fed Return To Grouch Mode?
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INVESTMENT HOUSE.COMTM
Informing Investors Around The World
Read In All 50 States And Over 100 Countries
Weekend Newsletter for
July 2, 2006
Table Of Contents 1) MARKET SUMMARY 2) PRE-SPLIT 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
Investors pause to consider FOMC statement and long holiday weekend.
– Stocks hung over from strong Thursday move and ahead of long weekend.
– Personal income and spending decent, PCE deflator 2.1%.
– Midwest manufacturing slows more than expected, still expanding.
– Gold continues to surge while bond yield curve re-inverts.
– Short week but a lot to prove: will Fed return to grouch mode?
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Market Summary (continued)
Foreign markets were surging on the heels of the big Thursday gain in the
US, but futures were mushy Friday morning until the personal spending and
income data hit, showing the PCE did not jump higher as feared (0.2%, 2.1%
year/year). That propped up the early trade and NASDAQ gapped higher on
the open as stocks took the early offensive.
After SP500 tapped near resistance at the 50 day SMA, however, the market
lost its bid. Unfortunately that happened in the first 10 minutes, and
stocks were selling back down through the first hour. Losses never came
close to getting out of hand, however, as the indices had those early
gains to buffer the downside. They recovered after that initial selling
and started a slow but steady climb back up, through midmorning, into
lunch, and on to the last hour. That pushed the indices to positive,
extending the Thursday move. As expected, however, the late trade ahead
of the weekend was to the sell side, and stocks slipped to negative by the
close, again sporting just modest losses.
Technically there was no damage done or advantage gained. SP500 closed at
its lows but it was hardly a wild ride. Volume jumped early, died off,
and then surged late as part of the Russell indices rebalancing. That
pushed a lot of stocks sharply up and sharply down at the close as
institutions shuffled their holdings to match the new balance. Breadth
was close to 2:1 on NYSE, mediocre on NASDAQ. Some leaders moved higher,
but there was no new surge upside. Basically some modest backfilling on
volume that rose due to logistical issues as opposed to any new buying
spree.
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/fvesm.gif” width=”360″ height=”208″ border=”1″>
http://investmenthouse.com/indexq.php?smbl=
FVE”>
FVE (Five Star Quality Care–$11.07; -0.13; no options): Home health care.
http://finance.yahoo.com/q/pr?s=fve”>Company Profile
STATUS: Cup w/handle. Whenever someone proclaims himself as the best in
his name, you have to wonder, but FVE looks super. Issued back in early
2002, FVE sold off in a big base that lasted through 2003. Then in Q4
2004 it formed another big base lasting until early March 2006. It broke
higher and ran to 12 and then formed the current 15 week base over the 50
day EMA (10.63). Like this because it is perched on top of that long
base, and that is a load of support for the stock to move higher off of.
Positive accumulation and strong money flow. High volume Friday in the
Russell rebalance, but that just pushed it a bit lower in the handle. Set
up very well for the break higher this week.
Volume: 1.717M Avg Volume: 400.925K
BUY POINT: $11.65 Volume=600K Target=$13.98 Stop=$10.83
POSITION: – Stock
http://www.investmenthouse.com/1daily1.htm”>Learn more about “The Daily” 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.
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-split play to watch and our current analysis.
Chart by http://www.stockcharts.com”>StockCharts.com
http://www.investmenthouse.com/cc/halsm.gif” width=”360″ height=”208″ border=”1″>
http://investmenthouse.com/indexq.php?smbl=
HAL”>
HAL (Halliburton–$74.21; +0.49; optionable): Oil and gas service company. Splits 2:1 on 7-17-06.
http://finance.yahoo.com/q/pr?s=hal”>Company Profile
After Hours: $74.40
STATUS: Reverse head and shoulders. Hated by Chaney detractors and
others, HAL is the quintessential big corporation. It also makes investors
money. Rallied a bit further Friday but ran into the 50 day SMA (74.76)
and stalled, showing a doji. Still held above the 50 day on the low
(73.36), and we are looking at that to launch HAL higher. To recap: HAL
has formed this 6 week pattern at the bottom of its selloff that started
in early May after a quick double top sent it to the 200 day SMA (69.43).
It held that key support, working laterally and setting up this
accumulation base. Still a bit volatile, still a bit wild, but also looks
ready to move higher and start its pre-split move.
Volume: 7.456M Avg Volume: 8.106M
BUY POINT: A clear break higher is a move over the 50 day SMA at 74.76 (orig. $74.11) Volume=8.5M Target=$83.00 Stop=$71.55
POSITION: HAL JO – Oct. $75c (53 delta) &/or Stock.
Learn more about our Stock Split Report and how we have made gains of 321% with our powerful stock split plays!
http://www.investmenthouse.com/a/StockSplitReport.html”>Details Here.
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Chart by http://www.stockcharts.com”>StockCharts.com
http://www.investmenthouse.com/cc/ilmnsm.gif” width=”360″ height=”208″ border=”1″>
3) TECHNICAL PLAYhttp://investmenthouse.com/indexq.php?smbl=
ILMN”>
ILMN (Illumina–$29.66; +0.68; optionable): Biotechnology.
http://finance.yahoo.com/q/pr?s=ilmn”>Company Profile
After Hours: $29.61
STATUS: Double bottom w/handle. Some illuminating volume Thursday and
Friday as ILMN moved up to kiss the breakout point. A really nice base
has set up and it is showing really solid price/volume action the past two
weeks. To recap: Pretty 10 week double bottom that worked to nicely fill
the gap higher in mid-April. The action last week finished its handle.
Now it is set to give us the breakout to a 5.5 year high. Positive
accumulation and surging money flow go hand in hand. Relative strength is
making the breakout well ahead of price, a very bullish indication.
Volume: 1.175M Avg Volume: 737.262K
BUY POINT: $30.25 Volume=1M Target=$36.50 Stop=$28.22
POSITION: IQA LF – Dec. $30c (58 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/zeussm.gif” width=”360″ height=”208″ border=”1″>
4) COVERED CALL PLAYhttp://investmenthouse.com/indexq.php?smbl=
ZEUS”>
ZEUS – Olympic Steel Inc. is currently trading at $35.39. The July $35 Calls (SBQGG) are trading at $1.85. That provides a return of about 4% if ZEUS is above $35 on expiration Friday in July.
http://finance.yahoo.com/q/pr?s=zeus”>Company Profile
http://www.investmenthouse.com/1coveredcalls1.htm”>Learn more about our Covered Call Tables – 8 Tables Updated 5 Times Per Week
* * * SCOTTRADE * * *
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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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